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, Inc. Reports
First Quarter 2023 Results
SYRACUSE, N.Y. — April 25, 2023 — Community Bank System,
Inc. (the “Company”) (NYSE: CBU) reported first quarter 2023 net income of $5.8 million, or $0.11 per fully-diluted share.
This compares to $47.1 million of net income, or $0.86 per fully-diluted share for the first quarter of 2022. The $0.75 decrease in earnings
per share was primarily due to the impact of the previously announced strategic balance sheet repositioning executed during the quarter
to provide the Company with greater flexibility in managing balance sheet growth and deposit funding. During the quarter, the Company
sold certain available-for-sale investments securities and used the proceeds to pay down overnight borrowings with rising and comparatively
high variable interest rates. As a result, a $52.3 million pre-tax realized loss on the investment security sales was recognized during
the quarter which negatively impacted GAAP earnings per share by $0.75. In addition, increases in the provision for credit losses and
operating expenses were offset by increases in net interest income and noninterest revenues, lower income taxes and a decrease in fully-diluted
shares outstanding. Comparatively, the Company recorded $0.97 in fully-diluted earnings per share for the linked fourth quarter of 2022.
The Company’s deposit base and liquidity position continues to be strong, as the Company maintained total immediately available
liquidity sources at the end of the quarter of $4.69 billion, over double its estimated uninsured deposits, net of collateralized deposits,
which represent less than 20% of first quarter ending total deposits. Additionally, total ending deposits increased $98.4 million, or
0.8%, from December 31, 2022.
Operating earnings per share, a non-GAAP measure, which excludes acquisition
expenses, acquisition-related contingent consideration adjustments, loss on sales of investment securities, unrealized loss (gain) on
equity securities and gain on debt extinguishment, net of tax, was $0.86 for the first quarter of 2023, as compared to $0.87 for the first
quarter of 2022 and $0.96 for the fourth quarter of 2022. The $0.01 decrease in operating earnings per share on a year over year basis
was driven by a decrease in banking-related noninterest revenues, an increase in the provision for credit losses and higher operating
expenses, partially offset by increases in net interest income and financial services business revenues, and decreases in income taxes
and fully-diluted shares outstanding. The $0.10 decrease in operating earnings per share from the fourth quarter of 2022 was driven by
various factors, including a decrease in net interest income, an increase in the provision for credit losses, lower deposit service and
other banking fees and higher operating expenses, offset, in part, by an increase in financial services business revenues and lower income
taxes.
First quarter 2023 adjusted pre-tax, pre-provision net revenue per
share, a non-GAAP measure, which excludes income taxes, the provision for credit losses, acquisition expenses, acquisition-related contingent
consideration adjustments, loss on sales of investment securities, gain on debt extinguishment and unrealized loss (gain) on equity securities
from net income, of $1.16 was up $0.04 as compared to the first quarter of 2022 and down $0.13 as compared to the fourth quarter of 2022.
First Quarter 2023 Performance Highlights:
| · | $0.11 per share, down from $0.86 per share for the first quarter of 2022 |
| v | Operating EPS (non-GAAP) |
| · | $0.86 per share, down $0.01 per share from the first quarter of 2022 |
| v | Adjusted Pre-Tax, Pre-Provision Net Revenue Per Share (non-GAAP) |
| · | $1.16 per share, up $0.04 per share from the first quarter of 2022 |
| v | Return on Assets / Return on Assets – Operating (non-GAAP) |
| v | Return on Equity / Return on Equity – Operating (non-GAAP) |
| · | Up $98.4 million, or 0.8%, from the end of the fourth quarter of 2022 |
| v | Total Deposit Funding Costs / Total Cost of Funds |
| v | Net Interest Margin (Fully Tax-Equivalent) |
| · | 3.20%, up 18 basis points from 3.02% for the fourth quarter of 2022 |
| · | Up $172.9 million, or 2.0%, from the end of the fourth quarter of 2022 |
| v | Annualized Loan Net Charge-Offs |
“We are pleased with the core revenue performance of both our
banking and nonbanking businesses despite the Company’s first quarter operating expenses being a bit elevated due to higher compensation
and benefit related expenses and other factors,” commented Mark E. Tryniski, President and CEO. “Excluding net realized and
unrealized securities gains and losses and gain on debt extinguishment, the Company generated $176.6 million in total operating revenues
in the first quarter. This represents a $16.1 million, or 10.0%, increase over the prior year’s first quarter and a $0.7 million,
or 0.4%, increase over linked fourth quarter results. The Company’s net interest margin for the quarter of 3.20%, was 47 basis points
higher than the prior year’s first quarter of 2.73% and up 18 basis points over the linked fourth quarter’s net interest margin
of 3.02%. In addition, the Company’s ending loans increased for the seventh consecutive quarter, and despite the turmoil in the
banking industry, ending deposit balances were up in the quarter. The Company recorded GAAP earnings per share of $0.11, as compared to
$0.86 in the prior year’s first quarter. During the first quarter, the Company repositioned its balance sheet by selling certain
available-for-sale investment securities with a market value of $733.8 million, the proceeds of which were used to pay down overnight
borrowings with rising and comparatively high variable interest rates. In connection with this transaction, the Company recorded a $52.3
million pre-tax realized loss on the sale, negatively impacting the quarterly GAAP earnings per share by $0.75. Excluding the realized
loss on the sale of the available-for-sale securities, acquisition expenses and gain on debt extinguishment, the Company recorded $0.86
per share on a non-GAAP operating basis, $0.01 per share less than the prior year’s first quarter operating earnings per share of
$0.87.”
Mr. Tryniski further noted, “Despite solid operating revenues
in the quarter, the Company’s operating earnings per share decreased a penny compared to the prior year’s first quarter largely
due to an increase in the provision for credit losses and higher operating expenses. Although asset quality remains strong, the Company
recorded $3.5 million in the provision for credit losses during the first quarter of 2023, a $2.6 million increase over the prior year’s
first quarter primarily due to an adverse change in the economic outlook. Operating expenses increased $14.2 million, or 14.3%, over the
prior year’s first quarter driven by higher salaries and employee benefits expense and an increase in other expenses that included
the impact of the Elmira Savings Bank (“Elmira”) acquisition from the second quarter of 2022. For the remaining three quarters
of 2023, management anticipates that total operating expenses, excluding any future acquisition activities, will remain generally in line
with first quarter levels. Deposit service and other banking fees decreased $0.7 million, or 4.4%, as compared to the first quarter of
2022, as the Company implemented certain deposit fee changes, including the elimination of nonsufficient and unavailable funds fees, late
in the fourth quarter of 2022. Total revenues for the financial services businesses increased $0.5 million, or 1.1%, over the first quarter
of 2022, driven by an increase in insurance services revenues.”
“At the end of the first quarter, the Company maintained total
liquidity sources of $4.69 billion, including $1.54 billion of borrowing capacity at the Federal Reserve Bank, $1.84 billion of borrowing
availability at the Federal Home Loan Bank, $1.21 billion of unencumbered high grade investment securities and $109.7 million of cash
and cash equivalents, net of float. These sources of immediately available liquidity represent over 200% of the Company’s estimated
uninsured deposits, net of collateralized deposits. The Company’s deposit base is well diversified across customer segments, comprised
of approximately 63% consumer, 25% business and 12% municipal, and broadly dispersed with an average deposit account balance of under
$20,000. The cycle-to-date deposit beta for the Company is 5%, reflective of a high proportion of non-interest bearing deposits, representing
over 30% of total deposits, and the composition and stability of the customer base. In addition, 74% of the Company’s total deposits
were in checking and savings accounts at the end of the first quarter. The Company does not currently utilize brokered or wholesale deposits
and total deposits were up approximately 1% from the end of the prior quarter. We believe the Company’s strong liquidity profile,
capital reserves, core deposit base, asset quality and revenue profile provide a solid foundation for future opportunities and growth,”
Mr. Tryniski concluded.
The Company recorded total revenues of $124.5 million in the first
quarter of 2023, a decrease of $36.0 million, or 22.4%, from the prior year’s first quarter. The decrease in total revenues
between the periods was primarily driven by the previously mentioned $52.3 million pre-tax realized loss on the sale of certain available-for-sale
investment securities associated with the Company’s first quarter 2023 balance sheet repositioning. Total operating revenues, which
excludes net realized and unrealized securities gains and losses and gain on debt extinguishment, were $176.6 million in the first quarter
of 2023, an increase of $16.1 million, or 10.0%, from the prior year’s first quarter. This increase was driven by a $16.2 million,
or 17.0%, increase in net interest income and a $0.5 million, or 1.1%, increase in financial services business revenues, offset, in part,
by a $0.6 million, or 3.6%, decrease in banking noninterest revenues. Comparatively, total revenues were down $51.4 million, or 29.2%,
from fourth quarter 2022 results, but up $0.7 million, or 0.4%, on an operating basis, excluding net realized and unrealized securities
gains and losses and gain on debt extinguishment. The linked quarter increase in total operating revenues was due to a $4.5 million, or
10.0%, increase in financial services business revenues, partially offset by a $1.2 million, or 1.1%, decline in net interest income and
a $2.6 million, or 13.6%, decrease in banking noninterest revenues.
The Company recorded net interest income of $111.0 million in the first
quarter of 2023. This compares to $94.9 million of net interest income recorded in the first quarter of 2022. Between comparable periods,
the combination of net interest margin expansion being partially offset by a decline in interest-earning assets drove a $16.2 million,
or 17.0%, increase in net interest income. The Company’s tax equivalent net interest margin increased by 47 basis points from 2.73%
in the first quarter of 2022 to 3.20% in the first quarter of 2023, while average interest-earning assets decreased $31.8 million, or
0.2%. The tax equivalent yield on average interest-earning assets in the first quarter of 2023 of 3.63% was 82 basis points higher than
the tax equivalent yield on average interest-earning assets of 2.81% in the first quarter of 2022. Comparatively, the Company recorded
net interest income of $112.2 million during the fourth quarter of 2022, which was $1.2 million more than first quarter 2023 results,
while the tax equivalent net interest margin was 3.02%, or 18 basis points lower.
Interest income and fees on loans increased $27.9 million, or 38.4%,
from $72.5 million in the first quarter of 2022 to $100.4 million in the first quarter of 2023. Average total loans outstanding increased
$1.49 billion, or 20.2%, between the comparable quarterly periods, while the tax equivalent loan yield increased 60 basis points from
3.99% in the first quarter of 2022 to 4.59% in the first quarter of 2023. The increase in the tax equivalent loan yields between the periods
was due to market-related increases in interest rates on new loans, a significant increase in variable and adjustable rate loan yields
driven by rising market interest rates, including the prime rate, and a high level of new loan originations. Comparatively, the Company
recorded $96.2 million of interest income and fees on loans during the fourth quarter of 2022, while the tax equivalent yield on loans
was 4.39%.
Interest income on investments, including cash equivalents, increased
$0.3 million, or 1.3%, between the first quarter of 2022 and the first quarter of 2023. The increase in interest income on investments
was driven primarily by changes in market interest rates and changes in the composition of investment securities and interest-earning
cash equivalents, along with the impact of the previously mentioned balance sheet repositioning related to the sales of certain available-for-sale
investment securities. The average book value of investment securities decreased $623.5 million, or 10.5%, between the comparable periods,
while the average balance of cash equivalents decreased $903.1 million. The tax equivalent yield on the investment securities portfolio,
excluding cash equivalents, increased 27 basis points from 1.74% in the first quarter of 2022 to 2.01% in the first quarter of 2023, while
the yield on cash equivalents increased 330 basis points from 0.19% to 3.49%. The blended tax equivalent yield on investments, including
cash equivalents, increased 49 basis points, from 1.53% to 2.02%, as the average balance of cash equivalents decreased significantly due
in part to the funding of strong organic loan growth. Interest income on investments, including cash equivalents, decreased $2.3 million,
from $27.8 million in the fourth quarter of 2022 to $25.5 million in the first quarter of 2023 due primarily to the impact of a lower
average book value of investment securities due to the aforementioned sale of certain available-for-sale investment securities associated
with the Company’s first quarter balance sheet repositioning.
Interest expense increased from $2.8 million in the first quarter of
2022 to $14.9 million in the first quarter of 2023, a $12.1 million increase between the periods. The increase in interest expense was
driven by a 50 basis point increase in the cost of interest-bearing liabilities, from 0.12% in the first quarter of 2022 to 0.62% in the
first quarter of 2023, and a $223.5 million, or 2.4%, increase in average interest-bearing liabilities between the periods. This included
a $4.7 million increase in interest expense on borrowings due to both a $399.6 million increase in average borrowings and an increase
in the rate on average borrowings, from 0.33% in the first quarter of 2022 to 2.78% in the first quarter of 2023. The average interest-bearing
deposit cost of funds also increased 34 basis points, from 0.11% in the first quarter of 2022 to 0.45% in the first quarter of 2023, while
average interest-bearing deposit balances decreased $176.1 million, or 1.9%, between the periods, with the net result being a $7.4 million
increase in interest expense on deposits. The Company’s average cost of funds was up 35 basis points, from 0.09% in the first quarter
of 2022 to 0.44% in the first quarter of 2023, while the average cost of total deposits remained low at 0.31% for the quarter. Through
the end of the first quarter, the Company’s cycle-to-date deposit beta was 5% and the cycle-to-date total funding beta was 8%. The
target Federal Funds rate has increased 450 basis points over the prior twelve months, while the Company’s total deposit costs and
total funding costs increased 23 basis points and 35 basis points, respectively, over the same period.
During the first quarter of 2023, the Company recorded a provision
for credit losses of $3.5 million driven by a weaker economic forecast combined with a $172.9 million increase in loans outstanding. Comparatively,
the Company recorded a provision for credit losses of $0.9 million during the first quarter of 2022 when economic forecasts were generally
stable and loans outstanding increased $48.6 million during that quarter. During the fourth quarter of 2022, the Company recorded a provision
for credit losses of $2.8 million, due in part to a $265.8 million increase in loans outstanding, combined with a less favorable economic
forecast during that quarter.
Employee benefit services revenues for the first quarter of 2023 were
$29.4 million, down $0.2 million, or 0.7%, in comparison to the first quarter of 2022. The decline in revenues was driven primarily by
a decline in asset-based fees reflecting the impact from lower financial market valuations. Wealth management services revenues for the
first quarter of 2023 were $8.2 million, down from $8.6 million in the first quarter of 2022. The $0.4 million, or 4.5%, decrease in wealth
management services revenues was primarily driven by more challenging investment market conditions. The Company recorded insurance services
revenues of $11.5 million in the first quarter of 2023, which represents a $1.1 million, or 10.7%, increase versus the prior year’s
first quarter, reflective primarily of a strong premium market and organic growth. Banking noninterest revenues decreased $0.6 million,
or 3.6%, from $17.0 million in the first quarter of 2022 to $16.4 million in the first quarter of 2023. This was driven by a $0.7 million,
or 4.4%, decrease in deposit service and other banking fees reflective of the Company’s implementation of certain deposit fee changes,
including the elimination of nonsufficient and unavailable funds fees, late in the fourth quarter of 2022. Comparatively, the Company
recorded $29.0 million of employee benefit services revenues, $7.4 million of wealth management services revenues and $8.3 million of
insurance services revenues during the fourth quarter of 2022, which on a combined basis were $4.4 million lower than the financial services
business revenues generated in the first quarter of 2023. Fourth quarter 2022 banking noninterest revenues were $19.0 million, $2.6 million,
or 15.8%, higher than first quarter 2023 banking noninterest revenues, driven by a decrease in debit interchange revenues, overdraft occurrences,
as well as the aforementioned implementation of certain deposit fee changes.
The Company recorded $114.0 million in total operating expenses in
the first quarter of 2023, compared to $99.8 million of total operating expenses in the prior year’s first quarter. The $14.2 million,
or 14.3%, increase in operating expenses was attributable to a $9.8 million, or 16.0%, increase in salaries and employee benefits, a $4.2
million, or 39.7%, increase in other expenses, a $0.5 million, or 3.7%, increase in data processing and communications expenses and a
$0.1 million, or 0.7%, increase in occupancy and equipment expenses, partially offset by a $0.3 million decrease in acquisition-related
expenses and a $0.1 million, or 1.7%, decrease in amortization of intangible assets. The increase in salaries and benefits expense was
driven by increases in merit, severance and incentive-related employee wages, acquisition-related and other additions to staffing, higher
payroll taxes and higher employee benefit-related expenses. Other expenses were up due to increases in legal and professional fees, insurance
and travel-related expenses, business development and marketing expenses, along with incremental expenses associated with operating an
expanded franchise subsequent to the Elmira acquisition in the second quarter of 2022. The higher insurance expenses reflected larger
FDIC insurance expenses due in part to a higher base assessment rate effective at the beginning of 2023. The increase in data processing
and communications expenses was due to the Company’s continued investment in customer-facing and back office digital technologies
between the comparable periods. The slight increase in occupancy and equipment expense was driven by inflationary pressures, partially
offset by the impact of branch office consolidations between the periods. In comparison, the Company recorded $105.9 million of total
operating expenses in the fourth quarter of 2022. The $8.2 million, or 7.7%, increase in total operating expenses between the fourth quarter
of 2022 and the first quarter of 2023 was largely attributable to a $7.4 million, or 11.5%, increase in salaries and employee benefits
and a $0.7 million, or 5.0%, increase in other expenses reflective of higher FDIC insurance expenses due in part to a higher base assessment
rate.
The effective tax rate for the first quarter of 2023 was 16.9%, down
from 21.4% in the first quarter of 2022. Excluding the impact of tax benefits related to stock-based compensation activity, the effective
tax rate was 21.4% in the first quarter of 2023, down from 22.3% in the first quarter of 2022.
The Company also provides supplemental reporting of its results on
an “operating,” “adjusted” and “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-purchased credit deteriorated (“PCD”) loans, expenses associated with
acquisitions, acquisition-related provision for credit losses, acquisition-related contingent consideration adjustments, gain on debt
extinguishment, loss on sales of investment securities and unrealized (loss) gain on equity securities. In addition, the Company provides
supplemental reporting for “adjusted pre-tax, pre-provision net revenues,” which subtracts the provision for credit losses,
acquisition expenses, acquisition-related contingent consideration adjustments, gain on debt extinguishment, loss on sales of investment
securities and unrealized (loss) gain on equity securities 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 and analysts measure underlying core performance and improves comparability to other organizations that have not engaged
in acquisitions. Diluted adjusted net earnings per share, a non-GAAP measure, were $0.90 in the first quarter of 2023, compared to $0.91
in the first quarter of 2022 and $1.00 in the fourth quarter of 2022. Adjusted pre-tax, pre-provision net revenue per share, a non-GAAP
measure, was $1.16 in the first quarter of 2023, compared to $1.12 in the first quarter of 2022 and $1.29 in the fourth quarter of 2022.
Financial Position and Liquidity
The Company’s total assets were $15.26 billion at March 31, 2023,
representing a $369.9 million, or 2.4%, decrease from one year prior and a $579.7 million, or 3.7%, decrease from the end of the fourth
quarter of 2022. The decrease in the Company’s total assets during the prior twelve-month period was primarily driven by the aforementioned
sales of certain available-for-sale investment securities and the related pay down of overnight borrowings and a decline in the pre-tax
market value adjustment on the investment securities portfolio due to higher market interest rates, partially offset by organic loan growth
and the Elmira acquisition. The book value of average interest-earning assets was down from $14.24 billion in the first quarter of 2022
to $14.20 billion in the first quarter of 2023, representing a $31.8 million, or 0.2%, decrease. This included a $903.1 million decrease
in average cash equivalents and a $623.5 million, or 10.5%, decrease in the average book value of investment securities, partially offset
by a $1.49 billion, or 20.2%, increase in average loans outstanding. Average deposit balances decreased $100.8 million, or 0.8%, between
the first quarter of 2022 and the first quarter of 2023.
On a linked quarter basis, the book value of average interest-earning
assets decreased $662.1 million, or 4.5%, due primarily to a decrease in the average book value of investment securities, partially offset
by higher average loan balances. The average book value of investment securities decreased $843.5 million, or 13.7%, during the quarter,
driven primarily by the aforementioned sales of certain available-for-sale investment securities in connection with a balance sheet repositioning,
while average cash equivalents increased $1.3 million, or 4.8%, between linked quarters. Average loan balances increased $180.1 million,
or 2.1%, during the quarter reflecting continued strong organic growth. Average loan balances for business lending, consumer indirect
and consumer mortgage loans increased during the first quarter, while the average balances of home equity and consumer direct loans decreased.
Average deposit balances decreased $211.5 million, or 1.6%, compared to the fourth quarter of 2022.
Ending loans at March 31, 2023 of $8.98 billion were $172.9 million,
or 2.0%, higher than the fourth quarter of 2022 and $1.56 billion, or 21.0%, higher than one year prior. The increase in ending loans
year-over-year was driven by increases in all loan categories due to net organic growth and the Elmira acquisition. Over the past twelve
months, business lending loans increased $645.4 million, or 20.8%, consumer indirect loans increased $429.3 million, or 36.5%, consumer
mortgage loans increased $427.1 million, or 16.5%, home equity loans increased $33.7 million, or 8.5%, and consumer direct loans increased
$24.5 million, or 16.1%. The increase in loans outstanding on a linked quarter basis was driven by a $102.3 million, or 2.8%, increase
in business lending loans, a $66.0 million, or 4.3%, increase in consumer indirect loans and a $7.2 million, or 0.2%, increase in consumer
mortgage loans, all of which reflected organic growth, partially offset by a $2.0 million, or 0.5%, decrease in home equity loans and
a $0.6 million, or 0.3%, decrease in consumer direct loans.
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 interest-bearing checking, savings and money market deposit accounts with customers that operate, reside or
work within its branch footprint. At March 31, 2023, the Company’s readily available sources of liquidity totaled $4.69 billion,
including cash and cash equivalents balances, net of float, of $109.7 million. The Company also maintains an investment securities portfolio,
comprised primarily of highly-liquid U.S. Treasury securities, highly-rated municipal securities and U.S. agency mortgage-backed securities,
which totaled $4.56 billion at March 31, 2023, $1.21 billion of which was unpledged as collateral. The Bank’s unused borrowing capacity
at the Federal Home Loan Bank of New York at March 31, 2023 was $1.84 billion and it had access to $1.54 billion of funding availability
at the Federal Reserve Bank’s discount window. The available sources of immediately available liquidity represent over 200% of the
Company’s estimated uninsured deposits, net of collateralized deposits and are exclusive of any potential benefits from utilization
of the Federal Reserve Bank’s Bank Term Funding Program announced on March 12, 2023.
The Company’s management believes that its financial position
continues to be very solid. 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 $1.63 billion at March 31, 2023 was $218.1 million, or 11.8%, lower than one year ago despite strong earnings
retention primarily because of a $239.7 million decline in accumulated other comprehensive income related to the Company’s investment
securities portfolio due to higher market interest rates. Shareholders’ equity was up $82.3 million, or 5.3%, from the end of the
fourth quarter of 2022, primarily driven by a $108.6 million increase in accumulated other comprehensive income related to the Company’s
investment securities portfolio.
At March 31, 2023, all of the Company’s and the Bank’s
regulatory capital ratios significantly exceeded well-capitalized standards. More specifically, the Company’s tier 1 leverage ratio,
a common measure used to evaluate a financial institution’s capital strength, was 9.06% at March 31, 2023, which substantially exceeds
the regulatory well-capitalized standard of 5.0%. The Company’s shareholders’ equity to assets ratio (GAAP) was 10.71% at
March 31, 2023, down from 11.85% at March 31, 2022, but up from 9.80% at December 31, 2022. The Company’s net tangible equity to
net tangible assets ratio (non-GAAP) was 5.41% at March 31, 2023, down from 6.98% a year earlier, but up from 4.64% at the end of the
fourth quarter of 2022. The decrease in the net tangible equity to net tangible assets ratio (non-GAAP) from one year prior was primarily
driven by a $254.6 million, or 24.6%, decrease in tangible equity due to the aforementioned decline in accumulated other comprehensive
income related to the Company’s investment securities portfolio and a $37.9 million net increase in intangible assets primarily
driven by the Elmira acquisition, partially offset by a $406.4 million, or 2.7%, decrease in tangible assets due primarily to the aforementioned
sales of certain available-for-sale investment securities. The increase in the net tangible equity to net tangible assets ratio (non-GAAP)
from the fourth quarter of 2022 was driven by an $83.5 million, or 12.0%, increase in tangible equity and a $578.5 million, or 3.9%, decrease
in tangible assets.
As previously announced, in December 2022 the Company’s Board
of Directors (the “Board”) approved a stock repurchase program authorizing the repurchase of up to 2.70 million shares of
the Company’s common stock during a twelve-month period starting January 1, 2023. 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 regulatory
and legal requirements. There were 200,000 shares repurchased pursuant to the 2023 stock repurchase program in the first quarter of 2023.
Allowance for Credit Losses and Asset Quality
At March 31, 2023, the Company’s allowance for credit losses
totaled $63.2 million, or 0.70% of total loans outstanding. This compares to $61.1 million, or 0.69% of total loans outstanding, at the
end of the fourth quarter of 2022 and $50.1 million, or 0.68% of total loans outstanding, at March 31, 2022. Reflective of a weaker economic
forecast and an increase in loans outstanding, the Company recorded a $3.5 million provision for credit losses during the first quarter
of 2023. The Company recorded net charge-offs of $1.5 million, or an annualized 0.07% of average loans, in the first quarter of 2023.
This compares to net charge-offs of $0.5 million, or an annualized 0.03% of average loans, in the first quarter of 2022 and net charge-offs
of $2.1 million, or an annualized 0.09% of average loans, in the fourth quarter of 2022.
At March 31, 2023, nonperforming (90 or more days past due and non-accruing)
loans increased slightly to $33.8 million, or 0.38%, of total loans outstanding compared to $33.4 million, or 0.38%, of total loans outstanding
at the end of the fourth quarter of 2022, but declined from $36.0 million, or 0.49%, of total loans outstanding one year earlier. Total
delinquent loans, which includes nonperforming loans and loans 30 or more days delinquent, to total loans outstanding was 0.73% at the
end of the first quarter of 2023. This compares to 0.84% at the end of the first quarter of 2022 and 0.89% at the end of the fourth quarter
of 2022. Loans 30 to 89 days delinquent (categorized by the Company as delinquent but performing), which tend to exhibit seasonal characteristics,
were 0.35% of total loans outstanding at March 31, 2023, down from 0.51% at the end of the fourth quarter of 2022 and consistent with
0.35% one year earlier.
Dividend Increase
During the first quarter of 2023, the Company declared a quarterly
cash dividend of $0.44 per share on its common stock, up 2.3% from the $0.43 dividend declared in the first quarter of 2022, representing
an annualized yield of 3.7% based upon the $47.20 closing price of the Company’s stock on April 24, 2023. The $0.01 increase in
the quarterly dividend declared in the third quarter of 2022 marked the 30th consecutive year of dividend increases for the
Company. “The payment of a meaningful and growing dividend is an important component of our commitment to provide consistent and
favorable long term returns to our shareholders, and it reflects the continued strength of our current operating performance and capital
position, and our confidence in the future of the Company,” said Mr. Tryniski.
Conference Call Scheduled
Company management will conduct an investor call at 11:00 a.m. (ET)
today, April 25, 2023, to discuss the first quarter 2023 results. The conference call can be accessed at 1-833-630-0464 (1-412-317-1809
if outside the United States and Canada). Investors may also listen live via the Internet at: https://app.webinar.net/9N2aOaWwpYJ.
This earnings release, including supporting financial tables, 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 Community Bank System, Inc.
Community Bank System, Inc. operates more than 210 customer facilities
across Upstate New York, Northeastern Pennsylvania, Vermont, and Western Massachusetts through its banking subsidiary, Community Bank,
N.A. With assets of over $15.2 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 or resulting from recent bank failures; current and
future economic and market conditions, including the effects on housing prices, unemployment rates, high inflation, U.S. fiscal debt,
budget and tax matters, geopolitical matters, and global economic growth; fiscal and monetary policies of the Federal Reserve Board; the
potential adverse effects of unusual and infrequently occurring events; management’s estimates and projections of interest rates
and interest rate policies; the effect of changes in the level of checking or savings account deposits and net interest margin; future
provisions for credit losses on loans and debt securities; changes in nonperforming assets; the effect on 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 (“SEC”), including the
discussion under “Risk Factors” as filed with the SEC and available on CBU’s website at https://ir.communitybanksystem.com
and on the SEC’s 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) |
|
|
|
|
|
| |
2023 |
2022 |
| |
1st Qtr |
4th Qtr |
3rd Qtr |
2nd Qtr |
1st Qtr |
| Earnings |
|
|
|
|
|
| Loan income |
$100,362 |
$96,168 |
$88,434 |
$77,959 |
$72,514 |
| Investment income |
25,520 |
27,815 |
27,441 |
28,216 |
25,182 |
| Total interest income |
125,882 |
123,983 |
115,875 |
106,175 |
97,696 |
| Interest expense |
14,852 |
11,760 |
5,481 |
3,034 |
2,824 |
| Net interest income |
111,030 |
112,223 |
110,394 |
103,141 |
94,872 |
| Acquisition-related provision for credit losses |
0 |
0 |
0 |
3,927 |
0 |
| Provision for credit losses |
3,500 |
2,768 |
5,061 |
2,111 |
906 |
| Net interest income after provision for credit losses |
107,530 |
109,455 |
105,333 |
97,103 |
93,966 |
| Deposit service and other banking fees |
16,156 |
19,228 |
18,364 |
17,008 |
16,894 |
| Mortgage banking |
275 |
(205) |
171 |
269 |
155 |
| Wealth management and insurance services |
19,767 |
15,680 |
18,834 |
17,921 |
19,042 |
| Employee benefit services |
29,384 |
29,023 |
27,884 |
28,921 |
29,580 |
| Loss on sales of investment securities |
(52,329) |
0 |
0 |
0 |
0 |
| Gain on debt extinguishment |
242 |
0 |
0 |
0 |
0 |
| Unrealized (loss) gain on equity securities |
0 |
(20) |
(4) |
(22) |
2 |
| Total noninterest revenues |
13,495 |
63,706 |
65,249 |
64,097 |
65,673 |
| Salaries and employee benefits |
71,487 |
64,103 |
66,190 |
65,398 |
61,648 |
| Data processing and communications |
13,129 |
13,645 |
14,184 |
13,611 |
12,659 |
| Occupancy and equipment |
11,024 |
10,673 |
10,364 |
10,424 |
10,952 |
| Amortization of intangible assets |
3,667 |
3,794 |
3,837 |
3,851 |
3,732 |
| Acquisition-related contingent consideration adjustment |
0 |
(700) |
0 |
400 |
0 |
| Acquisition expenses |
57 |
353 |
409 |
3,960 |
299 |
| Other |
14,688 |
13,984 |
13,201 |
12,780 |
10,517 |
| Total operating expenses |
114,052 |
105,852 |
108,185 |
110,424 |
99,807 |
| Income before income taxes |
6,973 |
67,309 |
62,397 |
50,776 |
59,832 |
| Income taxes |
1,175 |
14,779 |
13,706 |
10,971 |
12,777 |
| Net income |
$5,798 |
$52,530 |
$48,691 |
$39,805 |
$47,055 |
| Basic earnings per share |
$0.11 |
$0.97 |
$0.90 |
$0.74 |
$0.87 |
| Diluted earnings per share |
$0.11 |
$0.97 |
$0.90 |
$0.73 |
$0.86 |
| Profitability |
|
|
|
|
|
| Return on assets |
0.15% |
1.33% |
1.24% |
1.03% |
1.22% |
| Return on equity |
1.49% |
14.12% |
11.49% |
9.16% |
9.35% |
| Return on tangible equity(2) |
3.26% |
33.73% |
23.76% |
17.61% |
15.63% |
| Noninterest revenues/operating revenues (FTE)(1) |
37.1% |
36.2% |
37.2% |
38.3% |
40.9% |
| Efficiency ratio |
62.5% |
58.2% |
59.3% |
61.1% |
59.6% |
| Components of Net Interest Margin (FTE) |
|
|
|
|
|
| Loan yield |
4.59% |
4.39% |
4.22% |
4.05% |
3.99% |
| Cash equivalents yield |
3.49% |
2.83% |
1.76% |
0.65% |
0.19% |
| Investment yield |
2.01% |
1.85% |
1.80% |
1.81% |
1.74% |
| Earning asset yield |
3.63% |
3.34% |
3.18% |
2.97% |
2.81% |
| Interest-bearing deposit rate |
0.45% |
0.26% |
0.17% |
0.12% |
0.11% |
| Borrowing rate |
2.78% |
2.63% |
1.34% |
0.44% |
0.33% |
| Cost of all interest-bearing funds |
0.62% |
0.47% |
0.23% |
0.13% |
0.12% |
| Cost of funds (includes DDA) |
0.44% |
0.33% |
0.16% |
0.09% |
0.09% |
| Net interest margin (FTE) |
3.20% |
3.02% |
3.03% |
2.89% |
2.73% |
| Fully tax-equivalent adjustment |
$1,091 |
$1,118 |
$1,118 |
$1,008 |
$830 |
| Summary of Financial Data (unaudited) |
|
|
|
|
|
| (Dollars in thousands, except per share data) |
|
|
|
|
|
| |
2023 |
2022 |
| |
1st Qtr |
4th Qtr |
3rd Qtr |
2nd Qtr |
1st Qtr |
| Average Balances |
|
|
|
|
|
| Loans |
$8,884,164 |
$8,704,051 |
$8,333,148 |
$7,725,107 |
$7,389,290 |
| Cash equivalents |
27,775 |
26,501 |
25,730 |
472,671 |
930,882 |
| Taxable investment securities |
4,760,089 |
5,590,538 |
5,701,691 |
5,760,399 |
5,502,965 |
| Nontaxable investment securities |
532,604 |
545,679 |
551,610 |
513,506 |
413,268 |
| Total interest-earning assets |
14,204,632 |
14,866,769 |
14,612,179 |
14,471,683 |
14,236,405 |
| Total assets |
15,366,863 |
15,665,726 |
15,553,296 |
15,452,712 |
15,596,209 |
| Interest-bearing deposits |
8,925,555 |
8,982,442 |
9,142,333 |
9,268,859 |
9,101,664 |
| Borrowings |
717,788 |
879,194 |
481,657 |
310,674 |
318,193 |
| Total interest-bearing liabilities |
9,643,343 |
9,861,636 |
9,623,990 |
9,579,533 |
9,419,857 |
| Noninterest-bearing deposits |
4,043,494 |
4,198,086 |
4,192,615 |
4,061,738 |
3,968,197 |
| Shareholders' equity |
1,576,717 |
1,476,093 |
1,680,525 |
1,743,410 |
2,040,843 |
| Balance Sheet Data |
|
|
|
|
|
| Cash and cash equivalents |
$189,298 |
$209,896 |
$247,391 |
$197,628 |
$1,020,926 |
| Investment securities |
4,630,741 |
5,314,888 |
5,227,292 |
5,643,022 |
5,831,616 |
| Loans: |
|
|
|
|
|
| Business lending |
3,747,942 |
3,645,665 |
3,494,425 |
3,331,998 |
3,102,533 |
| Consumer mortgage |
3,019,718 |
3,012,475 |
2,975,521 |
2,903,822 |
2,592,586 |
| Consumer indirect |
1,605,659 |
1,539,653 |
1,461,235 |
1,309,753 |
1,176,373 |
| Home equity |
432,027 |
433,996 |
433,027 |
425,437 |
398,316 |
| Consumer direct |
176,989 |
177,605 |
179,399 |
173,686 |
152,445 |
| Total loans |
8,982,335 |
8,809,394 |
8,543,607 |
8,144,696 |
7,422,253 |
| Allowance for credit losses |
63,170 |
61,059 |
60,363 |
55,542 |
50,147 |
| Goodwill and intangible assets, net |
900,914 |
902,837 |
909,224 |
917,891 |
863,038 |
| Other assets |
615,835 |
659,695 |
727,396 |
640,138 |
538,197 |
| Total assets |
15,255,953 |
15,835,651 |
15,594,547 |
15,487,833 |
15,625,883 |
| Deposits: |
|
|
|
|
|
| Noninterest-bearing |
3,949,801 |
4,140,617 |
4,281,859 |
4,092,073 |
4,036,563 |
| Non-maturity interest-bearing |
8,106,734 |
7,964,983 |
8,296,993 |
8,268,649 |
8,388,800 |
| Time |
1,054,137 |
906,708 |
907,469 |
997,050 |
892,304 |
| Total deposits |
13,110,672 |
13,012,308 |
13,486,321 |
13,357,772 |
13,317,667 |
| Borrowings |
380,291 |
1,134,526 |
492,044 |
309,226 |
302,395 |
| Subordinated notes payable |
0 |
3,249 |
3,256 |
3,263 |
3,270 |
| Accrued interest and other liabilities |
130,977 |
133,863 |
151,763 |
155,876 |
150,448 |
| Total liabilities |
13,621,940 |
14,283,946 |
14,133,384 |
13,826,137 |
13,773,780 |
| Shareholders' equity |
1,634,013 |
1,551,705 |
1,461,163 |
1,661,696 |
1,852,103 |
| Total liabilities and shareholders' equity |
15,255,953 |
15,835,651 |
15,594,547 |
15,487,833 |
15,625,883 |
| Capital and Other |
|
|
|
|
|
| Tier 1 leverage ratio |
9.06% |
8.79% |
8.78% |
8.65% |
9.09% |
| Tangible equity/net tangible assets(2) |
5.41% |
4.64% |
4.08% |
5.40% |
6.98% |
| Loan-to-deposit ratio |
68.5% |
67.7% |
63.4% |
61.0% |
55.7% |
| Diluted weighted average common shares O/S |
54,207 |
54,253 |
54,290 |
54,393 |
54,515 |
| Period end common shares outstanding |
53,725 |
53,737 |
53,736 |
53,734 |
53,913 |
| Cash dividends declared per common share |
$0.44 |
$0.44 |
$0.44 |
$0.43 |
$0.43 |
| Book value |
$30.41 |
$28.88 |
$27.19 |
$30.92 |
$34.35 |
| Tangible book value(2) |
$14.49 |
$12.93 |
$11.18 |
$14.69 |
$19.16 |
| Common stock price (end of period) |
$52.49 |
$62.95 |
$60.08 |
$63.28 |
$70.15 |
| |
|
|
|
|
|
| Summary of Financial Data (unaudited) |
|
|
|
|
|
| (Dollars in thousands, except per share data) |
|
|
|
|
|
| |
2023 |
2022 |
| |
1st Qtr |
4th Qtr |
3rd Qtr |
2nd Qtr |
1st Qtr |
| Asset Quality |
|
|
|
|
|
| Nonaccrual loans |
$29,745 |
$29,245 |
$28,076 |
$31,686 |
$32,213 |
| Accruing loans 90+ days delinquent |
4,027 |
4,119 |
4,416 |
5,439 |
3,816 |
| Total nonperforming loans |
33,772 |
33,364 |
32,492 |
37,125 |
36,029 |
| Other real estate owned (OREO) |
508 |
503 |
527 |
619 |
416 |
| Total nonperforming assets |
34,280 |
33,867 |
33,019 |
37,744 |
36,445 |
| Net charge-offs |
1,511 |
2,054 |
358 |
383 |
539 |
| Allowance for credit losses/loans outstanding |
0.70% |
0.69% |
0.71% |
0.68% |
0.68% |
| Nonperforming loans/loans outstanding |
0.38% |
0.38% |
0.38% |
0.46% |
0.49% |
| Allowance for credit losses/nonperforming loans |
187% |
183% |
186% |
150% |
139% |
| Net charge-offs/average loans |
0.07% |
0.09% |
0.02% |
0.02% |
0.03% |
| Delinquent loans/ending loans |
0.73% |
0.89% |
0.71% |
0.75% |
0.84% |
| Provision for credit losses/net charge-offs |
232% |
135% |
1,415% |
1,577% |
168% |
| Nonperforming assets/total assets |
0.22% |
0.21% |
0.21% |
0.24% |
0.23% |
| Quarterly GAAP to Non-GAAP Reconciliations |
|
|
|
|
|
| Income statement data |
|
|
|
|
|
| Pre-tax, pre-provision net revenue |
|
|
|
|
|
| Net income (GAAP) |
$5,798 |
$52,530 |
$48,691 |
$39,805 |
$47,055 |
| Income taxes |
1,175 |
14,779 |
13,706 |
10,971 |
12,777 |
| Income before income taxes |
6,973 |
67,309 |
62,397 |
50,776 |
59,832 |
| Provision for credit losses |
3,500 |
2,768 |
5,061 |
6,038 |
906 |
| Pre-tax, pre-provision net revenue (non-GAAP) |
10,473 |
70,077 |
67,458 |
56,814 |
60,738 |
| Acquisition expenses |
57 |
353 |
409 |
3,960 |
299 |
| Acquisition-related contingent consideration adjustment |
0 |
(700) |
0 |
400 |
0 |
| Loss on sales of investment securities |
52,329 |
0 |
0 |
0 |
0 |
| Gain on debt extinguishment |
(242) |
0 |
0 |
0 |
0 |
| Unrealized loss (gain) on equity securities |
0 |
20 |
4 |
22 |
(2) |
| Adjusted pre-tax, pre-provision net revenue (non-GAAP) |
$62,617 |
$69,750 |
$67,871 |
$61,196 |
$61,035 |
| |
|
|
|
|
|
| Pre-tax, pre-provision net revenue per share |
|
|
|
|
|
| Diluted earnings per share (GAAP) |
$0.11 |
$0.97 |
$0.90 |
$0.73 |
$0.86 |
| Income taxes |
0.02 |
0.27 |
0.25 |
0.20 |
0.24 |
| Income before income taxes |
0.13 |
1.24 |
1.15 |
0.93 |
1.10 |
| Provision for credit losses |
0.07 |
0.06 |
0.10 |
0.12 |
0.01 |
| Pre-tax, pre-provision net revenue per share (non-GAAP) |
0.20 |
1.30 |
1.25 |
1.05 |
1.11 |
| Acquisition expenses |
0.00 |
0.00 |
0.00 |
0.07 |
0.01 |
| Acquisition-related contingent consideration adjustment |
0.00 |
(0.01) |
0.00 |
0.01 |
0.00 |
| Loss on sales of investment securities |
0.96 |
0.00 |
0.00 |
0.00 |
0.00 |
| Gain on debt extinguishment |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
| Unrealized loss (gain) on equity securities |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
| Adjusted pre-tax, pre-provision net revenue per share (non-GAAP) |
$1.16 |
$1.29 |
$1.25 |
$1.13 |
$1.12 |
| |
|
|
|
|
|
| |
|
|
|
|
|
| Summary of Financial Data (unaudited) |
|
|
|
|
|
| (Dollars in thousands, except per share data) |
|
|
|
|
|
| |
2023 |
2022 |
| |
1st Qtr |
4th Qtr |
3rd Qtr |
2nd Qtr |
1st Qtr |
| Quarterly GAAP to Non-GAAP Reconciliations |
|
|
|
|
|
| Income statement data |
|
|
|
|
|
| Net income |
|
|
|
|
|
| Net income (GAAP) |
$5,798 |
$52,530 |
$48,691 |
$39,805 |
$47,055 |
| Acquisition expenses |
57 |
353 |
409 |
3,960 |
299 |
| Tax effect of acquisition expenses |
(12) |
(78) |
(90) |
(856) |
(64) |
| Subtotal (non-GAAP) |
5,843 |
52,805 |
49,010 |
42,909 |
47,290 |
| Acquisition-related contingent consideration adjustment |
0 |
(700) |
0 |
400 |
0 |
| Tax effect of acquisition-related contingent consideration adjustment |
0 |
154 |
0 |
(86) |
0 |
| Subtotal (non-GAAP) |
5,843 |
52,259 |
49,010 |
43,223 |
47,290 |
| Acquisition-related provision for credit losses |
0 |
0 |
0 |
3,927 |
0 |
| Tax effect of acquisition-related provision for credit losses |
0 |
0 |
0 |
(848) |
0 |
| Subtotal (non-GAAP) |
5,843 |
52,259 |
49,010 |
46,302 |
47,290 |
| Loss on sales of investment securities |
52,329 |
0 |
0 |
0 |
0 |
| Tax effect of loss on sales of investment securities |
(11,171) |
0 |
0 |
0 |
0 |
| Subtotal (non-GAAP) |
47,001 |
52,259 |
49,010 |
46,302 |
47,290 |
| Gain on debt extinguishment |
(242) |
0 |
0 |
0 |
0 |
| Tax effect of gain on debt extinguishment |
52 |
0 |
0 |
0 |
0 |
| Subtotal (non-GAAP) |
46,811 |
52,259 |
49,010 |
46,302 |
47,290 |
| Unrealized loss (gain) on equity securities |
0 |
20 |
4 |
22 |
(2) |
| Tax effect of unrealized loss (gain) on equity securities |
0 |
(4) |
(1) |
(5) |
0 |
| Operating net income (non-GAAP) |
46,811 |
52,275 |
49,013 |
46,319 |
47,288 |
| Amortization of intangibles |
3,667 |
3,794 |
3,837 |
3,851 |
3,732 |
| Tax effect of amortization of intangibles |
(783) |
(833) |
(843) |
(832) |
(797) |
| Subtotal (non-GAAP) |
49,695 |
55,236 |
52,007 |
49,338 |
50,223 |
| Acquired non-PCD loan accretion |
(1,079) |
(1,138) |
(1,397) |
(1,023) |
(734) |
| Tax effect of acquired non-PCD loan accretion |
230 |
250 |
307 |
221 |
157 |
| Adjusted net income (non-GAAP) |
$48,846 |
$54,348 |
$50,917 |
$48,536 |
$49,646 |
| |
|
|
|
|
|
| Return on average assets |
|
|
|
|
|
| Adjusted net income (non-GAAP) |
$48,846 |
$54,348 |
$50,917 |
$48,536 |
$49,646 |
| Average total assets |
15,366,863 |
15,665,726 |
15,553,296 |
15,452,712 |
15,596,209 |
| Adjusted return on average assets (non-GAAP) |
1.29% |
1.38% |
1.30% |
1.26% |
1.29% |
| |
|
|
|
|
|
| Return on average equity |
|
|
|
|
|
| Adjusted net income (non-GAAP) |
$48,846 |
$54,348 |
$50,917 |
$48,536 |
$49,646 |
| Average total equity |
1,576,717 |
1,476,093 |
1,680,525 |
1,743,410 |
2,040,843 |
| Adjusted return on average equity (non-GAAP) |
12.56% |
14.61% |
12.02% |
11.17% |
9.87% |
| |
|
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| Summary of Financial Data (unaudited) |
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| (Dollars in thousands, except per share data) |
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|
| |
2023 |
2022 |
| |
1st Qtr |
4th Qtr |
3rd Qtr |
2nd Qtr |
1st Qtr |
| Quarterly GAAP to Non-GAAP Reconciliations |
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| Income statement data |
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| Earnings per common share |
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|
| Diluted earnings per share (GAAP) |
$0.11 |
$0.97 |
$0.90 |
$0.73 |
$0.86 |
| Acquisition expenses |
0.00 |
0.00 |
0.00 |
0.07 |
0.01 |
| Tax effect of acquisition expenses |
0.00 |
0.00 |
0.00 |
(0.02) |
0.00 |
| Subtotal (non-GAAP) |
0.11 |
0.97 |
0.90 |
0.78 |
0.87 |
| Acquisition-related contingent consideration adjustment |
0.00 |
(0.01) |
0.00 |
0.01 |
0.00 |
| Tax effect of acquisition-related contingent consideration adjustment |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
| Subtotal (non-GAAP) |
0.11 |
0.96 |
0.90 |
0.79 |
0.87 |
| Acquisition-related provision for credit losses |
0.00 |
0.00 |
0.00 |
0.07 |
0.00 |
| Tax effect of acquisition-related for provision credit losses |
0.00 |
0.00 |
0.00 |
(0.01) |
0.00 |
| Subtotal (non-GAAP) |
0.11 |
0.96 |
0.90 |
0.85 |
0.87 |
| Loss on sales of investment securities |
0.96 |
0.00 |
0.00 |
0.00 |
0.00 |
| Tax effect of loss on sales of investment securities |
(0.21) |
0.00 |
0.00 |
0.00 |
0.00 |
| Subtotal (non-GAAP) |
0.86 |
0.96 |
0.90 |
0.85 |
0.87 |
| Gain on debt extinguishment |
0.00 |
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 |
| Subtotal (non-GAAP) |
0.86 |
0.96 |
0.90 |
0.85 |
0.87 |
| Unrealized loss (gain) on equity securities |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
| Tax effect of unrealized loss (gain) on equity securities |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
| Operating diluted earnings per share (non-GAAP) |
0.86 |
0.96 |
0.90 |
0.85 |
0.87 |
| Amortization of intangibles |
0.07 |
0.07 |
0.07 |
0.07 |
0.07 |
| Tax effect of amortization of intangibles |
(0.01) |
(0.02) |
(0.02) |
(0.02) |
(0.02) |
| Subtotal (non-GAAP) |
0.92 |
1.01 |
0.95 |
0.90 |
0.92 |
| Acquired non-PCD loan accretion |
(0.02) |
(0.02) |
(0.02) |
(0.02) |
(0.01) |
| Tax effect of acquired non-PCD loan accretion |
0.00 |
0.01 |
0.01 |
0.01 |
0.00 |
| Diluted adjusted net earnings per share (non-GAAP) |
$0.90 |
$1.00 |
$0.94 |
$0.89 |
$0.91 |
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| Noninterest operating expenses |
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| Noninterest expenses (GAAP) |
$114,052 |
$105,852 |
$108,185 |
$110,424 |
$99,807 |
| Amortization of intangibles |
(3,667) |
(3,794) |
(3,837) |
(3,851) |
(3,732) |
| Acquisition expenses |
(57) |
(353) |
(409) |
(3,960) |
(299) |
| Acquisition-related contingent consideration adjustment |
0 |
700 |
0 |
(400) |
0 |
| Total adjusted noninterest expenses (non-GAAP) |
$110,328 |
$102,405 |
$103,939 |
$102,213 |
$95,776 |
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| Efficiency ratio (GAAP) |
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| Noninterest expenses (GAAP) – numerator |
$114,052 |
$105,852 |
$108,185 |
$110,424 |
$99,807 |
| Net interest income (GAAP) |
111,030 |
112,223 |
110,394 |
103,141 |
94,872 |
| Noninterest revenues (GAAP) |
13,495 |
63,706 |
65,249 |
64,097 |
65,673 |
| Total revenues (GAAP) – denominator |
124,525 |
175,929 |
175,643 |
167,238 |
160,545 |
| Efficiency ratio (GAAP) |
91.6% |
60.2% |
61.6% |
66.0% |
62.2% |
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| Summary of Financial Data (unaudited) |
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| (Dollars in thousands, except per share data) |
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| |
2023 |
2022 |
| |
1st Qtr |
4th Qtr |
3rd Qtr |
2nd Qtr |
1st Qtr |
| Quarterly GAAP to Non-GAAP Reconciliations |
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| Income statement data (continued) |
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| Efficiency ratio (non-GAAP) |
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| Adjusted noninterest expenses (non-GAAP) - numerator |
$110,328 |
$102,405 |
$103,939 |
$102,213 |
$95,776 |
| Fully tax-equivalent net interest income |
112,121 |
113,341 |
111,512 |
104,149 |
95,702 |
| Noninterest revenues |
13,495 |
63,706 |
65,249 |
64,097 |
65,673 |
| Acquired non-PCD loan accretion |
(1,079) |
(1,138) |
(1,397) |
(1,023) |
(734) |
| Unrealized loss (gain) on equity securities |
0 |
20 |
4 |
22 |
(2) |
| Loss on sales of investment securities |
52,329 |
0 |
0 |
0 |
0 |
| Gain on debt extinguishment |
(242) |
0 |
0 |
0 |
0 |
| Operating revenues (non-GAAP) - denominator |
176,624 |
175,929 |
175,368 |
167,245 |
160,639 |
| Efficiency ratio (non-GAAP) |
62.5% |
58.2% |
59.3% |
61.1% |
59.6% |
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| Balance sheet data |
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| Total assets |
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| Total assets (GAAP) |
$15,255,953 |
$15,835,651 |
$15,594,547 |
$15,487,833 |
$15,625,883 |
| Intangible assets |
(900,914) |
(902,837) |
(909,224) |
(917,891) |
(863,038) |
| Deferred taxes on intangible assets |
45,369 |
46,130 |
48,893 |
45,349 |
43,968 |
| Total tangible assets (non-GAAP) |
$14,400,408 |
$14,978,944 |
$14,734,216 |
$14,615,291 |
$14,806,813 |
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| Total common equity |
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| Shareholders' equity (GAAP) |
$1,634,013 |
$1,551,705 |
$1,461,163 |
$1,661,696 |
$1,852,103 |
| Intangible assets |
(900,914) |
(902,837) |
(909,224) |
(917,891) |
(863,038) |
| Deferred taxes on intangible assets |
45,369 |
46,130 |
48,893 |
45,349 |
43,968 |
| Total tangible common equity (non-GAAP) |
$778,468 |
$694,998 |
$600,832 |
$789,154 |
$1,033,033 |
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| Shareholders’ equity-to-assets ratio at quarter end |
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| Total shareholders’ equity (GAAP) - numerator |
$1,634,013 |
$1,551,705 |
$1,461,163 |
$1,661,696 |
$1,852,103 |
| Total assets (GAAP) - denominator |
15,255,953 |
15,835,651 |
15,594,547 |
15,487,833 |
15,625,883 |
| Net shareholders’ equity-to-assets ratio at quarter end (GAAP) |
10.71% |
9.80% |
9.37% |
10.73% |
11.85% |
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| Net tangible equity-to-assets ratio at quarter end |
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| Total tangible common equity (non-GAAP) - numerator |
$778,468 |
$694,998 |
$600,832 |
$789,154 |
$1,033,033 |
| Total tangible assets (non-GAAP) - denominator |
14,400,408 |
14,978,944 |
14,734,216 |
14,615,291 |
14,806,813 |
| Net tangible equity-to-assets ratio at quarter end (non-GAAP) |
5.41% |
4.64% |
4.08% |
5.40% |
6.98% |
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| (1) Excludes loss on sales of investment securities, gain on debt extinguishment and unrealized gain (loss) on equity securities. |
| (2) Includes deferred tax liabilities related to certain intangible assets. |
# # #
