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<CONFORMED-NAME>FINANCIAL INSTITUTIONS INC
<CIK>0000862831
<ASSIGNED-SIC>6021
<IRS-NUMBER>160816610
<STATE-OF-INCORPORATION>NY
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<STREET1>220 LIBERTY STREET
<CITY>WARSAW
<STATE>NY
<ZIP>14569
<PHONE>7167861100
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<FILENAME>d56894_8-k.txt
<DESCRIPTION>FORM 8-K
<TEXT>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

                       Pursuant to Section 13 OR 15(d) of
                       The Securities Exchange Act of 1934

       Date of Report (Date of earliest event reported): September 4, 2003

                          FINANCIAL INSTITUTIONS, INC.
                Exact Name of Registrant as Specified in Charter)

            New York                     0-26481                 16-0816610
(State or other jurisdiction of   (Commission File No.)       (I.R.S. Employer
 incorporation or organization)                              Identification No.)

  220 Liberty Street, Warsaw, New York                              14569
(Address of principal executive offices)                          (Zip code)

Registrant's telephone number, including area code     (585) 786-1100

<PAGE>

Item 5. Other Events and Regulation FD

On September 4, 2003, the Registrant's two wholly-owned national bank
subsidiaries, National Bank of Geneva and Bath National Bank, each entered into
Written Agreements with the Office of the Comptroller of the Currency. The text
of each agreement is attached hereto as Exhibit 99.1 and Exhibit 99.2 and
described in the Registrant's Press Release, dated September 4, 2003, which is
attached hereto as Exhibit 99.3

Item 7. Financial Statements and Exhibits

            99.1  Text of the Agreement by and between National Bank of Geneva
                  and the Office of the Comptroller of the Currency.

            99.2  Text of the Agreement by and between The Bath National Bank
                  and the Office of the Comptroller of the Currency.

            99.3  Press Release dated September 4, 2003.


                                       2
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                                  FINANCIAL INSTITUTIONS, INC.
                                                         (Registrant)


September 4, 2003                                    /s/ Ronald A. Miller
-----------------                                    --------------------
     Date                                      Ronald A. Miller, Senior VP & CFO


                                       3

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>3
<FILENAME>d56894_ex99-1.txt
<DESCRIPTION>TEXT OF THE AGREEMENT
<TEXT>
EXHIBIT 99.1

                            AGREEMENT BY AND BETWEEN
                             National Bank of Geneva
                                Geneva, New York
                                       and
                  The Office of the Comptroller of the Currency

      National Bank of Geneva, Geneva, New York ("Bank") and the Comptroller of
the Currency of the United States of America ("Comptroller") wish to protect the
interests of the depositors, other customers, and shareholders of the Bank, and,
toward that end, wish the Bank to operate safely and soundly and in accordance
with all applicable laws, rules and regulations.

      The Comptroller, through his/her National Bank Examiner, has examined the
Bank, and his/her findings are contained in the Report of Examination for the
examination that commenced on January 6, 2003 ("ROE").

      In consideration of the above premises, it is agreed, between the Bank, by
and through its duly elected and acting Board of Directors ("Board"), and the
Comptroller, through his/her authorized representative, that the Bank shall
operate at all times in compliance with the articles of this Agreement.

                                   ARTICLE I

                                  JURISDICTION

      (1) This Agreement shall be construed to be a "written agreement entered
into with the agency" within the meaning of 12 U.S.C. ss. 1818(b)(1).

      (2) This Agreement shall be construed to be a "written agreement between
such depository institution and such agency" within the meaning of 12 U.S.C. ss.
1818(e)(1) and 12 U.S.C. ss. 1818(i)(2).


                                     - 1 -
<PAGE>

      (3) This Agreement shall be construed to be a "formal written agreement"
within the meaning of 12 C.F.R. ss. 5.51(c)(6)(ii). See 12 U.S.C. ss. 1831i.

      (4) This Agreement shall be construed to be a "written agreement" within
the meaning of 12 U.S.C.ss. 1818(u)(1)(A).

      (5) All reports or plans which the Bank or Board has agreed to submit to
the Assistant Deputy Comptroller pursuant to this Agreement shall be forwarded
to:

           James M. Gouldie
           Assistant Deputy Comptroller
           Upstate New York Field Office
           231 Salina Meadows Parkway, Suite 105
           Syracuse, New York 13212

                                   ARTICLE II

                              COMPLIANCE COMMITTEE

      (1) Within thirty days (30) days, the Board shall appoint a Compliance
Committee of at least six (6) directors, of which no more than two (2) shall be
employees of the Bank or any of its affiliates (as the term "affiliate" is
defined in 12 U.S.C. ss. 371c(b)(1)), or a family member of any such person.
Upon appointment, the names of the members of the Compliance Committee shall be
submitted in writing to the Assistant Deputy Comptroller. The Compliance
Committee shall be responsible for monitoring and coordinating the Bank's
adherence to the provisions of this Agreement.

      (2) The Compliance Committee shall meet at least monthly.

      (3) Within thirty days (30) days of the appointment of the Committee and
every thirty days thereafter, the Compliance Committee shall submit a written
progress report to the Board setting forth in detail:

            (a) actions taken to comply with each Article of this Agreement; and


                                     - 2 -
<PAGE>

            (b) the results of those actions.

      (4) The Board shall forward a copy of the Compliance Committee's report,
with any additional comments by the Board, to the Assistant Deputy Comptroller.

                                  ARTICLE III

                                   ACTION PLAN

      (1) Within thirty (30) days, the Board shall adopt, implement, and
thereafter ensure Bank adherence to a written action plan detailing the Board's
assessment of what needs to be done to address the regulatory recommendations
outlined in the Report of Examination (ROE) and the requirements of this
Agreement to improve the Bank, specifying how the Board will implement the plan,
and setting forth a timetable for the implementation of the plan.

      (2) Upon completion of the plan, the Board shall submit the plan to the
Assistant Deputy Comptroller for review. The Board shall establish appropriate
procedures for the implementation of the plan.

      (3) In the event the Assistant Deputy Comptroller recommends changes to
the action plan, the Board shall promptly incorporate those changes into the
plan.

      (4) The plan shall be implemented pursuant to the time frames set forth
within the plan unless events dictate modifications to the plan. Where the Board
considers modifications appropriate, those modifications shall be submitted to
the Assistant Deputy Comptroller for prior determination of no supervisory
objection.

      (5) The Board shall ensure that the Bank has processes, personnel, and
control systems to ensure implementation of and adherence to the plan developed
pursuant to this Article.


                                     - 3 -
<PAGE>

                                   ARTICLE IV

                      BOARD TO ENSURE COMPETENT MANAGEMENT

      (1) Within one hundred and eighty days (180) days, the Board shall review
the capabilities of the Bank's recently appointed management (President and
Senior Loan Officer) to perform present and anticipated duties, and shall
determine whether management changes should be made, including the need for
additions to or deletions from current management.

      (2) For the incumbent officer in the position of Financial Officer, the
Board shall within one hundred and eighty days (180) days assess the officer's
experience, other qualifications and performance compared to the position's
description, duties and responsibilities.

      (3) If the Board determines that an officer will continue in his/her
position but that the officer's depth of skills needs improvement, the Board
will within 30 days develop and implement a written program, with specific time
frames, to improve the officer's supervision and management of the Bank. At a
minimum the written program shall include:

      (a)   an education program designed to ensure that the officer has skills
            and abilities necessary to supervise effectively;

      (b)   a program to improve the effectiveness of the officer;

      (c)   objectives by which the officer's effectiveness will be measured;
            and

      (d)   performance appraisal program for evaluating performance according
            to the position's description and responsibilities and for measuring
            performance against the Bank's goals and objectives.


                                     - 4 -
<PAGE>

Upon completion, a copy of the written program shall be submitted to the
Assistant Deputy Comptroller.

      (4) If any position mentioned in Paragraphs (1) or (2) of this Article
become vacant now or in the future, including if the Board determines that the
skills of the individual are not suitable for the position or realigns an
existing officer's responsibilities and a position mentioned in paragraphs (1)
or (2) becomes vacant, the Board shall within 30 days of such vacancy appoint
(on an interim basis or otherwise) a capable person to the vacant position who
shall be vested with sufficient executive authority to ensure the Bank's
compliance with this Agreement and the safe and sound operation of functions
within the scope of that position's responsibility.

      (5) Prior to the appointment of any individual to an executive officer or
director position, the Board shall submit to the Assistant Deputy Comptroller
the following information:

      (a)   the information sought in the "Changes in Directors and Senior
            Executive Officers" booklet of the Comptroller's Corporate Manual,
            together with a legible fingerprint card for the proposed
            individual;

      (b)   a written statement of the Board's reasons for selecting the
            proposed officer or director; and

      (c)   a written description of the proposed officer's or director's duties
            and responsibilities.

      (6) The Assistant Deputy Comptroller shall have the power to disapprove
the appointment of the proposed new director or executive officer. However, the
lack of disapproval of such individual shall not constitute an approval or
endorsement of the proposed new director or executive officer.


                                     - 5 -
<PAGE>

      (7) The requirement to submit information and the prior disapproval
provisions of this Article are based on the authority of 12 U.S.C. ss.
1818(b)(6)(E) and do not require the Comptroller to complete his/her review and
act on any such information or authority within ninety (90) days.

                                   ARTICLE V

                        CAPITAL PLAN AND HIGHER MINIMUMS

      (1) The Bank shall achieve by December 31, 2003, and thereafter maintain,
the following capital levels (as defined in 12 C.F.R. Part 3 and 12 C.F.R. Part
6):

      (a)   Tier 1 leverage capital at least equal to seven percent (7%) of
            risk-weighted assets as defined by 12 C.F.R.ss.6.2(d) and (f);

      (b)   Tier 1 risk-based capital equal to nine percent (9%) of risk
            weighted assets as defined by 12 C.F.R.ss. 6.2(i) and (f); and

      (c)   Total risk-based capital of ten and one-half percent (10.5%) of risk
            weighted assets as defined by 12 C.F.R.ss. 6.2(k) and (f).

      (2) The Bank shall achieve by March 31, 2004, and thereafter maintain, the
following capital levels (as defined in 12 C.F.R. Part 3 and 12 C.F.R. Part 6):

      (a)   Tier 1 leverage capital at least equal to eight percent (8%) of
            risk-weighted assets as defined by 12 C.F.R.ss.6.2(d) and (f);

      (b)   Tier 1 risk-based capital equal to ten percent (10%) of risk
            weighted assets as defined by 12 C.F.R. ss. 6.2(i) and (f); and

      (c)   Total risk-based capital of twelve percent (12%) of risk weighted
            assets as defined by 12 C.F.R. ss. 6.2(k) and (f).


                                     - 6 -
<PAGE>

      (3) Until such time the Bank has achieved compliance with paragraph (1) of
this Article, at no time shall the Bank's capital levels drop below those levels
as of the effective date of the Agreement.

      (4) The requirement in this Agreement to meet and maintain a specific
capital level means that the bank may not be deemed to be "well capitalized" for
purposes of 12U.S.C.ss. 1831o and 12 C.F.R. Part 6 pursuant to 12 C.F.R.ss.
6.4(b)(1)(iv).

      (5) Within sixty (60) days, the Board shall develop, implement, and
thereafter ensure Bank adherence to a three year capital program. The program
shall include:

      (a)   specific plans for the maintenance of adequate capital that may in
            no event be less than the requirements of Paragraph (1);

      (b)   projections for growth and capital requirements based upon strategic
            plan objectives and a detailed analysis of the Bank's assets,
            liabilities, earnings, fixed assets, and off-balance sheet
            activities;

      (c)   projections of the sources and timing of additional capital to meet
            the Bank's current and future needs;

      (d)   the primary source(s) from which the Bank will strengthen its
            capital structure to meet the Bank's needs;

      (e)   contingency plans that identify alternative methods should the
            primary source(s) under (d) above not be available; and

      (f)   a dividend policy that permits the declaration of a dividend only:

            (i)   when the Bank is in compliance with its approved capital
                  program;

            (ii)  when the Bank is in compliance with 12 U.S.C. ss.ss. 56 and
                  60; and

            (iii) with prior written notice to the Assistant Deputy Comptroller.


                                     - 7 -
<PAGE>

      (6) Upon completion, the Bank's capital program shall be submitted to the
Assistant Deputy Comptroller for prior determination of no supervisory
objection. Upon receiving a determination of no supervisory objection from the
Assistant Deputy Comptroller, the Bank shall implement and adhere to the capital
program. The Board shall review and update the Bank's capital program on an
annual basis, or more frequently if necessary. Copies of the reviews and updates
shall be submitted to the Assistant Deputy Comptroller.

      (7) The Board shall ensure that the Bank has processes, personnel, and
control systems to ensure implementation of and adherence to the program
developed pursuant to this Article.

                                   ARTICLE VI

                                   CREDIT RISK

      (1) Within ninety (90) days, the Board shall develop, implement, and
thereafter ensure Bank adherence to a written program to reduce the high level
of credit risk in the Bank. The program shall include, but not be limited to:

      (a)   procedures to strengthen credit administration, underwriting, and
            problem loan identification particularly in the commercial,
            commercial real estate, and agricultural loan portfolios as outlined
            in the Report of Examination; and

      (b)   procedures to strengthen management of lending operations and to
            maintain an adequate, qualified staff in all functional areas;

      (c)   The Board shall submit a copy of the program to the Assistant Deputy
            Comptroller.


                                     - 8 -
<PAGE>

      (d)   At least quarterly, the Board shall prepare a written assessment of
            the bank's credit risk, which shall evaluate the Bank's progress
            under the aforementioned program. The Board shall submit a copy of
            this assessment to the Assistant Deputy Comptroller.

      (2) The Board shall ensure that the Bank has processes, personnel, and
control systems to ensure implementation of and adherence to the program
developed pursuant to this Article.

                                  ARTICLE VII

                                CRITICIZED ASSETS

      (1) The Bank shall take immediate and continuing action to protect its
interest in those assets criticized in the ROE, and any subsequent Report of
Examination, by internal or external loan review, or in any list provided to
management by the National Bank Examiners during any examination.

      (2) Within one hundred and twenty (120) days, the Board shall adopt,
implement, and thereafter ensure Bank adherence to a written program designed to
eliminate the basis of criticism of each problem asset in the ROE, any
subsequent Report of Examination, any internal or external loan review, or any
list provided to management by the National Bank Examiners during any
examination designated "doubtful," "substandard," or "special mention." This
program shall include, at a minimum:

      (a)   the development of written action plans for each criticized borrower
            with an aggregate outstanding balance of one hundred thousand
            dollars ($100,000) or more or when total exposure on SBA guaranteed
            loan balance is one hundred


                                     - 9 -
<PAGE>

            thousand dollars ($100,000) or more. At a minimum, these action
            plans should include those items outlined in the ROE as well as the
            following:

            (i)   an identification of the expected sources of repayment;

            (ii)  the appraised value of supporting collateral and the position
                  of the Bank's lien on such collateral where applicable;

            (iii) an analysis of current and satisfactory credit information,
                  including cash flow analysis where loans are to be repaid from
                  operations; and

            (iv)  the proposed action to eliminate the basis of criticism and
                  the time frame for its accomplishment.

      (b)   The written action plans outlined in subparagraph 2(a) shall be
            produced and presented to the Board on a quarterly basis.

      (3) The Board, or a designated committee composed of a quorum of outside
directors, shall conduct a review of the written action plans, on at least a
quarterly basis, to determine:

      (a)   the status of each criticized asset or criticized portion thereof
            that equals or exceeds one hundred thousand dollars ($100,000);

      (b)   management's adherence to the program adopted pursuant to this
            Article;

      (c)   the status and effectiveness of the written program; and

      (d)   the need to revise the program or take alternative action.

      (4) Upon adoption, and quarterly thereafter, a copy of the written action
plans for all criticized assets equal to or exceeding one hundred thousand
dollars ($100,000) along with the Board's response shall be forwarded to the
Assistant Deputy Comptroller.

      (5) The Bank may extend credit, directly or indirectly, including
renewals, extensions or capitalization of accrued interest, to a borrower whose
loans or other extensions of credit are


                                     - 10 -
<PAGE>

criticized in the ROE, in any subsequent Report of Examination, in any internal
or external loan review, or in any list provided to management by the National
Bank Examiners during any examination and whose aggregate loans or other
extensions exceed one hundred thousand dollars ($100,000) only if each of the
following conditions is met:

      (a)   the Board or designated committee finds that the extension of
            additional credit is necessary to promote the best interests of the
            Bank and that prior to renewing, extending or capitalizing any
            additional credit, a majority of the full Board (or designated
            committee) approves the credit extension and records, in writing,
            why such extension is necessary to promote the best interests of the
            Bank; and

      (b)   a comparison to the written program adopted pursuant to this Article
            shows that the Board's formal plan to collect or strengthen the
            criticized asset will not be compromised.

      (6) A copy of the approval of the Board or of the designated committee
shall be maintained in the file of the affected borrower.

      (7) The Board shall ensure that the Bank has processes, personnel, and
control systems to ensure implementation of and adherence to the plan developed
pursuant to this Article.

                                  ARTICLE VIII

                                 LENDING POLICY

      (1) Within sixty (60) days, the Board shall review and revise the Bank's
written loan policy. In revising this policy, the Board shall refer to the Loan
Portfolio Management booklet, A-LPM, of the Comptroller's Handbook. This policy
shall incorporate, but not necessarily be limited to, the following:


                                     - 11 -
<PAGE>

      (a)   a description of acceptable types of loans;

      (b)   a provision that current and satisfactory credit information will be
            obtained on each borrower;

      (c)   establishing minimum requirements for uniform and comprehensive
            credit analysis, including full disclosure of all significant
            aspects of the proposed credit and an assessment of the risks
            involved, prior to credit approval;

      (d)   maturity scheduling related to the anticipated source of repayment,
            the purpose of the loan, and the useful life of the collateral;

      (e)   maximum ratio of loan value to appraised value or acquisition costs
            of collateral securing the loan;

      (f)   collection procedures, to include follow-up efforts, that are
            systematically and progressively stronger;

      (g)   a definition of the Bank's trade area;

      (h)   guidelines and limitations for loans originating outside of the
            Bank's trade area;

      (i)   a limitation on aggregate outstanding loans in relation to other
            balance sheet accounts;

      (j)   distribution of loans by category;

      (k)   limitations on participation loans by aggregate dollar per
            individual institution, and specific guidelines to properly
            administer participation loans;

      (l)   a prohibition regarding the use of brokered deposits to fund loan
            growth or support criticized loans;

      (m)   guidelines for loans to insiders, including a statement that such
            loans will not be granted on terms more favorable than those offered
            to similar outside borrowers;


                                     - 12 -
<PAGE>

      (n)   guidelines and limitations on concentrations of credit;

      (o)   a limitation on the type and size of loans that may be made by loan
            officers without prior approval by the Board or a committee
            established by the Board for this purpose;

      (p)   measures to correct the deficiencies in the Bank's lending
            procedures noted in any Report of Examination (ROE); and

      (q)   guidelines designed to improve Board oversight of the loan approval
            process, specifically with regard to credits exhibiting significant
            risk. At a minimum, the policy shall:

            (i)   establish dollar limits on extensions of credit to any one
                  borrower, above which the prior approval of the Board, or a
                  committee thereof, would be required;

            (ii)  establish dollar limits on aggregate extensions of credit to
                  any one borrower, above which any new extensions of credit to
                  that borrower, regardless of amount, would require the prior
                  approval of the Board, or a committee thereof; and

            (iii) require that all credits which deviate from the Bank's normal
                  course of business, including all credits which deviate from
                  the Bank's written strategic plan, receive the prior approval
                  of the Board, or a committee thereof.

      (r)   guidelines consistent with Banking Circular 255, Troubled Loan
            Workouts and Loans to Borrowers in Troubled Industries setting forth
            the criteria under which


                                     - 13 -
<PAGE>

            renewals of extensions of credit may be approved. At a minimum the
            policy shall:

            (i)   ensure that renewals are not made for the sole purpose of
                  reducing the volume of loan delinquencies; and

            (ii)  provide guidelines and limitations on the capitalization of
                  interest;

      (s)   charge-off guidelines, by type of loan or other asset, including
            Other Real Estate Owned, addressing the circumstances under which a
            charge-off would be appropriate and ensuring the recognition of
            losses within the quarter of discovery; and

      (t)   a pricing policy that takes into consideration costs, general
            overhead, and probable loan losses, while providing for a reasonable
            margin of profit;

      (u)   guidelines for periodic review of the Bank's adherence to the
            revised lending policy.

      (2) Upon adoption, the policy shall be implemented, the Board shall
thereafter ensure Bank adherence to the policy, and a copy of the policy shall
be forwarded to the Assistant Deputy Comptroller for review.

      (3) The Board shall ensure that the Bank has processes, personnel, and
control systems to ensure implementation of and adherence to the policy
developed pursuant to this Article.


                                     - 14 -
<PAGE>

                                   ARTICLE IX

                                NONACCRUAL LOANS

      (1) The Bank shall immediately reverse or charge-off all interest that has
been accrued contrary to the requirements contained in the Instruction for
Preparation of Consolidated Reports of Condition and Income ("Call Report
Instructions") governing nonaccrual loans. Further, the bank shall immediately
reverse or charge-off that portion of the remaining accrued interest on such
loans that, when combined with principal, is not protected by sound collateral
values

      (2) Within thirty (30) days, but no later than the next call report filing
on September 30, 2003, whichever date is earlier, the Board shall adopt and
implement written policies and procedures governing the supervision and control
of nonaccrual loans. Such policies and procedures shall:

      (a)   be consistent with the accounting requirements contained in the Call
            Report Instructions;

      (b)   address the circumstances under which accrued interest due on a loan
            may be added to the outstanding principal amount when the loan is
            renewed or restructured; address the comments provided in the ROE,
            and

      (c)   require the monthly presentation to the Board of all loans meeting
            any of the nonaccrual criteria.

      (3) Within sixty (60) days, the Board shall develop and implement a
written policy that shall provide for auditing accrued interest on loans. The
policy shall, at a minimum, provide for quarterly audits of loan accruals and
incorporate procedures for periodically testing the


                                     - 15 -
<PAGE>

Bank's identification of nonaccrual loans as governed by the policy adopted
pursuant to paragraph (1) above.

      (4) Upon adoption, a copy of the written policies and procedures shall be
forwarded to the Assistant Deputy Comptroller and the Board shall thereafter
ensure Bank adherence to all policies and procedures developed pursuant to this
Article.

      (5) The Board shall ensure that the Bank has processes, personnel, and
control systems to ensure implementation of and adherence to the policies
developed pursuant to this Article.


                                     - 16 -
<PAGE>

                                   ARTICLE X

                           APPRAISALS OF REAL PROPERTY

      (1) Within thirty (30) days, the Board shall engage the services of an
independent, professionally certified, or licensed appraiser(s) to provide:

      (a)   a written or updated appraisal, in accordance with 12 C.F.R. Part
            34, for each parcel of real property that represents primary
            collateral behind any extension of credit where:

            (i)   the appraisal is specifically required by the provisions of 12
                  U.S.C. ss. 34 Subpart C - Appraisals;

            (ii)  the loan was criticized or classified in the ROE or by the
                  Bank's internal loan review, and the most recent independent
                  appraisal is more than twelve (12) months old; or

            (iii) accrued interest or loan fees have been or will be added to
                  the outstanding principal balance, and the most recent
                  independent appraisal is more than twelve (12) months old;

      (b)   a written appraisal on each parcel of "Other Real Estate Owned"
            where it is needed to bring the Bank into conformity with the
            provisions of 12 C.F.R. Part 34.

      (2) The Board shall specifically instruct the appraiser(s) to comply with
the requirements of 12 C.F.R. Part 34. The details surrounding any and all other
instructions given to the appraiser(s) by the Bank, whether written or oral,
shall be provided to the Assistant Deputy Comptroller for review prior to the
appraiser(s) undertaking the actual appraisals.


                                     - 17 -
<PAGE>

      (3) All such appraisals shall be completed within one hundred and twenty
(120) days, and certification by the Board attesting to the completion of the
appraisals shall be forwarded to the Assistant Deputy Comptroller.

                                   ARTICLE XI

                        CREDIT AND COLLATERAL EXCEPTIONS

      (1) Within ninety (90) days the Board shall obtain current and
satisfactory credit information on all loans lacking such information, including
those listed in the ROE, in any subsequent Report of Examination, in any
internal or external loan review, or in any listings of loans lacking such
information provided to management by the National Bank Examiners at the
conclusion of an examination.

      (2) Within ninety (90) days the Board shall ensure proper collateral
documentation is maintained on all loans and correct each collateral exception
listed in the ROE, in any subsequent Report of Examination, in any internal or
external loan review, or in any listings of loans lacking such information
provided to management by the National Bank Examiners at the conclusion of an
examination.

      (3) Effective immediately, the Bank may grant, extend, renew, alter or
restructure any loan or other extension of credit only after:

      (a)   documenting the specific reason or purpose for the extension of
            credit;

      (b)   identifying the expected source of repayment in writing;

      (c)   structuring the repayment terms to coincide with the expected source
            of repayment;

      (d)   obtaining and analyzing current and satisfactory credit information,
            including cash flow analysis, where loans are to be repaid from
            operations;


                                     - 18 -
<PAGE>

            (i)   Failure to obtain the information in Subparagraph (3)(d) shall
                  require a majority of the full Board (or a delegated committee
                  thereof) to certify in writing the specific reasons why
                  obtaining and analyzing the information in 3(d) would be
                  detrimental to the best interests of the Bank.

            (ii)  A copy of the Board certification shall be maintained in the
                  credit file of the affected borrower(s). The certification
                  will be reviewed by this Office in subsequent examinations of
                  the Bank; and

      (e)   documenting, with adequate supporting material, the value of
            collateral and properly perfecting the Bank's lien on it where
            applicable.

      (4) The Board shall ensure that the Bank has processes, personnel, and
control systems to ensure implementation of and adherence to the policy
developed pursuant to this Article.

                                  ARTICLE XII

                              INTERNAL LOAN REVIEW

      (1) The Board shall within thirty (30) days employ or designate a
sufficiently experienced and qualified person(s) or firm to ensure the timely
and independent identification of problem loans and leases.

      (2) Within forty-five (45) days, the Board shall establish an effective,
independent loan review system to periodically review the Bank's loan and lease
portfolios to assure the timely identification and categorization of problem
credits and provide an assessment of the overall condition of the loan and lease
portfolios. The system shall provide for a written report to be filed with the
Board after each review and shall use a loan and lease grading system


                                     - 19 -
<PAGE>

consistent with the guidelines set forth in the Rating Credit Risk booklet,
A-RCR, of the Comptroller's Handbook. These reports shall, at a minimum, include
conclusions regarding:

      (a)   the identification, type, rating, and amount of problem loans and
            leases;

      (b)   credit and collateral documentation exceptions;

      (c)   the identification and status of credit related violations of law,
            rule or regulation;

      (d)   the identity of the loan officer and/or participating financial
            institution who originated each loan reported in accordance with
            subparagraphs (a) through (c) of the Article as well as the adequacy
            of loan officer credit analyses;

      (e)   loans and leases to executive officers, directors, principal
            shareholders (and their related interests) of the Bank;

      (f)   loans and leases not in conformance with the Bank's lending and
            leasing policies, and exceptions to the Bank's lending and leasing
            policies;

      (g)   the adequacy of allowance for loan and lease loss allocations; and

      (h)   the adequacy of written action plans for criticized borrowers as
            outlined in Article VII.

      (3) At least annually, such report, also shall include conclusions on, at
a minimum:

      (a)   the overall quality of the loan and lease portfolios;

      (b)   concentrations of credit; and

      (c)   the adequacy of management's documentation supporting the allowance
            for loan and lease loss methodology and as well as the methodology's
            compliance with regulatory guidance.


                                     - 20 -
<PAGE>

      (4) The Board shall evaluate the internal loan and lease review report(s)
and shall ensure that immediate, adequate, and continuing remedial action, if
appropriate, is taken upon all findings noted in the report(s).

      (5) A copy of the reports submitted to the Board, as well as documentation
of the action taken by the Bank to collect or strengthen assets identified as
problem credits, shall be maintained in the Bank.

      (6) The Board shall ensure that the Bank has processes, personnel, and
control systems to ensure implementation of and adherence to the policy
developed pursuant to this Article.

                                  ARTICLE XIII

                       ALLOWANCE FOR LOAN AND LEASE LOSSES

      (1) The Board shall review the adequacy of the Bank's Allowance for Loan
and Lease Losses (Allowance) and shall establish a program for the maintenance
of an adequate Allowance. This review and program shall be designed in light of
the comments on maintaining a proper Allowance found in the ROE, the
Comptroller's Handbook - Allowance for Loan and Lease Losses booklet, A-ALLL,
OCC Bulletin 2001-37, Policy Statement on Allowance for Loan and Lease Losses
Methodologies and Documentation for Banks and Savings Institutions, and
Statement of Financial Accounting Standards (FASB) 114 - Accounting by Creditors
for the Impairment of a Loan, and shall focus particular attention on the
following factors:

      (a)   results of the Bank's internal and external loan review;

      (b)   an estimate of inherent loss exposure on each significant credit;

      (c)   loan loss experience;

      (d)   trends of delinquent and nonaccrual loans;


                                     - 21 -
<PAGE>

      (e)   concentrations of credit in the Bank;

      (f)   present and prospective economic conditions; and

      (g)   participations purchased from other financial institutions.

      (2) The program shall provide for a review of the Allowance by the Board
at least once each calendar quarter. Any deficiency in the Allowance shall be
remedied in the quarter it is discovered, prior to the filing of the
Consolidated Reports of Condition and Income, by additional provisions from
earnings. Written documentation shall be maintained indicating the factors
considered and conclusions reached by the Board in determining the adequacy of
the Allowance.

      (3) The Board shall ensure that the Bank has processes, personnel, and
control systems to ensure implementation of and adherence to the program
developed pursuant to this Article.

                                  ARTICLE XIV

                          INSIDER BUSINESS TRANSACTIONS

      (1) The Bank may enter into a Business Transaction with an Insider only if
the Business Transaction is:

      (a)   made on terms and under circumstances that are substantially the
            same, or at least as favorable to the Bank, as those prevailing at
            the time for comparable transactions with or involving other
            companies or individuals who are not Insiders or related interests
            of Insiders;

      (b)   made, in the absence of comparable transactions, on reasonable
            commercial terms entered into in good faith and reflecting
            comparable service fees payable to similarly situated service
            providers (for example, professional service contracts);


                                     - 22 -
<PAGE>

      (c)   preceded by a finding by the Board that the primary purpose of the
            Business Transaction is to further the best interests of the Bank;
            and

      (d)   approved in advance by a majority of the entire Board, not merely a
            quorum thereof, with any interested Insider abstaining from voting
            and participating directly or indirectly in the deliberations
            regarding the approval.

      (2)   For purposes of this Agreement, the following definitions shall
            apply:

      (a)   "Related Interest" shall have the same meaning as set forth in 12
            C.F.R. ss. 215.2.

      (b)   "Business Transaction" means any single transaction in excess of
            $250,000 or which creates an aggregate relationship in excess of
            $500,000 (including any renewal of or changes to an existing
            transaction). "Business Transaction" applies to transactions and
            relationships other than as a depositor, borrower, employee or
            director, and excludes Bank income tax payments and dividends
            lawfully made to Financial Institutions Inc. (FII) (the Bank's
            holding company) and the Bank's payment of salaries and benefits to
            FII (the Bank's holding company) for work performed by holding
            company employees.

      (c)   "Company" shall have the same meaning as set forth in 12 C.F.R. ss.
            215.2.

      (d)   "Person" shall meaning as individual or a company.

      (e)   "Control" shall mean the power to vote directly or indirectly 25
            percent or more of any class of voting securities of a company, the
            ability to control in any manner the election of a majority of a
            company's directors, or the ability to exercise a controlling
            influence over the management and policies of a company. Any general
            partner of a partnership is presumed to control the partnership. A
            person who directly or indirectly owns, controls, or has power to
            vote at least 10 percent


                                     - 23 -
<PAGE>

            of any class of voting securities of a company and is an executive
            officer or director of that company is deemed to control that
            company by exercising a controlling influence over that company.

      (f)   "Insider" shall have the same meaning as set forth in 12 C.F.R. ss.
            215.2.

                                   ARTICLE XV

                                OVERDRAFT POLICY

      (1) Within thirty (30) days, the Board shall adopt, implement, and
thereafter ensure Bank adherence to a written policy concerning the extension of
overdrafts that shall include, at a minimum:

      (a)   conditions and circumstances under which overdrafts will be allowed,
            taking into consideration the requirements of 12 U.S.C. ss. 375b;

      (b)   charges that will be levied against depositors using overdrafts;

      (c)   conditions and circumstances under which overdrafts will be
            permitted to principal shareholders or the related interests (as
            that term is defined in 12 C.F.R. Part 215) of executive officers,
            directors or principal shareholders; and

      (d)   conditions and circumstances under which overdrafts will be charged
            off.

      (2) Upon adoption, a copy of this policy shall be forwarded to the
Assistant Deputy Comptroller.

      (3) The Board shall ensure that the Bank has processes, personnel, and
control systems to ensure implementation of and adherence to the policy
developed pursuant to this Article.


                                     - 24 -
<PAGE>

                                  ARTICLE XVI

                            AFFILIATES - TRANSACTIONS

      (1) The Bank may, directly or indirectly, pay money or its equivalent to
or for the benefit of, or extend credit in any form to or for the benefit of,
its affiliates (as defined in 12 U.S.C. ss. 221a and 371c), or transfer assets
between the Bank and its affiliates, or enter into or engage in any transaction
that obligates the Bank to do the same only after:

      (a)   the Board has conducted an independent review of the action, that is
            documented in writing;

      (b)   the Board has determined in writing that it is advantageous for the
            Bank to engage in such action, and that the action complies with all
            applicable laws, rules, regulations, and Comptroller's issuances,
            including, but not limited to 12 U.S.C. ss. 371c and 371c-1.

      (2) Prior to the payment of any management or other fees to any affiliate
of the Bank as defined in 12 U.S.C. ss. 221a and 12 U.S.C. ss. 371c
("Affiliate"), the Board, or delegated committee of the Board, shall document
and support, in writing, that such fees:

      (a)   are reasonable;

      (b)   have a direct relationship to, and are based solely upon, the fair
            value of goods and services received by the Bank; and

      (c)   compensate the Affiliate only for providing goods and services which
            meet the legitimate needs of the Bank.

      (3) All documentation supporting the payment of management and other fees
to an Affiliate, shall be preserved in the Bank.


                                     - 25 -
<PAGE>

                                  ARTICLE XVII

                  ADMINISTRATIVE APPEALS AND EXTENSIONS OF TIME

      (1) If the Bank determines that an exception to any provision of this
Agreement is in the best interests of the Bank, or requires an extension of any
timeframe within this Agreement, the Board shall submit a written request to the
Assistant Deputy Comptroller asking for relief.

      (2) Any written requests submitted pursuant to this Article shall include
a statement setting forth in detail the special circumstances that prevent the
Bank from complying with any provision, that require the Assistant Deputy
Comptroller to exempt the Bank from any provision, or that require an extension
of any timeframe within this Agreement. All such requests shall be accompanied
by relevant supporting documentation.

      (3) The Assistant Deputy Comptroller's decision in granting the request is
final and not subject to further review.

                                 ARTICLE XVIII

                                     CLOSING

      (1) Although the Board has agreed to submit certain programs and reports
to the Assistant Deputy Comptroller for review or prior determination of no
supervisory objection, the Board has the ultimate responsibility for proper and
sound management of the Bank.

      (2) It is expressly and clearly understood that if, at any time, the
Comptroller deems it appropriate in fulfilling the responsibilities placed upon
him/her by the several laws of the United States of America to undertake any
action affecting the Bank, nothing in this Agreement shall in any way inhibit,
estop, bar, or otherwise prevent the Comptroller from so doing.


                                     - 26 -
<PAGE>

      (3) Any time limitations imposed by this Agreement shall begin to run from
the effective date of this Agreement. Such time requirements may be extended in
writing by the Assistant Deputy Comptroller for good cause upon written
application by the Board.

      (4) The provisions of this Agreement shall be effective upon execution by
the parties hereto and its provisions shall continue in full force and effect
unless or until such provisions are amended in writing by mutual consent of the
parties to the Agreement or excepted, waived, or terminated in writing by the
Comptroller.

      (5) In each instance in this Agreement in which the Board is required to
ensure adherence to, and undertake to perform certain obligations of the Bank,
it is intended to mean that the Board shall:

      (a) authorize and adopt such actions on behalf of the Bank as may be
necessary for the Bank to perform its obligations and undertakings under the
terms of this Agreement;

      (b)   require the timely reporting by Bank management of such actions
            directed by the Board to be taken under the terms of this Agreement;

      (c)   follow-up on any non-compliance with such actions in a timely and
            appropriate manner; and

      (d)   require corrective action be taken in a timely manner of any
            non-compliance with such actions.

      (6) This Agreement is intended to be, and shall be construed to be, a
supervisory "written agreement entered into with the agency" as contemplated by
12 U.S.C. ss. 1818(b)(1), and expressly does not form, and may not be construed
to form, a contract binding on the OCC or the United States. Notwithstanding the
absence of mutuality of obligation, or of


                                     - 27 -
<PAGE>

consideration, or of a contract, the OCC may enforce any of the commitments or
obligations herein undertaken by the Bank under its supervisory powers,
including 12 U.S.C. ss. 1818(b)(1), and not as a matter of contract law. The
Bank expressly acknowledges that neither the Bank nor the OCC has any intention
to enter into a contract. The Bank also expressly acknowledges that no OCC
officer or employee has statutory or other authority to bind the United States,
the U.S. Treasury Department, the OCC, or any other federal bank regulatory
agency or entity, or any officer or employee of any of those entities to a
contract affecting the OCC's exercise of its supervisory responsibilities. The
terms of this Agreement, including this paragraph, are not subject to amendment
or modification by any extraneous expression, prior agreements or prior
arrangements between the parties, whether oral or written.


                                     - 28 -

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>4
<FILENAME>d56894_ex99-2.txt
<DESCRIPTION>TEXT OF THE AGREEMENT
<TEXT>

EXHIBIT 99.2

                            AGREEMENT BY AND BETWEEN
                             The Bath National Bank
                                 Bath, New York
                                       and
                  The Office of the Comptroller of the Currency

      The Bath National Bank, Bath, New York ("Bank") and the Comptroller of the
Currency of the United States of America ("Comptroller") wish to protect the
interests of the depositors, other customers, and shareholders of the Bank, and,
toward that end, wish the Bank to operate safely and soundly and in accordance
with all applicable laws, rules and regulations.

      The Comptroller, through his/her National Bank Examiner, has examined the
Bank, and his/her findings are contained in the Report of Examination for the
examination that commenced on January 6, 2003 ("ROE").

      In consideration of the above premises, it is agreed, between the Bank, by
and through its duly elected and acting Board of Directors ("Board"), and the
Comptroller, through his/her authorized representative, that the Bank shall
operate at all times in compliance with the articles of this Agreement.

                                  ARTICLE XIX

                                  JURISDICTION

      (1) This Agreement shall be construed to be a "written agreement entered
into with the agency" within the meaning of 12 U.S.C. ss. 1818(b)(1).

      (2) This Agreement shall be construed to be a "written agreement between
such depository institution and such agency" within the meaning of 12 U.S.C. ss.
1818(e)(1) and 12 U.S.C. ss. 1818(i)(2).


                                     - 1 -
<PAGE>

      (3) This Agreement shall be construed to be a "formal written agreement"
within the meaning of 12 C.F.R. ss. 5.51(c)(6)(ii). See 12 U.S.C. ss. 1831i.

      (4) This Agreement shall be construed to be a "written agreement" within
the meaning of 12 U.S.C. ss. 1818(u)(1)(A).

      (5) All reports or plans which the Bank or Board has agreed to submit to
the Assistant Deputy Comptroller pursuant to this Agreement shall be forwarded
to:

                                James M. Gouldie
                          Assistant Deputy Comptroller
                          Upstate New York Field Office
                      231 Salina Meadows Parkway, Suite 105
                            Syracuse, New York 13212

                                   ARTICLE XX

                              COMPLIANCE COMMITTEE

      (1) Within thirty days (30) days, the Board shall appoint a Compliance
Committee of at least six (6) directors, of which no more than two (2) shall be
employees of the Bank or any of its affiliates (as the term "affiliate" is
defined in 12 U.S.C. ss. 371c(b)(1)), or a family member of any such person.
Upon appointment, the names of the members of the Compliance Committee shall be
submitted in writing to the Assistant Deputy Comptroller. The Compliance
Committee shall be responsible for monitoring and coordinating the Bank's
adherence to the provisions of this Agreement.

      (2) The Compliance Committee shall meet at least monthly.

      (3) Within thirty days (30) days of the appointment of the Committee and
every thirty days thereafter, the Compliance Committee shall submit a written
progress report to the Board setting forth in detail:

            (a)   actions taken to comply with each Article of this Agreement;
                  and


                                     - 2 -
<PAGE>

            (b)   the results of those actions.

      (4) The Board shall forward a copy of the Compliance Committee's report,
with any additional comments by the Board, to the Assistant Deputy Comptroller.

                                  ARTICLE XXI

                                   ACTION PLAN

      (1) Within thirty (30) days, the Board shall adopt, implement, and
thereafter ensure Bank adherence to a written action plan detailing the Board's
assessment of what needs to be done to address the regulatory recommendations
outlined in the Report of Examination (ROE) and the requirements of this
Agreement to improve the Bank, specifying how the Board will implement the plan,
and setting forth a timetable for the implementation of the plan.

      (2) Upon completion of the plan, the Board shall submit the plan to the
Assistant Deputy Comptroller for review. The Board shall establish appropriate
procedures for the implementation of the plan.

      (3) In the event the Assistant Deputy Comptroller recommends changes to
the action plan, the Board shall promptly incorporate those changes into the
plan.

      (4) The plan shall be implemented pursuant to the time frames set forth
within the plan unless events dictate modifications to the plan. Where the Board
considers modifications appropriate, those modifications shall be submitted to
the Assistant Deputy Comptroller for prior determination of no supervisory
objection.

      (5) The Board shall ensure that the Bank has processes, personnel, and
control systems to ensure implementation of and adherence to the plan developed
pursuant to this Article.


                                     - 3 -
<PAGE>

                                  ARTICLE XXII

                      BOARD TO ENSURE COMPETENT MANAGEMENT

      (1) Within one hundred and eighty days (180) days, the Board shall review
the capabilities of the Bank's management (President and Senior Loan Officer) to
perform present and anticipated duties, and shall determine whether management
changes should be made, including the need for additions to or deletions from
current management.

      (2) For the incumbent officer in the position of Financial Officer, the
Board shall within one hundred and eighty days (180) days assess the officer's
experience, other qualifications and performance compared to the position's
description, duties and responsibilities.

      (3) If the Board determines that an officer will continue in his/her
position but that the officer's depth of skills needs improvement, the Board
will within 30 days develop and implement a written program, with specific time
frames, to improve the officer's supervision and management of the Bank. At a
minimum the written program shall include:

      (a)   an education program designed to ensure that the officer has skills
            and abilities necessary to supervise effectively;

      (b)   a program to improve the effectiveness of the officer;

      (c)   objectives by which the officer's effectiveness will be measured;
            and

      (d)   performance appraisal program for evaluating performance according
            to the position's description and responsibilities and for measuring
            performance against the Bank's goals and objectives.

Upon completion, a copy of the written program shall be submitted to the
Assistant Deputy Comptroller.


                                     - 4 -
<PAGE>

      (4) If any position mentioned in Paragraphs (1) or (2) of this Article
become vacant now or in the future, including if the Board determines that the
skills of the individual are not suitable for the position or realigns an
existing officer's responsibilities and a position mentioned in paragraphs (1)
or (2) becomes vacant, the Board shall within 30 days of such vacancy appoint
(on an interim basis or otherwise) a capable person to the vacant position who
shall be vested with sufficient executive authority to ensure the Bank's
compliance with this Agreement and the safe and sound operation of functions
within the scope of that position's responsibility.

      (5) Prior to the appointment of any individual to an executive officer or
director position, the Board shall submit to the Assistant Deputy Comptroller
the following information:

      (a)   the information sought in the "Changes in Directors and Senior
            Executive Officers" booklet of the Comptroller's Corporate Manual,
            together with a legible fingerprint card for the proposed
            individual;

      (b)   a written statement of the Board's reasons for selecting the
            proposed officer or director; and

      (c)   a written description of the proposed officer's or director's duties
            and responsibilities.

      (6) The Assistant Deputy Comptroller shall have the power to disapprove
the appointment of the proposed new director or executive officer. However, the
lack of disapproval of such individual shall not constitute an approval or
endorsement of the proposed new director or executive officer.

      (7) The requirement to submit information and the prior disapproval
provisions of this Article are based on the authority of 12 U.S.C. ss.
1818(b)(6)(E) and do not require the


                                     - 5 -
<PAGE>

Comptroller to complete his/her review and act on any such information or
authority within ninety (90) days.

                                 ARTICLE XXIII

                        CAPITAL PLAN AND HIGHER MINIMUMS

      (1) The Bank shall achieve by December 31, 2003, and thereafter maintain,
the following capital levels (as defined in 12 C.F.R. Part 3 and 12 C.F.R. Part
6):

      (a)   Tier 1 leverage capital at least equal to six and one-quarter
            percent (6.25%) of risk-weighted assets as defined by 12
            C.F.R. ss.6.2(d) and (f);

      (b)   Tier 1 risk-based capital equal to nine percent (9%) of risk
            weighted assets as defined by 12 C.F.R. ss. 6.2(i) and (f); and

      (c)   Total risk-based capital of eleven percent (11%) of risk weighted
            assets as defined by 12 C.F.R. ss. 6.2(k) and (f).

      (2) The Bank shall achieve by March 31, 2004, and thereafter maintain, the
following capital levels (as defined in 12 C.F.R. Part 3 and 12 C.F.R. Part 6):

      (a)   Tier 1 leverage capital at least equal to eight percent (8%) of
            risk-weighted assets as defined by 12 C.F.R. ss. 6.2(d) and (f);

      (b)   Tier 1 risk-based capital equal to ten percent (10%) of risk
            weighted assets as defined by 12 C.F.R. ss. 6.2(i) and (f); and

      (c)   Total risk-based capital of twelve percent (12%) of risk weighted
            assets as defined by 12 C.F.R. ss. 6.2(k) and (f).

      (3) Until such time the Bank has achieved compliance with paragraph (1) of
this Article, at no time shall the Bank's capital levels drop below those levels
as of the effective date of the Agreement


                                     - 6 -
<PAGE>

      (4) The requirement in this Agreement to meet and maintain a specific
capital level means that the bank may not be deemed to be "well capitalized" for
purposes of 12U.S.C.ss. 1831o and 12 C.F.R. Part 6 pursuant to 12 C.F.R.ss.
6.4(b)(1)(iv).

      (5) Within sixty (60) days, the Board shall develop, implement, and
thereafter ensure Bank adherence to a three year capital program. The program
shall include:

      (a)   specific plans for the maintenance of adequate capital that may in
            no event be less than the requirements of Paragraph (1);

      (b)   projections for growth and capital requirements based upon strategic
            plan objectives and a detailed analysis of the Bank's assets,
            liabilities, earnings, fixed assets, and off-balance sheet
            activities;

      (c)   projections of the sources and timing of additional capital to meet
            the Bank's current and future needs;

      (d)   the primary source(s) from which the Bank will strengthen its
            capital structure to meet the Bank's needs;

      (e)   contingency plans that identify alternative methods should the
            primary source(s) under (d) above not be available; and

      (f)   a dividend policy that permits the declaration of a dividend only:

            (i)   when the Bank is in compliance with its approved capital
                  program;

            (ii)  when the Bank is in compliance with 12 U.S.C. ss.ss. 56 and
                  60; and

            (iii) with prior written notice to the Assistant Deputy Comptroller.

      (6) Upon completion, the Bank's capital program shall be submitted to the
Assistant Deputy Comptroller for prior determination of no supervisory
objection. Upon receiving a determination of no supervisory objection from the
Assistant Deputy Comptroller, the Bank shall


                                     - 7 -
<PAGE>

implement and adhere to the capital program. The Board shall review and update
the Bank's capital program on an annual basis, or more frequently if necessary.
Copies of the reviews and updates shall be submitted to the Assistant Deputy
Comptroller.

      (7) The Board shall ensure that the Bank has processes, personnel, and
control systems to ensure implementation of and adherence to the program
developed pursuant to this Article.

                                  ARTICLE XXIV

                                   CREDIT RISK

      (1) Within ninety (90) days, the Board shall develop, implement, and
thereafter ensure Bank adherence to a written program to reduce the high level
of credit risk in the Bank. The program shall include, but not be limited to:

      (a)   procedures to strengthen credit administration, underwriting, and
            problem loan identification particularly in the commercial,
            commercial real estate, and agricultural loan portfolios as outlined
            in the Report of Examination; and

      (b)   procedures to strengthen management of lending operations and to
            maintain an adequate, qualified staff in all functional areas;

      (c)   The Board shall submit a copy of the program to the Assistant Deputy
            Comptroller.

      (d)   At least quarterly, the Board shall prepare a written assessment of
            the bank's credit risk, which shall evaluate the Bank's progress
            under the aforementioned program. The Board shall submit a copy of
            this assessment to the Assistant Deputy Comptroller.


                                     - 8 -
<PAGE>

      (2) The Board shall ensure that the Bank has processes, personnel, and
control systems to ensure implementation of and adherence to the program
developed pursuant to this Article.

                                  ARTICLE XXV

                                CRITICIZED ASSETS

      (1) The Bank shall take immediate and continuing action to protect its
interest in those assets criticized in the ROE, and any subsequent Report of
Examination, by internal or external loan review, or in any list provided to
management by the National Bank Examiners during any examination.

      (2) Within one hundred and twenty (120) days, the Board shall adopt,
implement, and thereafter ensure Bank adherence to a written program designed to
eliminate the basis of criticism of each problem asset in the ROE, any
subsequent Report of Examination, any internal or external loan review, or any
list provided to management by the National Bank Examiners during any
examination designated "doubtful," "substandard," or "special mention." This
program shall include, at a minimum:

      (a)   the development of written action plans for each criticized borrower
            with an aggregate outstanding balance of one hundred thousand
            dollars ($100,000) or more or when total exposure on SBA guaranteed
            loan balance is one hundred thousand dollars ($100,000) or more. At
            a minimum, these action plans should include those items outlined in
            the ROE as well as the following:

            (i)   an identification of the expected sources of repayment;

            (ii)  the appraised value of supporting collateral and the position
                  of the Bank's lien on such collateral where applicable;


                                     - 9 -
<PAGE>

            (iii) an analysis of current and satisfactory credit information,
                  including cash flow analysis where loans are to be repaid from
                  operations; and

            (iv)  the proposed action to eliminate the basis of criticism and
                  the time frame for its accomplishment.

      (b)   The written action plans outlined in subparagraph 2(a) shall be
            produced and presented to the Board on a quarterly basis.

      (3) The Board, or a designated committee composed of a quorum of outside
directors, shall conduct a review of the written action plans, on at least a
quarterly basis, to determine:

      (a)   the status of each criticized asset or criticized portion thereof
            that equals or exceeds one hundred thousand dollars ($100,000);

      (b)   management's adherence to the program adopted pursuant to this
            Article;

      (c)   the status and effectiveness of the written program; and

      (d)   the need to revise the program or take alternative action.

      (4) Upon adoption, and quarterly thereafter, a copy of the written action
plans for all criticized assets equal to or exceeding one hundred thousand
dollars ($100,000) along with the Board's response shall be forwarded to the
Assistant Deputy Comptroller.

      (5) The Bank may extend credit, directly or indirectly, including
renewals, extensions or capitalization of accrued interest, to a borrower whose
loans or other extensions of credit are criticized in the ROE, in any subsequent
Report of Examination, in any internal or external loan review, or in any list
provided to management by the National Bank Examiners during any examination and
whose aggregate loans or other extensions exceed one hundred thousand dollars
($100,000) only if each of the following conditions is met:


                                     - 10 -
<PAGE>

      (a)   the Board or designated committee finds that the extension of
            additional credit is necessary to promote the best interests of the
            Bank and that prior to renewing, extending or capitalizing any
            additional credit, a majority of the full Board (or designated
            committee) approves the credit extension and records, in writing,
            why such extension is necessary to promote the best interests of the
            Bank; and

      (b)   a comparison to the written program adopted pursuant to this Article
            shows that the Board's formal plan to collect or strengthen the
            criticized asset will not be compromised.

      (6) A copy of the approval of the Board or of the designated committee
shall be maintained in the file of the affected borrower.

      (7) The Board shall ensure that the Bank has processes, personnel, and
control systems to ensure implementation of and adherence to the plan developed
pursuant to this Article.

                                  ARTICLE XXVI

                                 LENDING POLICY

      (1) Within sixty (60) days, the Board shall review and revise the Bank's
written loan policy. In revising this policy, the Board shall refer to the Loan
Portfolio Management booklet, A-LPM, of the Comptroller's Handbook. This policy
shall incorporate, but not necessarily be limited to, the following:

      (a)   a description of acceptable types of loans;

      (b)   a provision that current and satisfactory credit information will be
            obtained on each borrower;


                                     - 11 -
<PAGE>

      (c)   establishing minimum requirements for uniform and comprehensive
            credit analysis, including full disclosure of all significant
            aspects of the proposed credit and an assessment of the risks
            involved, prior to credit approval;

      (d)   maturity scheduling related to the anticipated source of repayment,
            the purpose of the loan, and the useful life of the collateral;

      (e)   maximum ratio of loan value to appraised value or acquisition costs
            of collateral securing the loan;

      (f)   collection procedures, to include follow-up efforts, that are
            systematically and progressively stronger;

      (g)   a definition of the Bank's trade area;

      (h)   guidelines and limitations for loans originating outside of the
            Bank's trade area;

      (i)   a limitation on aggregate outstanding loans in relation to other
            balance sheet accounts;

      (j)   distribution of loans by category;

      (k)   limitations on participation loans by aggregate dollar per
            individual institution, and specific guidelines to properly
            administer participation loans;

      (l)   a prohibition regarding the use of brokered deposits to fund loan
            growth or support criticized loans;

      (m)   guidelines for loans to insiders, including a statement that such
            loans will not be granted on terms more favorable than those offered
            to similar outside borrowers;

      (n)   guidelines and limitations on concentrations of credit;


                                     - 12 -
<PAGE>

      (o)   a limitation on the type and size of loans that may be made by loan
            officers without prior approval by the Board or a committee
            established by the Board for this purpose;

      (p)   measures to correct the deficiencies in the Bank's lending
            procedures noted in any Report of Examination (ROE); and

      (q)   guidelines designed to improve Board oversight of the loan approval
            process, specifically with regard to credits exhibiting significant
            risk. At a minimum, the policy shall:

            (i)   establish dollar limits on extensions of credit to any one
                  borrower, above which the prior approval of the Board, or a
                  committee thereof, would be required;

            (ii)  establish dollar limits on aggregate extensions of credit to
                  any one borrower, above which any new extensions of credit to
                  that borrower, regardless of amount, would require the prior
                  approval of the Board, or a committee thereof; and

            (iii) require that all credits which deviate from the Bank's normal
                  course of business, including all credits which deviate from
                  the Bank's written strategic plan, receive the prior approval
                  of the Board, or a committee thereof.

      (r)   guidelines consistent with Banking Circular 255, Troubled Loan
            Workouts and Loans to Borrowers in Troubled Industries setting forth
            the criteria under which renewals of extensions of credit may be
            approved. At a minimum the policy shall:


                                     - 13 -
<PAGE>

            (i)   ensure that renewals are not made for the sole purpose of
                  reducing the volume of loan delinquencies; and

            (ii)  provide guidelines and limitations on the capitalization of
                  interest;

      (s)   charge-off guidelines, by type of loan or other asset, including
            Other Real Estate Owned, addressing the circumstances under which a
            charge-off would be appropriate and ensuring the recognition of
            losses within the quarter of discovery; and

      (t)   a pricing policy that takes into consideration costs, general
            overhead, and probable loan losses, while providing for a reasonable
            margin of profit;

      (u)   guidelines for periodic review of the Bank's adherence to the
            revised lending policy.

      (2) Upon adoption, the policy shall be implemented, the Board shall
thereafter ensure Bank adherence to the policy, and a copy of the policy shall
be forwarded to the Assistant Deputy Comptroller for review.

      (3) The Board shall ensure that the Bank has processes, personnel, and
control systems to ensure implementation of and adherence to the policy
developed pursuant to this Article.


                                     - 14 -
<PAGE>

                                 ARTICLE XXVII

                                NONACCRUAL LOANS

      (1) The Bank shall immediately reverse or charge-off all interest that has
been accrued contrary to the requirements contained in the Instruction for
Preparation of Consolidated Reports of Condition and Income ("Call Report
Instructions") governing nonaccrual loans. Further, the bank shall immediately
reverse or charge-off that portion of the remaining accrued interest on such
loans that, when combined with principal, is not protected by sound collateral
values

      (2) Within thirty (30) days, but no later than the next call report filing
on September 30, 2003, whichever date is earlier, the Board shall adopt and
implement written policies and procedures governing the supervision and control
of nonaccrual loans. Such policies and procedures shall:

      (a)   be consistent with the accounting requirements contained in the Call
            Report Instructions;

      (b)   address the circumstances under which accrued interest due on a loan
            may be added to the outstanding principal amount when the loan is
            renewed or restructured; address the comments provided in the ROE,
            and

      (c)   require the monthly presentation to the Board of all loans meeting
            any of the nonaccrual criteria.

      (3) Within sixty (60) days, the Board shall develop and implement a
written policy that shall provide for auditing accrued interest on loans. The
policy shall, at a minimum, provide for quarterly audits of loan accruals and
incorporate procedures for periodically testing the


                                     - 15 -
<PAGE>

Bank's identification of nonaccrual loans as governed by the policy adopted
pursuant to paragraph (1) above.

      (4) Upon adoption, a copy of the written policies and procedures shall be
forwarded to the Assistant Deputy Comptroller and the Board shall thereafter
ensure Bank adherence to all policies and procedures developed pursuant to this
Article.

      (5) The Board shall ensure that the Bank has processes, personnel, and
control systems to ensure implementation of and adherence to the policies
developed pursuant to this Article.

                                 ARTICLE XXVIII

                        CREDIT AND COLLATERAL EXCEPTIONS

      (1) Within ninety (90) days the Board shall obtain current and
satisfactory credit information on all loans lacking such information, including
those listed in the ROE, in any subsequent Report of Examination, in any
internal or external loan review, or in any listings of loans lacking such
information provided to management by the National Bank Examiners at the
conclusion of an examination.

      (2) Within ninety (90) days the Board shall ensure proper collateral
documentation is maintained on all loans and correct each collateral exception
listed in the ROE, in any subsequent Report of Examination, in any internal or
external loan review, or in any listings of loans lacking such information
provided to management by the National Bank Examiners at the conclusion of an
examination.

      (3) Effective immediately, the Bank may grant, extend, renew, alter or
restructure any loan or other extension of credit only after:

      (a)   documenting the specific reason or purpose for the extension of
            credit;


                                     - 16 -
<PAGE>

      (b)   identifying the expected source of repayment in writing;

      (c)   structuring the repayment terms to coincide with the expected source
            of repayment;

      (d)   obtaining and analyzing current and satisfactory credit information,
            including cash flow analysis, where loans are to be repaid from
            operations;

            (i)   Failure to obtain the information in Subparagraph (3)(d) shall
                  require a majority of the full Board (or a delegated committee
                  thereof) to certify in writing the specific reasons why
                  obtaining and analyzing the information in 3(d) would be
                  detrimental to the best interests of the Bank.

            (ii)  A copy of the Board certification shall be maintained in the
                  credit file of the affected borrower(s). The certification
                  will be reviewed by this Office in subsequent examinations of
                  the Bank; and

      (e)   documenting, with adequate supporting material, the value of
            collateral and properly perfecting the Bank's lien on it where
            applicable.

      (4) The Board shall ensure that the Bank has processes, personnel, and
control systems to ensure implementation of and adherence to the policy
developed pursuant to this Article.


                                     - 17 -
<PAGE>

                                  ARTICLE XXIX

                              INTERNAL LOAN REVIEW

      (1) The Board shall within thirty (30) days employ or designate a
sufficiently experienced and qualified person(s) or firm to ensure the timely
and independent identification of problem loans and leases.

      (2) Within forty-five (45) days, the Board shall establish an effective,
independent loan review system to periodically review the Bank's loan and lease
portfolios to assure the timely identification and categorization of problem
credits and provide an assessment of the overall condition of the loan and lease
portfolios. The system shall provide for a written report to be filed with the
Board after each review and shall use a loan and lease grading system consistent
with the guidelines set forth in the Rating Credit Risk booklet, A-RCR, of the
Comptroller's Handbook. These reports shall, at a minimum, include conclusions
regarding:

      (a)   the identification, type, rating, and amount of problem loans and
            leases;

      (b)   credit and collateral documentation exceptions;

      (c)   the identification and status of credit related violations of law,
            rule or regulation;

      (d)   the identity of the loan officer and/or participating financial
            institution who originated each loan reported in accordance with
            subparagraphs (a) through (c) of the Article as well as the adequacy
            of loan officer credit analyses;

      (e)   loans and leases to executive officers, directors, principal
            shareholders (and their related interests) of the Bank;

      (f)   loans and leases not in conformance with the Bank's lending and
            leasing policies, and exceptions to the Bank's lending and leasing
            policies;

      (g)   the adequacy of allowance for loan and lease loss allocations; and


                                     - 18 -
<PAGE>

      (h)   the adequacy of written action plans for criticized borrowers as
            outlined in Article VII.

      (3) At least annually, such report, also shall include conclusions on, at
a minimum:

      (a)   the overall quality of the loan and lease portfolios;

      (b)   concentrations of credit; and

      (c)   the adequacy of management's documentation supporting the allowance
            for loan and lease loss methodology and as well as the methodology's
            compliance with regulatory guidance.

      (4) The Board shall evaluate the internal loan and lease review report(s)
and shall ensure that immediate, adequate, and continuing remedial action, if
appropriate, is taken upon all findings noted in the report(s).

      (5) A copy of the reports submitted to the Board, as well as documentation
of the action taken by the Bank to collect or strengthen assets identified as
problem credits, shall be maintained in the Bank.

      (6) The Board shall ensure that the Bank has processes, personnel, and
control systems to ensure implementation of and adherence to the policy
developed pursuant to this Article.

                                  ARTICLE XXX

                     INTEREST RATE RISK MEASUREMENT SYSTEMS

      (1) Within thirty (30) days, the Board shall adopt, implement, and
thereafter ensure Bank adherence to a written action plan outlining proposed
corrective action and corresponding timeframes to address each item recommended
in the ROE - Matters Requiring Attention (MRA) Interest Rate Risk Measurement
and Monitoring Systems. In formulating this plan, the


                                     - 19 -
<PAGE>

Board shall also refer to the Interest Rate Risk booklet, L-IRR, of the
Comptroller's Handbook. The plan shall provide for a coordinated interest rate
risk measurement process and, at a minimum, address:

      (a)   Enhancement of the measurement system and supporting documentation
            used to prepare management reports as recommended in the ROE;

      (b)   Employment of sufficient competent personnel to ensure timely,
            routine preparation of management reports used to make strategic
            interest rate risk decisions;

      (c)   Establishment of a comprehensive validation process as required by
            OCC Bulletin 2000-16 Risk Modeling - Model Validation dated May 30,
            2000.

      (d)   Periodic review of the Bank's adherence to the plan to achieve
            timely compliance.

      (2) Upon adoption, a copy of the written plan shall be forwarded to the
Assistant Deputy Comptroller for review.

      (3) The Board shall ensure that the Bank has processes, personnel, and
control systems to ensure implementation of and adherence to the policy
developed pursuant to this Article.

                                  ARTICLE XXXI

                       ALLOWANCE FOR LOAN AND LEASE LOSSES

      (1) The Board shall review the adequacy of the Bank's Allowance for Loan
and Lease Losses (Allowance) and shall establish a program for the maintenance
of an adequate Allowance. This review and program shall be designed in light of
the comments on maintaining a proper Allowance found in the ROE, the
Comptroller's Handbook - Allowance for Loan and Lease Losses booklet, A-ALLL,
OCC Bulletin 2001-37, Policy Statement on Allowance for Loan and


                                     - 20 -
<PAGE>

Lease Losses Methodologies and Documentation for Banks and Savings Institutions,
and Statement of Financial Accounting Standards (FASB) 114 - Accounting by
Creditors for the Impairment of a Loan, and shall focus particular attention on
the following factors:

      (a)   results of the Bank's internal and external loan review;

      (b)   an estimate of inherent loss exposure on each significant credit;

      (c)   loan loss experience;

      (d)   trends of delinquent and nonaccrual loans;

      (e)   concentrations of credit in the Bank;

      (f)   present and prospective economic conditions; and

      (g)   participations purchased from other financial institutions.

      (2) The program shall provide for a review of the Allowance by the Board
at least once each calendar quarter. Any deficiency in the Allowance shall be
remedied in the quarter it is discovered, prior to the filing of the
Consolidated Reports of Condition and Income, by additional provisions from
earnings. Written documentation shall be maintained indicating the factors
considered and conclusions reached by the Board in determining the adequacy of
the Allowance.

      (3) The Board shall ensure that the Bank has processes, personnel, and
control systems to ensure implementation of and adherence to the program
developed pursuant to this Article.


                                     - 21 -
<PAGE>

                                 ARTICLE XXXII

                  ADMINISTRATIVE APPEALS AND EXTENSIONS OF TIME

      (1) If the Bank determines that an exception to any provision of this
Agreement is in the best interests of the Bank, or requires an extension of any
timeframe within this Agreement, the Board shall submit a written request to the
Assistant Deputy Comptroller asking for relief.

      (2) Any written requests submitted pursuant to this Article shall include
a statement setting forth in detail the special circumstances that prevent the
Bank from complying with any provision, that require the Assistant Deputy
Comptroller to exempt the Bank from any provision, or that require an extension
of any timeframe within this Agreement. All such requests shall be accompanied
by relevant supporting documentation.

      (3) The Assistant Deputy Comptroller's decision in granting the request is
final and not subject to further review.

                                 ARTICLE XXXIII

                                     CLOSING

      (1) Although the Board has agreed to submit certain programs and reports
to the Assistant Deputy Comptroller for review or prior determination of no
supervisory objection, the Board has the ultimate responsibility for proper and
sound management of the Bank.

      (2) It is expressly and clearly understood that if, at any time, the
Comptroller deems it appropriate in fulfilling the responsibilities placed upon
him/her by the several laws of the United States of America to undertake any
action affecting the Bank, nothing in this Agreement shall in any way inhibit,
estop, bar, or otherwise prevent the Comptroller from so doing.


                                     - 22 -
<PAGE>

      (3) Any time limitations imposed by this Agreement shall begin to run from
the effective date of this Agreement. Such time requirements may be extended in
writing by the Assistant Deputy Comptroller for good cause upon written
application by the Board.

      (4) The provisions of this Agreement shall be effective upon execution by
the parties hereto and its provisions shall continue in full force and effect
unless or until such provisions are amended in writing by mutual consent of the
parties to the Agreement or excepted, waived, or terminated in writing by the
Comptroller.

      (5) In each instance in this Agreement in which the Board is required to
ensure adherence to, and undertake to perform certain obligations of the Bank,
it is intended to mean that the Board shall:

      (a)   authorize and adopt such actions on behalf of the Bank as may be
            necessary for the Bank to perform its obligations and undertakings
            under the terms of this Agreement;

      (b)   require the timely reporting by Bank management of such actions
            directed by the Board to be taken under the terms of this Agreement;

      (c)   follow-up on any non-compliance with such actions in a timely and
            appropriate manner; and

      (d)   require corrective action be taken in a timely manner of any
            non-compliance with such actions.

      (6) This Agreement is intended to be, and shall be construed to be, a
supervisory "written agreement entered into with the agency" as contemplated by
12 U.S.C. ss. 1818(b)(1), and expressly does not form, and may not be construed
to form, a contract binding on the OCC or the United States. Notwithstanding the
absence of mutuality of obligation, or of


                                     - 23 -
<PAGE>

consideration, or of a contract, the OCC may enforce any of the commitments or
obligations herein undertaken by the Bank under its supervisory powers,
including 12 U.S.C. ss. 1818(b)(1), and not as a matter of contract law. The
Bank expressly acknowledges that neither the Bank nor the OCC has any intention
to enter into a contract. The Bank also expressly acknowledges that no OCC
officer or employee has statutory or other authority to bind the United States,
the U.S. Treasury Department, the OCC, or any other federal bank regulatory
agency or entity, or any officer or employee of any of those entities to a
contract affecting the OCC's exercise of its supervisory responsibilities. The
terms of this Agreement, including this paragraph, are not subject to amendment
or modification by any extraneous expression, prior agreements or prior
arrangements between the parties, whether oral or written.


                                     - 24 -

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.3
<SEQUENCE>5
<FILENAME>d56894_ex99-3.txt
<DESCRIPTION>PRESS RELEASE DATED SEPTEMBER 4, 2003
<TEXT>

EXHIBIT 99.3

For More Information:                                  For Immediate Release:
Ronald A. Miller                                       September 4, 2003
Senior Vice President, Chief Financial Officer
(585) 786-1102

Financial Institutions, Inc. Announces Dividend and Agreements Between National
 Bank of Geneva and Bath National Bank and The Office of the Comptroller of the
                                    Currency

WARSAW, NY -- Financial Institutions, Inc. (NASDAQ: FISI) (FII) announced that
its Board of Directors declared a quarterly cash dividend of $0.16 per common
share, payable on October 1, 2003 to shareholders of record on September 17,
2003. In addition, the Board declared a quarterly dividend of $2.12 per share on
Series B-1, 8.48% Preferred Stock and $0.75 per share on Series A, 3% Preferred
Stock, payable on October 1, 2003 to shareholders of record on September 17,
2003.

The Company also disclosed that the Boards of Directors of its two national bank
subsidiaries, National Bank of Geneva ("NBG") and Bath National Bank ("BNB"),
have entered into agreements with the Office of the Comptroller of the Currency
("OCC").

"FII, together with its bank subsidiaries, is fully committed to complying with
the rules and regulations that govern the operation of our banks," said Peter G.
Humphrey, Chairman, President and CEO of FII. "We have been actively involved
throughout the past eight months working with the managements of NBG and BNB and
the OCC to identify and resolve the problems noted in the recently issued
reports of examination (covering an examination period as of September 30,
2002), and have provided and will continue to provide significant financial,
managerial and operational support as our banks work through these issues."


                                     - 1 -
<PAGE>

Under the terms of the agreements, NBG and BNB, without admitting any
violations, will take actions designed to assure that their operations are in
accordance with applicable laws and regulations. The agreements require them,
among other things, to: appoint a Compliance Committee of the Board; develop,
implement and ensure compliance with a written plan outlining actions to be
taken to address regulatory recommendations set forth in the reports of
examination, review and assess the capabilities of management; develop various
policies and programs to reduce credit risk and identify problem loans and to
adopt policies that will permit them to declare dividends only when they are in
compliance with their approved capital plans and applicable laws, and upon prior
written notice to (but not with the consent of) the OCC.

Both banks are required to develop capital plans that will enable them to
achieve, by March 31, 2004, Tier 1 leverage capital equal to 8% of risk-weighted
assets, Tier 1 risk-based capital equal to 10% of risk-weighted assets, and
total risk-based capital of 12% of risk-weighted assets. Interim levels, to be
achieved by December 31, 2003, were also established, at 6.25%, 9.0% and 11.0%,
respectively, for Bath, and 7.0%, 9.0% and 10.5%, respectively, for NBG.

Mr. Humphrey stated, "The December 31, 2003 capital levels at NBG and BNB are
achievable, utilizing a combination of de-leveraging, retained earnings and some
capital contributions by the holding company. FII will need to raise additional
funds to meet the March 31, 2004 capital requirements at NBG and BNB, and is in
the process of exploring alternatives with its investment bankers. We believe
that a number of options will be available within the required time frame, and
we are confident that we will be able to raise sufficient funds during this
period."


                                     - 2 -
<PAGE>

In addition, the NBG agreement requires its Board of Directors to adopt,
implement and ensure adherence to a written policy on extensions of overdraft
credit and limit the circumstances under which NBG will be permitted to extend
credit to its affiliates, and requires the bank to engage an independent
appraiser to provide updated real estate appraisals where required. The BNB
agreement requires its board of directors to adopt, implement and ensure
adherence to a written action plan outlining proposed corrective action
addressing issues in the pre-existing Matters Requiring Attention pertaining to
interest rate risk measurement and monitoring systems.

Mr. Humphrey continued, "Randy Brown, the new President and CEO of NBG, has hit
the ground running and has already addressed most of the major requirements of
the agreement that his Board has entered into. Randy has the full support of an
energized, committed bank Board, and has the FII Board and management fully
behind him as well."

Mr. Humphrey stated, "Doug McCabe, BNB's President and CEO, and his Board are
fully committed to achieving compliance with the agreement, and have already
addressed most of its major requirements. The bank has recently added an
experienced Senior Loan Officer and a Chief Financial Officer to its ranks,
providing greater depth on the management team."

"Since FII first became aware in January of the existence of significant numbers
of improperly graded loans at NBG, we have taken a number of proactive steps
that have been communicated to the OCC, our other regulators, our shareholders
and the public. The banks have already addressed most of the action items set
forth in the written agreements. Randy Brown and Doug


                                     - 3 -
<PAGE>

McCabe, and their Boards, have accomplished a great deal in a very short time
period, and they are fully committed to ensuring compliance going forward," said
Mr. Humphrey.

In a letter to the Federal Reserve Bank of New York, FII's primary regulator,
FII today terminated its financial holding company status and will operate
instead as a bank holding company. The change in status will not affect any
non-financial subsidiaries or activities currently being conducted by FII,
although it will mean that future acquisitions or expansions of non-financial
activities may require prior Federal Reserve Board approval and will be limited
to those that are permissible for bank holding companies.

This release contains forward-looking statements as described by the Private
Securities Litigation Reform Act of 1995. These forward-looking statements
pertain to future events, such as the ability of the holding company to complete
the raising of additional funds. Actual events could differ materially, and FII
undertakes no obligation to revise these forward-looking statements to reflect
events or circumstances subsequent to the date of this release.

FII is the bank holding company parent of Wyoming County Bank, National Bank of
Geneva, Bath National Bank, and First Tier Bank & Trust. The four banks provide
a wide range of consumer and commercial banking services to individuals,
municipalities, and businesses through a network of 47 offices and 67 ATMs in
Western and Central New York State. FII's Financial Services Group also provides
diversified financial services to its customers and clients, including
brokerage, trust, insurance and employee benefits and compensation consulting.
More information on FII and its subsidiaries is available through the Company
web site at www.fiiwarsaw.com.

                                      *****


                                     - 4 -

</TEXT>
</DOCUMENT>
</SUBMISSION>
