SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CORTLAND FIRST FINANCIAL CORPORATION
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(Name of Registrant as Specified In Its Charter)
CNY FINANCIAL CORPORATION
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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CNY
FINANCIAL
PROXY STATEMENT OF
CNY FINANCIAL CORPORATION
SOLICITATION OF PROXIES OPPOSING THE PROPOSED MERGER OF CORTLAND FIRST
FINANCIAL CORPORATION AND ONEIDA VALLEY BANCSHARES, INC.
SPECIAL MEETING OF SHAREHOLDERS
OF CORTLAND FIRST FINANCIAL CORPORATION
TO BE HELD ON NOVEMBER 16, 1998
This Proxy Statement is being furnished to shareholders of Cortland
First Financial Corporation, a New York business corporation ("CFF"), by CNY
Financial Corporation, a Delaware corporation ("CNY Financial"), on or about
November 12, 1998 in connection with CNY Financial's solicitation of proxies to
be used at the Special Meeting of Shareholders of CFF, scheduled to be held on
November 16, 1998 at 4:00 p.m. Eastern Time, at CFF's offices at 65 Main Street,
Cortland, New York (the "Meeting").
At the Meeting, CFF shareholders will be voting on whether to approve
and adopt (1) an Agreement and Plan of Reorganization, dated July 10, 1998 (the
"Merger Agreement"), between CFF and Oneida Valley Bancshares, Inc., a New York
business corporation ("OVB"), providing for the merger of CFF and OVB under the
name "Alliance Financial Corporation" (the "Proposed Merger") and (2) the
Alliance Financial Corporation 1998 Long Term Incentive Compensation Plan in
connection with the Proposed Merger (the "Compensation Plan").
On November 4, 1998, CNY Financial delivered a confidential expression
of interest to CFF in which it had offered to structure an in-market business
combination between CNY and CFF ("CNY's Proposal"), pursuant to which each
shareholder of common stock of CFF would receive merger consideration of $37.00
per share, consisting of $18.50 in cash plus shares of common stock of CNY with
an estimated market value of $18.50. CNY's Proposal would provide CFF
shareholders with greater opportunities to recognize enhanced shareholder value
than under the terms of CFF's proposed merger of equals with OVB. CNY's Proposal
was to expire on November 9, 1998. Without any discussion, CFF issued a press
release on November 6, 1998, rejecting CNY's Proposal. (See "Background for this
Solicitation" and "CNY Financial's Proposal").
PURSUANT TO THIS PROXY STATEMENT, CNY FINANCIAL IS SOLICITING PROXIES FROM
SHAREHOLDERS OF CFF TO VOTE AGAINST CFF'S PROPOSAL TO APPROVE AND ADOPT
THE PROPOSED MERGER.
In reliance upon Rule 14a-5(c) of the Securities and Exchange Act of
1934, as amended (1), reference is made to the proxy statement sent to you by
CFF on or about September 28, 1998 for a full description of management's
proposals, as well as information with respect to the number of shares eligible
to vote at the Meeting, the quorum, the record date, the securities ownership of
CFF, information about dissenters' rights, information about CFF's officers and
directors, including compensation and the same information about OVB and its
officers and directors.
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(1) Rule 14a-5(c) provides that "any information contained in any other
proxy soliciting material which has been furnished to each person solicited in
connection with the same meeting or subject matter may be omitted from the proxy
statement, if a clear reference is made to the particular document containing
such information."
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PLEASE READ THE FOLLOWING MATERIAL AND
THE PROXY STATEMENT OF CFF'S MANAGEMENT WITH CARE.
IF YOU HAVE ALREADY SENT A PROXY APPROVING THE
PROPOSED MERGER TO THE BOARD OF DIRECTORS OF CFF,
YOU MAY REVOKE IT AND VOTE AGAINST THE PROPOSED
MERGER BY SIGNING, DATING AND MAILING THE ENCLOSED
PROXY CARD.
VOTE "NO" TO THE PROPOSED MERGER OF CFF AND OVB
CNY Financial encourages CFF shareholders to vote AGAINST CFF's
Proposed Merger with OVB because in our view:
(1) the terms of the Proposed Merger do not maximize CFF's value and
are not fair to CFF's public shareholders; and
(2) the Proposed Merger will not allow full enhancement of long-term
shareholder value.
In CFF's November 6, 1998 press release, David R. Alvord, President
and Chief Executive Officer of CFF, and his board of directors claim that they
determined that "it is in our shareholders' best interest to reject the CNY
proposal and proceed with our strategic merger of equals with Oneida Valley."
Is this really true?
Under the Proposed Merger, CFF shareholders are to receive shares of
common stock of a new institution, the value of which is difficult to ascertain
because the shares of CFF and OVB are not actively traded on any national
exchange or market and there is very little trading of the shares of CFF and
OVB. SNL Securities reported that the trading volume of 8,700 shares of CFF's
stock on November 6, 1998 was 3,710% above the average shares traded daily of
CFF. CNY's Proposal, on the other hand, contemplates structuring a business
combination between CNY Financial and CFF whereby CFF shareholders would receive
merger consideration having a value of $37.00 per share, consisting of $18.50 in
cash plus common stock of CNY Financial with an estimated market value of
$18.50. The common stock of CNY Financial is actively traded on the NASDAQ
National Market under the stock symbol of "CNYF," with an average daily trading
volume of over 120,000 shares. The closing price of CNY Financial's common stock
on November 9, 1998 was $9.50 per share.
In the words of Mr. Alvord, "the proposed merger of equals with Oneida
Valley does not involve a financial premium." Shareholders will not realize the
benefits of any efficiencies typical in merger transactions because the planned
cost-savings measures and consolidation of resources between CFF and OVB are
minimal. In addition, the Proposed Merger may not be in the best interests of
the communities served by CFF where one stated goal of the Proposed Merger is to
"increase opportunities . . . to expand into new geographic markets."
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In CNY Financial's opinion, several individuals and entities other than
CFF shareholders, customers and communities served will reap the real benefits
of the Proposed Merger. Specifically, each officer, key employee and director of
CFF will be entitled to receive shares of common stock of the resulting
institution under the Compensation Plan. The board of directors of the combined
institution will consist of all of the current directors of CFF and OVB,
resulting in a combined board of directors of 22 members. Mr. Alvord and John C.
Mott, President of OVB, both will continue as co-chief executive officers of the
resulting institution. The total compensation levels of Mr. Alvord and Mr. Mott
for 1997, as reported in the joint Proxy Statement/Prospectus of CFF and OVB,
are $274,584 and $228,873, respectively. In addition, Messrs. Alvord and Mott
will each be granted options to purchase 50,000 shares of the common stock of
the resulting institution upon the consummation of the Proposed Merger. In our
view, given the benefits they will receive, none of the officers and directors
of CFF are independent in this transaction. Accordingly, we believe that the
terms of the Proposed Merger do not maximize CFF's current shareholder value and
will do little to create enhanced long-term shareholder value.
Approval of the Merger Agreement requires the affirmative vote of at
least two-thirds of the outstanding shares of CFF common stock. (See "Required
Vote and Manner of Voting").
CNY FINANCIAL CORPORATION
General.
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CNY Financial is a bank holding company and the parent company of
Cortland Savings Bank ("Cortland Savings"). The common stock of CNY Financial
Corporation is actively traded on the NASDAQ National Market under the symbol
"CNYF." Additional information about CNY Financial and its management and
Cortland Savings and the names of its officers, directors and controlling
shareholders and their ownership interests is presented on Schedule 1 of this
Proxy Statement. Additional information regarding CNY Financial is contained in
its prospectus, dated August 12, 1998, in connection with the initial public
offering of shares of common stock of CNY Financial and the conversion of
Cortland Savings from the mutual to stock form organization and in CNY
Financial's Quarterly Report on Form 10-Q filed with the Securities and Exchange
Commission on October 29, 1998.
Cortland Savings was chartered in 1866, and it has three bnaking
offices, all in Cortland County in Central New York State. As of October 31,
1998, CNY Financial had total assets of $280.9 million, loans receivable, net of
$159.5 million, deposits of $196.5 million and total shareholders' equity of
$79.9 million. It obtains deposits through Cortland Savings, mainly from local
depositors, and invests those deposits, and other available funds, principally
in loans, a majority of which are secured by property located in Cortland
County, New York. It also buys securities, such as Treasury bills issued by the
United States and securities which are backed by groups of mortgages. The Bank's
income primarily comes from the difference between the rate of interest it pays
on its deposits and the rate of interest earned on its loans and other
investments. In addition to the cost of its deposits, the Bank also has expenses
for salaries and employee benefits, maintaining its banking offices and
equipment, computer data processing, insurance and other expenses.
Recent Financial Statements.
- ----------------------------
Set forth below are selected financial and other data of CNY Financial.
This financial data is derived in part from, and it should be read in
conjunction with, Cortland Savings consolidated financial statements and related
notes included in the prospectus dated August 12, 1998.
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CNY Financial Corporation
Consolidated Balance Sheet
October 31, 1998
(unaudited)
Cash & due from banks $ 4,942
Federal funds sold & short-term investments 26,402
Investment securities 81,679
Loans receivable, net 159,522
Property, plant and equipment 2,935
Other assets 5,388
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Total Assets $ 280,868
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Deposits $ 196,489
Borrowings 1,000
Other liabilities 3,468
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200,957
Common stock, 5,356,662 shares outstanding 53
Additional paid-in capital 51,708
Retained earnings 31,444
Net unrealized gain on securities 991
Unallocated ESOP shares (4,285)
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Total shareholders' equity 79,911
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Total liabilities & equity $ 280,868
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Capital Ratios:
Equity to assets 28.45%
Tier 1 leverage capital ratio 33.05%
Tier 1 risk-based capital ratio 48.30%
Total risk-based capital ratio 49.80%
BACKGROUND FOR THIS SOLICITATION
On November 4, 1998, CNY Financial delivered a letter to CFF which
stated as follows:
"CNY Financial Corporation ("CNY") is the holding company for
Cortland Savings Bank ("Cortland Savings") and the beneficial owner of common
stock of Cortland First Financial Corporation ("CFF"). We have reviewed the
Agreement and Plan of Reorganization ("Merger Agreement") dated as of July 10,
1998 among CFF, its subsidiary First National Bank of Cortland ("Cortland
National"), Oneida Valley Bancshares, Inc. ("OVB") and its subsidiary Oneida
Valley National Bank ("Oneida Valley") and related
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documents. We have also reviewed the joint Proxy Statement/Prospectus dated
September 28, 1998 ("Proxy Statement/Prospectus") for the special meetings of
shareholders of CFF and OVB to be held on November 16, 1998 and November 17,
1998, respectively, to approve the Merger Agreement and related matters,
pursuant to which OVB would merge with and into CFF and Cortland National would
merge with and into Oneida Valley in what is described as a "merger of equals."
As described in the July 13, 1998 joint press release of CFF
and OVB, shareholders of CFF would receive 1 share of the common stock of the
merged company for each share of CFF common stock owned. The common stock of the
merged company would be traded on the NASDAQ National Market. Currently, the
shares of CFF and OVB are not actively traded on any national exchange or
market, and the lack of an active market makes it difficult to determine what
the shares of the merged company will be worth.
After reviewing the joint press release, the Merger Agreement
and the Proxy Statement/Prospectus, we believe that the proposed merger of CFF
and OVB does not provide shareholders of CFF adequate value for their shares of
CFF. As you know from our prior discussions, we have had, and continue to have,
an interest in structuring a business combination with CFF. Such a combination
between two financial institutions operating in the same general market area
would permit substantially greater value to be offered to CFF's shareholders.
Accordingly, we are writing to you to express our current proposal for such a
business combination between CFF and CNY Financial pursuant to which each share
of CFF common stock would receive merger consideration of $37.00 per share,
consisting of $18.50 per share in cash plus shares of common stock of CNY
Financial with an estimated market value of $18.50. Common stock of CNY
Financial is actively traded on the NASDAQ National Market under the symbol
"CNYF."
The proposal set forth in this letter is subject to the
negotiation of an acceptable definitive agreement containing customary terms and
conditions. This proposal is subject to CFF not consummating the proposed merger
with OVB and is subject to customary due diligence review, which we would expect
could be completed within two weeks of CFF's acceptance of this proposal. We
believe that such a combination would be in the best interests of CFF's
shareholders. We are prepared, subject to the execution of a definitive merger
agreement, to proceed with such a business combination as soon as possible. This
proposal will expire at 9:00 a.m. on November 9, 1998.
Under this proposal, CNY Financial would acquire all
outstanding shares of CFF for merger consideration of $37.00 per share of CFF,
which represents an extremely attractive opportunity for all CFF shareholders.
Merger consideration of $37.00 per share of CFF stock represents a premium of
$9.25 per share, or 33.3%, over the last reported trade of CFF stock of $27.75
per share on November 3, 1998. Under our proposal, for each share of CFF stock
owned, shareholders of CFF will receive $18.50 in cash, which would not be
subject to market fluctuations, and common stock of CNY Financial with an
estimated value, based on its trading on the NASDAQ National Market, of $18.50.
Because CNY Financial common stock is actively traded on the NASDAQ National
Market, it provides CFF shareholders with increased liquidity as compared with
the untested stock of the merged company to be formed pursuant to the proposed
merger with OVB. If during our negotiations and due diligence review additional
value in CFF is demonstrated to us, we may be prepared to increase the value of
our proposal.
We believe that our proposal will provide CFF shareholders
with greater opportunities to recognize enhanced shareholder value than under
the proposed merger of equals with OVB. As you may be aware, CNY Financial made
a proposal to OVB in a letter dated October 22, 1998 to structure a business
combination between CNY Financial and OVB. CNY Financial is prepared to enter
into definitive agreements
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and proceed with either of the business combinations proposed to each of CFF and
OVB, or both business combinations proposed to CFF and OVB. CNY Financial has
sufficient capital to go forward with both business combinations and continue to
satisfy the regulatory requirements to be considered a "well-capitalized"
institution. We believe that each of our proposals offers superior merger
consideration to the shareholders of CFF and OVB, as compared to the proposed
merger of equals. As in the case of our proposal to OVB, our proposal to CFF
will also enable CFF shareholders to have a continuing equity interest in a
growing and diversified, multi-bank holding company serving the central New York
area.
We hope you find this expression of interest an attractive
alternative to your current merger plans. We are confident that we can offer a
significant long-term value to CFF shareholders. We respectfully request that
you call the undersigned no later than 9:00 a.m. on November 9, 1998. We look
forward to your favorable response."
On November 6, 1998, without any discussion with CNY Financial, CFF
issued a press release rejecting CNY Financial's proposal, in part because "the
proposal from CNY is not definitive enough to determine the number of shares
which would be offered" and unspecified "other contingencies and factors."
CNY FINANCIAL'S PROPOSAL
Current Value to Shareholders based on Merger Consideration.
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Under CNY's Proposal, CNY Financial would structure a business
combination with CFF for merger consideration of $37.00 per share of CFF, which
represents an extremely attractive opportunity for all CFF shareholders. Merger
consideration of $37.00 per share of CFF stock represents a premium of $9.625
per share, or 33.9%, over the last reported trade of CFF stock of $27.625 per
share on November 5, 1998. For each share of CFF stock owned, CFF shareholders
would receive $18.50 in cash, which would not be subject to market fluctuations,
and common stock of CNY Financial with an estimated value, based on its trading
on the NASDAQ National Market, of $18.50. If during our negotiations and due
diligence review additional value in CFF is demonstrated to us, we may be
prepared to increase the value of our proposal. On November 9, 1998, CNY
Financial announced that it would consider structuring the proposal as an
all-cash offer where CFF shareholders would receive all cash for their shares of
CFF common stock.
CNY Financial's Strategic Business Plan.
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In addition to CNY's Proposal to structure a business combination with
CFF, on October 22, 1998, CNY Financial proposed to OVB a business combination
to acquire OVB for consideration of $67.00 per share, consisting of $33.50 per
share in cash plus shares of common stock of CNY Financial with an estimated
market value of $33.50. On November 4, 1998, CNY Financial announced that OVB
had rejected its proposal and that CNY Financial had extended its offer to
acquire OVB and suggested that OVB shareholders vote no to the proposed merger
of equals between CFF and OVB. On November 9, 1998, CNY Financial announced that
it would consider structuring the proposal to OVB as an all-cash offer where OVB
shareholders would receive all cash for their shares of OVB common stock.
CNY Financial is prepared to structure a business combination with CFF
or OVB, or both CFF and OVB. The CNY proposals to CFF and OVB will enable
shareholders of each of CFF and OVB to receive a substantial premium over the
estimated merger consideration to be provided in their proposed merger of
equals.
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Moreover, they would have a continuing equity interest in a more economically
efficient, diversified, multi-bank holding company committed to serving both the
Oneida and Cortland communities.
CNY Financial's proposed strategy of combining approximately $467
million in assets in quality commercial bank franchises, one in-market and one
in a contiguous upstate market, with its franchise should be a spectacular
success. Even CFF and OVB management agree on this point, as they believe the
CFF and OVB combination is compelling. CNY Financial is simply willing to pay
shareholders more than CFF and OVB are for the privilege of this three way
combination. The combination of CFF and CNY greatly strengthens CNY Financial's
position in the Cortland area, while the addition of OVB will tap a market which
offers significant population growth since 1990. Most importantly, CNY Financial
transcends itself into a consolidated entity which has a much greater emphasis
on non-interest income. OVB offers considerable data processing strength,
serving three independent banks at present, which can be expanded. Additionally,
OVB and CFF offer trust departments with consolidated assets under management of
approximately $165 million. These elements alone will contribute to a
considerable increase in non-interest income as a percentage of net interest
income. The three banks, when combined, would substantially improve CNY
Financial's efficiency ratio. These savings levels cause the offers for CFF and
OVB to be accretive to stated GAAP earnings per share by year two. Moreover,
cash earnings per share are immediately accretive by over 70%. Finally, no
revenue enhancements comprise any of the breakeven stated earnings accretion by
year two, although such opportunities clearly exist.
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IF YOU HAVE SUPPORTED CFF MANAGEMENT,
NOW IS THE TIME TO CHANGE YOUR MIND
CNY FINANCIAL URGES CFF SHAREHOLDERS TO
VOTE "NO" TO THE PROPOSED MERGER
Even if you have already executed management's proxy card, you can
change your vote by signing, dating and returning the enclosed white proxy card
in the postage paid envelope provided. Any proxy, including one we hold, can be
revoked (see "Revocation of Proxies").
REQUIRED VOTE AND MANNER OF VOTING
If more than one-third of the outstanding shares of common stock of CFF
by proxy or in person either vote against the Proposed Merger or do not
affirmatively vote for the Proposed Merger, the Proposed Merger will be
rejected. If less than a majority of outstanding shares of CFF common stock vote
for the Compensation Plan, this proposal will also be rejected. Valid proxies
will be voted as instructed therein, but absent instructions on the white proxy
card, will be voted FOR approval of the Proposed Merger and the Compensation
Plan and will be voted in accordance with the determination of a majority of
CFF's Board of Directors on any other matter that comes before the Meeting,
including a proposal to adjourn the Meeting, which was not known a reasonable
time before the Meeting. Abstentions and broker non-votes (where a nominee
holding shares for a beneficial owner has not received voting instructions from
the beneficial owner on a particular matter and the nominee does not vote the
shares) will not be counted as votes cast. We urge you to sign, date and return
the white proxy card in the enclosed envelope. No postage is required if mailed
in the United States.
SHARES IN STREET NAME
If you hold your CFF shares in the name of a brokerage firm or bank,
your broker or banker cannot vote the shares until the broker or banker receives
specific instructions from you. Please contact the party at the brokerage firm
or bank responsible for your account to make sure that a proxy is executed for
your CFF shares on the white proxy card.
REVOCATION OF PROXIES
If you have already executed management's proxy card before receiving
this Proxy Statement, you have every right to change your vote by signing,
dating and returning the enclosed white proxy card in the postage-paid envelope
provided. Only your latest dated proxy will count at the Meeting. Any proxy,
including the proxy solicited hereby, may be revoked at any time before it is
voted. To effectively revoke such proxy before it is voted at the Meeting, a CFF
shareholder must do one of the following:
(1) File a duly executed proxy card with a later date, and vote
"NO" to the Proposed Merger, with David R. Alvord, Cortland
First Financial Corporation, 65 Main Street, Cortland New York
13045 prior to a vote being taken on the Proposed Merger at
the Meeting of CFF shareholders on November 6, 1998 (the later
dated proxy card must be received by CFF before the Meeting,
so be sure to send it as soon as possible if it is mailed);
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(2) File a written revocation of the proxy card, and note "NO" to
the Proposed Merger, with David R. Alvord at CFF; or
(3) Attend the Meeting of CFF shareholders on November 6, 1998,
request a revocation of proxy card form, or a new proxy card,
from CFF and vote "NO" to the Proposed Merger, and file the
new proxy card or the voting ballot with CFF at the Meeting,
thereby voting "NO" in person.
Keep in mind that the presence of a shareholder at the Meeting will not, in and
of itself, revoke a shareholder's previously submitted proxy. Additional blank
proxy cards are available from Steven A. Covert, Executive Vice President and
Chief Financial Officer of CNY Financial at 1 North Main Street, Cortland, New
York 13045, whose telephone number is (607) 756-8449, or from Sandy Samson,
Corporate Secretary of CNY Financial, whose telephone number is (607) 758- 2216.
SOLICITATION EXPENSE
CNY Financial will bear the cost of preparing, assembling and mailing
the enclosed form of proxy, this Proxy Statement and other material which may be
sent to shareholders in connection with this solicitation. Officers and regular
employees of CNY Financial or its affiliates may solicit proxies by mail,
telephone, telegraph and personal interview, for which no additional
compensation will be paid. In addition, Mr. Arthur Loomis of Northeast Capital &
Advisory, Inc., CNY Financial's financial advisor with respect to this
solicitation, may solicit proxies by mail, telephone, telegraph and personal
interview, for which no additional compensation will be paid in excess of
customary fees provided under the engagement as financial advisor. In addition,
CNY Financial has retained Regan and Associates to solicit proxies on its
behalf. It is anticipated that the cost to CNY Financial in connection with this
solicitation will be approximately $8,000.
Very truly yours,
/s/ Wesley D. Stisser, Jr.
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Wesley D. Stisser, Jr.
President and Chief Executive Officer
IMPORTANT
If your shares are held in "Street Name" only your bank or broker can
vote your shares, and only upon receipt of your specific instructions. Please
contact the person responsible for your account and instruct them to execute a
white proxy card as soon as possible.
If you have any questions or need further assistance in voting, please
call Steven A. Covert, Executive Vice President and Chief Financial Officer of
CNY Financial Corporation at (607) 756-8449, or our proxy solicitor,
Artic Regan, at (212) 587-3005.
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<TABLE>
<CAPTION>
SCHEDULE 1
ADDITIONAL INFORMATION ABOUT CNY FINANCIAL CORPORATION
DIRECTORS AND EXECUTIVE OFFICERS
OF CNY FINANCIAL CORPORATION
Shares of Direct or
Indirect Ownership of Shares of Direct or
Voting Securities of Indirect Ownership of
Name and Address Position and Office CNY Financial Voting-Securities of
of Beneficial Owner Currently Held Corporation CFF
------------------- ------------------- ----------- --------------------
Cortland Savings Bank
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<S> <C> <C> <C>
Wesley D. Stisser, Jr. President, CEO & Director 15,547 1
Joseph H. Compagni Director 22,000
Roland Fragnoli Director [15,000]
Edward E. Hatter, Jr. Director [19,600]
Patrick J. Hayes, M.D. Director [30,000]
Robert S. Kashdin, CPA Director 15,000
Harvey Kaufman Director 15,000
Donald P. Reed Director 15,000
Judith F. Riehlman Director 1,000
Terrance D. Stalder Director 10,040
F. Michael Stapleton Executive Vice President & 15,000
Chief Operating Officer
Steven A. Covert Executive Vice President & 5,000
Chief Financial Officer
Kerry D. Meeker Senior Vice President & 8,000
Senior Loan Officer
</TABLE>
CNY Financial Corporation
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Wesley D. Stisser, Jr. President, CEO & Director
Joseph H. Compagni Director
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<TABLE>
<CAPTION>
Shares of Direct or
Indirect Ownership of Shares of Direct or
Voting Securities of Indirect Ownership of
Name and Address Position and Office CNY Financial Voting-Securities of
of Beneficial Owner Currently Held Corporation CFF
------------------- ------------------- ----------- --------------------
<S> <C> <C> <C>
Patrick J. Hayes, M.D. Director
Robert S. Kashdin, CPA Director
Harvey Kaufman Director
Donald P. Reed Director
Terrance D. Stalder Director
</TABLE>
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PROXY
CORTLAND FIRST FINANCIAL CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR
THE SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 16, 1998
The undersigned hereby appoints David R. Alvord, Donald S. Ames, and
David J. Taylor, and each of them, as proxies, with full power of substitution,
to represent the undersigned at the Special Meeting of Shareholders of Cortland
First Financial Corporation (the "Company") to be held at the office of the
Company at 65 Main Street, Cortland, New York, on the 16th of November, 1998 at
4:00 p.m. and at any adjournment or adjournments thereof, and to vote all shares
of stock as designated on the reverse side, which the undersigned may be
entitled to vote at such Meeting, and with all other powers which the
undersigned would possess if personally present.
CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE REVERSE SIDE
[x] PLEASE MARK YOUR VOTES AS INDICATED IN THIS EXAMPLE.
CNY FINANCIAL RECOMMENDS A VOTE AGAINST THE MERGER
PROPOSAL I: Approval and Adoption of the Agreement and Plan of Reorganization
dated July 10, 1998 among Cortland First Financial Corporation,
Oneida Valley Bancshares, Inc., First National Bank of Cortland
and Oneida Valley National Bank, and the related Plan of Merger
FOR [_] AGAINST [_] ABSTAIN [_]
CNY FINANCIAL RECOMMENDS A VOTE AGAINST THE COMPENSATION PLAN
- -------------------------------------------------------------
PROPOSAL II: Approval of Alliance Financial Corporation 1998 Long Term
Incentive Compensation Plan
FOR [_] AGAINST [_] ABSTAIN [_]
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS INDICATED, THIS
PROXY WILL BE VOTED FOR PROPOSALS I AND II, AND IN THE DISCRETION OF THE PROXIES
ON ANY OTHER BUSINESS.
PLEASE SIGN AND DATE BELOW, AND RETURN
Signature(s) of Shareholder(s)_____________________ Date:____________,1998
NOTE: Please sign exactly as name appears above and where shares are held
jointly each holder should sign. When signing as attorney, administrator,
executor, trustee, guardian, or other fiduciary, please give your full title. If
signing for a corporation, please indicate your office.
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<PAGE>
[CNY Financial Corporation Letterhead]
November 12, 1998
Dear Cortland First Financial Corporation Shareholder:
At the upcoming Special Meeting of Cortland First Financial
Corporation ("CFF") Shareholders, scheduled for November 16, 1998 ("Special
Meeting"), CFF proposes, among other things, to merge with Oneida Valley
Bancshares, Inc. ("OVB"), a company located in Oneida, New York (the "Proposed
Merger").
We have read carefully the Joint Proxy Statement/Prospectus sent by CFF
and OVB to shareholders of CFF and OVB on or about September 28, 1998. CNY
Financial Corporation ("CNY Financial") opposes the Proposed Merger because in
our view:
(1) the terms of the Proposed Merger do not maximize CFF's value and
are not fair to CFF's public shareholders; and
(2) the Proposed Merger will not allow full enhancement of long-term
shareholder value.
We have read carefully the Joint Proxy Statement/Prospectus sent by CFF
and OVB to shareholders of CFF and OVB on or about September 28, 1998.
On November 4, 1998, CNY Financial delivered a confidential expression
of interest to CFF proposing a business combination between CFF and CNY
Financial, pursuant to which each shareholder of CFF would receive merger
consideration of $37.00, consisting of $18.50 per share in cash plus common
stock of CNY with an estimated market value of $18.50. Such merger consideration
represents a premium of $9.375 per share, or 33.9%, over the last reported trade
of CFF stock of $27.625 per share on November 5, 1998. CNY Financial's proposal
was to expire on November 9, 1998. Without any discussion with CNY Financial,
CFF issued a press release on November 6, 1998 rejecting CNY Financial's
proposal, in part because "the proposal from CNY is not definitive enough to
determine the number of shares which would be offered" and unspecified "other
contingencies and factors."
We urge you to read our enclosed Proxy Statement and vote AGAINST the
Proposed Merger with OVB.
Sincerely,
/s/ Wesley D. Stisser, Jr.
-------------------------------------
Wesley D. Stisser, Jr.
President and Chief Executive Officer
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