COMMUNITY FINANCIAL SYSTEM, INC. — Director's Dealing 2017

May 19, 2017

SEC Form 3 — Initial Statement of Beneficial Ownership

Issuer: COMMUNITY BANK SYSTEM, INC. (CBU)
CIK: 0000723188
Period of Report: 2017-05-12

Reporting Person: Pecor Raymond C III (Director)

Holdings (Non-Derivative)

Security	Shares	Ownership
Common Stock	12152	Direct
Common Stock	6392	Indirect

Footnotes

F1: Pursuant to the Agreement and Plan of Merger, dated as of October 22, 2016 (the "Merger Agreement"), each share of Merchants Bancshares, Inc. ("Merchants") stock held by the reporting person was converted into and became exchangeable for shares of Community Bank System, Inc. common stock. Under the terms of the Merger Agreement, and subject to the allocation and proration procedures set forth therein, for each share of Merchants common stock, the reporting person could elect to receive either(i) $40.00 in cash (the "Cash Consideration"), (ii) 0.9630 shares of Community Bank System, Inc. Common Stock, par value $1.00 per share, and cash in lieu of fractional shares, if any (the "Stock Consideration"), or (iii) a combination of $12.00 in cash and 0.6741 shares of Community Bank System, Inc. Common Stock, and cash in lieu of fractional shares, if any (the "Mixed Election Consideration," and together with the Cash Consideration and the Stock Consideration, the "Merger Consideration"). Set forth above is the number of shares of Community Bank System, Inc. stock beneficially owned by the reporting person based upon the allocation and proration procedures set forth in the Merger Agreement.

F2: The reporting person disclaims beneficial ownership of these securities, and the inclusion of these shares in this report shall not be deemed an admission of beneficial ownership of all of the reported shares for purposes of Section 16 or any other purpose.