EXHIBIT 4.2

PRESS RELEASE

Date: October 26, 2001

CONTACTS:

           David R. Alvord                    Jack H. Webb
           Chairman & CEO                     President
           Alliance Financial Corporation     Alliance Financial Corporation
           {607} 758-1201                     {315} 475-2100

                         Alliance Financial Corporation
                    Adopts Shareholder Protection Rights Plan

CORTLAND,  NEW YORK;  ONEIDA,  NEW YORK  {OCTOBER 26, 2001}  Alliance  Financial
Corporation  (NASDAQ:  ALNC)  announced  today that its Board of  Directors  has
adopted a  shareholder  protection  rights plan to help  protect  the  Company's
shareholders against hostile takeover attempts that are coercive or unfair.

A  shareholder  protection  rights  plan is a  dividend  of rights  to  existing
shareholders  to acquire  stock of a company  and is  designed  to  protect  the
company and its shareholders  against abusive takeover attempts and tactics.  In
essence,  the  rights  plan  operates  to  dilute  the  interests  of an  entity
attempting  to take  control of the  company if the attempt is not deemed by the
Board of Directors to be in the best interests of the shareholders. If the Board
of  Directors  of the  company  has  determined  that  the  offer is in the best
interests of the  shareholders,  the rights may be redeemed  for nominal  value,
allowing the entity to acquire control of the company.

"The  implementation  of a  shareholder  rights  plan will  enable  the Board of
Directors,  on  behalf  of  Alliance's   shareholders,   to  maximize  long-term
shareholder  value by  providing  a vehicle by which the Board will be  actively
involved in negotiating any potential acquisition," stated David R. Alvord. "The
rights plan was not adopted in response to any identified  takeover  overture or
threat, but is simply intended to provide time and flexibility that is essential
in obtaining the best potential return for our shareholders."

Under the plan adopted by the Board of Directors,  Series A Junior Participating
Preferred  Stock purchase Rights will be distributed as of the close of business
on October 29, 2001 to  shareholders  of record as of that date. The Rights will
initially  trade  with the  Common  Stock,  and will be  exercisable  and  trade
separately from the


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Common  Stock  only if a person  or group  acquires  or  announces  a tender  or
exchange  offer that would  result in such person or group  owning 20 percent or
more of the  Common  Stock of the  Company.  In the  event  the  person or group
acquires a 20 percent Common Stock  position,  the Rights allow other holders to
purchase  stock of the Company at a discount to market  value.  The Company will
generally  be entitled to redeem the Rights at $.001 per Right at any time prior
to the 10th day after a person or group has  acquired a 20 percent  Common Stock
position.  The Rights will expire on October 29, 2011 unless earlier redeemed or
exchanged.

The issuance of the Rights is not a taxable  event,  will not affect  Alliance's
reported financial  condition or results of operations  (including  earnings per
share) and will not change the way in which Alliance's Common Stock is currently
traded.  Further  information  regarding  the  rights  plan and a summary of the
Rights will be mailed to shareholders in the near future.

Alliance  Financial  Corporation is an independent bank holding company with one
subsidiary,  Alliance Bank,  N.A., that provides  banking,  trust and investment
services  through 20 community branch  locations in Cortland,  Madison,  Oneida,
Onondaga and Broome counties.

This press release contains certain  forward-looking  statements with respect to
the  financial  condition,  results  of  operations  and  business  of  Alliance
Financial  Corporation.  These forward-looking  statements involve certain risks
and  uncertainties.  Factors that may cause actual results to differ  materially
from  those  contemplated  by such  forward-looking  statements  include,  among
others, the following possibilities:  (1) an increase in competitive pressure in
the  banking  industry;  (2) changes in the  interest  rate  environment  reduce
margins;  (3)  changes  in the  regulatory  environment;  (4)  general  economic
conditions,  either nationally or regionally,  are less favorable than expected,
resulting in, among other things, a deterioration in credit quality; (5) changes
in business conditions and inflation; (6) changes in the securities markets; (7)
changes occur in technology used in the banking  business;  (8) the new Syracuse
area  branches do not attract the expected loan and deposit  customers;  (9) the
ability to maintain and increase  market  share and control  expenses;  and (10)
other factors detailed from time to time in the Company's SEC filings.