FOURTH AMENDMENT TO REVOLVING CREDIT AGREEMENT

Exhibit 10.18

FOURTH AMENDMENT
TO
REVOLVING CREDIT AGREEMENT

     THIS FOURTH AMENDMENT is effective as of September 30, 2005 and made by and between Financial Institutions, Inc., a New York corporation having its head office at 220 Liberty Street, Warsaw, New York 14569 (the “Borrower”) and Manufacturers and Traders Trust Company, a New York banking corporation, having its principal banking office at One M&T Plaza, Buffalo, New York 14023 (the “Bank”).

     WHEREAS, Bank, at Borrower’s request, has made available to Borrower a Five Million Dollar ($5,000,000.00) revolving credit facility (the “Revolving Loan”), which Loan was made pursuant to the terms and conditions contained in that certain Revolving Credit Agreement, dated as of April 25, 2001, by and between Borrower and Bank (the “Original Agreement”); and

     WHEREAS, Bank, at Borrower’s request, agreed to extend the term of the Original Agreement and increase the amount of the Loan to Ten Million Dollars in accordance with the provisions of that certain First Amendment to Revolving Credit Agreement, dated as of July 3, 2002, by and between Borrower and Bank (the “First Revolver Amendment”); and

     WHEREAS, Bank, at Borrower’s request, agreed to make available to Borrower a Twenty-Five Million Dollar ($25,000,000.00) term loan facility (the “Term Loan”) pursuant to the terms and conditions of contained in that certain Term Loan Agreement, of dated as of December 15, 2003, by and between Borrower and Bank (the “Term Loan Agreement”), subject to a decrease in the amount of the Revolving Loan and the amendment of certain covenants contained in the Original Agreement as amended by the First Revolver Amendment, in accordance with the provisions of that certain Second Amendment to Revolving Credit Agreement, dated as of December 15, 2003, by and between Borrower and Bank (the “Second Revolver Amendment”); and

     WHEREAS, Bank, at Borrower’s request, agreed to further extend the term of the Revolving Loan subject to the amendment of certain covenants contained in the Original Agreement as amended by the First Revolver Amendment and the Second Revolver Amendment, in accordance with the provisions of that certain Third Amendment to Revolving Credit Agreement, dated as of May 25, 2005, by and between Borrower and Bank (the Original Agreement, as amended by the First Revolver Amendment, the Second Revolver Amendment and the Third Amendment to Revolving Credit Agreement, the “Amended Agreement”);

     NOW, THEREFORE, in consideration of the premises herein contained, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

     1.  Termination Date .

          The definition of “Termination Date” contained in Section 1.1 of the Amended

Agreement is hereby amended in its entirety as follows:

“ Termination Date . April 30, 2007 or such earlier date on which the commitment to make loans is terminated or the Commitment Amount is reduced to zero in accordance with the terms hereof.”

     2.  Nonperforming Assets Ratio .

          Section 6.7 of the Amended Agreement is hereby deleted and replaced in its entirety as follows:

           a 6.7. Nonperforming Assets to Total Loans and Other Real Estate Ratio . The Borrower shall not permit its Nonperforming Assets to Total Loans and Other Real Estate Ratio to be greater than 5.00%. As used in this Section 6.7, “Nonperforming Assets to Total Loans and Other Real Estate Ratio” means the ratio of (A) “Nonperforming Assets” to (B) the sum of (i) “Total Loans”, plus (ii) “Other Real Estate”; “Nonperforming Assets” means the Consolidated loans, leases and other assets of the Borrower that are not accruing interest or are 90 days or more past due in the payment of principal or interest, plus Consolidated “other real estate owned” by the Borrower (“Other Real Estate”); and “Total Loans” means the Consolidated principal of loans made by Borrower to unrelated third parties; in each case as shown on the Consolidated financial statements of Borrower, prepared in accordance with FFIEC requirements. @

     3.  Minimum Tangible Common Equity .

          Section 6.9 of the Amended Agreement is hereby deleted and replaced in its entirety as follows:

          “6.9. Minimum Tangible Common Equity . The Borrower shall not permit its Tangible Common Equity to be less than $100,000,000.00, as of 9/30/05 and 12/31/05. The minimum amount of Tangible Common Equity specified in the immediately preceding sentence shall increase $4,000,000.00 at each succeeding year end thereafter. By way of example, the mimimum Tangible Common Equity shall be $104,000,000.00 as of 12/31/06, and $108,000,000.00 as of 12/31/07. As used in this Section 6.9, “Tangible Common Equity” means the difference between (A) the Consolidated stockholder equity in the Borrower, including, but not limited to, accumulated other comprehensive income accounted for under FASB 115 as gains or losses on securities held for sale, minus (B) the sum of (i) the Consolidated preferred stockholder equity in the Borrower, and (ii) the Consolidated goodwill and intangibles of the Borrower; in each case as shown on the Consolidated financial statements of Borrower, prepared in accordance with FFIEC requirements.”

     4.  Debt Service Coverage Ratio .

          Section 6.10 of the Amended Agreement is hereby deleted and replaced in its entirety as follows:

          “6.10. Debt Service Coverage Ratio . The Borrower shall not permit, on a “Rolling Four-Quarter Basis”, the ratio of (A) the Consolidated net income of the Borrower, during any such fiscal period, as shown on the Consolidated financial statements of Borrower, prepared in accordance with FFIEC requirements, to (B) the total of (i) the installments of all principal payable by the Borrower in connection with any indebtedness or other obligation required to be paid during the next four fiscal quarters and arising from the borrowing of any money or the deferral of the purchase price of any asset and (ii) the total interest expense of the Borrower thereon during such next four fiscal quarters, calculated on the basis of the interest rate(s) applicable to such principal obligations as of the end of the last fiscal quarter included in the Rolling Four-Quarter Basis, in each case excluding the one-time costs associated with the Borrower’s consolidation of it’s four subsidiary banks into one, and as shown on the financial statements of Borrower, prepared in accordance with FFIEC requirements, to be less than the following for the specified measurement date:

The measurements for 9/30/05, 12/31/05 and 3/31/06 shall exclude Borrower’s second quarter 2005 loss of $11,965,000.00. The measurements for 9/30/05, 12/31/05, 3/31/06 and 6/30/06 shall exclude Borrower’s third quarter 2005 after-tax gain on the sale of assets of $5,539,000.00. As used in this Section 6.10, “ Rolling Four-Quarter Basis ” means a basis using the most recently completed four (4) full consecutive fiscal quarters of Borrower which precede and include the date on which the Debt Service Coverage Ratio is calculated.”

     5.  Limitation on Indebtedness .

          A new Section 6.11 is hereby added to the Amended Agreement, as follows:

          “6.11 Limitation on Indebtedness. Without the Bank’s prior written consent, the Borrower shall not at any time create, incur or assume, or become or be liable (directly or indirectly) in respect of, any Indebtedness, other than Indebtedness arising under or contemplated by this Agreement. For purposes of this Agreement, “Indebtedness” shall mean any obligation of Borrower which, in accordance with GAAP, would be classified as indebtedness upon Borrower’s balance sheet including any footnote thereto prepared at such time and, in any event shall include, without limitation, and without duplication: (i) all indebtedness of arising or incurred under or in respect of (A) any guaranties (whether direct or indirect) by Borrower of the indebtedness, obligations or liabilities of any other person or entity, or (B) any endorsement by Borrower of any of the indebtedness, obligations or liabilities of any other person or entity, or (C) the discount by Borrower, with recourse to Borrower, of any of the indebtedness, obligations or liabilities of any other person or entity.”

     6.  No Adverse Change .

          A new Section 6.12 is hereby added to the Amended Agreement, as follows:

          “6.12 No Adverse Change. Borrower shall not suffer or permit (i) any change to occur in the assets, liabilities or financial condition of Borrower which, individually or in the aggregate, are materially adverse, or (ii) any adverse development in the business or in the operations or prospects of Borrower.”

     7.  Regulatory Enforcement .

          A new Section 6.13 is hereby added to the Amended Agreement, as follows:

          “6.13 Regulatory Enforcement. Neither Borrower nor any of its Material Subsidiaries shall be subject to any enforcement action by any regulatory body that are unrelated in cause or nature to the National Bank of Geneva Formal Agreement or the Bath National Bank Formal Agreement, both of which Formal Agreements were entered into in September 2003 with the Office of the Comptroller of the Currency.”

     8.  Events of Default .

          Section 7.1(b) of the Amended Agreement is hereby deleted and replaced in its entirety as follows:

          “(b) The Borrower shall fail to perform any term, covenant or agreement contained in Sections 5.1(f), 5.5, 6.2, 6.3, 6.5, 6.8, 6.9, 6.10, 6.11, 6.12 or 6.13; or”

     9.  Form of CFO Report .

          Exhibit E to the Amended Agreement is hereby deleted in its entirety and replaced with the Exhibit E attached to this Second Amendment.

     10.  Inducement .

          As a material inducement to Bank to enter into this Fourth Amendment, the Borrower hereby:

     11.  Applicability of Amended Agreement Provisions .

          Except to the extent specifically modified by this Fourth Amendment, all the terms and provisions contained in the Amended Agreement remain in full force and effect.

     IN WITNESS WHEREOF, the parties hereto have signed this Fourth Amendment on the date first above written.

ACKNOWLEDGMENTS

On the                      day of October, in the year 2005, before me, the undersigned, a Notary Public in and for said State, personally appeared Ronald A. Miller , personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

On the                      day of October, in the year 2005, before me, the undersigned, a Notary Public in and for said State, personally appeared Christopher Padgett , personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.