An upstate New York community bank that has been an active acquirer has adopted a shareholders' rights plan to protect itself from being taken over without board approval.

The $916 million-asset Community Bank System Inc. recently issued rights to its shareholders that entitle them to buy $170 worth of common stock for $85 if an individual or company acquires more than 15% of the bank's stock.

The board of directors could also elect to issue one share of stock for each right to avoid disrupting the company's market price, currently at $27.38.

The plan is designed to dilute a hostile acquirer's shares and force it to negotiate with the board if it wants to buy the DeWitt-based company, said Sanford A. Belden, president and chief executive.

"This is not intended to prevent takeovers," Mr. Belden said. "It is intended that the board is in a position to deliberate with any interested party."

The board can "undo the poison pill" if a merger is negotiated by paying 1 cent to shareholders for each right, Mr. Belden said.

Currently, no shareholder owns more than 5% of Community Bank stock. Mr. Belden added that the plan was not adopted in response to any merger offers.

Community Bank, which has 36 branches stretching across central New York, is considered a likely acquisition target because of "the relative lack of quality bank franchises" in the area, according to an August report by First Albany Corp.

The company has been an active acquirer in upstate New York, buying three branches from the Resolution Trust Corp. in the second quarter of 1994 and one from Chase Manhattan Corp. in the fourth quarter.

The bank also has pending deals to buy 15 more Chase branches and the First National Bank of Hermon, both expected to close in the second quarter of 1995.

"It's a very good franchise," said Kevin Timmons, bank analyst at First Albany. "If someone were interested in a spread-out, upstate franchise, CBSI could be interesting to them."

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