Group 1 - Community Financial System (CBU) is benefiting from fixed-rate asset repricing, leading to an expanding net interest margin [1] - The bank reported positive operating leverage, indicating efficient management of its resources [1] - The overall performance reflects a trend of healthy earnings, aligning with a long-term investment strategy focused on high-quality earnings [1]

Core Points - Community Financial System, Inc. has completed the acquisition of seven former Santander Bank branches in the Allentown, Pennsylvania area, adding approximately $553.0 million in customer deposit accounts [1][2] - This acquisition enhances the company's service capabilities for consumer, business banking, and private banking clients in the Greater Lehigh Valley, while also expanding its customer base [1][2] - Following this acquisition, Community Bank will operate a total of 12 retail locations in the Greater Lehigh Valley, securing a Top 5 market position in the area [2] Company Overview - Community Financial System, Inc. is a diversified financial services company focused on banking services, employee benefit services, insurance services, and wealth management services [3] - The banking subsidiary, Community Bank, N.A., is among the top 100 largest banking institutions in the U.S., with over $16 billion in assets and approximately 200 customer facilities across several states [3] - The company is publicly traded on the New York Stock Exchange under the symbol CBU [3]

Core Viewpoint - The article discusses the volatility in the stock market, highlighting that while it presents opportunities, it also increases risks, making both significant gains and declines possible. The focus is on identifying one stock with potential for high returns and two stocks that are not recommended for investment. Group 1: Stocks to Sell - Albany (AIN) is a global textiles and materials processing company with a rolling one-year beta of 1.45, trading at $49.48 per share, which corresponds to a forward P/E of 16.1x [2][4] - Orion (ORN) provides construction services for marine infrastructure and industrial projects, has a rolling one-year beta of 2.34, and is priced at $10.09 per share, reflecting a forward P/E of 40.4x [5][7] Group 2: Stock to Watch - Community Bank (CBU) is a financial holding company with a rolling one-year beta of 1.09, offering various financial services. Its annual revenue growth over the last two years was 10.8%, indicating an increase in market share [8][11] - CBU's earnings per share grew by 5.5% annually over the last two years, significantly outperforming its peers [11] - The expected tangible book value per share growth of 20.2% suggests that CBU's capital strength will likely improve over the next 12 months [11]

Financial Performance - Q3 2025 net income increased by $11.2 million, or 25.5%, compared to Q3 2024, while YTD net income rose by $23.3 million, or 17.6%[162]. - Earnings per share for Q3 2025 was $1.04, an increase of $0.21 from Q3 2024, and YTD earnings per share was $2.94, up $0.44 from the previous year[162]. - Operating net income increased by $11.4 million, or 24.5%, for Q3 2025 compared to Q3 2024, and by $24.6 million, or 17.4%, YTD compared to September 2024[168][169]. - Net income for Q3 2025 was $55.1 million, a 25.5% increase from Q3 2024, and YTD net income was $156.0 million, up 17.6% from the same period last year[169]. - Pre-tax, pre-provision net revenue (non-GAAP) for Q3 2025 was $82,502,000, up 20.8% from $68,274,000 in Q3 2024[279]. - Net income (GAAP) for the nine months ended September 30, 2025, was $156,033,000, compared to $132,688,000 for the same period in 2024, reflecting a year-over-year increase of 17.6%[280]. Interest Income and Margin - Net interest income for Q3 2025 was $128.2 million, an increase of $15.4 million, or 13.7%, from Q3 2024, and YTD net interest income was $373.1 million, up $44.0 million, or 13.4%[170][179]. - The net interest margin for Q3 2025 was 3.30%, an increase of 27 basis points compared to the prior year[180]. - Average interest-bearing deposits increased by $638.6 million for Q3 2025 compared to the prior year quarter, driven by non-time deposits[185]. - The net interest spread (GAAP) improved to 2.81% for the three months ended September 30, 2025, compared to 2.48% in the same period of 2024[189]. - Net interest earnings (FTE) for the year-to-date period reached $375,783, up from $331,983 in the prior year, reflecting a net interest margin (FTE) of 3.29% compared to 3.02%[192]. Credit Losses and Asset Quality - The provision for credit losses was $5.6 million for Q3 2025, which is $2.1 million lower than the comparable prior year period[165]. - The provision for credit losses decreased by $2.1 million to $5.6 million for Q3 2025 compared to Q3 2024, reflecting a stable economic environment[171]. - The allowance for credit losses increased to $84,900,000, reflecting an 11.5% increase from the previous year and a 7.4% increase from the end of 2024[239]. - Nonperforming loan ratio decreased to 0.52% at September 30, 2025, down 9 basis points from September 30, 2024[165]. - The net charge-offs during Q3 2025 were $2.5 million, a decrease of $0.3 million compared to Q3 2024, with a total net charge-off ratio of 0.09%[245]. Noninterest Income and Expenses - Noninterest revenues for Q3 2025 were $78.9 million, a 3.5% increase from Q3 2024, and YTD noninterest revenues were $229.4 million, up 3.9% from the previous year[172]. - Noninterest expenses increased by $4.1 million, or 3.3%, from Q3 2024 to Q3 2025, and by $21.4 million, or 5.9%, year-to-date (YTD) from September 2024 to September 2025, primarily due to data processing and communications expenses[167][173]. - Total noninterest expenses for the third quarter of 2025 were $128.3 million, up $4.1 million, or 3.3%, from the prior year[214]. - YTD noninterest expenses increased to $382.7 million, representing a rise of $21.4 million, or 5.9%, compared to the same period in 2024[214]. Capital and Liquidity - Total shareholders' equity increased to $1.94 billion, up $176.1 million or 10.0% from December 31, 2024, primarily driven by net income of $156.0 million[261]. - The Tier 1 leverage ratio improved to 9.46% at the end of Q3 2025, an increase of 27 basis points from December 31, 2024[267]. - Liquidity sources totaled $6.20 billion as of September 30, 2025, representing approximately 240% of the estimated uninsured deposits of $2.58 billion[271]. - The company must maintain a capital conservation buffer of 2.5% as of September 30, 2025, to satisfy regulatory capital requirements[264]. - The company has sufficient liquidity for the next year to cover projected cash outflows, as indicated by stress tests performed[273]. Market and Economic Conditions - The company anticipates potential impacts from adverse developments in the banking industry and economic conditions on customer confidence[276]. - The company is focused on maintaining and increasing market share while managing expenses effectively[276]. - Future provisions for credit losses and changes in nonperforming assets are key factors that could affect actual results compared to expectations[276]. Efficiency Metrics - The efficiency ratio (GAAP) improved to 62.0% for Q3 2025, down from 65.7% in the prior year[212]. - Operating efficiency ratio for Q3 2025 was 59.9%, reflecting a 3.7 percentage point improvement compared to Q3 2024, with operating revenues increasing by 9.3%[217]. - Noninterest expenses as a percentage of average assets decreased by 0.04 percentage points in Q3 2025, while average assets increased by 4.3%[218].

Core Insights - Teacher Retirement System of Texas reduced its stake in Community Financial System by 8.3%, holding 24,291 shares valued at $1,381,000 at the end of the reporting period [2] - Several institutional investors adjusted their positions, with Federated Hermes increasing its stake by 0.4%, Goldman Sachs by 7.9%, and Invesco by 80.2% [3] - Community Financial System reported a quarterly EPS of $1.04, exceeding estimates, with a revenue of $207.90 million, reflecting a year-over-year increase of 9.6% [8] Institutional Holdings - Institutional investors own 73.79% of Community Financial System's stock [3] - Waldron Private Wealth LLC increased its stake by 1.6% in the second quarter, now holding 216,121 shares valued at $12,390,000 [3] - Principal Financial Group Inc. grew its holdings by 2.9%, owning 262,245 shares worth $14,911,000 [3] Insider Transactions - SVP Jeffrey M. Levy sold 1,440 shares at an average price of $61.38, totaling $88,387.20, representing a 17.78% decrease in his position [4] Analyst Ratings - Wall Street Zen upgraded Community Financial System from "sell" to "hold" [6] - Keefe, Bruyette & Woods set a target price of $66.00, down from $67.00, maintaining a "market perform" rating [6] - The consensus rating for the stock is "Hold" with a target price of $68.00 [6] Stock Performance - Community Financial System shares opened at $56.78, with a 1-year low of $49.44 and a high of $73.39 [7] - The company has a market cap of $3.00 billion, a P/E ratio of 14.64, and a beta of 0.79 [7] Financial Results - The bank's net margin was 20.72% and return on equity was 11.09% [8] - Analysts expect the company to post an EPS of 4.18 for the current fiscal year [8] Dividend Announcement - A quarterly dividend of $0.47 per share was declared, representing an annualized yield of 3.3% [9] - The dividend payout ratio is 48.45% [9]

Financial Data and Key Metrics Changes - The company reported GAAP earnings per share of $1.04, an increase of $0.21 or 25.3% year-over-year and a $0.07 or 7.2% increase from the previous quarter [8][9] - Operating earnings per share reached $1.09, compared to $0.88 a year prior and $1.04 in the linked second quarter [8] - Total operating revenues were $206.8 million, marking a record high for the company [8] Business Line Data and Key Metrics Changes - The pre-tax tangible returns for the quarter were 63% for insurance services, 62% for employee benefit services, 48% for wealth management services, and 25% for banking and corporate [5][6] - Net interest income was $128.2 million, a $3.4 million or 2.7% increase from the previous quarter and a $15.4 million or 13.7% increase year-over-year [9] - Operating non-interest revenues represented 38% of total operating revenues, reflecting growth across all business lines [10] Market Data and Key Metrics Changes - Ending loans increased by $231.1 million or 2.2% during the quarter and $498.6 million or 4.9% year-over-year [12] - Total deposits increased by $580.7 million or 4.3% from one year prior and $355.1 million or 2.6% from the previous quarter [12][13] - The company's liquidity position remains strong with readily available sources of liquidity totaling $6.6 billion, which is 240% of estimated uninsured deposits [14] Company Strategy and Development Direction - The company is making a $100 million investment in facilities, talent, and technology across all businesses to drive growth [3] - The acquisition of seven Santander branches is expected to enhance the retail strategy in the banking services business [17] - A minority investment in Leap Holdings, Inc. is intended to complement the insurance services business [17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued growth, particularly in insurance and wealth management services [6][7] - The company anticipates a strong fourth quarter with a loan growth guidance of 4%-5% for the year [36] - The effective tax rate increased to 24.7% due to higher state income taxes, but overall capital ratios remain strong [12][15] Other Important Information - The company recorded a provision for credit losses of $5.6 million, down from $7.7 million in the prior year's third quarter [10] - Non-performing loans totaled $56.1 million, representing 52 basis points of total loans outstanding, a decrease from the previous year [15][16] Q&A Session Summary Question: On the minority investment into Leap - Management views the investment as a step towards potential larger investments in the future, with a financial impact expected to be roughly neutral for 2026 [22][23] Question: On deposit costs and legacy footprint - No dramatic difference in deposit costs was observed between legacy and de novo markets, with expectations for overall deposit costs to trend down [25] Question: On loan growth and competition - Management remains optimistic about loan growth, with the commercial pipeline at its highest level ever and expectations for continued market share gains [36] Question: On margin outlook with Santander deposits - The blended margin is expected to remain in the 3%-5% range, with costs likely decreasing further [39] Question: On employee benefit services growth - Seasonality is expected in Q4 due to recent acquisitions, but overall performance is anticipated to be better than Q3 [44] Question: On investment portfolio yields - The investment portfolio yield has decreased, but cash flows from treasury maturities are expected to provide opportunities for redeployment into loans [48][49]

Financial Data and Key Metrics Changes - The company reported record operating earnings per share of $1.04, an increase of $0.21 or 25.3% year-over-year and a $0.07 or 7.2% increase from the previous quarter [8][9] - Operating revenues reached $206.8 million, reflecting a $7.6 million or 3.8% increase from the previous quarter and a $17.7 million or 9.4% increase year-over-year [9][10] - The net interest income was $128.2 million, marking a $3.4 million or 2.7% increase from the previous quarter and a $15.4 million or 13.7% increase year-over-year [9][10] Business Line Data and Key Metrics Changes - The pre-tax tangible returns for the quarter were 63% for insurance services, 62% for employee benefit services, 48% for wealth management services, and 25% for banking and corporate [5][6] - Operating non-interest revenues increased by $2.3 million or 3% year-over-year and $4.1 million or 5.6% from the previous quarter, representing 38% of total operating revenues [10][11] - The company recorded a provision for credit losses of $5.6 million, down from $7.7 million in the prior year's third quarter [10][11] Market Data and Key Metrics Changes - Ending loans increased by $231.1 million or 2.2% during the quarter and $498.6 million or 4.9% year-over-year, indicating organic growth in the business and consumer lending portfolio [12][14] - Total deposits increased by $580.7 million or 4.3% year-over-year and $355.1 million or 2.6% from the previous quarter [12][14] - The company's liquidity position remains strong with readily available sources of liquidity totaling $6.6 billion, which is 240% of the estimated uninsured deposits [14][15] Company Strategy and Development Direction - The company is making a $100 million investment in facilities, talent, and technology across all businesses to drive growth [3][5] - The acquisition of seven Santander branches is expected to enhance the retail strategy in the banking services business [17] - A minority investment in Leap Holdings Inc. is intended to complement the insurance services business [17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued growth, particularly in insurance and wealth management services [7][17] - The company anticipates a strong fourth quarter with a loan growth guidance of 4% to 5% for the year [36] - Management noted that the effective tax rate increased to 24.7% due to higher state income taxes, but overall capital ratios remain strong [12][15] Other Important Information - The company did not hold any brokered or wholesale deposits during the quarter, maintaining a focus on core deposit growth [13][14] - The allowance for credit losses increased to $84.9 million, reflecting reserve building in the lending portfolio [16] Q&A Session Summary Question: On the minority investment into Leap - Management indicated that the investment is seen as a first step towards potential larger investments in the future, with a financial impact expected to be roughly neutral [22][23] Question: On deposit costs and legacy footprint - Management noted no dramatic difference in deposit costs between legacy and De Novo markets, with expectations for overall deposit costs to trend down [25] Question: On loan growth and competition - Management remains optimistic about loan growth, with the commercial pipeline at its highest level ever and expectations for continued market share gains [36] Question: On margin outlook with Santander deposits - Management expects blended margins to remain favorable, with costs potentially decreasing further as they address exception pricing [39][40] Question: On investment portfolio yields - Management explained that yields in the investment portfolio may fluctuate due to timing of dividends, with plans to redeploy cash flows into loans or pay down borrowings [47][50]

Financial Data and Key Metrics Changes - The company reported GAAP earnings per share of $1.04, an increase of $0.21 or 25.3% year over year and a $0.07 or 7.2% increase from the linked second quarter [12] - Operating earnings per share were $1.09, compared to $0.88 a year prior and $1.04 in the linked second quarter [12] - Total operating revenues reached a record $206.8 million, increasing by $7.6 million or 3.8% from the linked second quarter and $17.7 million or 9.4% from the prior year [13] Business Line Data and Key Metrics Changes - The pretax tangible returns for the quarter were 63% for insurance services, 62% for employee benefit services, 48% for wealth management services, and 25% for banking and corporate [9] - Operating noninterest revenues represented 38% of total operating revenues, reflecting revenue growth across all four business lines [15] Market Data and Key Metrics Changes - Ending loans increased by $231.1 million or 2.2% during the third quarter and increased by $498.6 million or 4.9% from one year prior [17] - Total deposits increased by $580.7 million or 4.3% from one year prior and $355.1 million or 2.6% from the linked second quarter [17] Company Strategy and Development Direction - The company is focused on diversifying higher growth subscription-like revenue streams in insurance benefits and wealth management, while also pursuing strong funding and liquidity in attractive high-priority markets [8] - The company anticipates closing on the acquisition of seven Santander branches, which will accelerate its retail strategy in the banking services business [21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued earnings growth, supported by a diversified revenue profile, strong liquidity, and stable core deposit base [21] - The company remains constructive on growth, with the commercial pipeline at its highest level ever and expectations for strong performance in the mortgage pipeline [41] Other Important Information - The company did not hold any brokered or wholesale deposits during the quarter, maintaining a strong liquidity position with readily available sources totaling $6.2 billion [18] - The effective tax rate for the third quarter was 24.7%, up from 23% in the prior year's third quarter [16] Q&A Session Summary Question: Regarding the minority investment in TALIP - Management indicated that the investment is seen as a first step towards a potentially larger investment in the future, with a financial impact expected to be roughly neutral for 2026 [26][27] Question: On deposit costs and legacy footprint - Management noted no dramatic difference in deposit costs between legacy and new markets, with expectations for overall deposit costs to trend down [28][30] Question: On loan growth and competition - Management remains optimistic about loan growth, with the commercial pipeline at its highest level and expectations for continued market share gains [41][43] Question: On margin outlook with Santander deposits - Management expects blended margins to remain in the 3% to 5% range, with cost of funds remaining low and potential for margin expansion with the Santander acquisition [45][47] Question: On the investment portfolio yields - Management explained that yields in the investment portfolio have been affected by timing of dividends and that they do not expect to make significant purchases in the near term [57][59]

Financial Data and Key Metrics Changes - The company reported GAAP earnings per share of $1.04, an increase of $0.21 or 25.3% year over year and an increase of $0.07 or 7.2% from the linked second quarter [8] - Operating earnings per share were $1.09, compared to $0.88 one year prior and $1.04 in the linked second quarter [8] - Total operating revenues reached a record high of $206.8 million, increasing $7.6 million or 3.8% from the linked second quarter and $17.7 million or 9.4% from one year prior [9] Business Line Data and Key Metrics Changes - The pre-tax tangible returns for the quarter were 63% for insurance services, 62% for employee benefit services, 48% for wealth management services, and 25% for banking and corporate [5] - Net interest income was $128.2 million, representing a $3.4 million or 2.7% increase over the linked second quarter and a $15.4 million or 13.7% improvement over the third quarter of 2024 [9] - Operating non-interest revenues increased $2.3 million or 3% compared to the prior year's third quarter, reflecting revenue growth in all four business lines [10] Market Data and Key Metrics Changes - Ending loans increased $231.1 million or 2.2% during the third quarter and increased $498.6 million or 4.9% from one year prior [12] - Total deposits increased $580.7 million or 4.3% from one year prior and increased $355.1 million or 2.6% from the end of the linked second quarter [12] - The company's liquidity position remains strong with readily available sources of liquidity totaling $6.6 billion, or 240% of the estimated uninsured deposits [13] Company Strategy and Development Direction - The company is focused on diversified, higher growth, subscription-like revenue streams in insurance, benefits, and wealth management, while also pursuing strong funding and liquidity in attractive high-priority markets [5] - The company anticipates closing on the acquisition of seven Santander branches, which will accelerate its retail strategy in the banking services business [16] - A minority investment in Leap Holdings Inc. was announced, complementing the insurance services business [16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued growth, particularly in insurance and wealth businesses, and highlighted strong capital deployment opportunities [5][6] - The company expects to maintain a strong earnings growth foundation due to its diversified revenue profile, strong liquidity, and stable core deposit bank [16] - Management noted that the effective tax rate increased to 24.7% from 23% in the prior year's third quarter, driven by increases in certain state income taxes [12] Other Important Information - The company recorded a $5.6 million provision for credit losses during the third quarter, down from $7.7 million in the prior year's third quarter [10] - Non-performing loans totaled $56.1 million or 52 basis points of total loans outstanding at the end of the third quarter, a decrease from $62.8 million or 61 basis points one year prior [14] Q&A Session Summary Question: On the minority investment into Leap - Management indicated that the investment is seen as a first step and is expected to be roughly neutral in financial impact for 2026 [19][20] Question: On deposit costs and legacy footprint - Management noted no dramatic difference in deposit costs between legacy and De Novo markets, with expectations for overall deposit costs to trend down [21] Question: On spread compression on incremental CRE loans - Management discussed current CRE loan yields and indicated a trend towards lower rates due to market evolution and competition [22][24] Question: On loan growth and pipeline - Management remains optimistic about loan growth, with the commercial pipeline at its highest level ever and expectations for a strong fourth quarter [28][30] Question: On NIM and investment portfolio - Management explained that the investment portfolio yield decreased due to timing of dividends and provided cash flow projections for future years [38][40]

Company Overview Community Financial System, Inc. is a diversified financial services company with over $16 billion in assets, operating across four main business lines [About Community Financial System, Inc.](index=1&type=section&id=About%20Community%20Financial%20System%2C%20Inc.) Community Financial System, Inc. is a diversified financial services company operating across four main business lines: banking, employee benefit services, insurance services, and wealth management services. Its banking subsidiary, Community Bank, N.A., is a top 100 U.S. banking institution with over $16 billion in assets - **Community Financial System, Inc.** is a diversified financial services company focused on four main business lines: banking, employee benefit, insurance, and wealth management services[3](index=3&type=chunk)[32](index=32&type=chunk) - Its banking subsidiary, **Community Bank, N.A.**, is among the country's 100 largest banking institutions with over **$16 billion in assets** and approximately **200 customer facilities**[3](index=3&type=chunk)[32](index=32&type=chunk) [Conference Call Information](index=1&type=section&id=Conference%20Call%20Information) Company management hosted a conference call on October 21, 2025, to discuss the third quarter 2025 results, with access provided via webcast and dial-in - A conference call was hosted on **October 21, 2025, at 11:00 a.m. (ET)** to discuss Q3 2025 results[2](index=2&type=chunk)[30](index=30&type=chunk) - The conference call was accessible via webcast or dial-in at **1-833-630-0464**[2](index=2&type=chunk)[30](index=30&type=chunk) Third Quarter 2025 Financial Highlights The company reported strong Q3 2025 results with record operating diluted EPS, driven by revenue growth across all business lines [Overall Performance Summary](index=2&type=section&id=Overall%20Performance%20Summary) Community Financial System, Inc. reported strong third quarter 2025 results, with net income of $55.1 million and operating net income of $58.1 million. The company achieved a second consecutive quarter of record operating diluted earnings per share of $1.09, reflecting growth in revenues and improved core operating performance across all four business lines - Community Financial System, Inc. reported Q3 2025 **net income of $55.1 million** ($1.04 per share) and **operating net income of $58.1 million** ($1.09 per share)[5](index=5&type=chunk) - The company achieved a second consecutive quarter of **record operating diluted earnings per share of $1.09**[6](index=6&type=chunk) - Results improved from the prior quarter, driven by increases in revenues and core operating performance across all four businesses[6](index=6&type=chunk) [Key Performance Metrics](index=2&type=section&id=Key%20Performance%20Metrics) Key performance metrics for Q3 2025 showed significant year-over-year and quarter-over-quarter improvements, including diluted EPS up 25.3% YoY and 7.2% QoQ, and operating diluted EPS up 23.9% YoY and 4.8% QoQ. Operating return on assets reached 1.38%, and total operating revenues increased 9.4% YoY Third Quarter 2025 Key Performance Metrics | Metric | 3rd Qtr 2025 | 2nd Qtr 2025 | 3rd Qtr 2024 | QoQ Change ($ in thousands) | QoQ Change (%) | YoY Change ($ in thousands) | YoY Change (%) | | :--------------------------------------- | :----------- | :----------- | :----------- | :------------- | :------------- | :------------- | :------------- | | Diluted Earnings Per Share | $1.04 | $0.97 | $0.83 | $0.07 | 7.2% | $0.21 | 25.3% | | Operating Diluted Earnings Per Share | $1.09 | $1.04 | $0.88 | $0.05 | 4.8% | $0.21 | 23.9% | | Operating Pre-Tax, Pre-Provision Net Revenue Per Share | $1.56 | $1.41 | $1.29 | $0.15 | 10.6% | $0.27 | 20.9% | | Return on Assets | 1.30% | 1.24% | 1.09% | - | 0.06% | - | 0.21% | | Operating Return on Assets | 1.38% | 1.34% | 1.16% | - | 0.04% | - | 0.22% | | Return on Equity | 11.62% | 11.21% | 10.21% | - | 0.41% | - | 1.41% | | Operating Return on Equity | 12.25% | 12.10% | 10.85% | - | 0.15% | - | 1.40% | | Total Operating Revenues | $206,816 | $199,257 | $189,096 | $7,559 | 3.8% | $17,720 | 9.4% | | Net Interest Income | $128,165 | $124,748 | $112,745 | $3,417 | 2.7% | $15,420 | 13.7% | | Net Interest Margin | 3.30% | 3.27% | 3.03% | - | 0.03% | - | 0.27% | | Total Ending Loans | $10,750,262 | $10,519,117 | $10,251,674 | $231,145 | 2.2% | $498,588 | 4.9% | | Total Ending Deposits | $14,056,850 | $13,701,768 | $13,476,171 | $355,082 | 2.6% | $580,679 | 4.3% | | Tier 1 Leverage Ratio | 9.46% | 9.42% | 9.12% | - | 0.04% | - | 0.34% | Results of Operations This section details the company's Q3 2025 financial performance, covering net income, net interest income, noninterest revenues, and expenses [Net Income and Earnings Per Share](index=4&type=section&id=Net%20Income%20and%20Earnings%20Per%20Share) The Company's net income for Q3 2025 was $55.1 million ($1.04 per share), a significant increase from $43.9 million ($0.83 per share) in Q3 2024 and $0.97 per share in Q2 2025. This growth was primarily driven by higher net interest income, increased noninterest revenues, and a decrease in the provision for credit losses Net Income and Diluted EPS | Metric | 3rd Qtr 2025 ($ in millions) | 2nd Qtr 2025 ($ in millions) | 3rd Qtr 2024 ($ in millions) | | :--------------------- | :----------- | :----------- | :----------- | | Net Income | $55.1 | $51.3 | $43.9 | | Diluted Earnings Per Share | $1.04 | $0.97 | $0.83 | - The **$0.21 increase in diluted earnings per share year-over-year** was primarily driven by higher net interest income, increased noninterest revenues, and a decrease in the provision for credit losses[13](index=13&type=chunk) - The **$0.07 increase in diluted earnings per share quarter-over-quarter** was primarily due to higher net interest income, increased noninterest revenues, and decreased noninterest expenses[13](index=13&type=chunk) [Net Interest Income and Net Interest Margin](index=4&type=section&id=Net%20Interest%20Income%20and%20Net%20Interest%20Margin) The Company achieved record quarterly net interest income of $128.2 million in Q3 2025, up 13.7% YoY and 2.7% QoQ. Net interest margin expanded to 3.30% (3.33% FTE), driven by organic loan growth, repricing, diminishing funding cost pressures, a 16 basis point increase in interest-earning asset yield, and a 17 basis point decrease in the cost of interest-bearing liabilities YoY Net Interest Income and Margin | Metric | 3rd Qtr 2025 ($ in millions) | 2nd Qtr 2025 ($ in millions) | 3rd Qtr 2024 ($ in millions) | YoY Change ($ in millions) | YoY Change (%) | QoQ Change ($ in millions) | QoQ Change (%) | | :---------------------- | :----------- | :----------- | :----------- | :------------- | :------------- | :------------- | :------------- | | Net Interest Income | $128.2 | $124.7 | $112.7 | $15.4 | 13.7% | $3.4 | 2.7% | | Net Interest Margin | 3.30% | 3.27% | 3.03% | - | 0.27% | - | 0.03% | | Net Interest Margin (FTE) | 3.33% | 3.30% | 3.05% | - | 0.28% | - | 0.03% | - The yield on interest-earning assets increased **16 basis points to 4.59%** over the prior year's third quarter, primarily driven by higher loan yields[14](index=14&type=chunk) - The cost of interest-bearing liabilities decreased **17 basis points from 1.93% to 1.76%** YoY, including a 26 basis point decrease in average borrowing rate and a 10 basis point decrease in average interest-bearing deposit rate[14](index=14&type=chunk) [Noninterest Revenues](index=6&type=section&id=Noninterest%20Revenues) Noninterest revenues accounted for 38% of total revenues in Q3 2025, with growth across banking, employee benefit, and insurance services, and consistent performance in wealth management - The Company's noninterest revenue streams generated **38% of total revenues** in Q3 2025[16](index=16&type=chunk) Noninterest Revenues by Segment | Segment | 3rd Qtr 2025 ($ in millions) | 2nd Qtr 2025 ($ in millions) | 3rd Qtr 2024 ($ in millions) | YoY Change ($ in millions) | YoY Change (%) | QoQ Change ($ in millions) | QoQ Change (%) | | :-------------------------- | :----------- | :----------- | :----------- | :------------- | :------------- | :------------- | :------------- | | Banking noninterest revenues | $21.2 | $20.1 | $20.6 | $0.6 | 2.8% | $1.1 | 5.5% | | Employee benefit services revenues | $34.4 | $32.4 | $33.2 | $1.2 | 3.6% | $2.0 | 6.3% | | Insurance services revenues | $14.1 | $13.4 | $13.6 | $0.5 | 3.6% | $0.7 | 5.6% | | Wealth management services revenues | $8.9 | $8.7 | $8.9 | $0.0 | 0.0% | $0.3 | 3.0% | - Employee benefit services revenue increases were largely driven by growth in recordkeeping and third-party administration services, including acquisitions[18](index=18&type=chunk) - Insurance services revenue increase from prior year was due to acquisitions, while the QoQ increase was driven by seasonality of insurance policy renewals[18](index=18&type=chunk) [Noninterest Expenses and Income Taxes](index=6&type=section&id=Noninterest%20Expenses%20and%20Income%20Taxes) Total noninterest expenses increased 3.3% YoY to $128.3 million in Q3 2025, primarily due to higher data processing, occupancy, legal fees, and acquisition expenses, partially offset by lower salaries. The effective tax rate rose to 24.7% Noninterest Expenses and Effective Tax Rate | Metric | 3rd Qtr 2025 ($ in millions) | 3rd Qtr 2024 ($ in millions) | YoY Change ($ in millions) | YoY Change (%) | | :-------------------------- | :----------- | :----------- | :------------- | :------------- | | Total noninterest expenses | $128.3 | $124.2 | $4.1 | 3.3% | | Effective tax rate | 24.7% | 23.0% | - | 1.7% | | Effective tax rate (Q2 2025) | 24.7% | 22.3% | - | 2.4% | - Key drivers for the increase in noninterest expenses include **data processing and communications (up 20.3%)**, **occupancy and equipment (up 7.9%)**, **legal and professional fees (up 20.0%)**, and **acquisition expenses (up $0.7 million)**[18](index=18&type=chunk) - Salaries and employee benefits expenses decreased **$1.5 million (1.9%)**, primarily due to lower employee medical costs and a decrease in performance-based incentive compensation[18](index=18&type=chunk) Business Segment Results This section provides a detailed breakdown of the financial performance for each of the company's four business segments [Banking Segment](index=3&type=section&id=Banking%20Segment) The Banking segment reported a strong adjusted income before income taxes of $56.3 million in Q3 2025, marking a 39.2% YoY increase and 3.3% QoQ increase. This was supported by a 13.9% YoY rise in net interest income and a 27.8% YoY decrease in provision for credit losses Banking Segment Performance | Metric | 3rd Qtr 2025 ($ in thousands) | 2nd Qtr 2025 ($ in thousands) | 3rd Qtr 2024 ($ in thousands) | QoQ Change ($ in thousands) | QoQ Change (%) | YoY Change ($ in thousands) | YoY Change (%) | | :-------------------------------- | :----------- | :----------- | :----------- | :------------- | :------------- | :------------- | :------------- | | Net interest income | $127,348 | $123,973 | $111,846 | $3,375 | 2.7% | $15,502 | 13.9% | | Provision for credit losses | $5,564 | $4,117 | $7,709 | $1,447 | 35.1% | ($2,145) | (27.8%) | | Operating noninterest revenues | $21,082 | $19,949 | $20,478 | $1,133 | 5.7% | $604 | 2.9% | | Adjusted income before income taxes | $56,303 | $54,492 | $40,445 | $1,811 | 3.3% | $15,858 | 39.2% | | Adjusted return on assets | 1.35% | 1.34% | 1.02% | - | 0.01% | - | 0.33% | | Adjusted return on equity | 14.08% | 14.16% | 11.36% | - | (0.08%) | - | 2.72% | | Adjusted return on tangible equity | 25.09% | 25.82% | 22.46% | - | (0.73%) | - | 2.63% | [Employee Benefit Services Segment](index=3&type=section&id=Employee%20Benefit%20Services%20Segment) The Employee Benefit Services segment recorded adjusted income before income taxes of $14.5 million in Q3 2025, an increase of 21.7% QoQ, despite a 4.8% YoY decrease. Segment operating revenues grew 6.1% QoQ and 3.2% YoY Employee Benefit Services Segment Performance | Metric | 3rd Qtr 2025 ($ in thousands) | 2nd Qtr 2025 ($ in thousands) | 3rd Qtr 2024 ($ in thousands) | QoQ Change ($ in thousands) | QoQ Change (%) | YoY Change ($ in thousands) | YoY Change (%) | | :-------------------------------- | :----------- | :----------- | :----------- | :------------- | :------------- | :------------- | :------------- | | Segment operating revenues | $35,965 | $33,892 | $34,858 | $2,073 | 6.1% | $1,107 | 3.2% | | Adjusted income before income taxes | $14,501 | $11,911 | $15,237 | $2,590 | 21.7% | ($736) | (4.8%) | | Adjusted return on assets | 25.49% | 20.46% | 24.88% | - | 5.03% | - | 0.61% | | Adjusted return on equity | 28.66% | 22.80% | 27.92% | - | 5.86% | - | 0.74% | | Adjusted return on tangible equity | 62.00% | 47.63% | 57.46% | - | 14.37% | - | 4.54% | [Insurance Services Segment](index=4&type=section&id=Insurance%20Services%20Segment) The Insurance Services segment saw a significant increase in adjusted income before income taxes, rising 44.3% QoQ and 12.6% YoY to $3.2 million in Q3 2025. Segment operating revenues also grew 5.6% QoQ and 3.7% YoY Insurance Services Segment Performance | Metric | 3rd Qtr 2025 ($ in thousands) | 2nd Qtr 2025 ($ in thousands) | 3rd Qtr 2024 ($ in thousands) | QoQ Change ($ in thousands) | QoQ Change (%) | YoY Change ($ in thousands) | YoY Change (%) | | :-------------------------------- | :----------- | :----------- | :----------- | :------------- | :------------- | :------------- | :------------- | | Segment operating revenues | $14,219 | $13,464 | $13,709 | $755 | 5.6% | $510 | 3.7% | | Adjusted income before income taxes | $3,242 | $2,247 | $2,879 | $995 | 44.3% | $363 | 12.6% | | Adjusted return on assets | 15.35% | 13.40% | 16.49% | - | 1.95% | - | (1.14%) | | Adjusted return on equity | 19.60% | 16.76% | 22.79% | - | 2.84% | - | (3.19%) | | Adjusted return on tangible equity | 63.09% | 96.98% | 147.58% | - | (33.89%) | - | (84.49%) | [Wealth Management Services Segment](index=4&type=section&id=Wealth%20Management%20Services%20Segment) The Wealth Management Services segment achieved adjusted income before income taxes of $2.9 million in Q3 2025, representing a substantial 44.3% YoY increase and 23.1% QoQ increase. Segment operating revenues grew 3.4% QoQ and 1.6% YoY, reflecting favorable market conditions Wealth Management Services Segment Performance | Metric | 3rd Qtr 2025 ($ in thousands) | 2nd Qtr 2025 ($ in thousands) | 3rd Qtr 2024 ($ in thousands) | QoQ Change ($ in thousands) | QoQ Change (%) | YoY Change ($ in thousands) | YoY Change (%) | | :-------------------------------- | :----------- | :----------- | :----------- | :------------- | :------------- | :------------- | :------------- | | Segment operating revenues | $9,528 | $9,219 | $9,380 | $309 | 3.4% | $148 | 1.6% | | Adjusted income before income taxes | $2,892 | $2,349 | $2,004 | $543 | 23.1% | $888 | 44.3% | | Adjusted return on assets | 29.22% | 24.67% | 22.25% | - | 4.55% | - | 6.97% | | Adjusted return on equity | 41.02% | 31.21% | 30.57% | - | 9.81% | - | 10.45% | | Adjusted return on tangible equity | 48.02% | 36.12% | 37.30% | - | 11.90% | - | 10.72% | Financial Position and Capital This section reviews the company's balance sheet, including assets, liquidity, deposits, loans, credit quality, and capital adequacy [Total Assets and Liquidity](index=7&type=section&id=Total%20Assets%20and%20Liquidity) The Company's total assets reached $16.96 billion at September 30, 2025, an increase of 3.4% YoY and 1.8% QoQ, maintaining a strong liquidity profile Total Assets Growth | Metric | September 30, 2025 | YoY Change ($) | YoY Change (%) | QoQ Change ($) | QoQ Change (%) | | :----------- | :------------------- | :------------- | :------------- | :------------- | :------------- | | Total Assets | $16.96 billion | $553.1 million | 3.4% | $292.8 million | 1.8% | - The increase in total assets was primarily driven by **organic loan growth**[22](index=22&type=chunk) - Readily available sources of liquidity totaled **$6.20 billion** at September 30, 2025, including unrestricted cash, unpledged investment securities, and unused borrowing capacity[22](index=22&type=chunk) - Readily available liquidity represents **240% of estimated uninsured deposits**, net of collateralized and intercompany deposits[22](index=22&type=chunk) [Deposits and Funding](index=7&type=section&id=Deposits%20and%20Funding) Ending deposits grew to $14.06 billion at September 30, 2025, up 4.3% YoY and 2.6% QoQ, driven by increases in non-maturity interest-bearing and noninterest-bearing deposit balances. The average cost of total deposits decreased to 1.17% Deposits and Funding Metrics | Metric | September 30, 2025 | YoY Change ($) | YoY Change (%) | QoQ Change ($) | QoQ Change (%) | | :-------------------- | :------------------- | :------------- | :------------- | :------------- | :------------- | | Ending Deposits | $14.06 billion | $580.7 million | 4.3% | $355.1 million | 2.6% | | Average Cost of Total Deposits | 1.17% | -0.06% | - | -0.02% | - | | Ending Borrowings | $763.3 million | -$185.1 million | -19.5% | -$131.1 million | -14.7% | - Deposit growth was driven by increases in **non-maturity interest-bearing and noninterest-bearing deposit balances**[22](index=22&type=chunk) - **65% of total deposits** were in no- and relatively low-rate checking and savings accounts, while time deposit accounts represented **14% of total deposits** at quarter-end[22](index=22&type=chunk) [Loans and Credit Quality](index=7&type=section&id=Loans%20and%20Credit%20Quality) Ending loans grew to $10.75 billion at September 30, 2025, up 4.9% YoY and 2.2% QoQ, reflecting organic growth in business and consumer lending. Credit quality remains strong, with net charge-offs at an annualized 0.09% of average loans and nonperforming loans at 0.52% of total loans, both remaining relatively low compared to the industry Loans and Credit Quality Metrics | Metric | September 30, 2025 | YoY Change ($) | YoY Change (%) | QoQ Change ($) | QoQ Change (%) | | :------------------------------------ | :------------------- | :------------- | :------------- | :------------- | :------------- | | Ending Loans | $10.75 billion | $498.6 million | 4.9% | $231.1 million | 2.2% | | Allowance for Credit Losses | $84.9 million | $8.7 million | 11.4% | $3.0 million | 3.7% | | Allowance for Credit Losses / Total Loans | 0.79% | 0.05% | - | 0.01% | - | | Annualized Loan Net Charge-Offs | 0.09% | -0.02% | - | -0.11% | - | | Total Delinquent Loans / Total Loans | 1.00% | -0.07% | - | -0.01% | - | | Nonperforming Loans / Total Loans | 0.52% | -0.09% | - | 0.01% | - | - The Company recorded a **$5.6 million provision for credit losses** during Q3 2025, reflective of organic loan growth and a stable economic environment[22](index=22&type=chunk) - Exposure to non-owner occupied and multifamily commercial real estate (CRE) remains diverse and relatively low at **15% of total assets**, **24% of total loans**, and **188% of total bank-level regulatory capital**[22](index=22&type=chunk) [Shareholders' Equity and Regulatory Capital](index=8&type=section&id=Shareholders%27%20Equity%20and%20Regulatory%20Capital) The Company maintains a strong capital position, with shareholders' equity increasing to $1.94 billion at September 30, 2025, up 8.6% YoY and 3.0% QoQ. All regulatory capital ratios significantly exceeded well-capitalized standards Shareholders' Equity and Capital Ratios | Metric | September 30, 2025 | YoY Change ($) | YoY Change (%) | QoQ Change ($) | QoQ Change (%) | | :------------------------------------ | :------------------- | :------------- | :------------- | :------------- | :------------- | | Shareholders' Equity | $1.94 billion | $154.0 million | 8.6% | $55.9 million | 3.0% | | Shareholders' Equity to Assets Ratio | 11.43% | 0.55% | - | 0.13% | - | | Tier 1 Leverage Ratio | 9.46% | 0.34% | - | 0.04% | - | | Tangible Equity to Tangible Assets Ratio (non-GAAP) | 6.73% | 0.76% | - | 0.22% | - | - The increase in shareholders' equity was primarily due to a **$108.2 million increase in retained earnings** and a **$32.1 million decrease in accumulated other comprehensive loss** YoY[28](index=28&type=chunk) - All of the Company's and Community Bank, N.A.'s regulatory capital ratios significantly exceeded **well-capitalized standards**[23](index=23&type=chunk) [Dividend and Stock Repurchase Program](index=8&type=section&id=Dividend%20and%20Stock%20Repurchase%20Program) The Company declared a quarterly cash dividend of $0.47 per share in Q3 2025, marking the 33rd consecutive year of dividend increases, and repurchased 206,054 shares - The Company declared a quarterly cash dividend of **$0.47 per share** on its common stock in Q3 2025, up 2.2% YoY, marking the **33rd consecutive year of dividend increases**[24](index=24&type=chunk)[28](index=28&type=chunk) - The Board approved a stock repurchase program in December 2024, authorizing the repurchase of up to **2.63 million shares (5.0% of common stock outstanding)** during 2025[28](index=28&type=chunk) - **206,054 shares** were repurchased pursuant to the 2025 stock repurchase program during the third quarter and first nine months of 2025[28](index=28&type=chunk) Strategic Developments Strategic initiatives include banking services expansion and a significant investment in a tech-first insurance managing general agent [Banking Services Expansion](index=8&type=section&id=Banking%20Services%20Expansion) Community Bank, N.A. is expanding its banking services into the strategic Greater Lehigh Valley market by acquiring seven branch locations from Santander Bank, N.A., adding approximately $600 million of customer deposits - Community Bank, N.A. entered an agreement to acquire **seven branch locations** in the Allentown, Pennsylvania market from Santander Bank, N.A.[25](index=25&type=chunk) - The transaction is expected to add approximately **$600 million of customer deposits**, as well as branch-related loans and wealth management relationships[25](index=25&type=chunk) - Regulatory approval has been received, and the branch transaction is expected to close on **November 7, 2025**[25](index=25&type=chunk) [Investment in Leap Holdings, Inc.](index=8&type=section&id=Investment%20in%20Leap%20Holdings%2C%20Inc.) The Company made a $37.4 million minority investment in Leap Holdings, Inc., a tech-first managing general agent providing insurance solutions for the rental housing sector, complementing existing insurance services - The Company announced a **$37.4 million minority investment** in Leap Holdings, Inc., parent company of Leap Insurance Agency, LLC[7](index=7&type=chunk)[26](index=26&type=chunk) - Leap Insurance Agency, LLC is a tech-first managing general agent providing insurance solutions for the rental housing sector, with flagship offerings including Agile Rent Guaranty and Leap Deposit Replacement[27](index=27&type=chunk) - This investment will complement the Company's existing insurance services business and underscores its commitment to scale as a diversified financial services company[7](index=7&type=chunk)[26](index=26&type=chunk) Non-GAAP Measures This section defines and explains the company's use of supplemental non-GAAP financial measures to aid in understanding core performance [Definition and Rationale](index=9&type=section&id=Definition%20and%20Rationale) The Company provides supplemental reporting using non-GAAP measures such as 'operating' and 'tangible' results, operating pre-tax, pre-provision net revenues, and fully tax-equivalent (FTE) net interest income/margin. These measures exclude specific items like acquisition expenses and amortization of intangibles to help investors and analysts better understand underlying core performance and enhance comparability - 'Operating' basis results exclude after-tax effects of acquisition expenses, contingent consideration adjustments, restructuring expenses, litigation accrual, and amortization of intangible assets[29](index=29&type=chunk) - 'Tangible' basis results exclude goodwill and intangible asset balances, net of accumulated amortization and applicable deferred tax amounts[29](index=29&type=chunk) - Management believes these non-GAAP measures help investors and analysts measure underlying core performance and provide better comparability[29](index=29&type=chunk) Forward-Looking Statements This section contains a standard disclaimer regarding forward-looking statements, noting that actual results may differ due to various risks [Disclaimer and Risk Factors](index=9&type=section&id=Disclaimer%20and%20Risk%20Factors) This section contains a standard disclaimer regarding forward-looking statements, emphasizing that actual results may differ materially from expectations due to various risks and uncertainties. Key risk factors include macroeconomic conditions, fiscal and monetary policies, litigation, competition, and regulatory changes. Readers are advised to consult SEC filings for a comprehensive discussion of these risks - The press release contains forward-looking statements, and actual results may differ from expectations due to significant risks and uncertainties[33](index=33&type=chunk) - Factors that could cause actual results to differ include macroeconomic conditions, fiscal and monetary policies, litigation, regulatory actions, and competition[33](index=33&type=chunk) - Readers are advised to refer to the Company's SEC filings, including the 'Risk Factors' section, for more information[33](index=33&type=chunk) Summary of Financial Data (Unaudited) This section provides unaudited detailed financial data, covering earnings, profitability, net interest margin, balances, balance sheet, capital, and asset quality [Earnings Data](index=10&type=section&id=Earnings%20Data) This section provides detailed quarterly and year-to-date earnings data, including comprehensive breakdowns of interest income, interest expense, net interest income, provision for credit losses, various noninterest revenues, and noninterest expenses, culminating in net income and earnings per share Quarterly and Year-to-Date Earnings Data | Metric | 3rd Qtr 2025 | 2nd Qtr 2025 | 1st Qtr 2025 | 4th Qtr 2024 | 3rd Qtr 2024 | YTD 2025 | YTD 2024 | | :--------------------------------------- | :----------- | :----------- | :----------- | :----------- | :----------- | :----------- | :----------- | | Loan income | $152,509 | $146,534 | $142,904 | $144,638 | $140,472 | $441,947 | $401,129 | | Total interest income | $177,283 | $172,878 | $167,647 | $169,931 | $163,900 | $517,808 | $473,597 | | Interest expense | $49,118 | $48,130 | $47,435 | $49,958 | $51,155 | $144,683 | $144,453 | | Net interest income | $128,165 | $124,748 | $120,212 | $119,973 | $112,745 | $373,125 | $329,144 | | Provision for credit losses | $5,564 | $4,117 | $6,690 | $6,208 | $7,709 | $16,371 | $16,565 | | Total noninterest revenues | $78,887 | $74,508 | $76,036 | $76,314 | $76,197 | $229,431 | $220,872 | | Total noninterest expenses | $128,319 | $129,102 | $125,290 | $125,539 | $124,203 | $382,711 | $361,286 | | Net income | $55,088 | $51,331 | $49,614 | $49,793 | $43,901 | $156,033 | $132,688 | | Diluted earnings per share | $1.04 | $0.97 | $0.93 | $0.94 | $0.83 | $2.94 | $2.50 | [Profitability Metrics](index=11&type=section&id=Profitability%20Metrics) This section presents a comprehensive overview of the Company's profitability, including both GAAP and non-GAAP metrics such as Return on Assets, Return on Equity, Noninterest Revenues/Total Revenues, and Efficiency Ratios, across multiple quarters Quarterly Profitability Metrics (GAAP and Non-GAAP) | Metric | 3rd Qtr 2025 | 2nd Qtr 2025 | 1st Qtr 2025 | 4th Qtr 2024 | 3rd Qtr 2024 | | :------------------------------------------------- | :----------- | :----------- | :----------- | :----------- | :----------- | | Return on assets (GAAP) | 1.30% | 1.24% | 1.22% | 1.21% | 1.09% | | Return on equity (GAAP) | 11.62% | 11.21% | 11.28% | 11.27% | 10.21% | | Noninterest revenues/total revenues (GAAP) | 38.1% | 37.4% | 38.7% | 38.9% | 40.3% | | Efficiency ratio (GAAP) | 62.0% | 64.8% | 63.8% | 64.0% | 65.7% | | Operating return on assets (non-GAAP) | 1.38% | 1.34% | 1.28% | 1.29% | 1.16% | | Operating return on equity (non-GAAP) | 12.25% | 12.10% | 11.84% | 11.99% | 10.85% | | Operating return on tangible equity (non-GAAP) | 22.43% | 22.63% | 22.76% | 23.36% | 21.80% | | Operating efficiency ratio (non-GAAP) | 59.9% | 62.0% | 61.9% | 61.8% | 63.6% | [Components of Net Interest Margin (FTE)](index=12&type=section&id=Components%20of%20Net%20Interest%20Margin%20(FTE)) This section details the components contributing to the net interest margin, including yields on various earning assets (loans, cash equivalents, investments) and costs of different funding sources (interest-bearing deposits, borrowings, total deposits, total funds), presented on a fully tax-equivalent basis Quarterly Components of Net Interest Margin (FTE) | Metric | 3rd Qtr 2025 | 2nd Qtr 2025 | 1st Qtr 2025 | 4th Qtr 2024 | 3rd Qtr 2024 | | :------------------------------------------ | :----------- | :----------- | :----------- | :----------- | :----------- | | Loan yield | 5.68% | 5.63% | 5.58% | 5.58% | 5.51% | | Earning asset yield | 4.59% | 4.56% | 4.51% | 4.52% | 4.43% | | Interest-bearing deposit rate | 1.59% | 1.59% | 1.59% | 1.68% | 1.69% | | Borrowing rate | 3.82% | 3.56% | 3.63% | 3.57% | 4.08% | | Cost of all interest-bearing funds | 1.76% | 1.74% | 1.75% | 1.84% | 1.93% | | Cost of total deposits | 1.17% | 1.19% | 1.17% | 1.23% | 1.23% | | Cost of funds (includes noninterest-bearing deposits) | 1.33% | 1.32% | 1.33% | 1.38% | 1.44% | | Net interest margin (FTE) (non-GAAP) | 3.33% | 3.30% | 3.24% | 3.20% | 3.05% | [Average Balances](index=12&type=section&id=Average%20Balances) This section provides average balances for key financial statement items over the past five quarters, including loans, cash equivalents, investment securities, total interest-earning assets, total assets, various deposit categories, borrowings, and shareholders' equity Quarterly Average Balances | Metric | 3rd Qtr 2025 | 2nd Qtr 2025 | 1st Qtr 2025 | 4th Qtr 2024 | 3rd Qtr 2024 | | :------------------------------------------ | :----------- | :----------- | :----------- | :----------- | :----------- | | Loans | $10,664,241 | $10,455,637 | $10,402,985 | $10,331,217 | $10,155,343 | | Total interest-earning assets | $15,393,114 | $15,289,591 | $15,165,301 | $15,035,988 | $14,796,369 | | Total assets | $16,755,095 | $16,590,741 | $16,439,357 | $16,324,320 | $16,058,219 | | Interest checking, savings and money market deposits | $8,086,979 | $8,094,208 | $7,899,568 | $7,689,659 | $7,462,225 | | Total interest-bearing liabilities | $11,047,159 | $11,064,639 | $10,961,853 | $10,787,274 | $10,567,402 | | Noninterest-bearing deposits | $3,640,964 | $3,522,734 | $3,519,962 | $3,603,416 | $3,611,755 | | Shareholders' equity | $1,881,116 | $1,836,965 | $1,783,646 | $1,757,467 | $1,709,791 | [Balance Sheet Data](index=13&type=section&id=Balance%20Sheet%20Data) This section provides period-end balance sheet data for the past five quarters, detailing assets (cash, investment securities, loans, goodwill, other assets), liabilities (deposits, borrowings, other liabilities), and shareholders' equity, offering a snapshot of the Company's financial position Quarterly Balance Sheet Data | Metric | 3rd Qtr 2025 | 2nd Qtr 2025 | 1st Qtr 2025 | 4th Qtr 2024 | 3rd Qtr 2024 | | :------------------------------------------ | :----------- | :----------- | :----------- | :----------- | :----------- | | Cash and cash equivalents | $245,247 | $237,248 | $518,021 | $197,004 | $346,110 | | Total investment securities | $4,380,564 | $4,350,070 | $4,301,343 | $4,218,386 | $4,287,551 | | Total loans | $10,750,262 | $10,519,117 | $10,421,141 | $10,432,365 | $10,251,674 | | Total assets | $16,957,804 | $16,665,018 | $16,764,296 | $16,386,044 | $16,404,700 | | Total deposits | $14,056,850 | $13,701,768 | $13,892,047 | $13,441,707 | $13,476,171 | | Total liabilities | $15,018,854 | $14,781,927 | $14,930,221 | $14,623,209 | $14,619,753 | | Shareholders' equity | $1,938,950 | $1,883,091 | $1,834,075 | $1,762,835 | $1,784,947 | [Capital and Other Data](index=13&type=section&id=Capital%20and%20Other%20Data) This section provides key capital and other financial metrics at quarter-end, including various equity-to-asset ratios (GAAP and non-GAAP), regulatory capital ratios like Tier 1 leverage, loan-to-deposit ratio, share information, dividends, and book values Quarterly Capital and Other Data | Metric | 3rd Qtr 2025 | 2nd Qtr 2025 | 1st Qtr 2025 | 4th Qtr 2024 | 3rd Qtr 2024 | | :------------------------------------------ | :----------- | :----------- | :----------- | :----------- | :----------- | | Shareholders' equity/total assets (GAAP) | 11.43% | 11.30% | 10.94% | 10.76% | 10.88% | | Tangible equity/tangible assets (non-GAAP) | 6.73% | 6.51% | 6.15% | 5.83% | 5.97% | | Tier 1 leverage ratio | 9.46% | 9.42% | 9.29% | 9.19% | 9.12% | | Loan-to-deposit ratio | 76.5% | 76.8% | 75.0% | 77.6% | 76.1% | | Cash dividends declared per common share | $0.47 | $0.46 | $0.46 | $0.46 | $0.46 | | Book value (GAAP) | $36.82 | $35.62 | $34.71 | $33.47 | $33.97 | | Tangible book value (non-GAAP) | $20.57 | $19.46 | $18.52 | $17.20 | $17.66 | | Common stock price at quarter-end | $58.64 | $56.87 | $56.86 | $61.68 | $58.07 | [Asset Quality](index=14&type=section&id=Asset%20Quality) This section provides a detailed breakdown of asset quality metrics over the past five quarters, including nonaccrual loans, delinquent loans, total nonperforming loans, other real estate owned, net charge-offs, and various ratios assessing credit risk and allowance coverage Quarterly Asset Quality Metrics | Metric | 3rd Qtr 2025 | 2nd Qtr 2025 | 1st Qtr 2025 | 4th Qtr 2024 | 3rd Qtr 2024 | | :------------------------------------------ | :----------- | :----------- | :----------- | :----------- | :----------- | | Nonaccrual loans | $49,327 | $45,808 | $69,051 | $66,387 | $59,013 | | Total nonperforming loans | $56,057 | $53,327 | $74,979 | $73,387 | $62,846 | | Total nonperforming assets | $63,908 | $61,281 | $77,725 | $76,168 | $65,125 | | Net charge-offs | $2,471 | $5,114 | $3,229 | $3,211 | $2,772 | | Allowance for credit losses/loans outstanding | 0.79% | 0.78% | 0.79% | 0.76% | 0.74% | | Nonperforming loans/loans outstanding | 0.52% | 0.51% | 0.72% | 0.70% | 0.61% | | Allowance for credit losses/nonperforming loans | 152% | 153% | 110% | 108% | 121% | | Net charge-offs/average loans | 0.09% | 0.20% | 0.13% | 0.12% | 0.11% | | Delinquent loans/ending loans | 1.00% | 1.01% | 1.29% | 1.24% | 1.07% | | Nonperforming assets/total assets | 0.38% | 0.37% | 0.46% | 0.46% | 0.40% | [Quarterly GAAP to Non-GAAP Reconciliations](index=14&type=section&id=Quarterly%20GAAP%20to%20Non-GAAP%20Reconciliations) This extensive section provides detailed reconciliations of various GAAP financial measures to their corresponding non-GAAP operating and tangible equivalents across five quarters, illustrating adjustments for non-recurring or non-core items Operating Pre-Tax, Pre-Provision Net Revenue (non-GAAP) Reconciliation | Metric | 3rd Qtr 2025 | 2nd Qtr 2025 | 1st Qtr 2025 | 4th Qtr 2024 | 3rd Qtr 2024 | | :------------------------------------------ | :----------- | :----------- | :----------- | :----------- | :----------- | | Net income (GAAP) | $55,088 | $51,331 | $49,614 | $49,793 | $43,901 | | Income before income taxes | $73,169 | $66,037 | $64,268 | $64,540 | $57,030 | | Provision for credit losses | $5,564 | $4,117 | $6,690 | $6,208 | $7,709 | | Pre-tax, pre-provision net revenue (non-GAAP) | $78,733 | $70,154 | $70,958 | $70,748 | $64,739 | | Operating pre-tax, pre-provision net revenue (non-GAAP) | $82,502 | $75,116 | $74,146 | $74,263 | $68,274 | Operating Diluted Earnings Per Share (non-GAAP) Reconciliation | Metric | 3rd Qtr 2025 | 2nd Qtr 2025 | 1st Qtr 2025 | 4th Qtr 2024 | 3rd Qtr 2024 | | :------------------------------------------ | :----------- | :----------- | :----------- | :----------- | :----------- | | Diluted earnings per share (GAAP) | $1.04 | $0.97 | $0.93 | $0.94 | $0.83 | | Operating diluted earnings per share (non-GAAP) | $1.09 | $1.04 | $0.98 | $1.00 | $0.88 | Operating Net Income (non-GAAP) Reconciliation | Metric | 3rd Qtr 2025 | 2nd Qtr 2025 | 1st Qtr 2025 | 4th Qtr 2024 | 3rd Qtr 2024 | | :------------------------------------------ | :----------- | :----------- | :----------- | :----------- | :----------- | | Net income (GAAP) | $55,088 | $51,331 | $49,614 | $49,793 | $43,901 | | Operating net income (non-GAAP) | $58,074 | $55,402 | $52,067 | $52,949 | $46,636 | [Quarterly Segment Information Reconciliations](index=19&type=section&id=Quarterly%20Segment%20Information%20Reconciliations) This section provides reconciliations of segment-level adjusted income before income taxes to total consolidated income before income taxes, and average total segment assets to average total consolidated assets. It also includes segment-specific adjusted return metrics (return on assets, equity, and tangible equity) for Banking, Employee Benefit Services, Insurance Services, and Wealth Management Services Reconciliation of Total Segment Adjusted Income Before Income Taxes to Total Consolidated Income Before Income Taxes | Metric | 3rd Qtr 2025 | 2nd Qtr 2025 | 3rd Qtr 2024 | | :---------------------------------------------------------------- | :----------- | :----------- | :----------- | | Total segment adjusted income before income taxes | $76,938 | $70,999 | $60,565 | | Total consolidated income before income taxes | $73,169 | $66,037 | $57,030 | Banking and Corporate Adjusted Return Metrics | Metric | 3rd Qtr 2025 | 2nd Qtr 2025 | 3rd Qtr 2024 | | :-------------------------------- | :----------- | :----------- | :----------- | | Adjusted return on assets | 1.35% | 1.34% | 1.02% | | Adjusted return on equity | 14.08% | 14.16% | 11.36% | | Adjusted return on tangible equity (non-GAAP) | 25.09% | 25.82% | 22.46% | Employee Benefit Services Adjusted Return Metrics | Metric | 3rd Qtr 2025 | 2nd Qtr 2025 | 3rd Qtr 2024 | | :-------------------------------- | :----------- | :----------- | :----------- | | Adjusted return on assets | 25.49% | 20.46% | 24.88% | | Adjusted return on equity | 28.66% | 22.80% | 27.92% | | Adjusted return on tangible equity (non-GAAP) | 62.00% | 47.63% | 57.46% |