SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report: July 14, 1995
(Date of earliest event reported)
COMMUNITY BANK SYSTEM, INC.
(Exact name of registrant as specified in charter)
Delaware 0-11716 16-1213679
(State or other Jurisdiction (Commission (IRS Employer
of incorporation) File Number Identification Number
5790 Widewaters Parkway, DeWitt, New York 13214
(Address of principal executive offices) (Zip Codes)
Registrant's telephone number,
including area code: (315) 445-2282
Not Applicable
(Former name or former address, if changed since last report)
This report contains 6 pages
Exhibit index located at page 6
<PAGE>
Item 2. Acquisition or Disposition of Assets
On December 6, 1994, Community Bank System, Inc., DeWitt, New
York ("Registrant"), a bank holding company owning 100 percent of
the outstanding stock of Community Bank, N.A. ("Bank") and the Bank
entered into a Purchase and Assumption Agreement ("the Agreement")
with The Chase Manhattan Bank, N.A. ("Chase"). The Agreement
provides for the acquisition of certain assets and the assumption
of certain liablities by the Bank ("the Acquisition") relating to
the 15 Chase branches located in Norwich, Watertown (two)
Boonville, New Hartford, Utica, Skaneateles, Geneva, Pulaski,
Seneca Falls, Hammondsport, Canton, Newark (two) and Penn Yan, New
York ("the Chase Branches").
On June 30, 1995, and July 10, 1995, the Registrant raised a
total of approximately $27.5 million in capital (net of expenses)
through the issuance of 862,500 shares of its $1.25 par value
common stock priced at $24.25 and 90,000 shares of its $1.00 par
value, $100.00 stated value, 9% cumulative perpetual preferred
stock, pursuant to the Registrant's Registration Statement on Form
S-2 (No. 33-58539) ("the Offerings"). All of the $27.5 million net
proceeds of the stock issuance was contributed to the Bank as
capital in anticipation of the Acquisition in order for the Bank
and the Registrant to maintain adequate capitalization pursuant to
applicable regulatory capital guidelines.
On July 14, 1995, the Acquisition closed using a preliminary
settlement based on deposit and loan balances and a premium payment
of 8.25% on these deposits as of June 30, 1995. The Purchase and
Assumption Agreement provides for a final settlement to occur
within 60 days of the closing to reflect loan and deposit balances
as of the closing date. It is not anticipated that the final
settlement adjustments will be material. Based on the preliminary
settlement information as of June 30, 1995, the Registrant's resulting
pro forma Tier I leverage ratio as of that date would have been 5.24%.
At the closing, the Bank assumed deposits, accrued interest
and other liabilities totalling approximately $390.9 million. In
addition, the Bank acquired certain small business and consumer
loans totalling approximately $15.3 million, certain real property,
furniture and equipment related to the branches for a purchase
price of approximately $5.1 million and currency, coin and other
assets totalling approximately $5.5 million. After paying a
deposit premium of 8.25% on the deposits assumed totalling
approximately $32.2 million, the Bank received approximately $332.8
million in cash from Chase as consideration for the net deposit
liabilities assumed.
The Chase Branches and deposits acquired in the Acquisition
will be incorporated into the Bank's existing branch network. The
Bank may, however, sell certain branch locations (including certain
of the Chase Branches) and related deposits consistent with its
overall business objectives. As of the date of this report, the
Registrant has had substative discussions with potential
purchasers, although no agreements to sell any branch locations or
related deposits have been executed.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(a) Financial Statements of Business Acquired
Not applicable.
(b) Pro Forma financial information
The following Pro Forma financial information is filed
herewith:
- Community Bank System, Inc. Pro Forma Consolidated
Statement of Condition as of March 31, 1995.
The following unaudited pro forma consolidated balance sheet has been
derived from the historical balance sheet of the Registrant, adjusted to
give effect to the acquisition of selected assets and the assumption of
selected liabilities in connection with the Acquisition, repayment of
borrowings, and the issuance and sale of common stock and preferred stock
through the Offerings as though such transactions had occurred on March 31,
1995. The unaudited pro forma consolidated balance sheet is not necessarily
indicative of the financial position that would have been achieved had the
transactions reflected therein occurred on such date. The pro forma
adjustments with respect to the Acquistion reflect March 31, 1995 balances
which are in accordance with the terms of the Purchase and Assumption
Agreement and changed prior to the closing date in accordance with the terms
of the Purchase and Assumption Agreement. The unaudited pro forma
consolidated balance sheet also does not purport to project the balance sheet
of the Registrant as of the period shown or for any future period.
<PAGE>
PRO FORMA CONSOLIDATED STATEMENT OF CONDITION
Acquisition and Capitalization as if they occurred on
March 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Adjustments
Offerings (2) Pro Forma
As Reported Acquisition (1) and Other Total
<S> <C> <C> <C> <C>
ASSETS
Cash, cash equivalents and due from banks $50,722 $385,258 (3) ($133,032) $302,948
Investment securities (approximate market
value of $391,124) 387,177 387,177
Loans 519,253 25,235 544,488
Less: Unearned discount 23,872 23,872
Reserve for possible loan losses 6,424 6,424
- -------------------------------------------------------------------------------------------------------------------
Net loans 488,957 25,235 514,192
Premises and equipment,net 10,652 5,314 15,966
Accrued interest receivable 8,007 160 8,167
Intangible assets,net 5,987 37,197 (4) 43,184
Other assets 8,778 8,778
- -------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $960,280 $453,164 ($133,032) $1,280,412
===================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits
Noninterest bearing $101,168 $41,183 $142,351
Interest bearing 621,213 409,693 1,030,906
- -------------------------------------------------------------------------------------------------------------------
Total deposits 722,381 450,876 1,173,257
Federal funds purchased 43,765 (43,765)(5) 0
Term borrowings 115,550 (115,000)(5) 550
Accrued interest and other liabilities 9,621 2,288 (6) 11,909
- -------------------------------------------------------------------------------------------------------------------
Total liabilities 891,317 453,164 (158,765) 1,185,716
- -------------------------------------------------------------------------------------------------------------------
Shareholders' equity:
Preferred Stock 9,000 9,000
Common stock 3,485 938 4,423
Surplus 14,885 15,795 30,680
Undivided profits 51,768 51,768
Unrealized net gains (losses) on available-
for-sale securities (1,172) (1,172)
Shares issued under employee stock plan-unearned (3) (3)
- -------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 68,963 25,733 94,696
- -------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $960,280 $453,164 ($133,032) $1,280,412
===================================================================================================================
</TABLE>
The accompanying notes are an integral part of the pro forma consolidated
financial statements.
<PAGE>
Notes to Pro Forma Consolidated Statement of Condition (Unaudited)
March 31, 1995
(1) Reflects acquisition of Chase branches after giving effect to
consummation of the transaction and related purchase accounting adjustments
by the Company as if they occurred on March 31, 1995.
(2) Reflects the Common Stock offering of 750,000 shares at $25.50 per
share; the Preferred Stock Offering of 90,000 shares at $100.00 per share,
less estimated expenses of $2.4 million.
(3) Consideration received from Chase in connection with the Acquisition
in accordance with the agreement.
(4) Includes core deposit value of $18.2 million to be amortized over 10
years using an accelerated method, and goodwill of $19.0 million to be
amortized on a straight line basis over 25 years.
(5) Reflects repayment of FHLB borrowings, except $550,000 3-year term
borrowing scheduled to mature in 1996.
(6) Reflects accrued interest payable of $1,957,520 and postretirement
benefit obligations other than pensions of $331,200.
(c) Exhibits
Exhibit Number Description of Exhibit
2.1 Purchase and Assumption Agreement
dated December 6, 1994 among the
Bank, the Registrant and Chase,
previously filed with the Commission
on April 11, 1995 as Exhibit 10.01
to the Registrant's Registration
Statement on Form S-2 (no. 33-
58539), and incorporated herein by
reference.
2.2 First Amendment dated April 4, 1995
to Purchase and Assumption Agreement
among the Bank, the Registrant and
Chase, previously filed with the
Commission on April 11, 1995 as
Exhibit 10.02 to the Registrant's
Registration Statement on Form S-2
(no. 33-58539), and incorporated
herein by reference.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
Date: July 28, 1995 Commuity Bank System, Inc.
By: /s/ David G. Wallace
Treasurer
