Principal Stockholders

The following table presents information known to BSB Bancorp regarding the beneficial ownership of BSB Bancorp common stock as of February 13, 2004 by each person believed by management to be the beneficial owner of more than 5% of the outstanding common stock of BSB Bancorp.

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SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS

The table below sets forth, for each of new Partners Trust Financial Group’s directors and executive officers and for all of the directors and executive officers as a group, the following information:

In each case, it is assumed that subscription shares are sold at the midpoint of the offering range. See “ The Conversion—Limitations on Common Stock Purchases .”

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PARTNERS TRUST FINANCIAL GROUP’S PROPOSAL I – THE CONVERSION

The boards of directors of SBU Bank, Partners Trust Financial Group and Partners Trust, MHC have approved the plan of conversion and reorganization. The plan of conversion and reorganization must also be approved by the members of Partners Trust, MHC (depositors of SBU Bank) and the stockholders of Partners Trust Financial Group. A special meeting of members and a special meeting of stockholders have been called for this purpose. The Office of Thrift Supervision also has conditionally approved the plan of conversion and reorganization; however, such approval does not constitute a recommendation or endorsement of the plan of conversion and reorganization by the agency. The BSB Bancorp merger is subject to receipt of all required regulatory approvals, including approvals from the OTS and the NYSBD.

General

In connection with the approval of the merger agreement, the respective boards of directors of Partners Trust, MHC, Partners Trust Financial Group and SBU Bank adopted the plan of conversion and reorganization on December 23, 2003 and amended the plan on February 24, 2004 and May 6, 2004. Pursuant to the plan of conversion and reorganization, our organization will convert from the mutual holding company form of organization to the fully stock form. Partners Trust, MHC, the mutual holding company parent of Partners Trust Financial Group, will be merged into SBU Bank, and Partners Trust, MHC will no longer exist. Partners Trust Financial Group, which owns 100% of SBU Bank, will be succeeded by a new Delaware corporation with the same name. As part of the conversion, shares of common stock representing the ownership interest of Partners Trust, MHC, will be offered for sale in the stock offering. When the conversion is completed, all of the capital stock of SBU Bank will be owned by Partners Trust Financial Group, our newly formed Delaware holding company, and all of the common stock of Partners Trust Financial Group will be owned by public stockholders. A diagram of our corporate structure before and after the conversion is set forth in the Summary of this document.

Immediately after the completion of the conversion, it is expected that BSB Bancorp will merge with and into new Partners Trust Financial Group with new Partners Trust Financial Group being the survivor of the merger in accordance with the terms of the merger agreement. Immediately thereafter, BSB Bank & Trust will merge with and into SBU Bank with SBU Bank being the survivor of the merger operating under the name Partners Trust Bank.

Under the plan of conversion and reorganization, at the conclusion of the conversion and offering, each share of Partners Trust Financial Group common stock owned by persons other than Partners Trust, MHC will be converted automatically into the right to receive shares of new Partners Trust Financial Group common stock determined pursuant to an exchange ratio. The exchange ratio will ensure that immediately after the exchange of existing shares of Partners Trust Financial Group for new shares, the public stockholders of Partners Trust Financial Group common stock will own approximately the same aggregate percentage of shares of common stock of new Partners Trust Financial Group that they owned immediately prior to the conversion, excluding any shares they purchased in the offering and excluding any shares issued in connection with the acquisition of BSB Bancorp.

The conversion will be consummated only upon the issuance of at least the minimum number of shares of our common stock offered pursuant to the plan of conversion and reorganization.

The plan of conversion and reorganization provides that we will offer shares of common stock for sale in the subscription offering to eligible account holders, our employee stock ownership plan, supplemental eligible account holders and other depositors. Subject to the prior rights of these holders of subscription rights, we may offer common stock for sale in a community offering to members of the general public, with a preference given in the following order:

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We have the right to accept or reject, in whole or in part, any orders to purchase shares of the common stock received in the community offering. The community offering may begin at the same time as the subscription offering and must be completed within 45 days after the completion of the subscription offering unless otherwise extended by the Office of Thrift Supervision. See “ – Community Offering .”

We determined the number of shares of common stock to be offered based upon an independent valuation appraisal of the estimated pro forma market value of Partners Trust Financial Group to reflect the proposed conversion and the merger. All shares of common stock to be sold in the offering will be sold at $10.00 per share. Investors will not be charged a commission to purchase shares of common stock. The independent valuation will be updated and the final number of the shares of common stock to be issued in the offering will be determined at the completion of the offering. See “ – Stock Pricing and Number of Shares to be Issued ” for more information as to the determination of the estimated pro forma market value of the common stock.

The following is a brief summary of the conversion and is qualified in its entirety by reference to the provisions of the plan of conversion and reorganization. A copy of the plan of conversion and reorganization is available for inspection at each branch office of SBU Bank and at the Northeast Regional and the Washington, D.C. offices of the Office of Thrift Supervision. The plan of conversion and reorganization is also filed as an exhibit to Partners Trust Financial Group’s application to convert from mutual to stock form of which this prospectus is a part, copies of which may be obtained from the Office of Thrift Supervision. See “ Where You Can Find Additional Information .”

Reasons For Conversion

The primary reasons for the conversion and related stock offering are:

As a fully converted stock holding company, we will have greater flexibility in structuring future mergers and acquisitions, including the form of consideration that we can use to pay for an acquisition. Our current mutual holding company structure limits our ability to offer shares of our common stock as consideration for a merger or acquisition since Partners Trust, MHC is required to own a majority of our shares of common stock. Potential sellers often want stock for at least part of the purchase price. Our new stock holding company structure will enable us to offer stock or cash consideration, or a combination thereof, and will, therefore, enhance our ability to compete with other bidders when acquisition opportunities arise. Other than our agreement to acquire BSB Bancorp, we currently have no arrangements or understandings regarding any specific acquisition.

The conversion will afford our officers and employees the opportunity to increase their stock ownership, which we believe to be an effective performance incentive and an effective means of attracting and retaining qualified personnel. The conversion also will provide our customers and local community members with an opportunity to acquire our stock.

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The primary disadvantages of the conversion are the significant expense and effort of consummating the conversion and the fact that operating in the stock holding company form of organization could subject Partners Trust Financial Group to contests for corporate control.

The Partners Trust Financial Group board of directors determined that the advantages of the conversion outweighed the disadvantages and unanimously recommends that Partners Trust Financial Group’s stockholders vote in favor of the plan of conversion and reorganization.

Approvals Required

The affirmative vote of a majority of the total number of outstanding votes entitled to be cast by the members of Partners Trust, MHC at the special meeting of members is required to approve the plan of conversion and reorganization. By their approval of the plan of conversion and reorganization, the members of Partners Trust, MHC will also be approving the merger of Partners Trust, MHC into SBU Bank. The affirmative vote of the holders of at least two-thirds of the outstanding shares of common stock of Partners Trust Financial Group and the affirmative vote of the holders of a majority of the outstanding shares of common stock of Partners Trust Financial Group held by the stockholders of Partners Trust Financial Group, other than Partners Trust, MHC, are also required to approve the plan of conversion and reorganization. The plan of conversion and reorganization also must be approved by the Office of Thrift Supervision, which has given its conditional approval.

Share Exchange Ratio

Office of Thrift Supervision regulations provide that in a conversion of a mutual holding company to full stock form, the public stockholders will be entitled to exchange their shares for common stock of the new holding company, provided that the mutual holding company demonstrates to the satisfaction of the Office of Thrift Supervision that the basis for the exchange is fair and reasonable. Each publicly held share of Partners Trust Financial Group common stock will, on the effective date of the conversion, be automatically converted into the right to receive a number of new shares of Partners Trust Financial Group common stock. The number of new shares of common stock will be determined pursuant to the exchange ratio which ensures that the public stockholders of Partners Trust Financial Group common stock will own approximately the same percentage of new common stock in new Partners Trust Financial Group after the conversion as they held in Partners Trust Financial Group immediately prior to the conversion, exclusive of their purchase of additional shares of common stock in the offering, their receipt of cash in lieu of fractional exchange shares and the issuance of shares of common stock to stockholders of BSB Bancorp. In addition, if options to purchase shares of Partners Trust Financial Group are exercised before consummation of the conversion, there will be an increase in the percentage of shares of Partners Trust Financial Group held by public stockholders, an increase in the number of shares issued to public stockholders in the share exchange and a decrease in the exchange ratio and the number of new shares to be sold in the offering. At January 31, 2004, there were 14,197,606 shares of Partners Trust Financial Group common stock outstanding and 6,570,253 shares were publicly held. The exchange ratio is not dependent on the market value of Partners Trust Financial Group common stock. The exchange ratio is calculated based on the percentage of Partners Trust Financial Group common stock held by the public, the independent valuation of Partners Trust Financial Group prepared by RP Financial and the number of shares of common stock in the offering. The exchange ratio is expected to range from approximately 1.9502 exchange shares for each publicly held share of Partners Trust Financial Group at the minimum of the offering range to 3.0343 exchange shares for each publicly held share of Partners Trust Financial Group at the adjusted maximum of the offering range.

If you are currently a stockholder of Partners Trust Financial Group your existing shares will be canceled and exchanged for new shares of new Partners Trust Financial Group. The number of shares you receive will be based on the final exchange ratio determined as of the closing of the conversion.

The following table shows how the exchange ratio will adjust based on the number of shares of common stock sold in the offering. The table also shows how many shares a hypothetical owner of Partners Trust Financial Group common stock would receive in the exchange, adjusted for the number of shares sold in the

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offering. The table excludes the effect of option exercises and issuance of shares of common stock to stockholders of BSB Bancorp.

Outstanding options to purchase shares of new Partners Trust Financial Group common stock also will convert into and become options to purchase shares of new Partners Trust Financial Group common stock. The number of shares of common stock to be received upon exercise of these options will be determined pursuant to the exchange ratio. The aggregate exercise price, duration and vesting schedule of these options will not be affected by the conversion. At December 31, 2003, there were 567,000 outstanding options to purchase shares of Partners Trust Financial Group common stock, 106,200 of which were vested. Such options will be converted into options to purchase 1,105,763 shares of common stock at the minimum of the offering range and 1,496,030 shares of common stock at the maximum of the offering range. If all existing options were exercised for authorized but unissued shares of common stock following the conversion, stockholders would experience dilution of approximately 2.3% at the minimum of the offering range and 2.6% at the maximum of the offering range. Because Office of Thrift Supervision regulations prohibit us from repurchasing our common stock during the first year following the conversion unless compelling business reasons exist for such repurchases, we may use authorized but unissued shares to fund option exercises that occur during the first year following conversion.

Ownership of New Partners Trust Financial Group After the Transactions

The following table shows information regarding the shares of common stock that we will issue in the stock offering and the acquisition. The table also shows the number of shares that will be owned by Partners Trust Financial Group’s public stockholders at the completion of the conversion who will receive our shares of common stock in exchange for their existing shares of common stock.

Information is presented at the minimum, midpoint, maximum and adjusted maximum of the offering range. The number of shares of common stock to be issued is based, in part, on our independent appraisal.

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Effects of Conversion on Depositors, Borrowers and Members

Continuity . While the conversion is being accomplished, the normal business of SBU Bank of accepting deposits and making loans will continue without interruption. SBU Bank will continue to be a federally chartered savings association and will continue to be regulated by the Office of Thrift Supervision. After the conversion, SBU Bank will continue to offer existing services to depositors, borrowers and other customers. The directors serving Partners Trust Financial Group at the time of the conversion will be the directors of Partners Trust Financial Group after the conversion, although three existing directors of BSB Bancorp will become additional directors of new Partners Trust Financial Group and SBU Bank at the completion of the acquisition of BSB Bancorp.

Effect on Deposit Accounts . Pursuant to the plan of conversion and reorganization, each depositor of SBU Bank at the time of the conversion will automatically continue as a depositor after the conversion, and the deposit balance, interest rate and other terms of such deposit accounts will not change as a result of the conversion. Each such account will be insured by the Federal Deposit Insurance Corporation to the same extent as before the conversion. Depositors will continue to hold their existing certificates, passbooks and other evidences of their accounts.

Effect on Loans . No loan outstanding from SBU Bank will be affected by the conversion, and the amount, interest rate, maturity and security for each loan will remain as it was contractually determined prior to the conversion.

Effect on Voting Rights of Members . At present, all depositors of SBU Bank are members of, and have voting rights in, Partners Trust, MHC as to all matters requiring membership action. Upon completion of the conversion, Partners Trust, MHC will cease to exist and depositors will cease to be members of Partners Trust, MHC and will no longer have voting rights. Upon completion of the conversion, all voting rights in SBU Bank will be vested in new Partners Trust Financial Group as the sole stockholder of SBU Bank. The stockholders of new Partners Trust Financial Group will possess exclusive voting rights with respect to new Partners Trust Financial Group common stock.

Tax Effects . Partners Trust Financial Group will receive an opinion of counsel or tax advisor with regard to federal and New York state income tax consequences of the conversion to the effect that the conversion will not be taxable for federal or New York state income tax purposes to Partners Trust, MHC, Partners Trust Financial Group, the public stockholders of Partners Trust Financial Group, members of Partners Trust, MHC, eligible account holders, supplemental eligible account holders, or SBU Bank. See “ – Tax Aspects .”

Effect on Liquidation Rights . Each depositor in SBU Bank has both a deposit account in SBU Bank and a pro rata ownership interest in the net worth of Partners Trust, MHC based upon the deposit balance in his or her account. This ownership interest is tied to the depositor’s account and has no tangible market value separate from the deposit account. This interest may only be realized in the event of a complete liquidation of Partners Trust, MHC and SBU Bank. Any depositor who opens a deposit account obtains a pro rata ownership interest in Partners Trust, MHC without any additional payment beyond the amount of the deposit. A depositor who reduces or closes his or her account receives a portion or all of the balance in the deposit account but nothing for his or her ownership interest in the net worth of Partners Trust, MHC, which is lost to the extent that the balance in the account is reduced or closed.

Consequently, depositors in a stock subsidiary of a mutual holding company normally have no way of realizing the value of their ownership interest, which has realizable value only in the unlikely event that Partners Trust, MHC and SBU Bank are liquidated. If this occurs, the depositors of record at that time, as owners, would share pro rata in any residual surplus and reserves of Partners Trust, MHC after other claims, including claims of depositors to the amounts of their deposits, are paid.

In the unlikely event that SBU Bank were to liquidate after the conversion, all claims of creditors, including those of depositors, would be paid first, followed by distribution of the “liquidation account” to depositors as of December 15, 2002 and March 31, 2004 who continue to maintain their deposit accounts as of the date of

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liquidation, with any assets remaining thereafter distributed to new Partners Trust Financial Group as the holder of SBU Bank’s capital stock. Pursuant to the rules and regulations of the Office of Thrift Supervision, a post-conversion merger, consolidation, sale of bulk assets or similar combination or transaction with another insured savings institution would not be considered a liquidation and, in such a transaction, the liquidation account would be assumed by the surviving institution. See “ – Liquidation Rights .”

There are no plans to liquidate SBU Bank in the future.

Stock Pricing and Number of Shares to be Issued

The plan of conversion and reorganization and federal regulations require that the aggregate purchase price of the common stock sold in the offering must be based on the estimated pro forma market value of the common stock, as determined by an independent valuation. SBU Bank and Partners Trust Financial Group have retained RP Financial to prepare an independent valuation appraisal. For its services in preparing the initial valuation, RP Financial will receive a fee of $135,000. SBU Bank and Partners Trust Financial Group have agreed to indemnify RP Financial and its employees and affiliates against specified losses, including any losses in connection with claims under the federal securities laws, arising out of its services as independent appraiser, except where such liability results from its negligence or bad faith.

The independent valuation appraisal considered the pro forma impact of the offering and the acquisition of BSB Bancorp. Consistent with the Office of Thrift Supervision appraisal guidelines, the appraisal applied three primary methodologies: the pro forma price-to-book value approach applied to both reported book value and tangible book value; the pro forma price-to-earnings approach applied to reported and core earnings; and the pro forma price-to-assets approach. The market value ratios applied in the three methodologies were based upon the current market valuations of the peer group companies, subject to valuation adjustments applied by RP Financial to account for differences between Partners Trust Financial Group and the peer group. RP Financial placed the greatest emphasis on the price-to-earnings and price-to-book approaches in estimating pro forma market value.

The independent valuation was prepared by RP Financial in reliance upon the information contained in this prospectus, including the consolidated financial statements of Partners Trust Financial Group. RP Financial also considered the following factors, among others:

Included in RP Financial’s independent valuation were certain assumptions as to the pro forma earnings of Partners Trust Financial Group after the conversion that were utilized in determining the appraised value. These

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assumptions included estimated expenses, an assumed after-tax rate of return on the net offering proceeds and purchases in the open market of 4% of the common stock issued in the offering by the recognition and retention plan at the $10.00 purchase price. See “ Pro Forma Data ” for additional information concerning these assumptions. The use of different assumptions may yield different results.

The independent valuation of RP Financial states that as of December 31, 2003, the estimated pro forma market value, or valuation range, of Partners Trust Financial Group ranged from a minimum of $476.6 million to a maximum of $574.3 million, with a midpoint of $525.5 million. The board of directors of Partners Trust Financial Group decided to offer the shares of common stock for a price of $10.00 per share. The aggregate offering price of the shares will be equal to the valuation range multiplied by the percentage of Partners Trust Financial Group common stock owned by Partners Trust, MHC. The number of shares offered will be equal to the aggregate offering price of the shares divided by the price per share. Based on the valuation range, the percentage of Partners Trust Financial Group common stock owned by Partners Trust, MHC and the $10.00 price per share, the minimum of the offering range will be 14,875,000 shares, the midpoint of the offering range will be 17,500,000 shares, the maximum of the offering range will be 20,125,000 shares and the adjusted maximum of the offering range will be 23,143,750 shares.

The board of directors of Partners Trust Financial Group reviewed the independent valuation and, in particular, considered the following:

All of these factors are set forth in the independent valuation. The board of directors also reviewed the methodology and the assumptions used by RP Financial in preparing the independent valuation and believes that such assumptions were reasonable. The offering range may be amended with the approval of the Office of Thrift Supervision, if required, as a result of subsequent developments in the financial condition of Partners Trust Financial Group or SBU Bank or market conditions generally. In the event the independent valuation is updated to amend the pro forma market value of Partners Trust Financial Group to less than $476.6 million or more than $630.5 million, the appraisal will be filed with the Securities and Exchange Commission by a post-effective amendment to Partners Trust Financial Group’s registration statement.

THE INDEPENDENT VALUATION IS NOT INTENDED, AND MUST NOT BE CONSTRUED, AS A RECOMMENDATION OF ANY KIND AS TO THE ADVISABILITY OF PURCHASING OUR COMMON STOCK. RP FINANCIAL DID NOT INDEPENDENTLY VERIFY OUR CONSOLIDATED FINANCIAL STATEMENTS AND OTHER INFORMATION THAT WE PROVIDED TO THEM, NOR DID RP FINANCIAL INDEPENDENTLY VALUE OUR ASSETS OR LIABILITIES. THE INDEPENDENT VALUATION CONSIDERS SBU BANK AS A GOING CONCERN AND SHOULD NOT BE CONSIDERED AS AN INDICATION OF THE LIQUIDATION VALUE OF SBU BANK. MOREOVER, BECAUSE THE VALUATION IS NECESSARILY BASED UPON ESTIMATES AND PROJECTIONS OF A NUMBER OF MATTERS, ALL OF WHICH MAY CHANGE FROM TIME TO TIME, NO ASSURANCE CAN BE GIVEN THAT PERSONS PURCHASING OUR COMMON STOCK IN THE OFFERING OR RECEIVING COMMON STOCK IN CONNECTION WITH THE CONVERSION OR ACQUISITION OF BSB BANCORP WILL THEREAFTER BE ABLE TO SELL THEIR SHARES AT PRICES AT OR ABOVE THE $10.00 PRICE PER SHARE.

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Following commencement of the subscription offering, the maximum of the valuation range may be increased by up to 15% without resoliciting subscribers to up to $630.5 million, which will result in a corresponding increase of up to 15% in the maximum of the offering range to up to 23,143,750 shares, to reflect changes in the market and financial conditions or demand for the shares. We will not decrease the minimum of the valuation range and the minimum of the offering range without a resolicitation of subscribers. The subscription price of $10.00 per share will remain fixed. See “ – Limitations on Common Stock Purchases ” as to the method of distribution and allocation of additional shares that may be issued in the event of an increase in the offering range to fill unfilled orders in the offering.

If the update to the independent valuation at the conclusion of the offering results in an increase in the maximum of the valuation range to more than $630.5 million and a corresponding increase in the offering range to more than 23,143,750 shares, or a decrease in the minimum of the valuation range to less than $476.6 million and a corresponding decrease in the offering range to fewer than 14,875,000 shares, then, after consulting with the Office of Thrift Supervision, we may terminate the plan of conversion and reorganization, cancel deposit account withdrawal authorizations and promptly return by check all funds received with interest at SBU Bank’s passbook savings rate of interest. Alternatively, we may hold a new offering, establish a new offering range, extend the offering period and commence a resolicitation of subscribers or take other actions as permitted by the Office of Thrift Supervision in order to complete the conversion or offering. Any resolicitation following the conclusion of the subscription and community offerings would not exceed 45 days unless further extended by the Office of Thrift Supervision for periods of up to 90 days.

An increase in the number of shares to be issued in the offering would decrease both a subscriber’s ownership interest and Partners Trust Financial Group’s pro forma earnings and stockholders’ equity on a per share basis while increasing pro forma earnings and stockholders’ equity on an aggregate basis. A decrease in the number of shares to be issued in the offering would increase both a subscriber’s ownership interest and Partners Trust Financial Group’s pro forma earnings and stockholders’ equity on a per share basis, while decreasing pro forma earnings and stockholders’ equity on an aggregate basis. For a presentation of the effects of these changes, see “ Pro Forma Data .”

Copies of the independent valuation appraisal report of RP Financial and the detailed memorandum setting forth the method and assumptions used in the appraisal report are available for inspection at the administrative offices of SBU Bank and as specified under “ Where You Can Find Additional Information .”

Exchange of Stock Certificates

The conversion of existing outstanding shares of Partners Trust Financial Group common stock into the right to receive shares of new Partners Trust Financial Group common stock will occur automatically on the effective date of the conversion. As soon as practicable after the effective date of the conversion, we or a bank or trust company or other entity designated by us in the capacity of exchange agent, will send a transmittal form to each public stockholder of Partners Trust Financial Group who holds stock certificates. The transmittal forms are expected to be mailed within five business days after the effective date of the conversion and will contain instructions on how to exchange shares of Partners Trust Financial Group common stock for shares of new Partners Trust Financial Group common stock. We expect that stock certificates evidencing shares of new Partners Trust Financial Group common stock will be distributed within five business days after we receive properly executed transmittal forms and other required documents. Shares held by public stockholders in street name will be exchanged automatically upon the effective date of the conversion; no transmittal forms will be mailed relating to these shares.

No fractional shares of new Partners Trust Financial Group common stock will be issued to any public stockholder of Partners Trust Financial Group when the conversion is completed. For each fractional share that would otherwise be issued to a stockholder who holds a stock certificate, we will pay by check an amount equal to the product obtained by multiplying the fractional share interest to which the holder would otherwise be entitled by the $10.00 offering purchase price per share. Payment for fractional shares will be made as soon as

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practicable after the receipt by the exchange agent of the transmittal forms and the surrendered Partners Trust Financial Group stock certificates. If your shares of common stock are held in street name, you will automatically receive cash in lieu of fractional shares.

YOU SHOULD NOT FORWARD YOUR STOCK CERTIFICATES UNTIL YOU HAVE RECEIVED TRANSMITTAL FORMS, WHICH WILL INCLUDE FORWARDING INSTRUCTIONS.

After the conversion, until existing certificates representing shares of Partners Trust Financial Group common stock are surrendered for exchange in compliance with the terms of the transmittal form, stockholders will not receive shares of new Partners Trust Financial Group common stock and will not be paid dividends on such shares. When stockholders surrender their certificates, any unpaid dividends will be paid without interest. For all other purposes, however, each certificate that represents shares of Partners Trust Financial Group common stock outstanding at the effective date of the conversion will be considered to evidence ownership of shares of new Partners Trust Financial Group common stock into which those shares have been converted by virtue of the conversion.

If a certificate for Partners Trust Financial Group common stock has been lost, stolen or destroyed, our exchange agent will issue a new stock certificate upon receipt of appropriate evidence as to the loss, theft or destruction of the certificate, appropriate evidence as to the ownership of the certificate by the claimant, and appropriate and customary indemnification, which is normally effected by the purchase of a bond from a surety company at the stockholder’s expense.

All shares of new Partners Trust Financial Group common stock that we issue in exchange for existing shares of Partners Trust Financial Group common stock will be considered to have been issued in full satisfaction of all rights pertaining to such shares of common stock, subject, however, to our obligation to pay any dividends or make any other distributions with a record date prior to the effective date of the conversion that may have been declared by us on or prior to the effective date and which remain unpaid at the effective date.

No Dissenters’ Rights

Stockholders of Partners Trust Financial Group do not have dissenters’ or appraisal rights in connection with the conversion.

Subscription Offering and Subscription Rights

In accordance with the plan of conversion and reorganization, rights to subscribe for shares of common stock in the subscription offering have been granted in the following descending order of priority. The filling of all subscriptions that we receive will depend on the availability of common stock after satisfaction of all subscriptions of all persons having prior rights in the subscription offering and to the maximum, minimum and overall purchase limitations set forth in the plan of conversion and reorganization and as described below under “ – Limitations on Common Stock Purchases .”

Priority 1: Eligible Account Holders . Each SBU Bank, SBU Municipal Bank or The Herkimer Country Trust Company depositor with aggregate deposit account balances (aggregated by bank) of $50.00 or more (a “Qualifying Deposit”) on December 15, 2002 (“Eligible Account Holders”) will receive, without payment therefor, nontransferable subscription rights to purchase up to the greater of (i) 100,000 shares of new Partners Trust Financial Group common stock, (ii) 0.10% of the total number of shares of new Partners Trust Financial Group common stock issued in the offering, or (iii) fifteen times the product (rounded down to the nearest whole number) obtained by multiplying the number of shares of common stock offered in the offering by a fraction of which the numerator is the amount of the Eligible Account Holder’s Qualifying Deposit and the denominator is the total amount of Qualifying Deposits of all Eligible Account Holders, in each case as of December 15, 2002, subject to the overall purchase limitations. The balance of Qualifying Deposits of all Eligible Account Holders as of December 15, 2002 was $887.0 million. See “ – Limitations on Common Stock Purchases .”

If there are not sufficient shares available to satisfy all subscriptions, shares will first be allocated so as to permit each Eligible Account Holder to purchase a number of shares sufficient to make his or her total allocation equal to the lesser of 100 shares or the number of shares for which he or she subscribed. Thereafter, unallocated

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shares will be allocated to each Eligible Account Holder whose subscription remains unfilled in the proportion that the amount of his or her Qualifying Deposit bears to the total amount of Qualifying Deposits of all subscribing Eligible Account Holders whose subscriptions remain unfilled. If an amount so allocated exceeds the amount subscribed for by any one or more Eligible Account Holders, the excess shall be reallocated among those Eligible Account Holders whose subscriptions are not fully satisfied until all available shares have been allocated.

To ensure proper allocation of our shares of common stock, each Eligible Account Holder must list on his or her stock order form all deposit accounts in which he or she has an ownership interest on December 15, 2002. In the event of oversubscription, failure to list an account could result in fewer shares being allocated than if all accounts had been disclosed. In addition, in the event of an oversubscription, the subscription rights of Eligible Account Holders who are also executive directors or officers of Partners Trust Financial Group or their associates will be subordinated to the subscription rights of other Eligible Account Holders to the extent attributable to increased deposits in the twelve months preceding December 15, 2002.

Priority 2: Tax-Qualified Plans . Our employee stock ownership plan will receive, without payment therefor, nontransferable subscription rights to purchase in the aggregate up to 10% of the common stock issued in the offering, including any shares to be issued as a result of an increase in the maximum of the offering range after commencement of the offering and prior to the completion of the conversion. We anticipate our employee stock ownership plan will purchase 8.0% of the shares of common stock issued in the offering, including any increase in the number of shares of common stock after the date hereof as a result of an increase of up to 15% in the maximum of the offering range. Subscriptions by the employee stock ownership plan will not be aggregated with shares of common stock purchased directly by or which are otherwise attributable to any other participants in the offering, including subscriptions of any of our trustees, officers, employees or associates thereof. In the event the Partners Trust Financial Group employee stock ownership plan is unable to purchase 8.0% of the shares of the common stock in the subscription offering, it is anticipated that the employee stock ownership plan will consider purchasing an amount of shares in the open market sufficient to increase its ownership to 8% of the number of shares of new Partners Trust Financial Group common stock sold in the offering. See “ Management of Partners Trust Financial Group – Benefit Plans – Employee Stock Ownership Plan and Trust ” and “ – Limitations on Common Stock Purchases. ”

Priority 3: Supplemental Eligible Account Holders . Each SBU Bank depositor with a Qualifying Deposit on March 31, 2004 (“Supplemental Eligible Account Holders”) will receive, without payment therefor, nontransferable subscription rights to purchase up to the greater of (i) 100,000 shares of new Partners Trust Financial Group common stock, (ii) 0.10% of the total number of shares of common stock issued in the offering, or (iii) fifteen times the product (rounded down to the nearest whole number) obtained by multiplying the number of shares of common stock offered in the offering by a fraction of which the numerator is the amount of the Supplemental Eligible Account Holder’s Qualifying Deposit and the denominator is the total amount of Qualifying Deposits of all Supplemental Eligible Account Holders, in each case as of March 31, 2004, subject to the availability of sufficient shares after filling in full all subscription orders of the Eligible Account Holders and tax-qualified employee stock benefit plans and subject to the overall purchase limitations. The balance of all Qualifying Deposits of all Supplemental Eligible Account Holders as of March 31, 2004 was $869.1 million. See “ – Limitations on Common Stock Purchases .”

If there are not sufficient shares available to satisfy all subscriptions, shares will first be allocated so as to permit each Supplemental Eligible Account Holder to purchase a number of shares sufficient to make his or her total allocation equal to the lesser of 100 shares or the number of shares for which he or she subscribed. Thereafter, unallocated shares will be allocated to each Supplemental Eligible Account Holder whose subscription remains unfilled in the proportion that the amount of his or her Qualifying Deposit bears to the total amount of Qualifying Deposits of all subscribing Supplemental Eligible Account Holders whose subscriptions remain unfilled. If an amount so allocated exceeds the amount subscribed for by any one or more Supplemental Eligible Account Holders, the excess shall be reallocated among those Supplemental Eligible Account Holders whose subscriptions are not fully satisfied until all available shares have been allocated.

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To ensure proper allocation of our shares of common stock, each Supplemental Eligible Account Holder must list on his or her stock order form all deposit accounts in which he or she has an ownership interest on March 31, 2004. In the event of oversubscription, failure to list an account could result in fewer shares being allocated than if all accounts had been disclosed.

Priority 4: Other Depositors . To the extent that there are shares of common stock remaining after satisfaction of subscriptions by Eligible Account Holders, our tax-qualified employee stock benefit plans, and Supplemental Eligible Account Holders, each depositor of SBU Bank on the voting record date of May 2, 2004 who is not an Eligible Account Holder or Supplemental Eligible Account Holder (“Other Depositors”) will receive, without payment therefor, nontransferable subscription rights to purchase up to 100,000 shares of common stock, subject to the overall purchase limitations. See “ – Limitations on Common Stock Purchases .” If there are not sufficient shares available to satisfy all subscriptions, shares will first be allocated so as to permit each Other Depositor to purchase a number of shares sufficient to make his or her total allocation equal to the lesser of 100 shares or the number of shares for which he or she subscribed. Thereafter, unallocated shares will be allocated to each Other Depositor whose subscription remains unfilled in the proportion that the amount of his or her Qualifying Deposit bears to the total amount of Qualifying Deposits of all subscribing Other Depositors whose subscriptions remain unfilled.

Expiration Date . The Subscription Offering will expire at [  :    ] a.m., Eastern Time, on [            ], unless extended by us for up to 45 days or such additional periods with the approval of the Office of Thrift Supervision, if necessary. Subscription rights will expire whether or not each eligible depositor can be located. We may decide to extend the expiration date of the subscription offering for any reason, whether or not subscriptions have been received for shares at the minimum, midpoint or maximum of the offering range. Subscription rights which have not been exercised prior to the expiration date will become void.

We will not execute orders until at least the minimum number of shares of common stock have been issued. If at least 14,875,000 shares have not been issued within 45 days after the expiration date and the Office of Thrift Supervision has not consented to an extension, all funds delivered to us to purchase shares of common stock in the offering will be returned promptly to the subscribers with interest at SBU Bank’s passbook savings rate and all deposit account withdrawal authorizations will be canceled. If an extension beyond the 45-day period following the expiration date is granted by the Office of Thrift Supervision, we will provide each person who subscribed for common stock with an amendment to this prospectus indicating that each person who subscribed for common stock may increase, decrease, or rescind their subscription within the time remaining in the extension period.

Extensions may not go beyond [            ], which is two years after the special meeting of depositors of Partners Trust, MHC to vote on the conversion.

Community Offering

To the extent that shares of common stock remain available for purchase after satisfaction of all subscriptions of the Eligible Account Holders, our tax-qualified employee stock benefit plans, Supplemental Eligible Account Holders and Other Depositors, we may offer shares pursuant to the plan of conversion and reorganization to members of the general public in a community offering. Shares may be offered with the following preferences:

Subscribers in the community offering may purchase up to 100,000 shares of common stock, subject to the overall purchase limitations. See “ – Limitations on Common Stock Purchases .” The minimum purchase is 25

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shares. In the event orders in any of the above categories exceed the number of shares available for sale, shares may be allocated on a pro rata basis within a category based on the amount of the respective orders. We will use our best efforts to distribute shares sold in the community offering in such a manner as to promote the widest distribution practicable of such stock.