Community Bank System Prices Stock Offering

DEWITT, N.Y.--(BUSINESS WIRE)--Community Bank System, Inc. (NYSE: CBU) today announced that it has entered into an underwriting agreement for the sale of 2,200,000 shares of common stock at a price of $20.75 per share for gross proceeds of approximately $45.6 million, exclusive of any underwriter over-allotment option. The net proceeds of the offering after deducting underwriting discounts and commissions and estimated offering expenses are expected to be approximately $42.9 million.

The underwriters have been granted an option to purchase up to an additional 330,00 shares to cover over-allotments, if any.

The settlement and closing of the public offering are expected to take place on or about October 7, 2008. Following the offering, assuming no exercise of the over-allotment option, the Company is expected to have 32,297,809 shares of common stock issued and outstanding.

The Company intends to use the net proceeds from this offering to support the pending acquisition of certain assets and liabilities associated with 18 branches from RBS Citizens in northern New York State.

This announcement is neither an offer to sell nor a solicitation of any offer to buy any securities and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful. Any offers of the shares will be made exclusively by means of a prospectus and prospectus supplement. Copies of the prospectus relating to the offering may be obtained by contacting Janney Montgomery Scott LLC, Equity Capital Markets at 60 State Street, Boston, MA by calling (617) 557-2971 or emailing prospectus@jmsonline.com.

Community Bank System, Inc., is based in DeWitt, N.Y., with $4.7 billion in assets and 140 customer facilities across Upstate New York, where it operates as Community Bank, N.A., and Northeastern Pennsylvania, where it is known as First Liberty Bank & Trust. Its other subsidiaries include: BPAS, an employee benefits administration and consulting firm with offices in Upstate New York, Pittsburgh, and Houston; the CBNA Insurance Agency, with offices in three northern New York communities; Community Investment Services, Inc., a broker-dealer delivering financial products throughout the company’s branch network; and Nottingham Advisors, a wealth management and advisory firm with offices in Buffalo, N.Y., and North Palm Beach, Fla. For more information, please visit our websites at: www.communitybankna.com or www.firstlibertybank.com.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The following factors, among others, could cause the actual results of CBU’s operations to differ materially from CBU’s expectations: the successful integration of operations of its acquisitions; 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.