Market Overview

Community Bank System to Enhance Capital District Presence with Acquisition of Kinderhook Bank Corp.


Community Bank System, Inc. ("Community Bank System") (NYSE:CBU) and
Kinderhook Bank Corp. (OTCQB:NUBK) today announced that they have
entered into a definitive agreement pursuant to which Community Bank
System will acquire Kinderhook Bank Corp., parent company of National
Union Bank of Kinderhook ("Kinderhook Bank") in an all cash transaction
representing total consideration valued at approximately $93.4 million.
The transaction has been unanimously approved by the boards of directors
of both companies.

This press release features multimedia. View the full release here:

This transaction will provide natural market extension for both
institutions, joining two high-quality, low-risk franchises with long
histories of customer service, as well as a commitment to their
communities. Kinderhook Bank provides Community Bank, N.A. a solid
operating presence in the Capital District of Upstate New York, with
total assets of nearly $640 million, deposits of $560 million and 11
banking offices across a five county area.

Under the terms of the agreement, shareholders of Kinderhook Bank Corp.
will receive consideration per share of common stock equal to $62.00 in
cash. This price represents, assuming full conversion of preferred
equity, approximately 193% of Kinderhook Bank Corp.'s tangible book
value as of September 30, 2018.

"Our acquisition of Kinderhook Bank Corp. will extend our banking
footprint into the attractive Capital District markets which are similar
to the other Upstate New York markets in which we successfully compete,"
said Mark E. Tryniski, President and Chief Executive Officer of
Community Bank System. "Our move to establish a broader and deeper
banking presence in this region reflects the relative economic,
demographic and geographic attractiveness of the area. This investment
also complements the financial commitment we made in 2018 when we added
an experienced commercial banking team focused on the greater Albany
area. We're pleased with the results of this activity to date and
confident that the Kinderhook franchise will further support our efforts
to grow our retail and business banking presence in the Capital
District. Kinderhook Bank has an impressive 165-year history of service
to its customers, its communities and its shareholders, values which
align closely with those of Community Bank. Equally important, our
institutions have similar organizational values and cultures that
respect and value the people that contribute to our success. We are
delighted to welcome the Kinderhook Bank team to the Community Bank
organization and look forward to the future of the combined company."

"The shareholders, customers and associates of Kinderhook Bank should
benefit from our merger with Community Bank System, a financially strong
and effectively managed institution," said John A. Balli, President and
Chief Executive Officer of Kinderhook Bank Corp. "Our customers will
continue to receive the highly personalized service they expect, while
having access to a greatly expanded set of products and services
available from the larger combined organization with an extensive branch
network. We are pleased that all of the Kinderhook Bank branch offices
will remain open and our employees benefit by becoming part of an
organization which also values their commitment and contribution to the
Company's growth and profitability and which offers additional
opportunities for professional growth and advancement. We view our
combination with Community Bank as a win for all of our stakeholders,
and we look forward to working closely with their team to complete the

Upon completion of the transaction, the combined company will have
approximately $11.3 billion in assets. Community Bank System expects the
transaction to be approximately $0.07 - $0.08 per share accretive to its
first full year of GAAP earnings and $0.09 to $0.10 per share accretive
to cash earnings, excluding any one-time transaction costs.

The merger is expected to close in the second quarter of 2019 and is
subject to customary closing conditions, including approval by the
shareholders of Kinderhook Bank Corp. and required regulatory approvals.

Loomis & Co. Inc. acted as exclusive financial advisor to Community Bank
System and Cadwalader, Wickersham & Taft LLP acted as its legal advisor.
Endicott Financial Advisors, L.L.C. and First Capital Equities, Ltd.
acted as financial advisors to Kinderhook Bank Corp. and Cranmore,
FitzGerald, & Meaney acted as its legal advisor.

Community Bank System will host a conference call at 11 am (ET) on
Wednesday, January 23, 2019 to discuss its fourth quarter 2018 financial
results and the combination with Kinderhook Bank Corp. The conference
call can be accessed at 866-337-5532 using the conference ID code
7885932. Investors may also listen live via the Internet at:

About Community Bank System, Inc.

Community Bank System, Inc. operates more than 230 customer facilities
across Upstate New York and Northeastern Pennsylvania, Vermont, and
Western Massachusetts through its banking subsidiary, Community Bank,
N.A. With assets of approximately $10.6 billion, the DeWitt, N.Y.
headquartered company is among the country's 150 largest financial
institutions. In addition to a full range of retail, municipal, and
business banking services, the Company offers comprehensive financial
planning, trust and wealth management services through its' Community
Bank Wealth Management Group and OneGroup NY, Inc. operating units. The
Company's Benefit Plans Administrative Services, Inc. subsidiary is a
leading provider of employee benefits administration, trust services,
collective investment fund administration and actuarial and consulting
services to customers on a national scale. Community Bank System, Inc.
is listed on the New York Stock Exchange and the Company's stock trades
under the symbol CBU. For more information about Community Bank visit

About Kinderhook Bank Corp.

Kinderhook Bank Corp. reported total assets at September 30, 2018 of
approximately $640 million, and is the holding company for National
Union Bank of Kinderhook. The bank's business, municipal, and consumer
customers enjoy personalized relationships, online and mobile banking
options, with 11 branches in upstate New York. Kinderhook Bank Corp. is
listed on the OTCQB Venture Market and trades under the symbol NUBK. For
more information about Kinderhook Bank visit

Forward Looking Statements

This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
statements can be identified by the use of the words "will,"
"anticipate," "expect," "intend," "estimate," "target," and words of
similar import.
Forward-looking statements are not historical
facts but instead express only management's current beliefs regarding
future results or events, many of which, by their nature, are inherently
uncertain and outside of management's control.
The following
factors, among others listed in the Companies' Form 10-K filings, could
cause the actual results of the Companies' operations to differ
materially from the Companies' expectations: failure to obtain the
approval of the shareholders of Kinderhook Bank Corp. in connection with
the merger;
the timing to consummate the proposed merger; the
risk that a condition to closing of the proposed merger may not be
satisfied; the risk that a regulatory approval that may be required for
the proposed merger is not obtained or is obtained subject to conditions
that are not anticipated; the parties' ability to achieve the synergies
and value creation contemplated by the proposed merger; the parties'
ability to successfully integrate operations in the proposed merger; the
effect of the announcement of the proposed merger on the ability of
Kinderhook Bank Corp. to maintain relationships with its key partners,
customers and employees, and on its operating results and business
generally; competition; changes in economic conditions, interest rates
and financial markets; the impact of the federal government shutdown;
and changes in legislation or regulatory requirements. The Companies do
not assume any duty to update forward-looking statements.

This press release does not constitute a solicitation of proxies.

In connection with the proposed merger, Kinderhook Bank Corp. will
deliver a Proxy Statement, as well as other relevant documents
concerning the proposed transaction. This communication does not
constitute an offer to sell or the solicitation of an offer to buy any
securities or a solicitation of any vote or approval. Stockholders of
Kinderhook Bank Corp. are urged to read the proxy statement and the
other relevant materials when they are delivered because they will
contain important information about the proposed transaction.
Information regarding Kinderhook Bank Corp. may be obtained at
or by directing a request to Kinderhook Bank Corp., 1 Hudson Street,
Kinderhook, New York 12106, Attention: Investor Relations, Telephone:
(518) 758-7101.

Information regarding Community Bank System, Inc., may be obtained at
the SEC's Internet site (
or you may obtain copies of certain documents, free of charge from
Community Bank System, Inc. by accessing its website at
under the heading of "Investor Relations" and then "SEC Filings & Annual

Kinderhook Bank Corp. and Community Bank System, Inc. and certain of
their respective directors and executive officers may be deemed to
participate in the solicitation of proxies from the stockholders of
Kinderhook Bank Corp. in connection with the proposed merger.
Information about the directors and executive officers of Kinderhook
Bank Corp. and their ownership of Kinderhook Bank Corp. common stock
will be set forth in the proxy statement to be delivered for the
proposed merger. Information about the directors and executive officers
of Community Bank System, Inc. and their ownership of Community Bank
System, Inc. common stock is set forth in the proxy statement for its
2018 annual meeting of shareholders, as filed with the SEC on Schedule
14A on March 29, 2018. Additional information regarding the interests of
those participants and other persons who may be deemed participants in
the transaction may be obtained by reading the proxy statement regarding
the proposed merger when it becomes available. Free copies of this
document when available may be obtained as described above.

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