By ALLISSA KLINE
akline@bizjournals.com | 716-541-1612

Financial Institutions Inc. announced net income of $5.7 million, or 43 cents per share, for the third quarter of 2010.

That's up 67.6 percent from the same quarter in 2009 when the banking company reported net income of $3.4 million, or 23 cents per share.

The parent of Five Star Bank said the rise stems from a "back-to-basics" banking mind-set.

"We continue to be active lenders in our marketplace, which is driving our revenue growth, while maintaining solid asset quality. We have also been very focused on expense control," bank President and CEO Peter Humphrey said in a release. "This back-to-basics banking approach, started several years ago, is truly paying off."

Net interest income totaled $19.8 million for the period ending Sept. 30, up from $18.1 million a year ago due to a higher net interest margin and earning-asset growth, the bank said. Its noninterest income also rose from $4.4 million in the third quarter of 2009 to $5.1 million for the most recent quarter. Noninterest expense, meanwhile, dropped from $15.1 million to $14.9 million.

Nonperforming assets rose to $8.5 million, representing 0.38 percent of all assets. That's an increase from $7.9 million a year ago. The bank attributed the rise to a $5 million commercial business loan of which it sold its interest during the third quarter. The loan was sold for $1.9 million, leaving $3.1 million to be charged off.

The provision for loan losses dropped by $400,000, from $2.6 million a year ago to $2.2 million as of Sept. 30.

Five Star operates three branches in Erie County. Its assets were $2.2 billion at the end of the quarter.