An upstate New York thrift has tried to derail the planned merger of two community banks by making last-minute bids to acquire each company.

But the boards of Oneida Valley Bancshares and Cortland First Financial rejected the hostile offers last week and said they intend to proceed with their merger.

Flush with cash from its recent public offering, CNY Financial Corp. in Cortland offered to buy Oneida Valley for $60.5 million and Cortland First for $72 million. CNY Financial, a thrift with $279 million of assets, converted from mutual to stock ownership in early October.

After separately consulting with financial and legal advisers, executives of Oneida Valley and Cortland First said they remained committed to the $47 million deal they announced in July.

"The board has reaffirmed its long-term strategic plan and concluded that it is in our shareholders' best interests to reject the CNY proposal and proceed with our merger of equals with Oneida Valley," said David Alvord, president and chief executive officer of $234 million-asset Cortland First.

Shareholders of both banks are expected to vote on the merger next week. The merged company, to be named Alliance Financial Corp., would have $450 million of assets, 16 branches, and 250 employees. Its plan is to expand into the Syracuse, N.Y., market.

CNY Financial, which owns a small stake in Oneida Valley, is urging the latter's shareholders to reject the Cortland First transaction. The thrift pointed out in a press release that Oneida Valley shareholders would get $14.50 per share more from its offer.

"We thought that (Oneida Valley's) executives should have sat down with us and discussed the transaction before rejecting it," said Steven A. Covert, chief financial officer at CNY Financial. He added that some Oneida Valley shareholders have "called us expressing support for our bid."

John C. Mott, president of Oneida Valley, acknowledged that his company's shareholders would get a higher premium under CNY's bid.

However, he said, CNY's proposal would have a negative effect on the bank's future, including the loss of decision-making and jobs in the community. Oneida Valley's board also questioned CNY Financial's lack of track record as a commercial bank and publicly held company, according to a letter mailed to shareholders Thursday.

"The board feels that it has filled its fiduciary responsibilities," said Mr. Mott.

Mr. Mott and Mr. Alvord, friends for three decades, would become co-CEOs of Alliance Financial. The company would be 55%-owned by Cortland First shareholders and 45%-owned by Oneida Valley shareholders.

One CNY shareholder has opposed the company's aggressive tactics.

Spence Ltd., a Nashville-based investment partner, which owns 1.9% of CNY's stock, issued a press release Thursday calling the bid for Oneida Valley "ill-advised and financially destructive to the creation of shareholder value."

Spence said it has made a written request for CNY's shareholder list. The investor intends to communicate to other shareholders its concerns about CNY's profitability, overhead, and capital management.

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