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FAIRPORT – Five Star Bank sees more opportunities to grow in Erie County.

The bank’s deposit market share in the county was a paltry 0.4 percent as of last June, the most recent figure released by the Federal Deposit Insurance Corp. Five Star ranked 11th in a crowded field.

“We don’t have meaningful market share, if any” in the county, said Martin K. Birmingham, president and CEO of Five Star’s parent, Financial Institutions Inc.

“It is about recruiting the right (employees), and it is about considering how best to expand our retail presence.”

Warsaw-based Financial Institutions held its annual meeting Wednesday, coming off a year when its net income rose by 9 percent from 2012, to $25.5 million.

While Five Star has about 50 offices in Western and Central New York, only three of them are in Erie County. The bank has similar designs on pumping up its limited presence in Monroe County, including Rochester.

How would the bank, with assets of $3 billion, bolster its retail presence in Erie County, which is dominated by M&T and First Niagara and home to numerous other players?

“That could take many forms,” Birmingham said.

“Traditional branch, smaller, more flexible branching. We’re looking at all options, leveraging technology to make our bank more accessible and easier for our customers and our potential customers to bank with us.”

For instance, he said, Five Star has expanded its ATM presence through a program at Rite Aid drugstores.

As far as the idea of adding branches, Birmingham said Five Star in the past has found success in acquiring branches that other banks have sold. “We would be open to that,” he said. But the bank is also looking at alternatives to the traditional “4,500-square-foot, multimillion-dollar branch investment, which comes along with a fixed increase in expenses to support that on an ongoing basis.”

Five Star is open to creating new branches in the right locations, he said, but the bank is also exploring the idea of developing smaller retail outlets with employees trained for a number of functions.

In his remarks at the annual meeting, Birmingham hinted at the possibility of making an acquisition as one way to grow. Afterward, Kevin B. Klotzbach, executive vice president and chief financial officer, said there had not been much in the way of bank acquisitions lately in New York State, compared with elsewhere in the country. The banks are not feeling much pressure to sell, he said.

“But as the regulatory burdens continue to increase, particularly on banks under $1 billion, they’re going to have to look at their efficiency ratios and their ability to drive home earnings to the bottom line, and whether or not it makes sense from the shareholders’ perspective to remain independent,” Klotzbach said.

“And at some point, we think there will be opportunities, and when there are, we are open and receptive to looking at those opportunities.”

Five Star feels “very sanguine about the upstate economy,” Birmingham said.

“We live in a neighborhood in upstate New York that doesn’t have the boom-bust cycles; never has. In Greater Buffalo, I think it’s a shining beacon on a hill, if you will, with all the economic-development activity that’s happening there.”

The bank feels equally upbeat about the Rochester area and the Southern Tier, he said.

Birmingham described Five Star as “large enough to absorb the rising costs associated with the increase in regulatory burden, yet we are small and nimble enough to continue to provide personal service and local decision-making.”

During the 45-minute annual meeting, Andrew W. Dorn Jr., who founded Greater Buffalo Savings Bank, and Robert M. Glaser were elected to the board of directors.

They replaced Barton P. Dambra, who retired, and Peter G. Humphrey, the former CEO who was not nominated for re-election. Humphrey abruptly resigned as CEO in August 2012 but remained on the board until his term expired at the annual meeting. He did not attend the meeting.

Rich Humphrey, a cousin of Peter’s, asked why the Humphrey family, as major shareholders, no longer had representation on the board. John E. Benjamin, the board’s departing chairman, noted that James H. Wyckoff, another cousin of Peter Humphrey, remains a board member.

“Jim’s been with us for a long time and has had a very positive influence on the board,” Benjamin said. “I think the family is very well-represented by Jim.”

Benjamin also praised Peter Humphrey’s contributions to the bank over his career. “He’s been a tremendous asset for the bank and helped very much with this transition.”

Robert N. Latella was elected the bank’s new chairman; Benjamin remains on the board.

email: mglynn@buffnews.com