Community Bank System, Inc. (NYSE:CBU) entered into letter of intent to acquire Steuben Trust Corporation (OTCPK:SBHO) for approximately $110 million on August 16, 2019. Community Bank System, Inc. (NYSE:CBU) entered into a definitive agreement to acquire Steuben Trust Corporation (OTCPK:SBHO) for approximately $110 million on October 18, 2019. Under the terms of the agreement, Steuben will receive a combination of $12.60 in cash and 0.8054 shares of Community common stock for each share of common stock they own. Upon closing, Steuben Trust Corporation shall be merged with and into Community Bank System, Inc. with Community Bank System, Inc. as the surviving corporation. Steuben Trust Company, the wholly-owned banking subsidiary of Steuben Trust Corporation, will become a direct, wholly-owned subsidiary of Community Bank System. Each Steuben stock option outstanding and unexercised immediately prior to the effective time of the Merger, whether or not then vested or exercisable, will be cancelled and automatically converted into the right to receive a cash amount equal to the aggregate number of Steuben shares subject to such option multiplied by the excess of the value of the merger consideration over the exercise price of such option, less any applicable withholding. All of the Directors of Steuben and certain principal shareholders of Steuben have entered into voting agreements with Community Bank System requiring them to vote all of their shares in favor of adoption of the merger agreement. These shareholders hold approximately 25.8% of the outstanding shares of Steuben common stock. Upon termination, Steuben will be obligated to pay Community a termination fee of $4.3 million.

The transaction is subject to customary closing conditions, including approval by the shareholders of Steuben, authorization for listing on the New York Stock Exchange of the shares of Community common stock, the effectiveness of the Registration Statement, and all applicable notice or waiting periods expiring, the receipt of required regulatory approvals, including the approval of the Office of the Comptroller of the Currency and the Federal Reserve Board. Each party's obligation to complete the merger is also subject to certain additional customary conditions, including the receipt by such party of an opinion from its counsel to the effect that the Merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986 and Steuben having obtained all consents of third parties. The transaction has been unanimously approved by the Boards of Directors of both Community and Steuben. Steuben will hold a special meeting of its shareholders on March 3, 2020. On March 3, 2020, shareholders of Steuben approved the transaction. As of May 13, 2020, the transaction received the regulatory approvals from its primary regulators, the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York, as well as the approval from the New York State Department of Financial Services. The merger is expected to close in the second quarter of 2020. As of May 13, 2020, the transaction is expected to close on June 12, 2020. However, due to the novel Coronavirus (“COVID-19”) crisis, the closing date of the transaction may be delayed due to uncertainty. Community expects the transaction to be approximately $0.08 - $0.09 per share accretive to its first full year of GAAP earnings and $0.09 to $0.10 per share accretive to cash earnings, excluding one-time transaction costs.

D.A. Davidson & Co. acted as the financial advisor and Andrew Alin, Scott Cammarn, Mark Chorazak, David Teigman and Linda Swartz of Cadwalader, Wickersham & Taft LLP acted as the legal advisors to Community Bank System. Eric R. Tesche and Ryan J. Walker of PNC FIG Advisory, Inc. acted as the financial advisors and fairness opinion provider and Kenneth J. Rollins of Pillar+Aught acted as the legal advisor to Steuben. Steuben has agreed to pay PNC FIG Advisory a fee for its services currently estimated to be approximately $0.96 million, a portion of which fee became payable upon presentation of PNC's opinion and a significant portion of PNC's fee currently estimated to be approximately $0.84 million is contingent upon the closing of the merger. In addition, portions of PNC's fee became payable after the signing of PNC's engagement agreement and the execution of an exclusivity agreement between Community Bank System and Steuben, and a portion of PNC's fee is payable upon the mailing of Proxy Statement/Prospectus.

Community Bank System, Inc. (NYSE:CBU) completed the acquisition of Steuben Trust Corporation (OTCPK:SBHO) on June 12, 2020. Under the terms of the merger agreement, Steuben merged with and into Community Bank System, with Community Bank System being the surviving corporation of the merger, and Steuben Trust Company, a wholly owned subsidiary of Steuben, merged with and into Community Bank, N.A., a wholly owned subsidiary of Community Bank System, with Community Bank continuing as the surviving bank. The customers and employees of Steuben Trust will join Community .