Community Bank System to acquire Steuben Trust Corp. for $107 million

HORNELL — Community Bank System, Inc. (ticker: CBU), parent of Community Bank, N.A., on Oct. 21 announced it has agreed to acquire Steuben Trust Corporation (ticker: SBHO), parent company of Steuben Trust Company, in a stock and cash deal valued at $106.8 million. 

DeWitt–based Community Bank says the deal extends its reach in Western New York (WNY). Hornell–based Steuben Trust provides Community Bank, with improved scale in several more WNY markets, including Buffalo and Rochester, with total assets of nearly $580 million, deposits of $480 million, and 15 branch offices across a six-county area.

“Our acquisition of Steuben Trust will enhance and extend our banking footprint in Western New York, in markets which we successfully compete in and aspire to continue to grow,” Mark E. Tryniski, president and CEO of Community Bank System, said in a news release. “Our move to establish a broader and deeper banking presence in this region is reflective of these growth objectives. We are confident that the Steuben Trust franchise will further support our efforts to grow our retail and business banking presence in Western New York.

Steuben Trust has offices in the Southern Tier and WNY communities of Alfred, Andover, Arkport, Bath, Belmont, Bolivar, Canseraga, Canisteo, Clarence, Elma, Geneseo, Henrietta, Hornell, Warsaw, Wellsville, and Whitesville, according to its website.

Acquisition price details

Under the terms of the agreement, shareholders of Steuben Trust will receive, for each share of common stock they own, a combination of $12.60 cash and 0.8054 shares of Community Bank System common stock, for total consideration valued at about $63 per share, based on Community Bank System’s recent average price. The sale price is about 167 percent of Steuben Trust Corp.’s tangible book value as of June 30, 2019, the release stated.

The transaction is being arranged to qualify as a reorganization for federal income-tax purposes, which allows Steuben Trust shareholders to receive Community Bank System common stock tax-free, the banking companies said.

Upon completion of the acquisition, Community Bank System expects to have more than $12 billion in total assets. Community Bank expects the transaction to add about 8-9 cents per share to its first full year of GAAP earnings and 9-10 cents a share to its cash earnings, excluding one-time transaction costs.

The acquisition is expected to close in the second quarter of 2020 and is subject to customary closing conditions, including approval by the shareholders of Steuben Trust and required regulatory approvals.

D.A. Davidson & Co. Inc., a national financial-services and investment banking firm, was the financial advisor for Community Bank System and New York City–based law firm Cadwalader, Wickersham & Taft LLP acted as its legal advisor. PNC FIG Advisory was the financial advisor for Steuben Trust and Pillar Aught LLC served as its legal advisor.