Exhibit 99.1
 |
News Release
For further information, please contact: |
| 5790 Widewaters Parkway, DeWitt, N.Y. 13214 |
Joseph E. Sutaris, EVP & Chief Financial Officer
Office: (315) 445-7396 |
Community Bank System
Reports
Fourth Quarter and Full
Year 2020 Results
SYRACUSE, N.Y. — January 25, 2021 — Community Bank
System, Inc. (NYSE: CBU) reported fourth quarter 2020 net income of $46.5 million, or $0.86 per fully-diluted share. This compares
to net income of $42.9 million, or $0.82 per share, for the fourth quarter of 2019 and $42.8 million, or $0.79 per share, in the
linked third quarter of 2020. The $0.04, or 4.9%, increase in earnings per share year-over-year was driven by an increase in net
interest income, a decrease in the provision for credit losses, slightly lower operating expenses and a small increase in noninterest
revenues, offset, in part, by higher income taxes and an increase in fully-diluted shares outstanding. The $0.07, or 8.9%, increase
in earnings per share from the linked third quarter was driven by an increase in net interest income, a decrease in the provision
for credit losses and lower operating expenses, offset, in part, by lower noninterest revenues, higher income taxes and an increase
in fully-diluted shares outstanding. Operating diluted earnings per share (non-GAAP), which excludes, on an after-tax basis, acquisition
expenses, acquisition-related provision for credit losses, unrealized gain/(loss) on equity securities, net gain on sale of investments,
litigation accrual expenses and gain on debt extinguishment, were $0.85 for the fourth quarter of 2020, as compared to $0.83 in
the fourth quarter of 2019. Full year 2020 diluted earnings per share were $3.08, as compared to $3.23 in 2019. Full year 2020
diluted operating earnings per share (non-GAAP) of $3.24 were $0.05 per share lower than the $3.29 per share of operating earnings
generated in 2019.
2020 Performance Highlights:
v
GAAP EPS
| · | $0.86 per share for the fourth quarter of 2020, compared to $0.82 per share for the fourth quarter of 2019 |
| · | $3.08 per share for full year 2020, down $0.15 per share from full year 2019 |
v
Operating EPS (non-GAAP)
| · | $0.85 per share for the fourth quarter of 2020, up $0.02 per share from the fourth quarter of 2019 |
| · | $3.24 per share for full year 2020, $0.05 per share below 2019 |
v
Adjusted Pre-Tax, Pre-Provision Net Revenue Per Share (non-GAAP)
| · | $1.03 per share for the fourth quarter of 2020, compared to $1.06 per share for the fourth quarter of 2019 |
| · | $4.26 per share for full year 2020, $0.03 per share above full year 2019 |
v
Return on Assets
| · | 1.33% for the fourth quarter of 2020 |
| · | 1.28% for full year 2020 |
v
Return on Equity
| · | 8.82% for the fourth quarter of 2020 |
| · | 8.13% for full year 2020 |
v
Total Deposit Funding Costs
| · | 0.12% for the fourth quarter of 2020, down 14 basis points from the fourth quarter of 2019 |
| · | 0.16% for the full year 2020, down 7 basis points from the full year 2019 |
v
Loan Net Charge-Offs
| · | 0.07% annualized for the fourth quarter of 2020 |
| · | 0.07% for the full year 2020 |
“The Company generated very strong earnings results in
2020 despite the significant and persistent challenges posed by the COVID-19 pandemic and related market conditions throughout
the year,” said Mark E. Tryniski, President and CEO. “On a full-year basis, the Company generated diluted operating
earnings per share of $3.24. These results were only $0.05, or 1.5% lower than full-year 2019 operating earnings per share of $3.29,
despite navigating a difficult credit environment, significantly lower market interest rates and substantial growth in the Company’s
total assets due to unprecedented levels of Federal stimulus. Strong asset quality leading into the pandemic, a tremendous core
deposit base and diversified revenue streams, including year over year revenue increases in the Company’s nonbanking businesses,
demonstrated the strength and resiliency of the Company’s business model. Fourth quarter operating earnings per share of
$0.85 increased $0.02, or 2.4%, from the prior year’s fourth quarter and matched third quarter 2020 results. The Company’s
full year adjusted pre-tax, pre-provision net revenue per share of $4.26, was $0.03 above the full year 2019 results. The strength
of our nonbanking businesses became increasingly evident as the pandemic ran its course during 2020. On a full-year basis, the
total revenues from our nonbanking business were up $6.4 million, or 4.1%, from $155.2 million in 2019 to $161.6 million in 2020,
which helped offset a $4.1 million, or 5.8%, decrease in our banking noninterest revenues driven largely by a year over year decrease
in deposit-related fees.”
Mr. Tryniski, continued, “From an asset quality perspective,
during the second half of 2020 the Company experienced a significant decrease in the number and outstanding balances of loans under
COVID-related forbearance. At December 31, 2020, 74 borrowers, representing $66.5 million of loans outstanding, or 0.9% of total
loans, remained under a forbearance agreement. This is down from 216 borrowers, representing $192.7 million of loans outstanding,
or 2.6% of total loans, at September 30, 2020 and 3,699 borrowers, representing $704.1 million of loans outstanding, or 9.4% of
total loans at June 30, 2020. However, as anticipated, the Company recorded an increase in nonperforming assets during the fourth
quarter of 2020, due to the continued pandemic-related financial hardship experienced by certain borrowers. During the quarter,
several borrowers that operate in the hospitality, travel and entertainment industries requested extended forbearance agreements
to mitigate the ongoing cash flow challenges of their businesses. Although we continued to accommodate reasonable forbearance requests
for these borrowers, we determined that loans subject to a third forbearance would be classified as nonaccrual unless the borrower
could demonstrate current cash flows or payment reserves to service their pre-forbearance payment obligations. At December 31,
2020, nonperforming loans stood at $76.9 million, or 1.04%, of total loans outstanding. By comparison, nonperforming loans to total
loans outstanding were 0.35% at the end of 2019 and 0.43% at the end of the linked third quarter. Although nonperforming loans
increased significantly during the fourth quarter, specific reserves identified in the allowance for credit losses against these
loans totaled less than $4.0 million, which represents approximately five basis points of potential charge-offs. Net charge-offs
to average loans were just seven basis points in 2020, as compared to 12 basis points for 2019. Loans outstanding at the end of
the fourth quarter decreased $42.7 million, or 0.6% from the end of the linked third quarter due primarily to Paycheck Protection
Program (“PPP”) forgiveness and weaker demand for credit, but were up $525.4 million, or 7.6% over the prior year end
due largely to the origination of PPP loans and the second quarter acquisition of Steuben Trust Corporation (“Steuben”).
Deposit levels remained elevated during the fourth quarter due primarily to the retention of a significant portion of Federal stimulus-related
funds received by customers, and to a lesser extent, the Steuben acquisition. Total deposits increased $2.2 billion, or 24.8%,
during 2020 from $8.99 billion at the end of 2019 to $11.22 billion at the end of 2020.”
Mr. Tryniski added, “Although we expect to continue to
navigate challenging economic and market conditions during 2021, we believe our Company remains well positioned to perform effectively
in the evolving environment. The Company continues to maintain very high levels of capital and liquidity, diversified revenue streams
through its nonbanking businesses, a history of strong credit performance and an exceptional core deposit base.”
The Company recorded total revenues of $150.6 million in the
fourth quarter of 2020, an increase of $0.8 million, or 0.5%, from the prior year’s fourth quarter. The increase in
total revenues between the periods was driven by a $0.7 million, or 0.7%, increase in net interest income, a $1.7 million, or 7.0%,
increase in employee benefit services revenues, a $1.0 million, or 7.3%, increase in wealth management and insurance services revenues
and a $0.4 million gain on debt extinguishment, offset, in part, by a $2.0 million, or 11.2%, decrease in deposit service and other
banking fees and a $1.1 million decrease in mortgage banking income. Total revenues were down $2.0 million, or 1.3%, on a linked
quarter basis. The Company recorded a $0.9 million net loss on mortgage banking during the fourth quarter of 2020, as compared
to $3.9 million of mortgage banking revenues during the third quarter of 2020, as the Company shifted its strategy from selling
the substantial majority of its eligible residential mortgage loans into the secondary market to retaining them in portfolio in
the fourth quarter. The decrease in mortgage banking revenue between the linked quarters and a $0.3 million, or 2.1%, decrease
in wealth management and insurance services revenues, were partially offset by a $0.5 million, or 0.5%, increase in net interest
income, a $0.6 million, or 4.2%, increase in deposit service and other banking fees, a $1.6 million, or 6.3%, increase in employee
benefit service revenues, and a $0.4 million gain on debt extinguishment.
The Company recorded net interest income of $93.4 million in
the fourth quarter of 2020. This represents a $0.7 million, or 0.7%, increase over the fourth quarter of 2019. The increase was
driven by a $2.28 billion, or 22.7%, increase in average earning assets between the periods, offset, in part by a 66 basis point
decrease in the net interest margin. The increase in earning assets was driven by large net inflows of funds from government stimulus
programs, PPP loan originations and the acquisition of Steuben in the second quarter of 2020. The 66 basis point decrease in net
interest margin was driven by an 81 basis point decrease in tax-equivalent earning asset yields between the periods, partially
offset by a 17 basis point decrease in the total cost of funds. The large drop in earning asset yields was due to a significant
decrease in market interest rates between the periods and a significant change in the composition of earning assets, including
a $574.4 million increase in average cash equivalents and a $1.11 billion increase in the book value of investment securities.
The tax-equivalent yield on loans decreased 50 basis points between the periods from 4.67% in the fourth quarter of 2019 to 4.17%
in the fourth quarter of 2020, while the tax-equivalent yield on investments, including cash equivalents, decreased 86 basis points,
from 2.54% in the fourth quarter of 2019 to 1.68% in the fourth quarter of 2020.
Interest income and fees on loans decreased $2.7 million, or
3.3%, over the comparable prior year quarter. Although average loans outstanding increased $592.5 million, or 8.6%, due to the
Steuben acquisition and the origination of PPP loans over the comparable prior year’s quarter, the 50 basis point decrease
in loan yields resulted in lower interest income on loans. Interest income on investments, including cash equivalents, increased
$0.2 million, or 1.1%, between the fourth quarter of 2019 and the fourth quarter of 2020, reflective of the substantial increase
in the average balance of investment securities and cash equivalents between the periods, partially offset by an 86 basis point
decrease in the tax-equivalent yield on investments, including cash equivalents. Interest expense was $3.1 million lower than the
previous year’s fourth quarter, driven by a 22 basis point decrease in the cost of interest-bearing liabilities partially,
offset by a $1.31 billion, or 18.9%, increase in average interest-bearing liability balances. The average cost of deposits was
0.12% in the fourth quarter of 2020, as compared to 0.26% in the fourth quarter of 2019, reflective of market-driven rate decreases
for deposits between the periods and significant increases in noninterest-bearing deposit balances.
On
a linked quarter basis, net interest income increased $0.5 million, driven by a $0.1 million increase in interest income and a
$0.4 million decrease in interest expense. Interest income on loans decreased $1.8 million, while interest income on investments
and cash equivalents increased $1.9 million due to the purchase of investment securities during the fourth quarter. The average
book value of investment securities increased $636.9 million, or 20.2%, during the fourth quarter, while average cash equivalents
decreased $221.8 million, or 17.0%. The average cost of deposits decreased one basis point during the fourth quarter from
0.13% in the linked third quarter of 2020 to 0.12% in the fourth quarter.
The Company recorded a $3.1 million net benefit in the provision
for credit losses during the fourth quarter of 2020. This compares to a $2.9 million provision for credit losses during the
fourth quarter of 2019. The net benefit recorded in the provision for credit losses was driven by several factors, including
a $2.0 million reversal of a previously recorded allowance for credit loss on a purchase credit deteriorated loan, a significant
improvement in the economic outlook and a substantial decrease in loans under COVID-19 related forbearance agreements, offset,
in part, by a substantial, but anticipated, increase in nonperforming assets and the related specific impairment reserves on those
nonperforming assets. For comparative purposes, the Company recorded $1.9 million in the provision for credit losses during
the third quarter of 2020, $9.8 million in the second quarter of 2020, including $3.2 million of acquisition-related provision
for credit losses due the acquisition of Steuben, and $5.6 million of provision for credit losses during the first quarter of 2020.
During the first two quarters of 2020, financial conditions deteriorated rapidly as state and local governments shut down a substantial
portion of business activities in the Company’s markets and unemployment levels spiked. These conditions drove the
Company to build its allowance for credit losses during the first two quarters of 2020 to account for expected life of loan losses
in the loan portfolio. During the third quarter, the economic outlook remained unclear as markets were uncertain as to the
efficacy, approval and roll-out of a COVID-19 vaccine. With a greater than anticipated decline in actual unemployment levels,
as well as the Federal Government’s approval of a COVID-19 vaccine and Congress’ recent approval of additional Federal
stimulus funding, the near-term economic forecast improved significantly driving an improvement in the economic outlook and as
a result, a reduction in the Company’s allowance for credit losses. The Company recorded net charge-offs of $1.3 million,
or 0.07% of average loans annualized, during the fourth quarter. On a full-year basis, the Company recorded net charge-offs
of $5.0 million, or 0.07%, of average loans outstanding. Since the ultimate effect the COVID-19 pandemic will have on the
Company’s credit losses remains uncertain, the net benefit recorded in the provision for credit losses during the fourth
quarter should not be interpreted as a trend or utilized to forecast the provision for, or reversal of, credit losses in future
quarters. Any improvements in the economic forecast may be offset by increases in delinquency and nonperforming loan balances
in future quarters as COVID-affected borrowers may not resume full payment of contractual amounts upon expiration of their forbearance
agreements.
The Company recorded $57.2 million in noninterest revenues in
the fourth quarter of 2020, as compared to $57.1 million in the fourth quarter of 2019. This represents a $0.1 million, or 0.1%,
increase in noninterest revenues between the periods. This included a $0.4 million gain on debt extinguishment in the fourth quarter
of 2020, a $1.7 million, or 7.0%, increase in employee benefit services revenue, a $1.0 million, or 7.3%, increase in wealth management
and insurance services revenues, partially offset by a $2.0 million, or 11.2%, decrease in deposit services and other banking fees
and a $1.1 million decrease in mortgage banking revenues. During the fourth quarter, the Company redeemed $10.0 million of subordinated
debt acquired in connection with the 2019 acquisition of Kinderhook Bank Corp., resulting in a $0.4 million gain on debt extinguishment.
The increase in employee benefit services revenues was attributable to increases in plan administration, recordkeeping and trustee
fees. The increase in wealth management and insurance revenues were driven by organic growth in those businesses. The decrease
in deposit service and other banking fees was due to lower overdraft and other deposit revenues, offset partially by higher debit
card interchange revenues. The decrease in mortgage banking revenues, was driven by the Company’s decision to cease selling
secondary market eligible residential mortgage loans in the secondary market and retain them in portfolio. This resulted in a $0.9
million loss on mortgage banking activities in the quarter, as compared to revenues of $0.2 million in the fourth quarter of 2019.
Noninterest revenues decreased $2.5 million, or 4.1%, on a linked quarter basis. This was driven by a $4.2 million, or 21.8%, decrease
in banking-related revenues, including a $4.8 million decrease in mortgage banking revenues, offset, in part by a $0.7 million,
or 4.2%, increase in deposit service and other banking revenues. Wealth management and insurance services revenues decreased $0.3
million, or 2.1%, between linked quarters, while employee benefit services revenues increased, $1.6 million, or 6.3%.
The Company recorded $94.6 million in total operating expenses
in the fourth quarter of 2020, exclusive of $0.4 million of acquisition related expenses. This compares to total operating expenses
of $94.4 million in the fourth quarter of 2019, exclusive of $0.8 million of acquisition related expenses. The year-over-year $0.2
million, or 0.2%, increase in operating expenses, exclusive of acquisition related expenses, was attributable to a $1.7 million,
or 2.9%, increase in salaries and employee benefits and a $1.5 million, or 13.5%, increase in data processing and communications
expenses, offset, in part, by a $2.5 million, or 19.4%, decrease in other expenses and a $0.4 million, or 11.0%, decrease in amortization
of intangible assets. The Company recorded $10.1 million of occupancy and equipment expense in both periods. The increase in salaries
and benefits expense was driven by merit-related increases in employee wages and a net increase in full-time equivalent employees
between the periods, due to both the Steuben acquisition in the second quarter of 2020 and other factors, but were partially offset
by lower employee benefit expenses primarily associated with a decrease in employee medical expenses due to reduced provider utilization.
The increase in data processing and communications expenses was due to the Steuben acquisition and the implementation of new customer-facing
digital technologies and back office systems during 2020. Other expenses were down due to the general decrease in the level of
business activities as a result of the COVID-19 pandemic, including travel and entertainment and marketing and business development
expenses. Comparatively, the Company recorded $93.2 million of total operating expenses in the linked third quarter of 2020, exclusive
of $3.0 million of litigation accrual expenses and $0.8 million of acquisition-related expenses. The increase in operating expenses
from the linked quarter, exclusive of litigation accrual and acquisition expenses, was attributable to a $0.9 million, or 1.5%,
increase in salaries and employee benefits, a $0.3 million, or 2.6%, increase in data processing and communications expenses and
a $0.3 million, or 3.0%, increase in other expenses. The effective tax rate for the fourth quarter of 2020 was 20.9% and 20.1%
on a full-year basis, up from 17.1% and 19.2%, respectively, from the equivalent prior year periods.
The Company also provides supplemental reporting of its results
on an “operating,” “adjusted” or “tangible” basis, from which it excludes the after-tax effect
of amortization of core deposit and other intangible assets (and the related goodwill, core deposit intangible and other intangible
asset balances, net of applicable deferred tax amounts), accretion on non-impaired purchased loans, expenses associated with acquisitions,
acquisition-related provision for credit losses, litigation accrual expenses, the unrealized gain (loss) on equity securities,
gain on debt extinguishment, and net gain on sale of investments. In addition, the Company provides supplemental reporting for
“adjusted pre-tax, pre-provision net revenues,” which subtracts the provision for credit losses, acquisition expenses,
litigation accrual expenses, net gain on sale of investments, unrealized gain (loss) on equity securities and gain on debt extinguishments
from income before income taxes. The amounts for such items are presented in the tables that accompany this release. Although these
items are non-GAAP measures, the Company’s management believes this information helps investors understand the effect of
acquisition and other non-recurring activity in its reported results. Diluted adjusted net earnings per share were $0.89 in the
fourth quarter of 2020, as compared to $0.86 in the fourth 2019 and $0.88 in the third quarter of 2020. Adjusted pre-tax, pre-provision
net revenue per share was $1.03 in the fourth quarter of 2020, as compared to $1.06 in the fourth quarter of 2019 and $1.10 in
the third quarter of 2020.
Financial Position
The
Company’s total assets increased to $13.93 billion at December 31, 2020, which represents a $2.52 billion, or 22.1% increase
from one year ago and an $85.8 million, or 0.6%, increase over the prior quarter end. The substantial increase in the Company’s
total assets during 2020 was largely due to very large inflows of government stimulus-related deposit funding between the periods
and the Steuben acquisition in the second quarter of 2020. Similarly, average earning assets increased substantially over
the prior year, from $10.04 billion in the fourth quarter of 2019 to $12.31 billion in the fourth quarter of 2020, a $2.28 billion,
or 22.7% increase. This included a $592.5 million, or 8.6%, increase in average total loans outstanding, a $1.11 billion, or 41.4%,
increase in average total investment securities and a $574.4, or 114%, increase in average cash equivalent balances. On a linked
quarter basis, average earning assets increased $356.8 million, or 3.0%, due to net inflows of deposits. The average book value
of investment securities increased $636.9 million, or 20.2%, due to the purchase of $1.02 billion of investment securities during
the quarter. Average cash equivalents decreased $221.8 million, or 17.0%, due to the purchase of investment securities, offset,
in part by the continued growth of deposit liabilities during the quarter. Average loan balances decreased $58.4 million, or 0.8%,
due primarily to PPP forgiveness and seasonal decreases in the consumer installment and home equity loans outstanding. Average
deposit balances increased $2.11 billion, or 23.2%, between the fourth quarter of 2019 and the fourth quarter of 2020 and $275.9
million, or 2.5%, on a linked quarter basis. Ending loans at December 31, 2020 were $7.42 billion, $42.7 million, or 0.6%, lower
than linked third quarter ending loans of $7.46 billion, but up $525.4 million, or 7.6% from one year prior. The growth in ending
loans year over year was driven by the acquisition of $339.7 million of Steuben loans in the second quarter of 2020 and the $470.7
million net increase in PPP loans between the periods.
The Company’s liquidity position remains strong. The Company’s
Banking subsidiary, Community Bank, N.A. (the “Bank”) maintains a funding base largely comprised of core noninterest-bearing
demand deposit accounts and low cost interest-bearing interest checking, savings and money market deposit accounts with customers
that operate, reside or work within its branch footprint. At December 31, 2020, the Company’s cash and cash equivalents balances,
net of float, were $1.57 billion. The Company also maintains an available-for-sale investment securities portfolio, comprised primarily
of highly-liquid U.S. Treasury securities, highly-rated municipal securities and U.S. agency mortgage-backed securities. At December
31, 2020, the Company’s available-for-sale investment securities portfolio totaled $3.55 billion, $1.78 billion of which
was unpledged as collateral. Net unrealized gains on the portfolio at that time were $120.1 million. The Bank’s unused borrowing
capacity at the Federal Home Loan Bank of New York at December 31, 2020 was $1.66 billion and it maintained $256.2 million of funding
availability at the Federal Reserve Bank’s discount window.
Although there remains uncertainty around the magnitude and
duration of the economic impact of the COVID-19 pandemic, the Company’s management believes that its financial position,
including high levels of capital, will allow it to successfully endure the negative economic impacts of the crisis. The Company’s
capital planning and management activities, coupled with its historically strong earnings performance, diversified streams of revenue
and prudent dividend practices, have allowed it to build and maintain strong capital reserves. Shareholders’ equity of $2.10
billion at December 31, 2020 was $248.9 million, or 13.4%, higher than one year prior and was up $5.4 million, or 0.3%, from the
end of the linked third quarter. The increase in shareholders’ equity over the last four quarters was primarily driven by
solid earnings generation and capital retention, as well as the Steuben acquisition and an increase in accumulated other comprehensive
income due primarily to an increase in net unrealized gains on the Company’s available-for-sale investment securities portfolio.
At December 31, 2020, all of the Company’s regulatory capital ratios significantly exceeded well-capitalized standards. More
specifically, the Company’s tier 1 leverage ratio, a common measure to evaluate a financial institutions capital strength,
was 10.16% at December 31, 2020, which represents over two times the regulatory well-capitalized standard of 5.0%. This compares
to 10.80% at the end of the fourth quarter of 2019 and 10.21% at the end of the third quarter of 2020. The Company’s net
tangible equity to net tangible assets ratio was 9.92% at December 31, 2020, down slightly from 10.01% a year earlier and unchanged
from the end of the third quarter of 2020. The modest declines in the net tangible equity to net tangible assets ratio and the
tier 1 leverage ratio from one year prior was primarily due to the organic asset growth generated from the significant deposit
inflow noted previously and an increase in intangible assets.
As previously announced in December 2020, the Company’s
Board of Directors approved a stock repurchase program authorizing the repurchase of up to 2.68 million shares of the Company’s
common stock during a twelve-month period starting January 1, 2021. Such repurchases may be made at the discretion of the Company’s
senior management based on market conditions and other relevant factors and will be acquired through open market or privately negotiated
transactions as permitted under Rule 10b-18 of the Securities Exchange Act of 1934 and other applicable legal requirements. There
were no shares repurchased pursuant to the 2020 stock repurchase program in the fourth quarter of 2020.
Allowance for Credit Losses and Asset Quality
During the first quarter of 2020, the Company adopted ASU No.
2016-13, Financial Instruments – Credit Losses, also known as Current Expected Credit Losses (“CECL”).
Upon the adoption of CECL on January 1, 2020, the Company’s allowance for credit losses increased $1.4 million, from $49.9
million at December 31, 2019 to $51.3 million. Following the adoption of CECL, the Company’s allowance for credit losses
has increased by $9.6 million, or 18.7%, $3.6 million of which was due to the Steuben acquisition and $6.0 million of which was
primarily due to credit loss expectations associated with COVID-19’s adverse impact on economic and business operating conditions
and specific reserves on impaired loans. The table below illustrates the Company’s changes in the allowance for credit losses
just prior to CECL adoption through the end of 2020.
| ($ in millions) |
Allowance
for Loan
Losses at
12/31/2019 |
CECL
Adoption
Impact |
First
Quarter
2020
Reserve
Build |
Second
Quarter
2020
Steuben
Acquisition |
Second
Quarter
2020
Reserve
Build |
Third
Quarter
2020
Reserve
Build |
Fourth
Quarter
2020
Reserve
Release |
Allowance
for Credit
Losses at
12/31/20 |
| Balance |
$49.9 |
+$1.4 |
+$4.4 |
+$3.6 |
+$5.1 |
+$0.6 |
-$4.1 |
$60.9 |
| % Change from 12/31/2019 |
n/a |
+2.7% |
+8.8% |
+7.3% |
+10.3% |
+1.1% |
-8.2% |
+22.0% |
At December 31, 2020, nonperforming (90+ days past due and non-accruing)
loans were $76.9 million, or 1.04%, of total loans outstanding. This compares to $24.3 million, or 0.35%, of total loans outstanding
at the end of the fourth quarter of 2019 and $32.2 million, or 0.43%, of total loans outstanding at the end of the third quarter
of 2020. During the fourth quarter of 2020, several commercial borrowers, which primarily operate in the hospitality, travel and
entertainment industries, requested extended loan repayment forbearance due to the continued pandemic-related financial hardship
they were experiencing. Although the Company’s management granted these forbearance requests, it also reclassified the majority
of these loan relationships from accruing to nonaccrual status, unless the borrower clearly demonstrated current repayment capacity
or sufficient cash reserves to service their pre-forbearance payment obligations. The allowance for credit losses at December 31,
2020 included $3.9 million of specific reserves for certain nonperforming loans. The Company may continue to receive similar requests
during 2021 and will continue to work with its borrowers to establish fair and reasonable forbearance agreements in light of each
borrower’s specific circumstances, with an objective to minimize potential ultimate losses to the Company.
Total delinquent loans, which includes nonperforming loans and
loans thirty or more days delinquent, to total loans outstanding were 1.50% at the end of the fourth quarter of 2020. This compares
to 0.94% at the end of the fourth quarter of 2019 and 0.79% at the end of the third quarter of 2020. Loans 30 – 89 days delinquent
(categorized by the Company as delinquent but performing) were 0.47% of total loans outstanding at December 31, 2020, up from 0.36%
at the end of the linked quarter as seasonally expected, but down from 0.59% at the end of 2019. The Company recorded net charge-offs
of $1.3 million, or 0.07% annualized, in the fourth quarter of 2020. This compares to net charge-offs of $2.4 million, or 0.14%
annualized, in the fourth quarter of 2019 and $1.3 million, or 0.07%, in the linked third quarter of 2020. The allowance for credit
losses to total loans was 0.82% at December 31, 2020, compared to 0.72% one year prior and 0.87% at the end of the linked third
quarter.
The Company participated in both rounds of the 2020 Coronavirus
Aid, Relief, and Security Act (“CARES Act”) PPP, a specialized low-interest loan program funded by the U.S. Treasury
Department and administered by the U.S. Small Business Administration (“SBA”). As of December 31, 2020, the Company’s
business lending portfolio included 3,417 PPP loans with a total balance of $470.7 million. This was down from 3,473 loans with
a total balance of $507.2 million at the end of the third quarter of 2020. Under the PPP, the SBA may forgive all or a portion
of the loan amount if the borrower meets certain conditions. The Company’s expects to recognize through interest income most
of its remaining net deferred PPP fees totaling $9.0 million during 2021. In addition, the Company is participating in the 2021
second round of PPP lending, but is uncertain at this time as to the amount of loans it will originate in 2021.
From a credit risk and lending perspective, the Company continues
to take actions to assess and monitor its COVID-19 related credit exposures. No specific credit impairment has been identified
within the Company’s investment securities portfolio, including the Company’s municipal securities portfolio since
the onset of the pandemic. With respect to the Company’s lending activities, the Company continues to utilize a customer
forbearance program to assist borrowers that may be experiencing financial hardship due to COVID-19 related challenges. As of December
31, 2020, the Company had 74 borrowers in forbearance due to COVID-19 related financial hardship, representing $66.5 million in
outstanding loan balances, or 0.9% of total loans outstanding. This compares to 216 borrowers and $192.7 million in outstanding
loan balances, or 2.6%, of total loans outstanding in forbearance at September 30, 2020 and 3,699 borrowers in forbearance at June
30, 2020, representing $704.1 million in outstanding loan balances, or 9.4% of total loans outstanding.
Consistent with industry regulatory guidance, borrowers that
were otherwise current on loan payments and granted COVID-19 related financial hardship payment deferrals were reported as current
loans throughout the first 180 days of the deferral period. Borrowers that were delinquent in their payments to the Bank prior
to requesting a COVID-19 related financial hardship payment deferral were reviewed on a case-by-case basis for troubled debt restructure
classification and nonperforming loan status.
Dividend Increase
During the fourth quarter of 2020, the Company declared a quarterly
cash dividend of $0.42 per share on its common stock, up 2.4% from the $0.41 dividend declared in the fourth quarter of 2019, representing
an annualized yield of 2.4% based upon the $70.58 closing price of the Company’s stock on January 22, 2021. The one cent
per share increase declared in the third quarter of 2020 marked the 28th consecutive year of dividend increases for
the Company.
Conference Call Scheduled
Company
management will conduct an investor call at 11:00 a.m. (ET) today, January 25, 2021, to discuss the fourth quarter and full year
2020 results. The conference call can be accessed at 877-317-6789 (1-412-317-6789 if outside the United States and Canada). Investors
may also listen live via the Internet at: https://www.webcaster4.com/Webcast/Page/995/39287.
This
earnings release, including supporting financial tables and presentation slides, is available within the press releases section
of the Company's investor relations website at: https://ir.communitybanksystem.com. An archived webcast of the earnings
call will be available on this site for one full year.
About Us
Community
Bank System, Inc. operates more than 230 customer facilities across Upstate New York, Northeastern Pennsylvania, Vermont, and
Western Massachusetts through its banking subsidiary, Community Bank, N.A. With assets of over $13.9 billion, the DeWitt, N.Y.
headquartered company is among the country’s 125 largest banking institutions. In addition to a full range of retail, business,
and municipal banking services, the Company offers comprehensive financial planning, insurance and wealth management services
through its Community Bank Wealth Management Group and OneGroup NY, Inc. operating units. The Company's Benefit Plans Administrative
Services, Inc. subsidiary is a leading provider of employee benefits administration, trust services, collective investment fund
administration and actuarial consulting services to customers on a national scale. Community Bank System, Inc. is listed on the
New York Stock Exchange and the Company's stock trades under the symbol CBU. For more information about Community Bank visit www.cbna.com
or https://ir.communitybanksystem.com.
# # #
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations
of CBU’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth
in the forward-looking statements. The following factors, among others, could cause the actual results of CBU’s operations
to differ materially from its expectations: the macroeconomic and other challenges and uncertainties related to the COVID-19 pandemic,
including the negative impacts and disruptions on public health, corporate and consumer customers, the communities CBU serves,
and the domestic and global economy, including various actions taken in response by governments, central banks and others, which
may have an adverse effect on CBU’s business; current and future economic and market conditions, including the effects of
declines in housing prices, high unemployment rates, U.S. fiscal debt, budget and tax matters, geopolitical matters, and any slowdown
in global economic growth; fiscal and monetary policies of the Federal Reserve Board; the effect of changes in the level of checking
or savings account deposits on CBU’s funding costs and net interest margin; future provisions for credit losses on loans
and debt securities; changes in nonperforming assets; the effect of a fall in stock market prices on CBU’s fee income businesses,
including its employee benefit services, wealth management, and insurance businesses; the successful integration of operations
of its acquisitions; competition; changes in legislation or regulatory requirements; and the timing for receiving regulatory approvals
and completing pending transactions. For more information about factors that could cause actual results to differ materially from
CBU’s expectations, refer to its reports filed with the Securities and Exchange Commission, including the discussion under
“Risk Factors” in the Annual Report on Form 10-K for the year ended December 31, 2019 and Quarterly Reports on Form
10-Q for the quarterly periods ended March 31, 2020, June 30, 2020 and September 30, 2020, which have been filed with the Securities
and Exchange Commission and available on its website at www.sec.gov. Further, any forward-looking statement speaks only as of the
date on which it is made, and CBU undertakes no obligation to update any forward-looking statement to reflect events or circumstances
after the date on which the statement is made or to reflect the occurrence of unanticipated events.
|
Summary of Financial Data (unaudited) |
|
|
|
|
| (Dollars in thousands, except per share data) |
|
|
|
|
| |
Quarter Ended |
Year-to-Date |
| |
December 31,
2020 |
December 31,
2019 |
December 31,
2020 |
December 31,
2019 |
| Earnings |
|
|
|
|
| Loan income |
$77,848 |
$80,509 |
$314,779 |
$308,210 |
| Investment income |
19,753 |
19,538 |
74,499 |
77,517 |
| Total interest income |
97,601 |
100,047 |
389,278 |
385,727 |
| Interest expense |
4,168 |
7,307 |
20,875 |
26,552 |
| Net interest income |
93,433 |
92,740 |
368,403 |
359,175 |
| Acquisition-related provision for credit losses |
(140) |
0 |
3,061 |
0 |
| Provision for credit losses |
(2,961) |
2,857 |
11,151 |
8,430 |
| Net interest income after provision for credit losses |
96,534 |
89,883 |
354,191 |
350,745 |
| Deposit service and other banking fees |
15,827 |
17,828 |
61,123 |
69,960 |
| Mortgage banking |
(898) |
247 |
5,301 |
523 |
| Wealth management and insurance services |
15,090 |
14,060 |
60,251 |
58,068 |
| Employee benefit services |
26,736 |
24,997 |
101,329 |
97,167 |
| Gain on sale of investments, net |
0 |
0 |
0 |
4,882 |
| Unrealized gain (loss) on equity securities |
24 |
(9) |
(6) |
19 |
| Gain on debt extinguishment |
421 |
0 |
421 |
0 |
| Total noninterest revenues |
57,200 |
57,123 |
228,419 |
230,619 |
| Salaries and employee benefits |
58,132 |
56,468 |
228,384 |
219,916 |
| Data processing and communications |
12,413 |
10,932 |
45,755 |
41,407 |
| Occupancy and equipment |
10,105 |
10,142 |
40,732 |
39,850 |
| Amortization of intangible assets |
3,525 |
3,962 |
14,297 |
15,956 |
| Litigation accrual |
0 |
0 |
2,950 |
0 |
| Acquisition expenses |
396 |
819 |
4,933 |
8,608 |
| Other |
10,431 |
12,946 |
39,483 |
46,289 |
| Total operating expenses |
95,002 |
95,269 |
376,534 |
372,026 |
| Income before income taxes |
58,732 |
51,737 |
206,076 |
209,338 |
| Income taxes |
12,247 |
8,853 |
41,400 |
40,275 |
| Net income |
$46,485 |
$42,884 |
$164,676 |
$169,063 |
| Basic earnings per share |
$0.86 |
$0.82 |
$3.10 |
$3.26 |
| Diluted earnings per share |
$0.86 |
$0.82 |
$3.08 |
$3.23 |
| Summary of Financial Data (unaudited) |
|
|
|
|
|
| (Dollars in thousands, except per share data) |
|
|
|
|
|
| |
2020 |
2019 |
| |
4th Qtr |
3rd Qtr |
2nd Qtr |
1st Qtr |
4th Qtr |
| Earnings |
|
|
|
|
|
| Loan income |
$77,848 |
$79,646 |
$78,720 |
$78,565 |
$80,509 |
| Investment income |
19,753 |
17,844 |
18,472 |
18,430 |
19,538 |
| Total interest income |
97,601 |
97,490 |
97,192 |
96,995 |
100,047 |
| Interest expense |
4,168 |
4,525 |
5,241 |
6,941 |
7,307 |
| Net interest income |
93,433 |
92,965 |
91,951 |
90,054 |
92,740 |
| Acquisition-related provision for credit losses |
(140) |
0 |
3,201 |
0 |
0 |
| Provision for credit losses |
(2,961) |
1,945 |
6,573 |
5,594 |
2,857 |
| Net interest income after provision for credit losses |
96,534 |
91,020 |
82,177 |
84,460 |
89,883 |
| Deposit service and other banking fees |
15,827 |
15,184 |
12,934 |
17,178 |
17,828 |
| Mortgage banking |
(898) |
3,908 |
1,375 |
916 |
247 |
| Wealth management and insurance services |
15,090 |
15,420 |
14,549 |
15,192 |
14,060 |
| Employee benefit services |
26,736 |
25,159 |
24,068 |
25,366 |
24,997 |
| Unrealized gain (loss) on equity securities |
24 |
(12) |
12 |
(30) |
(9) |
| Gain on debt extinguishment |
421 |
0 |
0 |
0 |
0 |
| Total noninterest revenues |
57,200 |
59,659 |
52,938 |
58,622 |
57,123 |
| Salaries and employee benefits |
58,132 |
57,280 |
54,721 |
58,251 |
56,468 |
| Data processing and communications |
12,413 |
12,096 |
10,833 |
10,413 |
10,932 |
| Occupancy and equipment |
10,105 |
10,134 |
9,754 |
10,739 |
10,142 |
| Amortization of intangible assets |
3,525 |
3,581 |
3,524 |
3,667 |
3,962 |
| Litigation accrual |
0 |
2,950 |
0 |
0 |
0 |
| Acquisition expenses |
396 |
796 |
3,372 |
369 |
819 |
| Other |
10,431 |
10,129 |
8,699 |
10,224 |
12,946 |
| Total operating expenses |
95,002 |
96,966 |
90,903 |
93,663 |
95,269 |
| Income before income taxes |
58,732 |
53,713 |
44,212 |
49,419 |
51,737 |
| Income taxes |
12,247 |
10,904 |
8,964 |
9,285 |
8,853 |
| Net income |
$46,485 |
$42,809 |
$35,248 |
$40,134 |
$42,884 |
| Basic earnings per share |
$0.86 |
$0.80 |
$0.67 |
$0.77 |
$0.82 |
| Diluted earnings per share |
$0.86 |
$0.79 |
$0.66 |
$0.76 |
$0.82 |
| Profitability |
|
|
|
|
|
| Return on assets |
1.33% |
1.26% |
1.12% |
1.41% |
1.48% |
| Return on equity |
8.82% |
8.13% |
7.05% |
8.49% |
9.19% |
| Return on tangible equity(2) |
14.29% |
13.22% |
11.60% |
14.52% |
16.08% |
| Noninterest revenues/operating revenues (FTE)(1) |
37.9% |
39.2% |
36.6% |
39.6% |
38.3% |
| Efficiency ratio |
60.8% |
58.9% |
58.1% |
60.4% |
60.7% |
| Components of Net Interest Margin (FTE) |
|
|
|
|
|
| Loan yield |
4.17% |
4.23% |
4.40% |
4.61% |
4.67% |
| Cash equivalents yield |
0.10% |
0.10% |
0.10% |
0.90% |
1.68% |
| Investment yield |
2.13% |
2.31% |
2.50% |
2.51% |
2.70% |
| Earning asset yield |
3.18% |
3.28% |
3.56% |
3.93% |
3.99% |
| Interest-bearing deposit rate |
0.17% |
0.19% |
0.23% |
0.34% |
0.36% |
| Borrowing rate |
0.86% |
1.19% |
1.36% |
1.70% |
1.68% |
| Cost of all interest-bearing funds |
0.20% |
0.23% |
0.28% |
0.40% |
0.42% |
| Cost of funds (includes DDA) |
0.14% |
0.16% |
0.20% |
0.30% |
0.31% |
| Net interest margin (FTE) |
3.05% |
3.12% |
3.37% |
3.65% |
3.71% |
| Fully tax-equivalent adjustment |
$929 |
$963 |
$1,015 |
$1,032 |
$1,026 |
| Summary of Financial Data (unaudited) |
|
|
|
|
|
| (Dollars in thousands, except per share data) |
|
|
|
|
|
| |
2020 |
2019 |
| |
4th Qtr |
3rd Qtr |
2nd Qtr |
1st Qtr |
4th Qtr |
| Average Balances |
|
|
|
|
|
| Loans |
$7,450,513 |
$7,508,895 |
$7,219,462 |
$6,876,771 |
$6,857,977 |
| Cash equivalents |
1,079,236 |
1,300,981 |
822,992 |
114,660 |
504,858 |
| Taxable investment securities |
3,340,544 |
2,686,120 |
2,608,495 |
2,586,646 |
2,242,471 |
| Nontaxable investment securities |
444,417 |
461,963 |
454,511 |
459,340 |
434,020 |
| Total interest-earning assets |
12,314,710 |
11,957,959 |
11,105,460 |
10,037,417 |
10,039,326 |
| Total assets |
13,884,979 |
13,543,460 |
12,652,200 |
11,487,384 |
11,472,415 |
| Interest-bearing deposits |
7,853,764 |
7,621,206 |
7,146,301 |
6,598,131 |
6,581,979 |
| Borrowings |
359,102 |
291,241 |
315,934 |
329,355 |
325,139 |
| Total interest-bearing liabilities |
8,212,866 |
7,912,447 |
7,462,235 |
6,927,486 |
6,907,118 |
| Noninterest-bearing deposits |
3,356,156 |
3,312,841 |
2,964,717 |
2,458,529 |
2,519,645 |
| Shareholders' equity |
2,097,766 |
2,095,211 |
2,009,996 |
1,902,169 |
1,851,579 |
| Balance Sheet Data |
|
|
|
|
|
| Cash and cash equivalents |
$1,645,805 |
$1,836,521 |
$1,319,880 |
$529,336 |
$205,030 |
| Investment securities |
3,595,347 |
3,270,063 |
3,337,459 |
3,185,381 |
3,088,343 |
| Loans: |
|
|
|
|
|
| Business lending |
3,440,077 |
3,433,565 |
3,455,343 |
2,789,130 |
2,775,876 |
| Consumer mortgage |
2,401,499 |
2,410,249 |
2,428,060 |
2,424,656 |
2,430,902 |
| Consumer indirect |
1,021,885 |
1,039,925 |
1,056,865 |
1,087,879 |
1,113,062 |
| Home equity |
399,834 |
413,265 |
418,543 |
386,583 |
386,325 |
| Consumer direct |
152,657 |
161,639 |
169,228 |
177,844 |
184,378 |
| Total loans |
7,415,952 |
7,458,643 |
7,528,039 |
6,866,092 |
6,890,543 |
| Allowance for credit losses |
60,869 |
64,962 |
64,437 |
55,652 |
49,911 |
| Intangible assets, net |
846,648 |
850,214 |
852,761 |
832,919 |
836,923 |
| Other assets |
488,211 |
494,846 |
470,515 |
450,907 |
439,367 |
| Total assets |
13,931,094 |
13,845,325 |
13,444,217 |
11,808,983 |
11,410,295 |
| Deposits: |
|
|
|
|
|
| Noninterest-bearing |
3,361,768 |
3,326,517 |
3,273,921 |
2,491,720 |
2,465,902 |
| Non-maturity interest-bearing |
6,929,435 |
6,830,893 |
6,600,140 |
5,899,297 |
5,592,936 |
| Time |
933,771 |
963,180 |
972,612 |
912,965 |
936,129 |
| Total deposits |
11,224,974 |
11,120,590 |
10,846,673 |
9,303,982 |
8,994,967 |
| Borrowings |
290,666 |
288,448 |
176,195 |
208,718 |
253,758 |
| Subordinated notes payable |
3,303 |
13,735 |
13,755 |
13,775 |
13,795 |
| Subordinated debt held by unconsolidated subsidiary trusts |
77,320 |
77,320 |
79,382 |
77,320 |
77,320 |
| Accrued interest and other liabilities |
230,724 |
246,572 |
246,897 |
228,557 |
215,221 |
| Total liabilities |
11,826,987 |
11,746,665 |
11,362,902 |
9,832,352 |
9,555,061 |
| Shareholders' equity |
2,104,107 |
2,098,660 |
2,081,315 |
1,976,631 |
1,855,234 |
| Total liabilities and shareholders' equity |
13,931,094 |
13,845,325 |
13,444,217 |
11,808,983 |
11,410,295 |
| Capital |
|
|
|
|
|
| Tier 1 leverage ratio |
10.16% |
10.21% |
10.79% |
11.10% |
10.80% |
| Tangible equity/net tangible assets(2) |
9.92% |
9.92% |
10.08% |
10.78% |
10.01% |
| Diluted weighted average common shares O/S |
54,194 |
54,159 |
53,017 |
52,646 |
52,522 |
| Period end common shares outstanding |
53,593 |
53,538 |
53,514 |
52,031 |
51,794 |
| Cash dividends declared per common share |
$0.42 |
$0.42 |
$0.41 |
$0.41 |
$0.41 |
| Book value |
$39.26 |
$39.20 |
$38.89 |
$37.99 |
$35.82 |
| Tangible book value(2) |
$24.29 |
$24.15 |
$23.80 |
$22.84 |
$20.52 |
| Common stock price (end of period) |
$62.31 |
$54.46 |
$57.02 |
$58.80 |
$70.94 |
| Summary of Financial Data (unaudited) |
|
|
|
|
|
| (Dollars in thousands, except per share data) |
|
|
|
|
|
| |
2020 |
2019 |
| |
4th Qtr |
3rd Qtr |
2nd Qtr |
1st Qtr |
4th Qtr |
| Asset Quality |
|
|
|
|
|
| Nonaccrual loans |
$72,017 |
$28,756 |
$20,697 |
$19,046 |
$18,835 |
| Accruing loans 90+ days delinquent |
4,834 |
3,487 |
6,063 |
12,736 |
5,426 |
| Total nonperforming loans |
76,851 |
32,243 |
26,760 |
31,782 |
24,261 |
| Other real estate owned (OREO) |
883 |
1,209 |
3,186 |
1,469 |
1,270 |
| Total nonperforming assets |
77,734 |
33,452 |
29,946 |
33,251 |
25,531 |
| Net charge-offs |
1,258 |
1,257 |
910 |
1,550 |
2,369 |
| Allowance for credit losses/loans outstanding |
0.82% |
0.87% |
0.86% |
0.81% |
0.72% |
| Nonperforming loans/loans outstanding |
1.04% |
0.43% |
0.36% |
0.46% |
0.35% |
| Allowance for credit losses/nonperforming loans |
79% |
201% |
241% |
175% |
206% |
| Net charge-offs/average loans |
0.07% |
0.07% |
0.05% |
0.09% |
0.14% |
| Delinquent loans/ending loans |
1.50% |
0.79% |
0.72% |
1.11% |
0.94% |
| Provision for credit losses/net charge-offs |
(246)% |
155% |
1,074% |
361% |
121% |
| Nonperforming assets/total assets |
0.56% |
0.24% |
0.22% |
0.28% |
0.22% |
| Quarterly GAAP to Non-GAAP Reconciliations |
|
|
|
|
|
| Income statement data |
|
|
|
|
|
| Pre-tax, pre-provision net revenue |
|
|
|
|
|
| Net income (GAAP) |
$46,485 |
$42,809 |
$35,248 |
$40,134 |
$42,884 |
| Income taxes |
12,247 |
10,904 |
8,964 |
9,285 |
8,853 |
| Income before income taxes |
58,732 |
53,713 |
44,212 |
49,419 |
51,737 |
| Provision for credit losses |
(3,101) |
1,945 |
9,774 |
5,594 |
2,857 |
| Pre-tax, pre-provision net revenue (non-GAAP) |
55,631 |
55,658 |
53,986 |
55,013 |
54,594 |
| Acquisition expenses |
396 |
796 |
3,372 |
369 |
819 |
| Unrealized (gain) loss on equity securities |
(24) |
12 |
(12) |
30 |
9 |
| Litigation accrual |
0 |
2,950 |
0 |
0 |
0 |
| Gain on debt extinguishment |
(421) |
0 |
0 |
0 |
0 |
| Adjusted pre-tax, pre-provision net revenue (non-GAAP) |
$55,582 |
$59,416 |
$57,346 |
$55,412 |
$55,422 |
| |
|
|
|
|
|
| Pre-tax, pre-provision net revenue per share |
|
|
|
|
|
| Diluted earnings per share (GAAP) |
$0.86 |
$0.79 |
$0.66 |
$0.76 |
$0.82 |
| Income taxes |
0.22 |
0.20 |
0.17 |
0.18 |
0.17 |
| Income before income taxes |
1.08 |
0.99 |
0.83 |
0.94 |
0.99 |
| Provision for credit losses |
(0.04) |
0.04 |
0.19 |
0.10 |
0.06 |
| Pre-tax, pre-provision net revenue per share (non-GAAP) |
1.04 |
1.03 |
1.02 |
1.04 |
1.05 |
| Acquisition expenses |
0.00 |
0.02 |
0.06 |
0.01 |
0.01 |
| Unrealized (gain) loss on equity securities |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
| Litigation accrual |
0.00 |
0.05 |
0.00 |
0.00 |
0.00 |
| Gain on debt extinguishment |
(0.01) |
0.00 |
0.00 |
0.00 |
0.00 |
| Adjusted pre-tax, pre-provision net revenue per share
(non-GAAP) |
$1.03 |
$1.10 |
$1.08 |
$1.05 |
$1.06 |
| |
|
|
|
|
|
| Summary of Financial Data (unaudited) |
|
|
|
|
|
| (Dollars in thousands, except per share data) |
|
|
|
|
|
| |
2020 |
2019 |
| |
4th Qtr |
3rd Qtr |
2nd Qtr |
1st Qtr |
4th Qtr |
| Quarterly GAAP to Non-GAAP Reconciliations |
|
|
|
|
|
| Income statement data (continued) |
|
|
|
|
|
| Net income |
|
|
|
|
|
| Net income
(GAAP) |
$46,485 |
$42,809 |
$35,248 |
$40,134 |
$42,884 |
| Acquisition
expenses |
396 |
796 |
3,372 |
369 |
819 |
| Tax effect
of acquisition expenses |
(83) |
(162) |
(684) |
(69) |
(140) |
| Subtotal
(non-GAAP) |
46,798 |
43,443 |
37,936 |
40,434 |
43,563 |
| Acquisition-related
provision for credit losses |
(140) |
0 |
3,201 |
0 |
0 |
| Tax effect
of acquisition-related provision for credit losses |
29 |
0 |
(649) |
0 |
0 |
| Subtotal
(non-GAAP) |
46,687 |
43,443 |
40,488 |
40,434 |
43,563 |
| Unrealized
(gain) loss on equity securities |
(24) |
12 |
(12) |
30 |
9 |
| Tax effect
of unrealized (gain) loss on equity securities |
5 |
(2) |
2 |
(6) |
(2) |
| Subtotal
(non-GAAP) |
46,668 |
43,453 |
40,478 |
40,458 |
43,570 |
| Litigation
accrual |
0 |
2,950 |
0 |
0 |
0 |
| Tax effect
of litigation accrual |
0 |
(599) |
0 |
0 |
0 |
| Subtotal
(non-GAAP) |
46,668 |
45,804 |
40,478 |
40,458 |
43,570 |
| Gain
on debt extinguishment |
(421) |
0 |
0 |
0 |
0 |
| Tax effect
of gain on debt extinguishment |
88 |
0 |
0 |
0 |
0 |
| Operating
net income (non-GAAP) |
46,335 |
45,804 |
40,478 |
40,458 |
43,570 |
| Amortization
of intangibles |
3,525 |
3,581 |
3,524 |
3,667 |
3,962 |
| Tax effect
of amortization of intangibles |
(735) |
(727) |
(714) |
(689) |
(678) |
| Subtotal
(non-GAAP) |
49,125 |
48,658 |
43,288 |
43,436 |
46,854 |
| Acquired
non-impaired loan accretion |
(1,335) |
(1,326) |
(1,365) |
(1,465) |
(1,898) |
| Tax effect
of acquired non-impaired loan accretion |
278 |
269 |
277 |
275 |
325 |
| Adjusted
net income (non-GAAP) |
$48,068 |
$47,601 |
$42,200 |
$42,246 |
$45,281 |
| |
|
|
|
|
|
| Return on average assets |
|
|
|
|
|
| Adjusted
net income (non-GAAP) |
$48,068 |
$47,601 |
$42,200 |
$42,246 |
$45,281 |
| Average
total assets |
13,884,979 |
13,543,460 |
12,652,200 |
11,487,384 |
11,472,415 |
| Adjusted
return on average assets (non-GAAP) |
1.38% |
1.40% |
1.34% |
1.48% |
1.57% |
| |
|
|
|
|
|
| Return on average equity |
|
|
|
|
|
| Adjusted
net income (non-GAAP) |
$48,068 |
$47,601 |
$42,200 |
$42,246 |
$45,281 |
| Average
total equity |
2,097,766 |
2,095,211 |
2,009,996 |
1,902,169 |
1,851,579 |
| Adjusted
return on average equity (non-GAAP) |
9.12% |
9.04% |
8.44% |
8.93% |
9.70% |
| |
|
|
|
|
|
| Summary of Financial Data (unaudited) |
|
|
|
|
|
| (Dollars in thousands, except per share data) |
|
|
|
|
|
| |
2020 |
2019 |
| |
4th Qtr |
3rd Qtr |
2nd Qtr |
1st Qtr |
4th Qtr |
| Quarterly GAAP to Non-GAAP Reconciliations |
|
|
|
|
|
| Income statement data (continued) |
|
|
|
|
|
| Earnings
per common share |
|
|
|
|
|
| Diluted
earnings per share (GAAP) |
$0.86 |
$0.79 |
$0.66 |
$0.76 |
$0.82 |
| Acquisition
expenses |
0.00 |
0.02 |
0.06 |
0.01 |
0.01 |
| Tax effect
of acquisition expenses |
0.00 |
0.00 |
(0.01) |
0.00 |
0.00 |
| Subtotal
(non-GAAP) |
0.86 |
0.81 |
0.71 |
0.77 |
0.83 |
| Acquisition-related
provision for credit losses |
0.00 |
0.00 |
0.06 |
0.00 |
0.00 |
| Tax effect
of acquisition-related provision for credit losses |
0.00 |
0.00 |
(0.01) |
0.00 |
0.00 |
| Subtotal
(non-GAAP) |
0.86 |
0.81 |
0.76 |
0.77 |
0.83 |
| Unrealized
(gain) loss on equity securities |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
| Tax effect
of unrealized (gain) loss on equity securities |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
| Subtotal
(non-GAAP) |
0.86 |
0.81 |
0.76 |
0.77 |
0.83 |
| Litigation
accrual |
0.00 |
0.05 |
0.00 |
0.00 |
0.00 |
| Tax effect
of litigation accrual |
0.00 |
(0.01) |
0.00 |
0.00 |
0.00 |
| Subtotal
(non-GAAP) |
0.86 |
0.85 |
0.76 |
0.77 |
0.83 |
| Gain
on debt extinguishment |
(0.01) |
0.00 |
0.00 |
0.00 |
0.00 |
| Tax effect
of gain on debt extinguishment |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
| Operating
diluted earnings per share (non-GAAP) |
0.85 |
0.85 |
0.76 |
0.77 |
0.83 |
| Amortization
of intangibles |
0.07 |
0.07 |
0.07 |
0.07 |
0.07 |
| Tax effect
of amortization of intangibles |
(0.01) |
(0.01) |
(0.01) |
(0.01) |
(0.01) |
| Subtotal
(non-GAAP) |
0.91 |
0.91 |
0.82 |
0.83 |
0.89 |
| Acquired
non-impaired loan accretion |
(0.03) |
(0.03) |
(0.03) |
(0.03) |
(0.04) |
| Tax effect
of acquired non-impaired loan accretion |
0.01 |
0.00 |
0.01 |
0.00 |
0.01 |
| Diluted
adjusted net earnings per share (non-GAAP) |
$0.89 |
$0.88 |
$0.80 |
$0.80 |
$0.86 |
| |
|
|
|
|
|
| Noninterest operating expenses |
|
|
|
|
|
| Noninterest
expenses (GAAP) |
$95,002 |
$96,966 |
$90,903 |
$93,663 |
$95,269 |
| Amortization
of intangibles |
(3,525) |
(3,581) |
(3,524) |
(3,667) |
(3,962) |
| Acquisition
expenses |
(396) |
(796) |
(3,372) |
(369) |
(819) |
| Litigation
accrual |
0 |
(2,950) |
0 |
0 |
0 |
| Total
adjusted noninterest expenses (non-GAAP) |
$91,081 |
$89,639 |
$84,007 |
$89,627 |
$90,488 |
| |
|
|
|
|
|
| Efficiency ratio |
|
|
|
|
|
| Adjusted
noninterest expenses (non-GAAP) - numerator |
$91,081 |
$89,639 |
$84,007 |
$89,627 |
$90,488 |
| Tax-equivalent
net interest income |
94,362 |
93,928 |
92,966 |
91,086 |
93,766 |
| Noninterest
revenues |
57,200 |
59,659 |
52,938 |
58,622 |
57,123 |
| Acquired
non-impaired loan accretion |
(1,335) |
(1,326) |
(1,365) |
(1,465) |
(1,898) |
| Unrealized
(gain) loss on equity securities |
(24) |
12 |
(12) |
30 |
9 |
| Gain
on debt extinguishment |
(421) |
0 |
0 |
0 |
0 |
| Operating
revenues (non-GAAP) - denominator |
149,782 |
152,273 |
144,527 |
148,273 |
149,000 |
| Efficiency
ratio (non-GAAP) |
60.8% |
58.9% |
58.1% |
60.4% |
60.7% |
| Summary of Financial Data (unaudited) |
|
|
|
|
|
| (Dollars in thousands, except per share data) |
|
|
|
|
|
| |
2020 |
2019 |
| |
4th Qtr |
3rd Qtr |
2nd Qtr |
1st Qtr |
4th Qtr |
| Quarterly GAAP to Non-GAAP Reconciliations |
|
|
|
|
|
| Balance sheet data |
|
|
|
|
|
| Total assets |
|
|
|
|
|
| Total
assets (GAAP) |
$13,931,094 |
$13,845,325 |
$13,444,217 |
$11,808,983 |
$11,410,295 |
| Intangible
assets |
(846,648) |
(850,214) |
(852,761) |
(832,919) |
(836,923) |
| Deferred
taxes on intangible assets |
44,370 |
44,733 |
45,094 |
44,494 |
44,742 |
| Total
tangible assets (non-GAAP) |
13,128,816 |
13,039,844 |
12,636,550 |
11,020,558 |
10,618,114 |
| |
|
|
|
|
|
| Total common equity |
|
|
|
|
|
| Shareholders'
Equity (GAAP) |
2,104,107 |
2,098,660 |
2,081,315 |
1,976,631 |
1,855,234 |
| Intangible
assets |
(846,648) |
(850,214) |
(852,761) |
(832,919) |
(836,923) |
| Deferred
taxes on intangible assets |
44,370 |
44,733 |
45,094 |
44,494 |
44,742 |
| Total
tangible common equity (non-GAAP) |
1,301,829 |
1,293,179 |
1,273,648 |
1,188,206 |
1,063,053 |
| |
|
|
|
|
|
| Net tangible equity-to-assets ratio at quarter end |
|
|
|
|
|
| Total
tangible common equity (non-GAAP) - numerator |
$1,301,829 |
$1,293,179 |
$1,273,648 |
$1,188,206 |
$1,063,053 |
| Total
tangible assets (non-GAAP) - denominator |
13,128,816 |
13,039,844 |
12,636,550 |
11,020,558 |
10,618,114 |
| Net
tangible equity-to-assets ratio at quarter end (non-GAAP) |
9.92% |
9.92% |
10.08% |
10.78% |
10.01% |
| |
|
|
|
|
|
| |
| (1) Excludes unrealized gain and loss on equity securities and gain on debt extinguishment. |
| (2) Includes deferred tax liabilities related to certain intangible assets. |
# # #
