-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OgIS7DRvHqoYfQd7bImO0N1I+6uQLktOj/qyP3EyngNDU0rKhJ84uP5GPI4I4XBU DWN92ibmcFbZOZMtSl+0wg== 0000950123-00-011117.txt : 20001201 0000950123-00-011117.hdr.sgml : 20001201 ACCESSION NUMBER: 0000950123-00-011117 CONFORMED SUBMISSION TYPE: 425 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20001130 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: FIRST LIBERTY BANK CORP CENTRAL INDEX KEY: 0000741562 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 232275242 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 425 SEC ACT: SEC FILE NUMBER: 000-13312 FILM NUMBER: 781035 BUSINESS ADDRESS: STREET 1: 645 WASHINGTON AVE STREET 2: P O BOX 39 CITY: JERMYN STATE: PA ZIP: 18433-0039 BUSINESS PHONE: 7178766500 MAIL ADDRESS: STREET 1: 645 WASHINGTON AVE STREET 2: P O BOX 39 CITY: JERMYN STATE: PA ZIP: 18433-0039 FORMER COMPANY: FORMER CONFORMED NAME: FIRST JERMYN CORP DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: COMMUNITY BANK SYSTEM INC CENTRAL INDEX KEY: 0000723188 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 161213679 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 425 BUSINESS ADDRESS: STREET 1: 5790 WIDEWATERS PKWY CITY: DEWITT STATE: NY ZIP: 13214 BUSINESS PHONE: 3154452282 MAIL ADDRESS: STREET 1: 5790 WIDEWATERS PARKWAY CITY: DEWITT STATE: NY ZIP: 13214 425 1 y43151e425.txt COMMUNITY BANK SYSTEM, INC. 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 2 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] 3 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] 4 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] 5 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] 6 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] 7 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] 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] 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] 10 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] 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] 12 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 ($1.63 million benefit) - - Strengthened asset quality through FLIB's ratios at September 30, 2000 of: - 0.28% nonperforming assets (NPA) - 300% reserves/NPA coverage - 0.08% net charge-offs/average loans (YTD) [COMMUNITY BANK SYSTEM, INC. LOGO] 13 FRANCHISE PRO FORMA - PENDING ACQUISITIONS
PRO FORMA CBU/CITIZENS NATIONAL/ PRO FORMA FIRST LIBERTY CBU/ AS OF SEPTEMBER 30, 2000. CBU CITIZENS NATIONAL AMOUNT % CHG VS CBU ----------- ----------------------- ($ AMOUNTS IN MILLIONS) 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.
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.] 15 LACKAWANNA COUNTY, PA DEPOSIT MARKET SHARE
DEPOSITS MARKET HOLDING COMPANY ($000) SHARE BRANCHES - ------------------------ ------------ ------------- -------------- 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 ============ ============= ==============
(a) Balance is pro forma for the July, 2000 Mellon branch acquisitions. Source: SNL Securities, as of June 30, 1999. 16 LOAN AND DEPOSIT GROWTH: CBU AND COMPETITORS IN FLIB MARKETPLACE (1995 - JUNE 30, 2000)
6/30/00 TOTAL ASSETS CAGR- CAGR- NAME ($M) LOANS DEPOSITS - ---------------------------------------------------------------------------------------------------------- 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%
(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. 17 LOAN PROFILE CBU vs. FLIB (in $ Millions or %)
09/30/00 CBU (a) FLIB Pro Forma - -------- ------------------- --------------------- ------------------- $ % $ % $ % --------- -------- --------- --------- --------- -------- 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%
(a) Pro forma with acquisition of Citizens National Bank of Malone, closing 1/26/01. 18 DEPOSIT PROFILE CBU vs. FLIB (in $ Millions or %)
09/30/00 CBU (a) FLIB Pro Forma - -------- ------------------- --------------------- ------------------- $ % $ % $ % --------- -------- --------- --------- --------- -------- 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%
(a) Pro forma with acquisition of Citizens National Bank of Malone, closing 1/26/01. 19 EXCELLENT ASSET QUALITY
AS OF AND FOR THE PERIOD ENDED SEPTEMBER 30, 2000 ------------------------- PRO CBU FLIB FORMA ----------- ----------- ----------- 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%
(a) Non-performing asset balances include loans and leases 90 or more days past due. 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] 21 TRANSACTION PRICING MULTIPLES
IMPLIED COMPARABLE COMPARABLE CBU/FLIB TRANSACTIONS: TRANSACTIONS: PRICE AS A MULTIPLE OF:(a) MULTIPLES NORTHEASTERN PA(b) NY, NJ, PA(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
(a) Based on CBU's closing price of $24.30 on 11/28/00. (b) Based on transactions in northeastern PA counties, including Bradford, Luzerne, Carbon, Lackawanna and Wayne counties that have been announced since 8/1/99; five deals in total. (c) Based on transactions in New York, New Jersey and Pennsylvania announced since 12/1/99; 20 deals in total. 22 Proforma Analysis-Earnings per Share (AS IF TRANSACTION CLOSED 1/1/01)
ESTIMATED 2001(a) ---------------------- PER SHARE- ($ and shares in '000s) DOLLARS NOMINAL -------- ------- 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%
(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 ($7.0 million after-tax). 23 Pro Forma Analysis-Financial Position
AS OF SEPTEMBER 30, 2000 ------------------------ CBU ($ in millions) CBU(a) FLIB PRO FORMA(b) % CHANGE --------- --------- ------------ -------- 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%
(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. 24 Pro Forma Analysis-Financial Position (continued)
($ in millions) AS OF SEPTEMBER 30, 2000 ------------------------ CBU CBU(a) FLIB PRO FORMA(b) % CHANGE ---------- ---------- --------- -------- 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%
(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. 25 Community Bank System, Inc. Acquisition of First Liberty Bank Corp. An Opportunity for Strategic Franchise Expansion Questions? -----END PRIVACY-ENHANCED MESSAGE-----