Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-13695 (Exact name of registrant as specified in its charter) | Delaware | 16-1213679 | | --- | --- | | (State or other ju ...

Core Insights - Community Financial System reported a non-GAAP EPS of $1.04 for Q2 2025, exceeding the consensus estimate of $1.01, representing a 3.0% upside surprise [1] - Total GAAP revenue was $199.3 million, slightly below the consensus estimate of $201.3 million, but up 8.4% year-over-year [1][2] - The quarter showcased record net interest income of $124.7 million, a 14.0% increase from the previous year, and a net interest margin of 3.27%, up 0.26 percentage points year-over-year [5][6] Financial Performance - Non-GAAP EPS for Q2 2025 was $1.04, a 9.5% increase from $0.95 in Q2 2024 [2] - GAAP revenue was $199.3 million, compared to $183.8 million in Q2 2024, reflecting an 8.4% year-over-year growth [2] - Net interest income reached $124.7 million, up from $109.4 million in the prior year [2] - Operating expenses rose to $129.1 million, an increase of 8.5% from the prior-year quarter [8] Business Segments and Strategy - Community Financial System operates through four main segments: banking, employee benefits services, insurance services, and wealth management [3][12] - The company aims to maintain a diversified revenue mix and expand its geographic presence through acquisitions [4][13] - Fee-based businesses contributed 37.4% to total revenue, down from 40.5% a year ago, with mixed results across segments [7] Asset Quality and Capital - Loan balances increased to $10.52 billion, a 4.9% rise year-over-year, driven by consumer indirect lending [6] - The ratio of nonperforming loans to total loans was 0.51% as of June 30, 2025, indicating resilient asset quality [10] - Shareholder equity increased by 12.7% to $1.88 billion, with strong regulatory capital ratios supporting growth [11] Future Outlook - The company anticipates slower growth in fee-based businesses due to market pressures, with a focus on loan growth and deposit trends [14][15] - The quarterly dividend was raised by 2.2% to $0.47 per share, marking the 33rd consecutive year of dividend growth [11][15]

Financial Data and Key Metrics Changes - The company reported GAAP earnings per share of $0.97, an increase of $0.06 or 6.6% year-over-year and up $0.04 or 4.3% from the previous quarter [10] - Operating earnings per share were $1.04, compared to $0.95 a year prior and $0.98 in the linked first quarter [10] - Total operating revenues reached $199.3 million, up $16.1 million or 8.8% year-over-year and up $3.3 million or 1.7% from the previous quarter [10][11] - Net interest income was $124.7 million, representing a $4.5 million or 3.8% increase from the previous quarter and a $15.3 million or 14% improvement year-over-year [11] - The company's operating margin increased to 23%, driving operating pretax earnings expansion of 70% year-to-date [6] Business Line Data and Key Metrics Changes - The Employee Benefits Services business remained flat year-over-year and quarter-over-quarter, with recordkeeping growing at high single digits while Fiduciary Trust faced headwinds [5] - Wealth Management Services experienced muted revenue growth year-over-year but saw a 16% increase in pretax operating earnings [6] - Banking fee income remained strong, with credit results impacted by the resolution of two large nonperforming assets [4] Market Data and Key Metrics Changes - Ending loans increased by $98 million or 0.9% during the second quarter, primarily driven by growth in the consumer indirect lending portfolio [13] - Total deposits increased by $563.9 million or 4.3% year-over-year but decreased by $190.3 million or 1.4% from the previous quarter due to seasonal outflows [14] - The company's liquidity position remains strong, with readily available sources of liquidity totaling $5.9 billion, representing 246% of estimated uninsured deposits [16] Company Strategy and Development Direction - The company announced a branch acquisition that will enhance its presence in a strategically important market, with no share issuance involved [8][19] - The acquisition aligns with the company's retail growth strategy and is expected to close in the fourth quarter of this year [7][19] - The company aims to continue deploying capital productively in the second half of the year [9] Management's Comments on Operating Environment and Future Outlook - Management noted that competition in lending has intensified, with competitors trying to regain market share [21] - The company expects to outperform peers and is optimistic about market share gains in the upcoming quarters [22] - Management expressed confidence in achieving growth targets, with a focus on maintaining a diversified revenue profile and strong liquidity [19] Other Important Information - The company recorded a provision for credit losses of $4.1 million during the second quarter, compared to $2.7 million in the prior year's second quarter [12] - Nonperforming loans totaled $53.3 million or 51 basis points of total loans outstanding, a decrease from the previous quarter [17] Q&A Session Summary Question: Can you speak to the competitive landscape you're seeing in terms of lending? - Management acknowledged increased competition in the lending market, with competitors trying to make up for previous inactivity [21][22] Question: How are you feeling about the quarterly NIM expansion from here? - Management indicated expectations of a range closer to three to five basis points for NIM expansion [25] Question: Will the acquired deposits boost liquidity and be invested over time? - Management views the acquired deposits as a source for future loan growth, with initial proceeds likely to remain in short-term instruments [26] Question: Can you talk about OpEx trends from here? - Management expects OpEx to remain flat moving forward, with a focus on ensuring investments push the business forward [32][34] Question: How is the branch acquisition progressing? - Management confirmed that the acquisition is on track and complements the organic strategy in the market [35][36] Question: Can you provide an update on the pipeline and financial targets? - Management reiterated a target of mid-single-digit growth across lending portfolios, with expectations of returning to historical growth rates [42][45]

Financial Data and Key Metrics Changes - GAAP earnings per share for Q2 2025 were $0.97, up $0.06 or 6.6% year-over-year and up $0.04 or 4.3% from the previous quarter [10] - Operating earnings per share were $1.04, compared to $0.95 a year prior and $0.98 in the linked first quarter [10] - Total operating revenues reached $199.3 million, an increase of $16.1 million or 8.8% year-over-year and up $3.3 million or 1.7% from the previous quarter [10][11] - Net interest income was $124.7 million, representing a $4.5 million or 3.8% increase from the previous quarter and a $15.3 million or 14% improvement year-over-year [11] - The company's net interest margin increased by six basis points to 3.30% [11] Business Line Data and Key Metrics Changes - The Employee Benefits Services business was flat year-over-year, with recordkeeping growing at high single digits while Fiduciary Trust faced headwinds [6] - Insurance Services experienced a pull forward of contingency payments into Q1, impacting Q2 results [6] - Wealth Management Services saw muted revenue growth year-over-year but an increase in operating pretax earnings by 16% [7] Market Data and Key Metrics Changes - Ending loans increased by $98 million or 0.9% during Q2, primarily driven by growth in consumer indirect lending [14] - Total deposits increased by $563.9 million or 4.3% year-over-year but decreased by $190.3 million or 1.4% from the previous quarter [14] - Nonperforming loans totaled $53.3 million or 51 basis points of total loans outstanding, a decrease from the previous quarter [17] Company Strategy and Development Direction - The company announced a branch acquisition that is expected to close in Q4 2025, enhancing its market presence and liquidity [8][19] - The company is focused on organic loan growth and expanding into under-tapped markets within its Northeast footprint [14] - The management is optimistic about the pipeline strength and expects to meet previously communicated growth targets [5][19] Management's Comments on Operating Environment and Future Outlook - Management noted that competition in lending has intensified, impacting loan pricing and yields [22][24] - The company is bullish on its pipeline and expects to achieve mid-single-digit growth in lending portfolios [41][44] - Management expressed confidence in the company's diversified revenue profile and strong liquidity as a foundation for continued earnings growth [19] Other Important Information - The company recorded a provision for credit losses of $4.1 million during Q2, compared to $2.7 million in the prior year's second quarter [12] - Total non-interest expenses increased by $10.1 million or 8.5% year-over-year, driven by higher salaries and employee benefits [13] Q&A Session Summary Question: Can you speak to the competitive landscape you're seeing in terms of lending? - Management acknowledged that competition has intensified, with many competitors trying to regain market share through rate and credit adjustments [22][23] Question: How are you feeling about the quarterly NIM expansion from here? - Management indicated that they expect NIM expansion to be closer to three to five basis points moving forward [26] Question: Will the acquired deposits boost liquidity and be invested over time? - Management stated that the acquired deposits will primarily support loan growth over the coming years, with some proceeds initially staying in short-term instruments [27] Question: Can you talk about OpEx trends from here? - Management noted that restructuring charges are part of consolidating branches and that they expect OpEx to remain flat moving forward [32][34] Question: How is the branch acquisition progressing? - Management confirmed that the acquisition is on track and complements their organic growth strategy [36][37] Question: Can you provide an update on the De Novo branch build-out? - Management reported that seven out of the planned 19 De Novo branches have opened, with expectations to complete the build-out by the end of the year [55][56] Question: Any updates on loan yields and their recent performance? - Management clarified that the recent increase in loan yields was in line with expectations and not due to any atypical factors [58] Question: Is there any update regarding the CHIPS Act and Micron's plans? - Management confirmed that Micron is still on track to break ground later this year, with an increase in expected investment [60]

Exhibit 99.1 News Release For further information, please contact: 5790 Widewaters Parkway, DeWitt, N.Y. 13214 Marya Burgio Wlos, EVP & Chief Financial Officer Office: (315) 299-2946 Community Financial System, Inc. Reports Second Quarter 2025 Results SYRACUSE, N.Y. — July 22, 2025 — Community Financial System, Inc. (the "Company") (NYSE: CBU) reported second quarter 2025 results that are included in the attached supplement. This earnings release and attached supplement are also available within the "News" ...

The market expects Community Financial System (CBU) to deliver a year-over-year increase in earnings on higher revenues when it reports results for the quarter ended June 2025. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates.The earnings report, which is expected to be released on July 22, might help the stock move higher if these key numbers ...

Group 1 - Community Financial System, Inc. (NYSE: CBU) earnings for the last two quarters have been mostly in line with expectations [1] - Future growth is anticipated through network expansion and downward re-pricing of deposits [1]

Company Overview - Community Financial System, Inc (CBU) operates four scaled, complementary business lines: Employee Benefit Services, Insurance Services, Wealth Management Services, and Banking[5] - In Q1 2024, operating noninterest revenues accounted for 39% of total operating revenues[6] - The company's total operating revenue has grown at a 73% compound annual growth rate (CAGR) over the 10-year period from 2013 to 2023[12] Financial Performance - The company's Q1 2024 fully-diluted GAAP EPS was $076, while non-GAAP operating EPS was $082[29] - The company's Q1 2024 net interest income was $1070 million, a decrease of 36% from Q1 2023[80] - The company's Q1 2024 operating noninterest revenues increased by 71% compared to Q1 2023[27] Banking Segment - As of March 31, 2024, the company had $134 billion in total deposits[50] - As of March 31, 2024, the company had $988 billion in total loans[56] - The company's loan portfolio is diversified, with 36% in 1-4 family residential real estate, 16% in indirect auto loans, 14% in non-owner occupied CRE, and other segments[54]

Core Viewpoint - Community Financial System, Inc. will host a conference call to discuss its financial and operating results for the second quarter of 2025, scheduled for July 22, 2025 [1][2]. Group 1: Conference Call Details - The conference call will take place on Tuesday, July 22, 2025, at 11:00 a.m. Eastern Time [2]. - Dial-in numbers for the call include 1-833-630-0464 for U.S. participants and 1-412-317-1809 for international participants [2]. - A webcast of the call will be available at https://app.webinar.net/n7jl8918GAN, with management's prepared remarks lasting approximately 15 minutes, followed by a Q&A session [2]. Group 2: Financial Results Release - The financial results for the second quarter will be released prior to market open on July 22, 2025, and will be accessible in the 'News' section of the Company's website [3]. - A replay of the webcast will be available on the website for one year at no cost [3]. Group 3: Company Overview - Community Financial System, Inc. is a diversified financial services company with four main business lines: banking services, employee benefit services, insurance services, and wealth management services [4]. - The banking subsidiary, Community Bank, N.A., has over $16 billion in assets and operates approximately 200 customer facilities across several states [4]. - The Company also includes subsidiaries that provide employee benefits administration, insurance services, and comprehensive financial planning [4].

Core Viewpoint - Community Financial System (CBU) has been upgraded to a Zacks Rank 2 (Buy), indicating an upward trend in earnings estimates which is a significant factor influencing stock prices [1][4]. Earnings Estimates and Ratings - The Zacks rating system is based solely on a company's changing earnings picture, tracking the Zacks Consensus Estimate for EPS from sell-side analysts [2]. - The Zacks rating upgrade reflects a positive outlook on Community Financial's earnings, which could positively impact its stock price [4][6]. Impact of Earnings Estimates on Stock Prices - Changes in a company's future earnings potential, as shown through earnings estimate revisions, are strongly correlated with near-term stock price movements [5]. - Institutional investors utilize earnings estimates to determine the fair value of stocks, leading to significant price movements based on their trading activities [5]. Community Financial's Earnings Outlook - Community Financial is projected to earn $4.07 per share for the fiscal year ending December 2025, representing an 18.7% year-over-year increase [9]. - Over the past three months, the Zacks Consensus Estimate for Community Financial has increased by 0.2% [9]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks averaging a +25% annual return since 1988 [8]. - Community Financial's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating strong potential for market-beating returns in the near term [11].