<PAGE> 1
Filed by Community Bank System, Inc. pursuant to Rule
425 under the Securities Act of 1933.
Subject Company: First Liberty Bank Corp.
Commission File No.: 0-13312
COMMUNITY BANK SYSTEM, INC.
Acquisition of First Liberty Bank Corp.
An Opportunity for Strategic Franchise
Expansion
Investor Presentation
November 30, 2000
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FORWARD-LOOKING INFORMATION &
SHAREHOLDER DISCLOSURE
This presentation contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 with respect to the anticipated
effects of the merger. The following factors, among others, could cause the
actual results of the merger to differ materially from Community Bank System,
Inc.'s ("CBU") expectations: the satisfaction of contingencies for closing the
merger, including regulatory and shareholder approval; the successful
integration of operations of the pending Citizens National Bank of Malone ($115
million in assets) and Community Bank merger as well as the subsequent
consolidation with First Liberty Bank Corp. ("FLIB"); competition; changes in
economic conditions, interest rates and financial markets; and changes in
legislation or regulatory requirements. CBU does not assume any duty to update
forward-looking statements.
Shareholders of CBU, FLIB and other investors are urged to read the proxy
statement/prospectus that will be included in the registration statement on Form
S-4 that CBU will file with the SEC in connection with the merger. It will
contain important information about CBU, FLIB, the merger, the persons
soliciting proxies in the merger and their interests in the merger and related
matters. After it is filed with the SEC, the proxy statement/prospectus will be
available free of charge on the SEC's web site (www.sec.gov).
[COMMUNITY BANK SYSTEM, INC. LOGO]
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COMMUNITY BANK SYSTEM
MANAGEMENT CONFERENCE CALL INFORMATION
The senior management teams of Community Bank System and First Liberty Bank
Corp. will present an overview of the First Liberty transaction and respond to
investor questions via conference call on November 30, 2000 at 10:00 a.m.
eastern standard time.
DIAL-IN NUMBER: 1-877-917-6902
PASS CODE: SANFORD BELDEN
An audio recording of the call will be available one hour after the call until
December 10, 2001.
DIAL-IN NUMBER: 1-888-568-0677
Both the call and presentation will be simultaneously broadcast over the
Internet by Vcall at:
http://www.vcall.com/NASApp/Vcall/EventPage?ID=56148
[COMMUNITY BANK SYSTEM, INC. LOGO]
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Table of Contents
1. Transaction Summary 8. Loan Profile
2. Strategic Rationale 9. Deposit Profile
3. Financial Rationale 10. Asset Quality
4. Franchise Pro Forma - 11. Noninterest Income
Pending Acquisitions Opportunity
5. Extension of Franchise 12. Transaction Pricing
6. County Deposit Market Multiples
Share 13. Pro Forma Analysis -
7. Competitor Loan and Earnings per Share
Deposit Growth 14. Pro Forma Analysis -
Financial Position
[COMMUNITY BANK SYSTEM, INC. LOGO]
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Transaction Summary
Transaction: Acquisition of First Liberty Bank Corp.
by Community Bank System, Inc.
Exchange Ratio: Fixed exchange ratio of 0.56 shares of CBU common
stock for each share of FLIB common stock
Transaction Value: $13.61 per FLIB share (a)
Total deal value (including options) of $86.7 million
Transaction multiples: Price to Book: 144%
Price to LTM EPS: 17.7x
Price to Forward EPS: 14.1x
Consideration: 100% stock; tax-free exchange; 19.9% lock-up
Accounting Treatment: Pooling of Interests
[COMMUNITY BANK SYSTEM, INC. LOGO]
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Transaction Summary
(continued)
Synergies:
Cost savings - $3.2 million pre-tax cost savings (approximately
23% of FLIB's estimated 2000 noninterest expense).
Revenue Growth - $3.2 million pre-tax revenue improvement from
restructuring FLIB's investment portfolio and
aligning its asset/liability management position to
CBU's profile.
One-time
restructuring charges: Estimated $10.0 million, pre-tax
Estimated $7.0 million, after-tax
[COMMUNITY BANK SYSTEM, INC. LOGO]
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Transaction Summary
(continued)
Management:
CBU - James A. Gabriel, Chairman
Sanford A. Belden, President & CEO
First Liberty B&T - William M. Davis, CEO
(PA Division of CBU) Steven R. Tokach, President & COO
Board Representation: 3 additional CBU Board seats
(to FLIB's 3 largest shareholders)
Inside Ownership: Increases from 10.5% at CBU to 18.1%
for the combined company
[COMMUNITY BANK SYSTEM, INC. LOGO]
<PAGE> 8
Transaction Summary
(continued)
Required Approvals: Regulatory
CBU Shareholders
FLIB Shareholders
Due Diligence: Completed (including credit and operations review)
Anticipated Closing: Second quarter of 2001
[COMMUNITY BANK SYSTEM, INC. LOGO]
<PAGE> 9
Strategic Rationale
- Opportunity for CBU to expand its strong franchise beyond New York State and
establish its footprint in Pennsylvania, enhancing CBU's growth prospects
- Acquire significant deposit share in a large, new market:
- #2 in Lackawanna county, PA
- #3 in important Scranton/Wilkes-Barre/Hazleton MSA (includes Lackawanna
county)
- Major additional source of core deposit funding capacity
- Increased access to faster growing markets, including commercial lending
and financial services demanded by households with a higher average income
[COMMUNITY BANK SYSTEM, INC. LOGO]
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Strategic Rationale
(continued)
- Strong opportunity for revenue growth through the
delivery of financial services not currently offered by
FLIB, including:
- Enhanced benefit plan administration
- Investment management
- Brokerage services
- Opportunity to leverage CBU'S decentralized management
strategy across FLIB's franchise
- Building relationships & operating with local decision-makers
- Retaining the local identity using an established brand name
[COMMUNITY BANK SYSTEM, INC. LOGO]
<PAGE> 11
Financial Rationale
- Improved tangible capital position
- 20% increase in CBU's ratio of tangible equity to assets from
3.85% to 4.61%
- 4% increase in CBU's Tier I leverage ratio from 5.87% to 6.09%
- 13% increase in CBU's tangible book value per share from $10.18
to $11.52
- Transaction is accretive within the first year of combining
operations
[COMMUNITY BANK SYSTEM, INC. LOGO]
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Financial Rationale
(continued)
- Conservative transaction assumptions
- Estimated 23% noninterest expense cost savings
- Relatively minor revenue improvements ($130,000) from financial services
sales in first year, with greater returns as expansion strategy takes hold
- Near-term benefit from restructuring FLIB's investment portfolio
($1.4 million); potential expansion of portfolio if 1.25% spread is
achieved ($1.63 million benefit)
- Strengthened asset quality through FLIB's ratios at
September 30, 2000 of:
- 0.28% nonperforming assets (NPA)
- 300% reserves/NPA coverage
- 0.08% net charge-offs/average loans (YTD)
[COMMUNITY BANK SYSTEM, INC. LOGO]
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FRANCHISE PRO FORMA - PENDING ACQUISITIONS
<TABLE>
<CAPTION>
PRO FORMA CBU/CITIZENS NATIONAL/
PRO FORMA FIRST LIBERTY
CBU/
AS OF SEPTEMBER 30, 2000. CBU CITIZENS NATIONAL AMOUNT % CHG VS CBU
----------- -----------------------
($ AMOUNTS IN MILLIONS)
<S> <C> <C> <C> <C>
Total Assets $ 1,974 $ 2,101 $ 2,874 46%
Total Loans 1,082 1,141 1,575 46%
Total Deposits 1,455 1,550 2,047 41%
Assets Under Management 1,300 1,300 1,600 23%
Branches/Customer Facilities 67 72 85 27%
ATMs 50 54 70 40%
Households Served 123,500 133,500 TBD TBD
TBD: To be determined.
</TABLE>
<PAGE> 14
EXTENSION OF FRANCHISE
[DEPICTED IS A MAP OF THE STATE OF NEW YORK AND THE COMMONWEALTH OF PENNSYLVANIA
INDICATING BANK BRANCH LOCATIONS FOR EACH OF COMMUNITY BANK SYSTEM, INC., THE
CITIZENS NATIONAL BANK OF MALONE AND FIRST LIBERTY BANK CORP. THESE BRANCHES
ARE LOCATED IN THE FOLLOWING COUNTIES IN NEW YORK: FRANKLIN, ST. LAWRENCE,
JEFFERSON, LEWIS, OSWEGO, ONEIDA, HERKIMER, ONONDAGA, WAYNE, ONTARIO, SENECA,
CAYUGA, YATES, TIOGA, STEUBEN, ALLEGANY, CATTARAUGAS AND CHAUTAUQUA; AND IN THE
FOLLOWING COUNTIES IN PENNSYLVANIA: LACKAWANNA AND LUZERNE.]
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LACKAWANNA COUNTY, PA DEPOSIT MARKET SHARE
<TABLE>
<CAPTION>
DEPOSITS MARKET
HOLDING COMPANY ($000) SHARE BRANCHES
------------------------ ------------ ------------- --------------
<S> <C> <C> <C>
PNC FINANCIAL SERVICES GROUP $ 705,276 22.2 % 19
FIRST LIBERTY BANK CORP.(a) 549,511 17.3 11
NBT BANCORP INC. 364,779 11.5 20
PENSECO FINANCIAL SERVICES 330,226 10.4 6
FIRST NATIONAL COMMUNITY BNCP 295,177 9.3 6
FIDELITY D&D BANCORP 236,628 7.4 9
FIRST UNION CORP. 175,798 5.5 9
CITIZENS SAVINGS ASSOCIATION 175,021 5.5 5
OLD FORGE BANK 132,700 4.2 2
COMM BANCORP INC. 108,455 3.4 5
NORTH PENN S&L ASSN. 61,199 1.9 3
M&T BANK CORP. 23,514 0.7 1
HONAT BANCORP INC. 10,303 0.3 1
SUMMIT BANCORP 8,838 0.3 1
MELLON FINANCIAL CORP. 3,305 0.1 3
------------ ------------- --------------
TOTAL $ 3,180,730 100.0% 101
============ ============= ==============
</TABLE>
(a) Balance is pro forma for the July, 2000 Mellon branch acquisitions.
Source: SNL Securities, as of June 30, 1999.
<PAGE> 16
LOAN AND DEPOSIT GROWTH:
CBU AND COMPETITORS IN FLIB MARKETPLACE (1995 - JUNE 30, 2000)
<TABLE>
<CAPTION>
6/30/00
TOTAL
ASSETS CAGR- CAGR-
NAME ($M) LOANS DEPOSITS
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
First Liberty Bank Corp. $ 645.0 8.4% 0.2%
LA Bank NA(a) 603.6 19.2% 16.8%
First National Community Bancorp 567.5 12.0% 10.8%
Fidelity Deposit and Discount Bank 485.4 20.6% 14.5%
Penseco Financial Services Corporation 446.5 2.8% 0.4%
Pioneer American Holding Company Corporation (b) 417.8 5.3% 0.5%
Comm Bancorp, Inc. 407.3 6.8% 3.0%
FLIB Marketplace (c) 3,573.1 14.9% 10.0%
CBU 1,931.0 15.3% 7.5%
</TABLE>
(a) Subsequently acquired by NBT Bancorp, Inc. in 8/99.
(b) Subsequently acquired by NBT Bancorp, Inc. in 12/99.
(c) Represents the aggregate CAGR of the companies listed above.
<PAGE> 17
LOAN PROFILE
CBU vs. FLIB
(in $ Millions or %)
<TABLE>
<CAPTION>
09/30/00 CBU (a) FLIB Pro Forma
-------- ------------------- --------------------- -------------------
$ % $ % $ %
--------- -------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Real estate - com'l, residential
mortgage, & construction 556 49% 322 74% 878 56%
Com'l, fin. and agricultural 215 19% 53 12% 268 17%
Installment & other 370 32% 59 14% 429 27%
(net of unearned discounts)
--------- -------- --------- --------- --------- --------
Total loans 1,141 100% 434 100% 1,575 100%
</TABLE>
(a) Pro forma with acquisition of Citizens National Bank of Malone, closing
1/26/01.
<PAGE> 18
DEPOSIT PROFILE
CBU vs. FLIB
(in $ Millions or %)
<TABLE>
<CAPTION>
09/30/00 CBU (a) FLIB Pro Forma
-------- ------------------- --------------------- -------------------
$ % $ % $ %
--------- -------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Noninterest bearing 265 17% 55 11% 320 16%
Interest bearing under $100K 1,121 72% 382 77% 1,503 73%
Interest bearing $100K or more 164 11% 60 12% 224 11%
------------------------------ --------- -------- --------- --------- --------- --------
Total deposits 1,550 100% 497 100% 2,047 100%
</TABLE>
(a) Pro forma with acquisition of Citizens National Bank of Malone, closing
1/26/01.
<PAGE> 19
EXCELLENT ASSET QUALITY
<TABLE>
<CAPTION>
AS OF AND FOR THE PERIOD ENDED
SEPTEMBER 30, 2000
------------------------- PRO
CBU FLIB FORMA
----------- ----------- -----------
<S> <C> <C> <C>
Non-performing Assets(a) / Assets 0.36% 0.28% 0.35%
Net Charge-offs / Average
Loans + Leases 0.49% 0.08% 0.28%
Loan Loss Reserve / Non-performing Assets(a) 206% 300% 225%
Loan Loss Reserve / Loans + Leases 1.35% 1.26% 1.33%
</TABLE>
(a) Non-performing asset balances include loans and leases 90 or more days past
due.
<PAGE> 20
Non-Interest Income Growth: CBU vs. FLIB
(as a Percent of Operating Revenues)
[DEPICTED IS A VERTICAL BAR GRAPH WHICH COMPARES THE NONINTEREST INCOME GROWTH
AS A PERCENT OF OPERATING REVENUE OF COMMUNITY BANK SYSTEM, INC. ("CBU") AND
FIRST LIBERTY BANK CORP. ("FLIB"). ON THE HORIZONTAL AXIS ARE THE YEARS 1995,
1996, 1997, 1998, 1999, AND THE YEAR 2000 UP TO 9/30/00. ON THE VERTICAL AXIS
ARE PERCENTAGE POINTS MARKED OFF IN 5% INCREMENTS. FOR THE YEAR 1995, CBU'S
GROWTH RATE WAS 12.1% AND FLIB'S WAS 4.9%. FOR THE YEAR 1996, CBU'S GROWTH RATE
WAS 13.6% AND FLIB'S WAS 6.5%. FOR THE YEAR 1997, CBU'S GROWTH RATE WAS 15.3%
AND FLIB'S WAS 8.6%. FOR THE YEAR 1998, CBU'S GROWTH RATE WAS 19% AND FLIB'S
WAS 8.1%. FOR THE YEAR 1999, CBU'S GROWTH RATE WAS 18.3% AND FLIB'S WAS 9.2%.
FOR THE YEAR 2000 UP TO 9/30/2000, CBU'S GROWTH RATE WAS 21.4% AND FLIB'S WAS
9.4%.]
[COMMUNITY BANK SYSTEM, INC. LOGO]
<PAGE> 21
TRANSACTION PRICING MULTIPLES
<TABLE>
<CAPTION>
IMPLIED COMPARABLE COMPARABLE
CBU/FLIB TRANSACTIONS: TRANSACTIONS:
PRICE AS A MULTIPLE OF:(a) MULTIPLES NORTHEASTERN PA(b) NY, NJ, PA(c)
------------ ----------------------- ------------------
<S> <C> <C> <C>
Book Value(%) 143.9 173.9 216.0
Tangible Book Value(%) 155.1 184.2 225.2
LTM EPS(x) 17.7 21.0 18.5
Forward EPS(x) 14.1 -- --
Deposits(%) 17.4 26.7 24.1
Assets(%) 13.4 19.1 19.1
Tangible Book Premium to Deposits(%) 6.2 13.0 14.7
</TABLE>
(a) Based on CBU's closing price of $24.30 on 11/28/00.
(b) Based on transactions in northeastern PA counties, including Bradford,
Luzerne, Carbon, Lackawanna and Wayne counties that have been announced
since 8/1/99; five deals in total.
(c) Based on transactions in New York, New Jersey and Pennsylvania announced
since 12/1/99; 20 deals in total.
<PAGE> 22
Proforma Analysis-Earnings per Share
(AS IF TRANSACTION CLOSED 1/1/01)
<TABLE>
<CAPTION>
ESTIMATED 2001(a)
----------------------
PER
SHARE-
($ and shares in '000s) DOLLARS NOMINAL
-------- -------
<S> <C> <C>
CBU Earnings $ 24,122 $ 3.00
FLIB Earnings 6,162
After-tax Cost Savings 2,250
After-tax Revenue Enhancements(b) 2,214
-------- -------
Pro Forma Earnings(c) $ 34,748 $ 2.99
======== =======
Pro Forma Diluted Shares $ 11,629
EPS Accretion (Dilution) -0.3%
EPS Accretion (Dilution) by 4Q 2001 0.0%
</TABLE>
(a) First Call consensus earnings estimates used for 2001 CBU projections.
Internal estimates used for FLIB projections.
(b) Primarily includes impact of investment restructuring, additional
investments, and additional financial services fees.
(c) Excludes one-time pre-tax non-recurring charges of $10.0 million
($7.0 million after-tax).
<PAGE> 23
Pro Forma Analysis-Financial Position
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 2000
------------------------
CBU
($ in millions) CBU(a) FLIB PRO FORMA(b) % CHANGE
--------- --------- ------------ --------
<S> <C> <C> <C> <C>
ACCOUNT BALANCES:
Total Assets $ 2,101 $ 647 $ 2,874 37%
Total Loans 1,141 434 1,575 38%
Total Investment Securities 766 169 1,065 39%
Intangible Assets 65 4 69 7%
Total Deposits 1,550 497 2,047 32%
Total Borrowings 381 86 597 57%
Shareholders' Equity 146 60 202 38%
</TABLE>
(a) Pro forma with acquistion of Citizens National Bank of Malone, closing
1/26/01.
(b) As of 12/31/00 and includes the impact of restructuring charges and
additional investments.
<PAGE> 24
Pro Forma Analysis-Financial Position
(continued)
<TABLE>
<CAPTION>
($ in millions) AS OF SEPTEMBER 30, 2000
------------------------ CBU
CBU(a) FLIB PRO FORMA(b) % CHANGE
---------- ---------- --------- --------
<S> <C> <C> <C> <C>
ALCO POSITION & CAPITAL STRUCTURE:
Investments/Earning Assets 40.2% 28.0% 40.3% 0.1%
Borrowings/Earning Assets 20.0% 14.3% 22.6% 2.6%
Equity/Assets 6.94% 9.31% 7.02% 1.3%
Tangible Equity/Assets 3.85% 8.64% 4.61% 19.9%
PER SHARE ANALYSIS:
Book Value per Share $ 18.35 $ 9.46 $ 17.54 -4.4%
Tangible Book Value per Share $ 10.18 $ 8.77 $ 11.52 13.2%
</TABLE>
(a) Pro forma with acquisition of Citizen National Bank of Malone, closing
1/26/01.
(b) As of 12/31/00 and includes the impact of restructuring charges and
additional investments.
<PAGE> 25
Community Bank System, Inc.
Acquisition of First Liberty Bank Corp.
An Opportunity for Strategic Franchise
Expansion
Questions?
