Community Bank System, Inc. (NYSE:CBU) Q2 2023 Earnings Conference Call July 31, 2023 11:00 AM ET Company Participants Mark Tryniski - President and CEO Joseph Sutaris - Executive Vice President and CFO Dimitar Karaivanov - Executive Vice President and COO Conference Call Participants Nick Cucharale - The Hovde Group Steve Moss - Raymond James Alex Twerdahl - Piper Sandler Manuel Navas - D.A. Davidson Matthew Breese - Stephens Chris O'Connell - KBW Operator Welcome to the Community Bank System’s Second Quar ...

The Company determines fair values based on quoted market values, where available, estimates of present values, or other valuation techniques. Those techniques are significantly affected by the assumptions used, including, but not limited to, the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, may not be realized in immediate settlement of the instrument. The significant unobse ...

Community Bank System, Inc. (NYSE:CBU) Q1 2023 Results Conference Call April 25, 2023 11:00 AM ET Company Participants Mark Tryniski - President and CEO Joseph Sutaris - EVP and CFO Dimitar Karaivanov - COO Conference Call Participants Alex Twerdahl - Piper Sandler Steve Moss - Raymond James Matthew Breese - Stephens Inc Chris O'Connell - KBW Operator Welcome to the Community Bank System First Quarter 2023 Earnings Conference Call. Please note that this presentation contains forward-looking statements withi ...

Credit Losses and Allowance - The Company recorded a provision for credit losses of $0.1 million on purchased credit deteriorated (PCD) loans from the Elmira acquisition during 2022[87]. - The allowance for credit losses is estimated using historical credit loss experience and current macroeconomic trends, including unemployment rates and property values[85]. Interest Rate Sensitivity - The projected net interest income (NII) sensitivity shows a decrease of $1.91 million (0.4%) in a +200 basis points rate environment, while an increase of $1.09 million (0.2%) is expected in a +100 basis points environment[317]. - The Company’s net interest income projections are sensitive to changes in interest rates, with significant impacts expected from the repricing of loans and deposits[315]. Asset Management and Investment Strategy - The ongoing monitoring of interest rate risk is a key component of the Company’s asset/liability management process, with monthly reviews by the Asset-Liability Committee (ALCO)[313]. - The Company plans to use investment cash flows to pay down overnight borrowings and fund loan growth, with no additional investment security purchases expected over the next twelve months[320]. - The Company’s investment portfolio is primarily composed of 90.3% Treasury and agency securities rated AAA, with minimal foreign currency exchange rate risk exposure[312]. Loan Portfolio Management - The Company’s loan portfolio segments are disaggregated to monitor risk and performance effectively, considering various risk characteristics[85]. - The model assumes average deposit balances will decrease approximately 4.6% over the next twelve months, impacting overall earning assets[319]. - The Company anticipates that cash flows on earning assets will increase modestly throughout the forecast period[318].

| --- | --- | |---------------------------------------------|-------| | | | | | | | 级 Community | | | BANK SYSTEM, INC. | | | | | | | | | | | | | | | | | | | RUARY | | | | | | | | Investor Presentation | | | | | | COMMUNITY BANK SYSTEM, INC. I NYSE: CBU | | Note Regarding Non‐GAAP Financial Measures About CBU Record of executing accretive acquisitions within and around Northeast banking footprint $3.4B market capitalization (at 12/30/22 share price of $62.95) • EXPERIENCED AND DISCIPLINED ACQUIRER Community ...

Community Bank System, Inc. (NYSE:CBU) Q4 2022 Earnings Conference Call January 24, 2023 11:00 AM ET Company Participants Mark Tryniski - President and CEO Joseph Sutaris - EVP and CFO Dimitar Karaivanov - EVP of Financial Services and Corporate Development Conference Call Participants Alex Twerdahl - Piper Sandler Matthew Breese - Stevens Chris O'Connell - KBW Erik Zwick - The Hovde Group Operator Welcome to the Community Bank System Fourth Quarter and Full Year 2022 Earnings Conference Call. Please note t ...

[Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) This section provides the company's unaudited financial statements, management's analysis, market risk disclosures, and internal controls [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited financial statements for Q3 and YTD September 2022 show increased net interest income, decreased net income, and a significant decline in shareholders' equity due to unrealized losses [Consolidated Statements of Condition](index=3&type=section&id=Consolidated%20Statements%20of%20Condition) Total assets slightly increased to $15.59 billion, while shareholders' equity significantly declined to $1.46 billion due to accumulated other comprehensive loss Consolidated Statements of Condition (in thousands) | Account | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $247,391 | $1,875,064 | | Net loans | $8,483,244 | $7,323,770 | | Available-for-sale investment securities | $5,170,689 | $4,934,210 | | Goodwill | $844,984 | $799,109 | | **Total assets** | **$15,594,547** | **$15,552,657** | | **Liabilities** | | | | Total deposits | $13,486,321 | $12,911,168 | | **Total liabilities** | **$14,133,384** | **$13,451,850** | | **Shareholders' Equity** | | | | Retained earnings | $1,123,641 | $1,058,286 | | Accumulated other comprehensive loss | $(746,381) | $(50,627) | | **Total shareholders' equity** | **$1,461,163** | **$2,100,807** | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Q3 2022 net income increased to $48.7 million due to higher net interest income, while YTD net income decreased to $135.6 million primarily from a credit loss provision Consolidated Statements of Income (in thousands, except per-share data) | Metric | Q3 2022 | Q3 2021 | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Net interest income | $110,394 | $92,611 | $308,407 | $278,670 | | Provision for credit losses | $5,061 | $(944) | $12,005 | $(11,001) | | Noninterest revenues | $65,249 | $64,309 | $195,019 | $182,300 | | Noninterest expenses | $108,185 | $100,436 | $318,416 | $287,225 | | **Net income** | **$48,691** | **$45,336** | **$135,551** | **$146,130** | | **Diluted earnings per share** | **$0.90** | **$0.83** | **$2.49** | **$2.68** | [Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) The company reported a significant comprehensive loss for Q3 and YTD September 2022, primarily driven by large unrealized losses on available-for-sale securities - A significant comprehensive loss of **$(560.2) million** for the first nine months of 2022 was primarily driven by **$(696.5) million** in after-tax unrealized losses on available-for-sale securities[13](index=13&type=chunk) [Consolidated Statements of Changes in Shareholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders%27%20Equity) Shareholders' equity decreased from $2.10 billion to $1.46 billion, primarily due to a significant other comprehensive loss from unrealized securities losses and cash dividends - For the nine months ended September 30, 2022, shareholders' equity decreased by **$639.6 million**, driven by a **$(695.8) million** other comprehensive loss and **$70.2 million** in dividends, partially offset by **$135.6 million** in net income[23](index=23&type=chunk) - The company repurchased **250,000 shares** for **$16.4 million** during the first nine months of 2022[23](index=23&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2022, net cash provided by operating activities was $143.0 million, while net cash used in investing activities was $(1.89) billion, leading to a total decrease in cash of $(1.63) billion Consolidated Statements of Cash Flows (in thousands) | Activity | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $143,036 | $153,024 | | Net cash used in investing activities | $(1,885,169) | $(866,809) | | Net cash provided by financing activities | $114,460 | $1,390,641 | | **Change in cash and cash equivalents** | **$(1,627,673)** | **$676,856** | [Notes to the Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) The notes detail key events like the Elmira Savings Bank acquisition, loan portfolio growth, increased allowance for credit losses, and significant unrealized losses in the investment portfolio due to rising interest rates - On May 13, 2022, the Company acquired Elmira Savings Bank for **$82.2 million** in cash, acquiring **$579.0 million** in assets, including **$437.0 million** in loans, and recognizing **$45.8 million** in preliminary goodwill[30](index=30&type=chunk) - The allowance for credit losses to total loans ratio was **0.71%** at September 30, 2022, up from **0.68%** at year-end 2021, driven by a weaker economic forecast and loan growth, including a **$3.9 million** acquisition-related provision for the Elmira deal[88](index=88&type=chunk) - The investment portfolio had a net unrealized loss of **$965.9 million** as of September 30, 2022, a significant increase from a loss of **$45.9 million** at year-end 2021, primarily due to changes in interest rates[61](index=61&type=chunk)[64](index=64&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q3 and YTD 2022 financial performance, highlighting increased net interest income, decreased YTD net income due to credit loss provisions, loan growth from acquisitions, and a significant decline in shareholders' equity - Q3 2022 diluted EPS was **$0.90**, an **8.4%** increase from Q3 2021, driven by a **19.2%** rise in net interest income. YTD 2022 diluted EPS was **$2.49**, down from **$2.68** in the prior year, mainly due to a **$23.0 million** negative swing in the provision for credit losses[143](index=143&type=chunk)[146](index=146&type=chunk) - The acquisition of Elmira Savings Bank on May 13, 2022, for **$82.2 million** in cash added approximately **$579.0 million** in assets, including **$437.0 million** in loans and **$522.3 million** in deposits[145](index=145&type=chunk) - The net interest margin for Q3 2022 was **3.03%**, an increase of **29 basis points** from Q3 2021, as the yield on interest-earning assets rose **35 basis points**[164](index=164&type=chunk) - Total loans grew **17.3%** YoY to **$8.54 billion**, driven by the Elmira acquisition and organic growth across all loan categories, despite a **$156.2 million** decrease in PPP loans[203](index=203&type=chunk) - The allowance for credit losses to total loans ratio increased to **0.71%** from **0.68%** at year-end 2021, reflecting loan growth and a weaker economic forecast. The provision for credit losses was **$5.1 million** in Q3 2022, compared to a benefit of **$(0.9) million** in Q3 2021[221](index=221&type=chunk) - Total shareholders' equity declined by **$639.6 million** since year-end 2021 to **$1.46 billion**, primarily due to a **$695.7 million** other comprehensive loss from the mark-to-market impact on the available-for-sale securities portfolio[231](index=231&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=56&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk is interest rate risk, managed via NII simulation models, which project short-term NII decreases in both rising and falling rate scenarios Net Interest Income Sensitivity Model (as of Sep 30, 2022) | Interest Rate Scenario | Change in Projected NII (in thousands) | Change in Projected NII (%) | | :--- | :--- | :--- | | +300 basis points | ($8,243) | (1.8%) | | +200 basis points | ($5,702) | (1.2%) | | +100 basis points | ($3,217) | (0.7%) | | -100 basis points | ($763) | (0.2%) | | -200 basis points | ($2,455) | (0.5%) | | -300 basis points | ($9,804) | (2.1%) | - The primary tool for managing interest rate risk is an income simulation model. The model as of Q3 2022 shows short-term NII sensitivity to both rising and falling rates, with projected NII decreasing in all scenarios over the next 12 months[259](index=259&type=chunk)[267](index=267&type=chunk) [Controls and Procedures](index=58&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2022, with no material changes to internal control over financial reporting - The company's management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of September 30, 2022[271](index=271&type=chunk) - No material changes were made to the internal control over financial reporting during the quarter ended September 30, 2022[272](index=272&type=chunk) [Part II. Other Information](index=58&type=section&id=Part%20II.%20Other%20Information) This section covers legal proceedings, risk factors, equity security sales, and other miscellaneous disclosures [Legal Proceedings](index=58&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to various legal proceedings, but management does not anticipate a material impact on its consolidated financial position - Management does not expect pending or threatened litigation to have a material impact on the Company's consolidated financial position[273](index=273&type=chunk) [Risk Factors](index=58&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K or Quarterly Report on Form 10-Q were reported - No material changes in risk factors were reported from previous filings[274](index=274&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company has a stock repurchase program for up to 2.70 million shares, but no shares were repurchased under this plan in Q3 2022 - The Board approved a stock repurchase program for up to **2.70 million shares** for 2022. No shares were repurchased under this plan in Q3 2022[277](index=277&type=chunk) Issuer Purchases of Equity Securities (Q3 2022) | Period | Total Shares Purchased | Average Price Paid Per Share | Shares Purchased as Part of Publicly Announced Plan | Max Shares Remaining Under Plan | | :--- | :--- | :--- | :--- | :--- | | July 1-31, 2022 | 903 | $63.64 | 0 | 2,447,000 | | August 1-31, 2022 | 0 | $0.00 | 0 | 2,447,000 | | September 1-30, 2022 | 0 | $0.00 | 0 | 2,447,000 | [Defaults Upon Senior Securities](index=59&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section is not applicable for the current reporting period - Not applicable[282](index=282&type=chunk) [Mine Safety Disclosures](index=59&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable for the current reporting period - Not applicable[283](index=283&type=chunk) [Other Information](index=59&type=section&id=Item%205.%20Other%20Information) This section is not applicable for the current reporting period - Not applicable[284](index=284&type=chunk) [Exhibits](index=60&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including employment agreements, retirement agreements, and CEO/CFO certifications - Exhibits filed include amendments to employment agreements for Dimitar Karaivanov and a retirement agreement for Joseph F. Serbun[286](index=286&type=chunk) - Certifications by the CEO and CFO pursuant to Sarbanes-Oxley Sections 302 and 906 are included as exhibits[286](index=286&type=chunk)

Community Bank System, Inc. (NYSE:CBU) Q3 2022 Earnings Conference Call October 24, 2022 11:00 AM ET Company Participants Mark Tryniski - President and CEO Joseph Sutaris - EVP and CFO Dimitar Karaivanov - EVP of Financial Services and Corporate Development Conference Call Participants Alex Twerdahl - Piper Sandler Eric Zwick - Hovde Group Chris O’Connell - KBW Matthew Breese - Stephens, Inc. Manuel Navas - D.A. Davidson Presentation Operator Welcome to the Community Bank System Third Quarter 2022 Earnings ...

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, 2022 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) | --- | --- | |--------------------------------------------- ...

Financial Data and Key Metrics Changes - Operating earnings for Q2 2022 were strong, up 13% year-over-year when excluding PPP and reserve releases from 2021 [4] - Fully diluted GAAP earnings per share were $0.73, while operating earnings per share were $0.85, compared to $0.88 for Q2 2021 [9][10] - Total revenues reached $167.2 million, a record high, representing a 10.3% increase year-over-year [14] - Net interest income increased by $11 million or 12% year-over-year, totaling $103.1 million [16] - Adjusted pre-tax pre-provision net revenue per share was $1.13, up 6.6% from the prior year [13] Business Line Data and Key Metrics Changes - Organic loan growth for the quarter was 4.2%, with year-over-year growth exceeding 10% [6] - Employee benefit services revenues increased by 5.3% to $28.9 million [20] - Wealth management revenues slightly decreased to $8.1 million, while insurance services revenues increased by 19.1% to $9.8 million [21] - Banking non-interest revenues rose by 11% to $17.2 million [22] Market Data and Key Metrics Changes - Average deposit balances increased by $1.03 billion or 8.4% year-over-year [31] - Total assets were $15.49 billion, a 4.6% increase from the previous year [30] - Non-performing loans decreased to $37.1 million or 0.46% of total loans outstanding, down from 0.97% a year earlier [37] Company Strategy and Development Direction - The company plans to focus on new loan generation and pursue low-risk, strategically valuable M&A opportunities [39] - There is an emphasis on expanding market share in larger markets where the company has historically had low penetration [52] - The company aims to optimize its balance sheet by reinvesting maturities into the loan book to enhance economic returns [53] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining operating momentum, particularly in credit generation, with a robust commercial pipeline [9] - The company anticipates continued margin expansion and strong credit quality [9] - Management noted that the current economic environment presents both challenges and opportunities, particularly in the context of rising interest rates [47] Other Important Information - The company completed the acquisition of Elmira Savings Bank, adding eight branch locations and significant deposits and loans [29] - The effective tax rate for Q2 2022 was 21.6%, down from 23.1% in the prior year [28] - Core operating expenses increased by 13.4% year-over-year, driven by higher salaries and employee benefits [25] Q&A Session Summary Question: Can you help us think through deposit flows and expectations for deposits over the next quarter? - Management expects some growth in deposits due to tax collection season, anticipating a return of a couple hundred million dollars [44][45] Question: What is the outlook for deposit betas in a rising rate environment? - Management noted limited pressure on deposit betas, with a significant portion of deposits in checking and savings accounts [47] Question: How does the change in interest rates impact M&A appetite? - Management stated that changes in interest rates will not affect their M&A strategy, focusing on cash flow impacts rather than GAAP earnings [48] Question: What is the outlook for commercial loan growth and the strength of the pipeline? - Management indicated a strong commercial pipeline, with expectations for continued growth in various markets [51][66] Question: What are the expectations for margin expansion in light of potential rate hikes? - Management expressed optimism for continued margin expansion, although sustaining a 16-basis point increase every quarter may be challenging [68][69]