DeWITT, N.Y. — Community Bank System, Inc.’s (NYSE: CBU) recently announced $83 million agreement to acquire Elmira Savings Bank (ESB) will strengthen and deepen its reach in the Southern Tier, particularly the Corning-Elmira-Ithaca corridor. DeWitt–based Community Bank System announced Oct. 4 that it would acquire ESB (NASDAQ: ESBK), which has total assets of nearly $649 […]
DeWITT, N.Y. — Community Bank System, Inc.’s (NYSE: CBU) recently announced $83 million agreement to acquire Elmira Savings Bank (ESB) will strengthen and deepen its reach in the Southern Tier, particularly the Corning-Elmira-Ithaca corridor.
DeWitt–based Community Bank System announced Oct. 4 that it would acquire ESB (NASDAQ: ESBK), which has total assets of nearly $649 million, in a cash deal worth $82.8 million. Under the purchase terms, shareholders of ESB will receive $23.10 in cash for each share of common stock they own. Community Bank says it will use its existing on-hand cash balances to fund the purchase price.
Elmira Savings Bank has 12 branches across a five-county area, and it has a top-5 deposit market share in three counties (Chemung, Tompkins, and Schuyler).
ESB offers a “highly complementary franchise with a consistent performance track record,” Community Bank System said in an Oct. 4 presentation to investors. Specifically, ESB has delivered a consistent net interest margin in the 3 percent to 3.3 percent range for the last five years. Additionally, the bank’s net charge offs of bad loans have averaged less than 0.5 percent since 2017.
ESB also offers “diverse revenue sources” supported by a strong residential-mortgage business, the presentation stated. The bank’s $464 million loan portfolio is comprised of residential mortgages (63 percent), commercial real estate (23 percent), consumer loans (7 percent), and commercial and industrial loans (7 percent).
Community Bank System expects the acquisition to add 8 cents per share to its 2022 GAAP earnings and 9 cents a share to its cash earnings, excluding one-time transaction costs. It further expects the purchase to add 15 cents a share to its 2023 GAAP earnings and 16 cents per share to cash earnings, excluding one-time transaction costs.
The acquisition is slated to close in the first quarter of 2022. After the deal’s completion, the combined banking company is expected to have more than $15.4 billion in assets. Elmira Savings Bank will merge into Community Bank, NA, the main banking subsidiary of Community Bank System, which operates more than 215 branches across upstate New York, northeastern Pennsylvania, Vermont, and western Massachusetts.