1
EXHIBIT 99.1
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined financial statements
present the condensed financial position of Community Bank System, Inc. (the
"Registrant") and First Liberty Bank Corp. ("First Liberty") as of March 31,
2001, assuming that a merger between the Registrant and First Liberty (the
"Merger") had occurred as of March 31, 2001 and giving effect to the Merger by
combining the results of operations of the Registrant and First Liberty for the
years ended December 31, 2000, 1999, and 1998, and the three months ended March
31, 2001 and March 30, 2000. Pro forma earnings per share and weighted average
common shares are based on an exchange ratio of 0.56.
The unaudited pro forma condensed combined financial statements were prepared
giving effect to the Merger on the pooling of interest accounting method. All
adjustment necessary to arrive at a fair presentation of the combined financial
condition and results of operations of the Registrant and First Liberty, in the
opinion of the management of the Registrant, have been included and are of a
normal recurring nature. The data presented below does not reflect possible
adjustments for expenses related to the Merger, or any potential cost savings or
revenue enhancements resulting from the Merger. Accordingly, the financial
condition and results of operations of the Registrant as of the effective date
of the Merger and thereafter may be materially different from those reflected in
the pro forma information below.
The unaudited pro forma condensed combined financial statements should be read
in conjunction with the historical financial statements and notes thereto of the
Registrant and First Liberty as set forth in their respective Annual Reports on
Form 10-K for the year ended December 31, 2000 and the Quarterly Report on Form
10-Q of the Registrant for the quarter ended March 31, 2001. The unaudited pro
forma condensed combined financial statements are presented for informational
purposes only. These statements are not necessarily indicative of the combined
financial position and results of operations that would have occurred if the
Merger had been consummated on March 31, 2001 or at the beginning of the period
or of that which may be attained in the future.
HISTORICAL AND PRO FORMA BALANCE SHEET
At March 31, 2001
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Historical
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Community Bank First Liberty Pro Forma Pro Forma
System, Inc. Bank Corp. Adjustments Total
ASSETS
Cash, cash equivalents
and due from banks $ 65,690 $ 44,523 $ 110,213
Federal funds sold -- -- --
Time deposits with
other banks 339 -- 339
Investment securities 938,700 153,004 1,091,704
Loans, net of unearned
discount 1,151,957 420,725 1,572,682
Less: Reserve for possible
loan losses (15,401) (5,516) (20,917)
Premises and equipment 28,793 13,758 42,551
Intangible assets 66,529 4,190 70,719
Other real estate 1,210 266 1,476
Other assets 40,584 12,747 53,331
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$ 2,278,401 $ 643,697 $ 0 $ 2,922,098
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LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest bearing $ 262,597 $ 56,744 $ 319,341
Interest bearing 1,337,388 458,115 1,795,503
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Total deposits 1,599,985 514,859 0 2,114,844
Federal funds purchased 28,000 28,000
Term borrowings 413,100 60,438 473,538
Company obligated mandatorily
redeemable preferred
securities of subsidiary
Community Capital Trust 1
holding solely junior
subordinated debentures
of the company 29,826 0 29,826
Subordinated Debentures
Accrued interest and
other liabilities 35,556 3,927 39,483
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Total liabilities 2,106,467 579,224 0 2,685,691
Shareholders' equity
Common stock 7,979 2,009 1,557 11,545
Surplus 41,845 6,121 (1,753) 46,213
Undivided profits 110,659 56,155 0 166,814
Accumulated other
comprehensive income 11,665 384 12,049
Treasury stock
(60,820 shares) -- (196) 196 --
Shares issued under
employee stock plan
- unearned (214) 0 (214)
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Total shareholder's
equity 171,934 64,473 0 236,407
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Total liabilities and
shareholder's equity $ 2,278,401 $ 643,697 $ 0 $ 2,922,098
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HISTORICAL AND PRO FORMA STATEMENT OF INCOME
Three Months Ended March 31, 2001
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Historical
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Community Bank First Liberty Pro Forma
System, Inc. Bank Corp. Total
Interest and fees on loans $25,365 $ 7,896 $33,261
Interest on investments and federal funds sold 13,895 2,741 16,636
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Total interest income 39,260 10,637 49,897
Interest on deposits 14,409 5,152 19,561
Interest on federal funds purchased and
term borrowings 5,635 876 6,511
Interest on mandatorily redeemable capital
securities of subsidiary 733 0 733
Interest on subordinated debentures
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Total interest expense 20,777 6,028 26,805
Net interest income 18,483 4,609 23,092
Provision for loan losses 1,236 90 1,326
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Net interest income after provision
for loan losses 17,247 4,519 21,766
Other income 5,413 718 6,131
Salaries and benefits 8,141 1,981 10,122
Occupancy Expense 2,268 368 2,636
Amortization of intangible assets 1,364 95 1,459
Other Expense 4,517 1,225 5,742
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Total Expenses 16,290 3,669 19,959
Income before income tax 6,370 1,568 7,938
Income tax 1,911 274 2,185
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Net income $ 4,459 $ 1,294 $ 5,753
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Earnings per share - Basic $ 0.58 $ 0.20 $ 0.51
Earnings per share - Diluted $ 0.57 $ 0.20 $ 0.50
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HISTORICAL AND PRO FORMA STATEMENT OF INCOME
Three Months Ended March 31, 2000
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Historical
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Community Bank First Liberty Pro Forma
System, Inc. Bank Corp. Total
Interest and fees on loans $22,656 $ 8,229 $30,885
Interest on investments and federal funds sold 11,915 2,786 14,701
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Total interest income 34,571 11,015 45,586
Interest on deposits 11,171 4,701 15,872
Interest on federal funds purchased and
term borrowings 4,847 1,387 6,234
Interest on mandatorily redeemable capital
securities of subsidiary 733 -- 733
Interest on subordinated debentures
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Total interest expense 16,751 6,088 22,839
Net interest income 17,820 4,927 22,747
Provision for loan losses 1,209 180 1,389
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Net interest income after provision
for loan losses 16,611 4,747 21,358
Other income 3,930 519 4,449
Salaries and benefits 6,819 1,977 8,796
Occupancy Expense 1,945 650 2,595
Amortization of intangible assets 1,110 27 1,137
Other Expense 3,488 864 4,352
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Total Expenses 13,362 3,518 16,880
Income before income tax 7,179 1,748 8,927
Income tax 2,154 381 2,535
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Net income $ 5,025 $ 1,367 $ 6,392
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Earnings per share - Basic $ 0.71 $ 0.21 $ 0.60
Earnings per share - Diluted $ 0.70 $ 0.21 $ 0.59
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HISTORICAL AND PRO FORMA STATEMENT OF INCOME
Twelve Months Ended December 31, 2000
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Historical
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Community Bank First Liberty Pro Forma
System, Inc. Bank Corp. Total
Interest and fees on loans $ 96,525 $ 33,554 $130,079
Interest on investments and federal funds sold 48,696 10,661 59,357
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Total interest income 145,221 44,215 189,436
Interest on deposits 50,204 19,716 69,920
Interest on federal funds purchased and
term borrowings 20,876 5,412 26,288
Interest on mandatorily redeemable capital
securities of subsidiary 2,932 -- 2,932
Interest on subordinated debentures
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Total interest expense 74,012 25,128 99,140
Net interest income 71,209 19,087 90,296
Provision for loan losses 7,182 540 7,722
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Net interest income after provision
for loan losses 64,027 18,547 82,574
Other income 20,989 2,131 23,120
Salaries and benefits 28,835 7,742 36,577
Occupancy Expense 7,636 2,671 10,307
Amortization of intangible assets 4,670 221 4,891
Other Expense 14,848 4,169 19,017
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Total Expenses 55,989 14,803 70,792
Income before income tax 29,027 5,875 34,902
Income tax 8,708 1,295 10,003
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Net income $ 20,319 $ 4,580 $ 24,899
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Earnings per share - Basic $ 2.88 $ 0.72 $ 2.34
Earnings per share - Diluted $ 2.85 $ 0.72 $ 2.32
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HISTORICAL AND PRO FORMA STATEMENT OF INCOME
Twelve Months Ended December 31, 1999
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Historical
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Community Bank First Liberty Pro Forma
System, Inc. Bank Corp. Total
Interest and fees on loans $ 84,853 $ 30,727 $115,580
Interest on investments and federal funds sold 39,035 11,832 50,867
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Total interest income 123,888 42,559 166,447
Interest on deposits 42,774 19,128 61,902
Interest on federal funds purchased and
term borrowings 10,241 3,415 13,656
Interest on mandatorily redeemable capital
securities of subsidiary 2,932 -- 2,932
Interest on subordinated debentures
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Total interest expense 55,947 22,543 78,490
Net interest income 67,941 20,016 87,957
Provision for loan losses 5,136 720 5,856
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Net interest income after provision
for loan losses 62,805 19,296 82,101
Other income 15,486 2,244 17,730
Salaries and benefits 26,388 7,212 33,600
Occupancy Expense 7,384 2,462 9,846
Amortization of intangible assets 4,615 108 4,723
Other Expense 14,346 4,210 18,556
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Total Expenses 52,733 13,992 66,725
Income before income tax 25,558 7,548 33,106
Income tax 7,923 1,521 9,444
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Net income $ 17,635 $ 6,027 $ 23,662
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Earnings per share - Basic $ 2.45 $ 0.95 $ 2.20
Earnings per share - Diluted $ 2.42 $ 0.94 $ 2.18
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HISTORICAL AND PRO FORMA STATEMENT OF INCOME
Twelve Months Ended December 31, 1998
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Historical
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Community Bank First Liberty Pro Forma
System, Inc. Bank Corp. Total
Interest and fees on loans $ 82,778 $ 30,305 $113,083
Interest on investments and federal funds sold 40,160 12,060 52,220
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Total interest income 122,938 42,365 165,303
Interest on deposits 49,668 19,834 69,502
Interest on federal funds purchased and
term borrowings 5,943 2,839 8,782
Interest on mandatorily redeemable capital
securities of subsidiary 2,932 -- 2,932
Interest on subordinated debentures
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Total interest expense 58,543 22,673 81,216
Net interest income 64,395 19,692 84,087
Provision for loan losses 5,123 540 5,663
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Net interest income after provision
for loan losses 59,272 19,152 78,424
Other income 17,040 1,778 18,818
Salaries and benefits 25,750 7,080 32,830
Occupancy Expense 7,586 2,426 10,012
Amortization of intangible assets 4,640 108 4,748
Other Expense 13,900 5,745 19,645
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Total Expenses 51,876 15,359 67,235
Income before income tax 24,436 5,571 30,007
Income taxes 8,902 1,570 10,472
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15,534 4,001 19,535
Cumulative effect of change in accounting principal, net of taxes 194 194
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Net income $ 15,728 $ 4,001 $ 19,729
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Earnings per share - Basic $ 2.08 $ 0.63 $ 1.78
Earnings per share - Diluted $ 2.05 $ 0.63 $ 1.75