SCHEDULE 14A INFORMATION
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CORTLAND FIRST FINANCIAL CORPORATION
(Name of Registrant as Specified In Its Charter)
CNY FINANCIAL CORPORATION
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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PRESS RELEASE
CONTACT: STEVEN A. COVERT
EXECUTIVE VICE PRESIDENT AND CFO
607-756-8449
CNY FINANCIAL CONFIRMS OFFER TO BUY CORTLAND FIRST FINANCIAL, REAFFIRMS INTEREST
IN ONEIDA VALLEY BANCSHARES, AND WOULD CONSIDER ALL-CASH OFFER.
Cortland, N.Y., Nov. 9, 1998 -- CNY Financial Corporation ("CNY") confirmed
today that, as the second part of its overall acquisition strategy, it had
proposed on November 4, 1998 to Cortland First Financial Corporation ("CFF"), in
a confidential expression of interest, a business combination between CFF and
CNY pursuant to which each shareholder of common stock of CFF would receive
merger consideration of $37.00 per share, consisting of $18.50 per share in cash
plus shares of common stock of CNY with an estimated market value of $18.50.
Wesley D. Stisser, President and CEO of CNY, said that in its November 4, 1998
letter to CFF, CNY had offered to structure an in-market business combination
between CNY and CFF, which would be in the best interest of CFF's shareholders,
employees and community and would provide CFF shareholders with greater
opportunities to recognize enhanced shareholder value than under the terms of
CFF's proposed merger of equals with Oneida Valley Bancshares, Inc. ("Oneida").
Under CNY's proposal, CNY would acquire all outstanding shares of CFF for merger
consideration having a value of $37.00 per share of CFF. According to Mr.
Stisser, "this consideration represents an extremely attractive opportunity for
all CFF shareholders." Merger consideration of $37.00 per share of CFF stock
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. The CNY offer was
conveyed to CFF subject to the negotiation of an acceptable definitive agreement
containing customary terms and conditions, CFF not consummating the proposed
merger of equals with Oneida and customary due diligence.
CNY's offer to CFF was to expire November 9, 1998. Without any discussion with
CNY, CFF and Oneida issued press releases on November 6, 1998 rejecting CNY's
proposals, 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." In light of CFF's and Oneida's responses, CNY has
decided (1) to extend its offer to acquire CFF for $37.00 per share ($18.50 per
share in cash plus shares of common stock of CNY with an estimated market value
of $18.50) and make such offer known to CFF shareholders, and (2) reaffirm its
offer (which was described in CNY's November 4, 1998 press release) to acquire
Oneida for $67.00 per share ($33.50 per share in cash plus shares of common
stock of CNY with an estimated market value of $33.50).
Mr. Stisser said that "CNY's offers should be very attractive to CFF's and
Oneida's shareholders. While it is unfortunate that management and the Boards of
CFF and Oneida have refused to even meet with us to discuss constructively what
terms are appropriate, their comments suggest that we consider structuring our
proposals as all-cash offers, which we are delighted to pursue. CNY is prepared
to meet immediately with representatives of Oneida and CFF to negotiate
definitive
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purchase agreements. We have adequate capital to consider the interests of
shareholders of CFF and Oneida. I wonder, however, whether Oneida and CFF
shareholders would want an all-cash transaction."
Mr. Steven A. Covert, Executive Vice President and Chief Financial Officer of
CNY, noted that "all-cash offers could be made for CFF or Oneida, if
shareholders really want all cash and an immediate capital gains tax bill."
Oneida and CFF shareholders are encouraged to call Mr. Stisser or Mr. Covert at
1-800-934-2274 to express their opinion as to the extent of the cash component
of the offers.
Furthermore, Mr. Covert added, "CFF's press release was clear in one respect,
CFF is recommending a proposed transaction where its shareholders receive no
premium and CFF has rejected even exploring the proposed transaction where CFF's
shareholders would receive a substantial premium. The same is true for Oneida in
rejecting without even exploring the proposed CNY transaction at $67.00 per
share. I question how the Boards of CFF and Oneida can defend this behavior in
light of traditional director fiduciary responsibilities to shareholders."
Mr. Stisser said "CNY is prepared to structure a business combination with CFF
or Oneida, or both CFF and Oneida." On the prospect of completing both business
combinations, he stated that "the CNY proposals will enable shareholders of each
of CFF and Oneida to receive a substantial premium over the estimated merger
consideration to be provided in their proposed merger of equals. Moreover, they
could have a continuing equity interest in a more economically efficient,
diversified, multi-bank holding company committed to serving both the Oneida and
Cortland communities."
Mr. Stisser observed that the stock market for CFF and Oneida apparently
disagrees with management and the Boards of both banks. CFF's stock closed
Friday at $32.50, up 17.6% for the day on heavy volume of 8,700 shares for CFF
(3,710% of average shares traded according to SNL Securities). Similarly, Oneida
traded up to $56.00 per share on Thursday, before falling back to $53.50 per
share on Friday on 300 shares traded. Mr. Stisser added, "it would appear that
sophisticated investors believe our offers are attractive to shareholders of
Oneida and CFF."
In confirming CNY's offer, Mr. Stisser remarked, "the strategy of combining
approximately $467 million in assets in quality commercial bank franchises, one
in-market and one in a contiguous upstate market, with our franchise should be a
spectacular success. Even CFF and Oneida management agree on this point, as they
believe the CFF and Oneida combination is compelling. We are simply willing to
pay shareholders more than CFF and Oneida are for the privilege of this three
way combination. The combination of CFF and CNY greatly strengthens our position
in the Cortland area, while the addition of Oneida will tap a market which
offers significant population growth since 1990. Most importantly, CNY
transcends itself into a consolidated entity which has a much greater emphasis
on non-interest income. Oneida offers considerable data processing strength,
serving three independent banks at present. We think this can be expanded.
Additionally, Oneida 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."
Mr. Covert also stressed that the three banks, when combined, would
substantially improve CNY's efficiency ratio. He also notes that these savings
levels cause the offers for CFF and Oneida to be accretive to stated GAAP
earnings per share by year two. Moreover, cash earnings per share are
immediately accretive by over 70%. Finally, Mr. Covert stressed that no revenue
enhancements
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comprise any of the breakeven stated earnings accretion by year two, although
such opportunities clearly exist.
CNY urges CFF shareholders to vote "NO" to the proposed merger with Oneida if
they have not already executed and returned the CFF proxy card. If a CFF
shareholder has already executed and returned CFF's proxy card, then in order to
effectively revoke such proxy before it is voted, 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 Oneida, with David R. Alvord at Cortland
First Financial Corporation, 65 Main Street, Cortland, New York 13045
prior to a vote being taken on the merger at the special meeting of
CFF shareholders on November 16, 1998 (the later dated proxy card must
be received by CFF before the special meeting, so be sure to send it
as soon as possible if it is mailed);
2. File a written revocation of the proxy card, and vote "NO" to the
proposed merger with CFF, with David R. Alvord at CFF; or
3. Attend the special meeting of CFF shareholders on November 16, 1998,
request a revocation of proxy card form, or a new proxy card, from
CFF, and vote "NO" to the proposed merger with Oneida, and file the
new proxy card or the voting ballot with CFF at the special meeting,
thereby voting "NO" in person.
Keep in mind that the presence of a shareholder at the CFF special meeting will
not, in and of itself, revoke a shareholder's previously submitted proxy.
Additional blank proxy cards are available from CFF upon request. If CFF
shareholders have difficulty in obtaining a new proxy card from CFF on a timely
basis, please call Steven A. Covert, Executive Vice President and Chief
Financial Officer of CNY at (607)-756-8449, or Sandy Samson, Corporate Secretary
of CNY, at (607)-758-2216 and CNY will assist.
CNY was recently formed as part of the conversion from mutual to stock form of
organization of Cortland Savings Bank. The offers to CFF and Oneida are
consistent with its intended use of conversion proceeds disclosed in the
prospectus for the stock conversion and subscription offering.
CNY Financial Corporation is a publicly traded bank holding company
headquartered in Cortland, New York. The Company serves its community through
its wholly-owned subsidiary, Cortland Savings Bank. The Bank operates three full
service offices in Cortland County and a loan production
office in Ithaca, Tompkins County.
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A joint proxy statement/prospectus relating to the proposed
merger between Cortland First Financial Corporation ("CFF") and Oneida Valley
Bancshares, Inc. ("OVB") was filed by CFF with the Securities and Exchange
Commission ("Commission"), was sent by CFF to stockholders of CFF and was sent
by OVB to stockholders of OVB on or about September 28, 1998. A form of proxy
statement opposing the proposed merger of CFF and OVB will be filed by CNY
Financial Corporation ("CNY Financial") with the Commission and will be sent to
stockholders of CFF promptly after receiving clearance from the Commission and
obtaining CFF's stockholders list and related information. The participants in
the solicitation of proxies by CNY Financial opposing the merger of CFF and OVB
include directors, executive officers and certain employees of CNY Financial.
Information regarding current directors and executive officers of CNY Financial
is contained in the prospectus, dated August 12, 1998, in connection with the
offering of common stock of CNY Financial and the conversion of Cortland Savings
Bank from mutual to stock form. Certain of the participants may own small
amounts of CFF common stock.
OVB is not a reporting company under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the securities of OVB are not
registered under Section 12 of the Exchange Act. Accordingly, no form of proxy
statement soliciting proxies of OVB stockholders in opposition to the proposed
merger of CFF and OVB is required to be filed with the Commission or sent to OVB
stockholders by CNY Financial.
