Hornell-based Steuben Trust sold for $106.8 million
HORNELL — An institution in the Maple City since 1902 will soon enter a new era.
On Monday, Community Bank System, Inc. and Steuben Trust Corporation announced that they have entered into a definitive agreement in which Community Bank System will acquire Steuben Trust Corporation, the parent company of Steuben Trust Company based in Hornell.
The stock and cash transaction represents a total consideration valued at approximately $106.8 million, according to a joint press release. The transaction has been unanimously approved by the boards of directors of both companies.
Community Bank System is based in Syracuse with branches throughout the area, including in Hornell, Wellsville and Alfred, among others. Similarly, Steuben Trust also has locations in Hornell, Wellsville, Alfred and other communities in the region. Steuben Trust was originally organized in 1902 as the Bank of Steuben. The first office was in the former Babcock State Building at 74 Main Street in Hornell.
“Our acquisition of Steuben Trust will enhance and extend our banking footprint in Western New York, in markets which we successfully compete in and aspire to continue to grow,” 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 is reflective of these growth objectives. We are confident that the Steuben Trust franchise will further support our efforts to grow our retail and business banking presence in Western New York.
“Steuben Trust has an impressive 117-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 Steuben Trust team to the Community Bank organization and look forward to the future of the combined company.”
The companies said the transaction will provide natural market enhancement and 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. Steuben Trust provides Community Bank, N.A. with improved scale in several more Western New York markets, the companies said, including Buffalo and Rochester, with total assets of nearly $580 million, deposits of $480 million and 15 branch offices across a six county area.
“The shareholders, customers and associates of Steuben Trust should benefit from our merger with Community Bank System, a financially strong and effectively managed institution,” said Brenda L. Copeland, Chairman and Chief Executive Officer of Steuben Trust Corporation. “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 to be able to enhance our service capacity in all of our current communities. 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 our stakeholders, and we look forward to working closely with their team to complete the combination.”
Upon completion of the transaction, the combined company is expected to have over $12 billion in assets. Community Bank System 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.
The merger is expected to close in the second quarter of 2020 and is subject to customary closing conditions, including approval by the shareholders of Steuben Trust Corporation and required regulatory approvals.
Local officials reacted Monday in the immediate aftermath of the sale. Hornell Industrial Development Agency Executive Consultant Shawn Hogan noted that Steuben Trust was grandfathered into a law that maintained its status as the lone commercial bank in the city.
That could change following the sale, potentially opening the door for new commercial lending banks to enter the Hornell market.
“I’m thinking now that Steuben Trust has been sold to Community Bank, there will be interest from other banks to find locations in our community,” Hogan said. “We’ve had banks looking for years to want to establish (in Hornell).”
Mayor John Buckley said his office will be monitoring the situation moving forward.
“It is a developing story. It’s somewhat of a surprise but not a huge surprise,” Buckley said. “I have heard that they have been entertaining offers and shopping themselves to some extent over the past few years. It’s definitely interesting and we’ll have to wait and see.
“It could open the door for competition. It will definitely be something to keep an eye on.”
Steuben Trust history
Steuben Trust has a long history in Hornell.
In 1914, the bank built its Main Office located at 82 Main Street, which the bank called home for 85 years. The name of the bank was changed to Steuben Trust Company in 1920 when it began offering trust services, according to the company timeline.
n 1959, Steuben Trust built an office on Seneca Street in Hornell, followed 10 years later, in 1969, by the Arkport office. It wasn't again until 1988 that Steuben Trust made its next expansion, which was the Alfred office, followed in 1991 by the Canaseraga office.
In 1994, Steuben Trust entered the Wellsville market and built a permanent office there.
Steuben Trust acquired five Key Bank offices in Andover, Belmont, Bolivar, North Hornell, and Whitesville in December 1996.
In the summer of 1999, Steuben Trust completed construction on its current headquarters located at One Steuben Square in downtown Hornell.
Steuben Trust Company constructed a new office in the Bath Plaza which opened in December 2002. The full-service office features a drive-up ATM, drive-up lane, customer service and loan offices.
In September 2006, Steuben Trust opened a new full-service office in Geneseo to include a walk-up ATM, teller line, customer service and loan office. A new ATM Kiosk was also built and opened in the Wellsville area.
In 2007, Steuben Trust closed its North Hornell office and opened a full-service office in Henrietta.
In February 2009, Steuben Trust and Canisteo Savings and Loan Association merged to create a new office for Steuben Trust Company in Canisteo.
In May 2012, Steuben Trust constructed a new office in Warsaw. The full-service office features a drive-up ATM, drive-up teller lane, customer service and loan offices.
Steuben Trust opened the doors to a new representative office in Elma in October of 2015. The representative office provides customers commercial, small business and farm lending services to help them grow and expand their businesses.
In 2018, Steuben Trust fully rennovated an existing building and in August, opened the doors to their first full service branch in Erie County, located in the town of Clarence. The industrial designed branch features a drive-up ATM, drive-up teller lane, three offices and spacious conference room.
Under the terms of the agreement, shareholders of Steuben Trust Corporation will receive, for each share of common stock they own, a combination of $12.60 cash and 0.8054 shares of Community Bank System common stock, for total consideration valued at approximately $63.00 per share (based on Community Bank System’s volume weighted average price of $62.58 for the thirty trading day period ending Oct. 15, 2019). This price represents approximately 167% of Steuben Trust Corporation’s tangible book value as of June 30, 2019. The transaction is intended to qualify as a reorganization for federal income tax purposes, and as a result, the receipt of Community Bank System common stock by shareholders of Steuben Trust Corporation is expected to be tax-free.