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 Fourth Quarter And Full Year 2023 Results
SYRACUSE,
N.Y. — January 23, 2024 — Community Bank System, Inc. (the “Company”) (NYSE: CBU) reported fourth quarter and
full year 2023 results that are included in the attached supplement. This earnings release, including supporting financial tables, is
also available within the press releases section of the Company's investor relations website at: https://ir.communitybanksystem.com/news-presentations/press-releases/.
An archived webcast of the earnings call will be available on this site for one full year.
Fourth
Quarter and Full Year 2023 Performance Summary
| · | Fourth
quarter 2023 net income of $38.3 million, or $0.71 per fully diluted share, was down $14.2
million, or $0.26 per fully diluted share, from the prior year’s fourth quarter while
full year 2023 net income of $136.5 million, or $2.53 per fully diluted share, was down $51.6
million, or $0.93 per fully diluted share, from full year 2022 |
| · | Fourth
quarter 2023 operating net income, a non-GAAP measure, of $40.9 million, or $0.76 per fully
diluted share, was down $11.3 million, or $0.20 per fully diluted share, from the prior year’s
fourth quarter while full year 2023 operating net income, a non-GAAP measure, of $181.3 million,
or $3.36 per fully diluted share, was down $13.6 million, or $0.22 per fully diluted share,
from full year 2022 |
| · | Total
revenues for fourth quarter 2023 of $177.0 million, a new quarterly record for the Company,
were up $1.0 million, or 0.6%, from the prior year’s fourth quarter and up $1.6 million,
or 0.9%, from third quarter 2023 |
| · | Total
financial services (employee benefit services, insurance services and wealth management services)
revenues for fourth quarter 2023 of $49.5 million were up $4.8 million, or 10.8%, from the
prior year’s fourth quarter and total financial services revenues for full year 2023
of $197.0 million were up $10.1 million, or 5.4%, from full year 2022 |
| · | Total
ending loans of $9.70 billion were up $254.5 million, or 2.7%, from the end of the prior
quarter, marking the tenth consecutive quarter of loan growth, and were up $895.2 million,
or 10.2%, from the end of the prior year |
| · | Total
ending deposits of $12.93 billion were down $102.7 million, or 0.8%, from the end of the
prior quarter and down $84.2 million, or 0.6%, from December 31, 2022 |
| · | Annualized
loan net charge-offs were 0.10% in the quarter and 0.06% for the full year |
| · | Tier
1 leverage ratio of 9.37% was up 0.58 percentage points from the end of the prior year |
Company
management will conduct an investor call at 11:00 a.m. (ET) today, January 23, 2024, to discuss the fourth quarter and full year 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/Rm4ONkYgL8b.
About
Community Bank System, Inc.
Community
Bank System, Inc. is a diversified financial services company with total assets of $15.5 billion focused on four main business lines
– banking, benefits administration, insurance services and wealth management. Its banking subsidiary, Community Bank, N.A., is
among the country’s 100 largest banking institutions and operates more than 200 customer facilities across Upstate New York, Northeastern
Pennsylvania, Vermont, and Western Massachusetts. In addition to a full range of retail, business, and municipal banking services, the
Company offers comprehensive financial planning, trust administration and wealth management services through its Community Bank Wealth
Management operating unit. 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. The Company’s OneGroup NY, Inc. subsidiary is a top 100 U.S. insurance agency. 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.
 |
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 Fourth Quarter And Full Year 2023 Results
SYRACUSE, N.Y. — January 23, 2024
Community
Bank System, Inc. (the “Company”) (NYSE: CBU) reported fourth quarter 2023 net
income of $38.3 million, or $0.71 per fully diluted share and full year 2023 net income of
$136.5 million, or $2.53 per fully diluted share.
|
| |
“Our
Company achieved its highest level of quarterly revenues during the fourth quarter of 2023,
despite facing a challenging environment. However, our bottom-line net income results were
impacted by a series of non-operating and other notable noninterest expense items,”
commented Dimitar A. Karaivanov, President and CEO. “These included the impact of the
FDIC insurance special assessment, increased retirement expense, elevated fraud expenses,
and restructuring costs linked to our Company’s previously announced retail workforce
optimization strategy. Additionally, acquisition-related contingent consideration adjustments
were incurred connected to the achievement of earn-out objectives from previous acquisitions.
Looking back
to 2023, all of our four businesses - banking, employee benefit services, insurance services and wealth management services - recorded
year-over-year increases in revenues in spite of a volatile market environment. We achieved our below average risk investment thesis
through our diverse revenue streams, peer-leading liquidity levels, competitive funding costs, strong credit and robust regulatory capital
levels.
Looking forward
into 2024, our focus is squarely on maintaining this trajectory of revenue growth, while concurrently moderating operating expenses and
maximizing the returns on the investments we made in leadership, talent, risk management capabilities and data systems across all of
our businesses to achieve positive operating leverage.”
|
Fourth
Quarter and Full Year 2023 Performance
| Operating
Performance |
· GAAP
EPS
o $0.71
per share for the fourth quarter of 2023, a decrease of $0.26 per share from the fourth quarter of 2022
o
$2.53 per share for full year 2023, a decrease of $0.93 per share from full year 2022
·
Operating EPS (non-GAAP)
o
$0.76 per share for the fourth quarter of 2023, a decrease of $0.20 per share from the fourth quarter of 2022
o
$3.36 per share for full year 2023, a decrease of $0.22 per share from full year 2022
·
Adjusted Pre-Tax, Pre-Provision Net Revenue Per Share (non-GAAP)
o
$1.06 per share for the fourth quarter of 2023, a decrease of $0.23 per share from the fourth quarter of 2022
o
$4.49 per share for full year 2023, a decrease of $0.29 per share from full year 2022 |
| |
|
| Return
Metrics |
·
Return on Assets | Adjusted Return on Average Assets (non-GAAP)
o
0.99% | 1.12% for the fourth quarter of 2023
o
0.90% | 1.24% for full year 2023
·
Return on Equity | Adjusted Return on Average Equity (non-GAAP)
o
9.69% | 10.91% for the fourth quarter of 2023
o
8.55% | 11.88% for full year 2023 |
| |
|
| Revenues |
·
Total Revenues
o
$177.0 million for the fourth quarter of 2023, an increase of $1.0 million, or 0.6%, from the fourth quarter of 2022
o
$652.1 million for full year 2023, a decrease of $27.2 million, or 4.0%, from full year 2022
o Excluding
gains and losses on investment securities and debt extinguishment, total revenues were $704.3 million for
full year 2023, an increase of $24.9 million, or 3.7%, from 2022
·
Noninterest Revenues
o
$67.8 million for the fourth quarter of 2023, an increase of $4.1 million, or 6.4%, from the fourth quarter of 2022
o
$214.8 million for full year 2023, a decrease of $43.9 million, or 17.0%, from full year 2022
o
Excluding gains and losses on investment securities and debt extinguishment, total noninterest revenues were $267.0
million for full year 2023, an increase of $8.2 million, or 3.2%, from full year 2022
·
Noninterest Revenues/Total Revenues | Noninterest Revenues/Operating Revenues (FTE) (non-GAAP)
o
38.3% | 38.2% for the fourth quarter of 2023
o
32.9% | 37.9% for full year 2023 |
| |
|
| Net
Interest Income and Net Interest Margin |
·
Net Interest Income
o
$109.2 million for the fourth quarter of 2023, a decrease of $3.0 million, or 2.7%, from the fourth quarter of 2022 and an
increase of $1.4 million, or 1.3%, from the third quarter of 2023
o
$437.3 million for full year 2023, an increase of $16.7 million, or 4.0%, from full year 2022
·
Net Interest Margin
o
3.05% for the fourth quarter of 2023, a decrease of two basis points from 3.07% for the third quarter of 2023 and an increase of
six basis points from 2.99% for the fourth quarter of 2022
o
3.11% for full year 2023, an increase of 22 basis points from 2.89% for full year 2022
·
Net Interest Margin (Fully Tax-Equivalent) (non-GAAP)
o
3.07% for the fourth quarter of 2023, a decrease of three basis points from 3.10% for the third quarter of 2023 and an increase
of five basis points from 3.02% for the fourth quarter of 2022
o
3.14% for full year 2023, an increase of 22 basis points from 2.92% for full year 2022 |
| |
|
Balance Sheet and Funding |
·
Total Ending Loans
o
$9.70 billion, an increase of $254.5 million, or 2.7%, from September 30, 2023, and an increase of $895.2 million, or 10.2%,
from one year ago
·
Total Ending Deposits
o
$12.93 billion, a decrease of $102.7 million, or 0.8%, from September 30, 2023, and a decrease of $84.2 million, or 0.6%,
from December 31, 2022
·
Total Deposit Funding Costs | Total Cost of Funds
o
0.98% | 1.08% for the fourth quarter of 2023
o
0.66% | 0.77% for full year 2023 |
| |
|
| Risk
Metrics |
·
Annualized Loan Net Charge-Offs
o
0.10% for the fourth quarter of 2023 and 0.06% for full year 2023
·
Tier 1 Leverage Ratio
o
9.37%
·
Loan-to-deposit ratio
o
75.1%
·
Non-owner occupied commercial real estate / total bank-level regulatory capital
o 197% |
Fourth Quarter 2023 Business Segment Revenues
| Banking |
· Total
Revenues of $127.4 million decreased $3.8 million, or 2.9%, from the fourth quarter of 2022 primarily due to lower net interest income
resulting from higher funding costs.
· Total Revenues increased $2.1 million, or 1.7%, from the
third quarter of 2023, primarily driven by continued organic loan growth and a relatively stable net interest margin. |
| |
|
| Employee Benefit Services |
· Total Revenues of $30.0 million increased $1.0 million,
or 3.4%, from the fourth quarter of 2022 driven by an increase in the total participants under administration along with growth resulting
from market appreciation.
· Total Revenues were consistent with the third quarter of
2023. |
| |
|
| Insurance Services |
· Total Revenues of $11.6 million increased $3.3 million,
or 39.9%, from the fourth quarter of 2022 reflective of a strong premium market and organic expansion, along with growth resulting from
acquisitions.
· Total Revenues decreased $0.5 million, or 4.2%, from the
third quarter of 2023 due in part to seasonal factors. |
| |
|
| Wealth Management Services |
· Total Revenues of $7.9 million increased $0.5 million,
or 7.0%, from the fourth quarter of 2022 as more favorable investment market conditions drove increases in assets under management between
the periods.
· Total Revenues were consistent with the third quarter of
2023. |
Results of Operations
The Company reported fourth quarter 2023 net income of $38.3 million,
or $0.71 per fully diluted share. This compares to net income of $52.5 million, or $0.97 per fully diluted share for the fourth quarter
of 2022. The $0.26 decrease in earnings per share was reflective of increases in operating expenses and the provision for credit losses
and a decrease in net interest income, partially offset by an increase in noninterest revenues, as well as decreases in both income taxes
and the number of fully diluted shares outstanding. Comparatively, the Company recorded $0.82 in fully diluted earnings per share for
the linked third quarter of 2023.
Net Interest Income and Net Interest Margin
The Company’s tenth consecutive quarter of loan growth supported
expansion in net interest income over third quarter results.
| · | Net interest income in the fourth quarter of 2023 was $109.2
million, down $3.0 million, or 2.7%, compared to the fourth quarter of 2022, and up $1.4 million, or 1.3%, from the third quarter of 2023. |
| · | Net interest margin in the fourth quarter of 3.05% and fully
tax-equivalent net interest margin, a non-GAAP measure, of 3.07% increased by six basis points and five basis points, respectively, from
the fourth quarter of 2022. These increases were primarily the result of higher yields on interest-earning assets and a higher proportion
of those assets being comprised of loan balances primarily due to strong organic loan growth, and the sales and maturities of certain
lower-yielding available-for-sale investment securities between the periods, partially offset by higher rates paid on interest-bearing
liabilities. |
| · | The yield on interest-earning assets increased 77 basis points
to 4.11% over the prior year’s fourth quarter primarily as a result of higher loan yields 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. |
| · | The cost of interest-bearing liabilities increased 101 basis
points from 0.47% in the fourth quarter of 2022 to 1.48% in the fourth quarter of 2023 as a result of market-driven higher deposit and
borrowing rates. |
| · | On a linked quarter basis, net interest margin decreased by
two basis points, while tax-equivalent net interest margin, a non-GAAP measure, decreased by three basis points. The cost of funds increased
20 basis points, including a 25 basis point increase in the cost of interest-bearing liabilities, while the yield on interest-earning
assets increased 17 basis points. |
Noninterest Revenues
The Company’s banking and financial services (including employee
benefit services, insurance services and wealth management services) noninterest revenue streams continue to reduce its dependence on
net interest income and lay a solid foundation for future growth and opportunities.
| · | Banking noninterest revenues decreased $0.8 million, or 4.0%,
from $19.0 million in the fourth quarter of 2022 to $18.2 million in the fourth quarter of 2023 reflective of the Company’s implementation
of certain deposit fee changes, including the elimination of nonsufficient and unavailable funds fees on personal accounts late in the
fourth quarter of 2022. |
| · | Employee benefit services revenues for the fourth quarter
of 2023 were $30.0 million, up $1.0 million, or 3.4%, in comparison to the fourth quarter of 2022 driven by new business and a year-over-year
increase in the total participants under administration, along with a modest increase from market appreciation. |
| · | Insurance services revenues for the fourth quarter of 2023
were $11.6 million, which represents a $3.3 million, or 39.9%, increase versus the prior year’s fourth quarter, reflective primarily
of a strong premium market and organic expansion, along with growth resulting from acquisitions completed between the periods. |
| · | Wealth management services revenues for the fourth quarter
of 2023 were $7.9 million, up from $7.4 million in the fourth quarter of 2022 as more favorable investment market conditions drove an
increase in assets under management. |
Noninterest Expenses and Income Taxes
The Company continues to maintain a focus on managing expenses consistent
with its organic growth strategies and scale objectives, while continuing to evaluate efficiency opportunities and the enhancement of
operating leverage in all lines of business.
| · | The Company recorded $123.3 million in total operating expenses
in the fourth quarter of 2023, compared to $105.9 million of total operating expenses in the prior year’s fourth quarter. The $17.4
million, or 16.5%, increase between the periods was mainly driven by higher salaries and employee benefits, acquisition-related contingent
consideration adjustments, restructuring expenses, data processing and communications expenses, business development and marketing and
other expenses. |
| · | The $7.5 million, or 11.7%, increase in salaries and benefits
expenses was primarily driven by merit and market-related increases in employee wages, higher employee medical expenses and certain executive
retirement expenses. |
| · | The $2.9 million increase in acquisition-related contingent
consideration adjustment was due to an increase in the probability of achievement of retained revenue levels associated with future contingent
consideration payments for certain acquisitions completed in the employee benefit services and insurance businesses. |
| · | Restructuring expenses of $1.2 million were recognized during
the fourth quarter of 2023 due to severance payments associated with the Company’s previously announced retail customer service
workforce optimization plan. |
| · | The $1.0 million, or 7.6%, increase in data processing and
communications expenses is reflective of the Company’s continued investment in customer-facing and back-office digital technologies. |
| · | Business development and marketing expenses increased $0.5
million, or 16.5%, due to the Company’s investment in digital marketing initiatives and higher levels of targeted advertisements
intended to generate deposit inflows. |
| · | Other expenses were up $4.9 million, or 69.5%, primarily due
to increases in insurance expenses, including a $1.5 million accrual associated with the FDIC special assessment to recover the loss to
the Deposit Insurance Fund associated with protecting uninsured depositors following the closures of certain banks in the first quarter
of 2023 along with the impact of a higher FDIC insurance assessment rate, and non-service related components of the net periodic pension
benefit credit. |
| · | The effective tax rate for the fourth quarter of 2023 was
22.8%, up from 22.0% in the fourth quarter of 2022. On a full year basis the effective tax rate was 21.6% for 2023 compared to 21.7% for
2022. |
Financial Position and Liquidity
The Company’s financial position and liquidity profile remain
strong, demonstrating the effectiveness of its strategic asset and liability management and prudent financial planning.
| · | The Company’s total assets were $15.55 billion at December
31, 2023, representing a $281.1 million, or 1.8%, decrease from one year prior and a $168.2 million, or 1.1%, increase from the end of
the third quarter of 2023. The decrease in the Company’s total assets during the prior twelve-month period was primarily driven
by the sales and maturities of certain available-for-sale investment securities, partially offset by organic loan growth. |
| · | At December 31, 2023, the Company’s readily available
sources of liquidity totaled $4.83 billion, including cash and cash equivalents balances of $191.0 million, investment securities unpledged
as collateral totaling $2.17 billion, unused borrowing capacity at the Federal Home Loan Bank of New York of $1.37 billion and $1.10 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 and intercompany deposits. |
| · | Estimated insured deposits, net of collateralized and intercompany
deposits, represent greater than 80% of fourth quarter total ending deposits. |
Deposits and Funding
The Company continues to leverage its robust core deposit base, characterized
by low funding costs, to support its financial operations.
| · | Ending deposits at December 31, 2023 of $12.93 billion were
$102.7 million, or 0.8%, lower than the third quarter of 2023 and $84.2 million, or 0.6%, lower than one year prior. |
| · | Ending borrowings of $765.2 million at December 31, 2023,
which included $407.6 million of fixed rate Federal Home Loan Bank of New York term borrowings, $304.6 million of customer repurchase
agreements and $53.0 million of overnight borrowings, increased $118.1 million, or 18.3%, from September 30, 2023 and decreased $372.6
million, or 32.7%, from the year prior. |
| · | The Company’s average cost of funds increased 75 basis
points, from 0.33% in the fourth quarter of 2022 to 1.08% in the fourth quarter of 2023, while the average cost of total deposits remained
comparatively low relative to the industry at 0.98% for the quarter. |
| · | Through the end of the fourth quarter of 2023, the Company’s
cycle-to-date deposit beta was 17% and the cycle-to-date total funding beta was 19%. The target Federal Funds rate has increased 525 basis
points since December 31, 2021, while the Company’s total deposit costs and total funding costs increased 90 basis points and 99
basis points, respectively, over the same period. |
| · | The Company’s deposit base is well diversified across
customer segments, comprised of approximately 62% consumer, 26% business and 12% municipal at the end of the current quarter, and broadly
dispersed illustrated by an average deposit account balance of under $20,000. |
| · | 68% of the Company’s total deposits were in checking
and savings accounts at the end of the fourth quarter and the Company does not currently utilize brokered or wholesale deposits. Time
deposit accounts represented 13% of the Company’s total deposits at the end of 2023, up six percentage points from the end of 2022
and up two percentage points from the end of the third quarter of 2023 primarily due to the movement of customers’ deposits from
non-time to time accounts. |
Loans and Credit Quality
The Company’s predominantly footprint-based loan portfolio is
growing and diversified with a core focus on credit quality.
| · | Ending loans at December 31, 2023 of $9.70 billion were $254.5
million, or 2.7%, higher than September 30, 2023 and $895.2 million, or 10.2%, higher than one year prior with the year-over-year growth
driven by increases in all loan categories due to net organic growth. |
| · | At December 31, 2023, the Company’s allowance for credit
losses totaled $66.7 million, or 0.69% of total loans outstanding, compared to $64.9 million, or 0.69% of total loans outstanding, at
the end of the third quarter of 2023 and $61.1 million, or 0.69% of total loans outstanding, at December 31, 2022. |
| · | Reflective of an increase in loans outstanding and a stable
economic forecast, the Company recorded a $4.1 million provision for credit losses during the fourth quarter of 2023. While certain macroeconomic
concerns are emerging related to non-owner occupied commercial real estate (“CRE”), the Company’s exposure to this portfolio
remains diverse and relatively low at 15% of total assets, 25% of total loans and 197% of total bank-level regulatory capital. Additionally,
the current levels of delinquencies and charge-offs within this portfolio remain below long-term historical averages and credit risk ratings
remain strong which supports the solid asset quality of this portfolio. |
| · | The Company recorded net charge-offs of $2.3 million, or an
annualized 0.10% of average loans, in the fourth quarter of 2023 compared to net charge-offs of $2.1 million, or an annualized 0.09% of
average loans, in the fourth quarter of 2022 and net charge-offs of $1.2 million, or an annualized 0.05% of average loans, in the third
quarter of 2023. |
| · | Total delinquent loans, which includes loans 30 or more days
past due and nonaccrual loans, as a percentage of total loans outstanding was 1.06% at the end of 2023. This compares to 0.89% at the
end of 2022 and 0.90% at the end of the third quarter of 2023. |
| · | At December 31, 2023, nonperforming (90 or more days delinquent
and non-accruing) loans increased to $54.6 million, or 0.56% of total loans outstanding compared to $36.9 million, or 0.39% of total loans
outstanding at the end of the third quarter of 2023 and $33.4 million, or 0.38% of total loans outstanding one year earlier primarily
attributable to an increase in nonaccrual business lending loan balances driven largely by the performance of three customers. |
| · | Loans 30 to 89 days delinquent (categorized by the Company
as delinquent but performing), which tend to exhibit seasonal characteristics, were 0.50% of total loans outstanding at December 31, 2023,
down from 0.51% at the end of the third quarter of 2023 and one year earlier. |
Shareholders’ Equity and Regulatory Capital
The Company’s capital planning and management activities, coupled
with its diversified streams of revenue and prudent dividend practices, have allowed it to build and maintain a strong capital position.
At December 31, 2023, all of the Company’s and the Bank’s regulatory capital ratios significantly exceeded well-capitalized
standards.
| · | Shareholders’ equity of $1.70 billion at December 31,
2023 was $150.8 million, or 9.7%, higher than one year ago, primarily due to a $125.4 million decrease in accumulated other comprehensive
loss related to the Company’s investment securities portfolio. Shareholders’ equity increased $147.6 million, or 9.5%, from
September 30, 2023, primarily driven by a $129.8 million decrease in accumulated other comprehensive loss related to the Company’s
investment securities portfolio. |
| · | The Company’s shareholders’ equity to assets ratio
(GAAP) was 10.95% at December 31, 2023, up from 9.80% at December 31, 2022 and 10.11% at September 30, 2023. |
| · | The Company’s tier 1 leverage ratio was 9.37% at December
31, 2023, which substantially exceeds the regulatory well-capitalized standard of 5.0%. |
| · | The Company’s net tangible equity to net tangible assets
ratio (non-GAAP) was 5.78% at December 31, 2023, up from 4.64% a year earlier and 4.81% at the end of the third quarter of 2023. The increase
in the net tangible equity to net tangible assets ratio (non-GAAP) from one year prior was primarily driven by a $154.7 million, or 22.2%,
increase in tangible equity due to the aforementioned decrease in accumulated other comprehensive loss related to the Company’s
investment securities portfolio and a $277.2 million, or 1.9%, decrease in tangible assets due primarily to the sales and maturities of
certain available-for-sale investment securities. |
Dividend Increase and Stock Repurchase Program
The payment of a meaningful and growing dividend is an important component
of the Company’s commitment to provide consistent and favorable long term returns to its shareholders, and it reflects the continued
strength of the Company’s long-term operating results and capital position, and management’s confidence in the future performance
of the Company. The $0.01 increase in the quarterly dividend declared in the third quarter of 2023 marked the 31st consecutive
year of dividend increases for the Company.
| · | During the fourth quarter of 2023, the Company declared a
quarterly cash dividend of $0.45 per share on its common stock, up 2.3% from the $0.44 dividend declared in the fourth quarter of 2022,
representing an annualized yield of 3.6% based upon the $50.63 closing price of the Company’s stock on January 22, 2024. |
| · | In December 2023 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, 2024. 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.
As previously announced, in December 2022 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. There were 607,161 shares repurchased
pursuant to the 2023 stock repurchase program in 2023, including 107,161 shares in the fourth quarter of 2023. The 2023 stock repurchase
authorization expired on December 31, 2023. |
Non-GAAP Measures
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, restructuring
expenses, gain on debt extinguishment, loss on sales of investment securities and unrealized loss 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, restructuring expenses, gain on debt
extinguishment, loss on sales of investment securities and unrealized loss on equity securities from income before income taxes. Although
these items are non-GAAP measures, the Company’s management believes this information helps investors and analysts measure underlying
core performance and provides better comparability to other organizations that have not engaged in acquisitions or restructuring activities.
The Company also provides supplemental reporting of its net interest margin on a “fully tax-equivalent” basis, which includes
an adjustment to net interest income that represents taxes that would have been paid had nontaxable investment securities and loans been
taxable. Although fully tax-equivalent net interest margin is a non-GAAP measure, the Company’s management believes this information
helps enhance comparability of the performance of assets that have different tax liabilities. The amounts for such items are presented
in the tables that accompany this release. Diluted adjusted net earnings per share, a non-GAAP measure, were $0.80 in the fourth quarter
of 2023, down from $1.00 in the fourth quarter of 2022 and $0.86 in the third quarter of 2023. Adjusted pre-tax, pre-provision net revenue
per share, a non-GAAP measure, was $1.06 in the fourth quarter of 2023, down from $1.29 in the fourth quarter of 2022 and $1.10 in the
third quarter of 2023.
Conference Call Scheduled
Company management will conduct an investor call at 11:00 a.m. (ET)
today, January 23, 2024, to discuss the fourth quarter and full year 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/Rm4ONkYgL8b.
This earnings release, including supporting financial tables, is also
available within the press releases section of the Company's investor relations website at: https://ir.communitybanksystem.com/news-presentations/press-releases/.
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. is a diversified financial services company
with total assets of $15.5 billion focused on four main business lines – banking, benefits administration, insurance services and
wealth management. Its banking subsidiary, Community Bank, N.A., is among the country’s 100 largest banking institutions and operates
more than 200 customer facilities across Upstate New York, Northeastern Pennsylvania, Vermont and Western Massachusetts. In addition
to a full range of retail, business, and municipal banking services, the Company offers comprehensive financial planning, trust administration
and wealth management services through its Community Bank Wealth Management operating unit. 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. The Company’s OneGroup NY, Inc. subsidiary is a top 100 U.S.
insurance agency. 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.
Forward-Looking Statements
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 commercial real estate and residential housing or vehicle 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; litigation and actions
of regulatory authorities; management’s estimates and projections of interest rates and interest rate policies; the effect of changes
in the level of checking, savings, or money market account deposit balances and other factors that affect net interest margin; future
provisions for credit losses on loans and debt securities; changes in nonperforming assets; ability to contain costs in inflationary
conditions; the effect on financial market valuations 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, including capital requirements; and the timing for receiving regulatory approvals and completing pending
merger and acquisition transactions. For more information about factors that could cause actual results to differ materially from CBU’s
expectations, refer to its annual, periodic and other reports filed with the Securities and Exchange Commission (“SEC”),
including the discussion under the “Risk Factors” section of such reports 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) |
|
|
|
|
| |
Quarter
Ended |
Year-to-Date |
| |
December
31,
2023 |
December
31,
2022 |
December
31,
2023 |
December
31,
2022 |
| Earnings |
|
|
|
|
| Loan
income |
$122,392 |
$96,168 |
$445,167 |
$335,075 |
| Investment
income |
23,934 |
27,815 |
96,221 |
108,654 |
| Total interest
income |
146,326 |
123,983 |
541,388 |
443,729 |
| Interest
expense |
37,136 |
11,760 |
104,103 |
23,099 |
| Net interest
income |
109,190 |
112,223 |
437,285 |
420,630 |
| Acquisition-related
provision for credit losses |
0 |
0 |
0 |
3,927 |
| Provision
for credit losses |
4,073 |
2,768 |
11,203 |
10,846 |
| Net interest
income after provision for credit losses |
105,117 |
109,455 |
426,082 |
405,857 |
| Deposit service
and other banking fees |
18,003 |
19,228 |
69,377 |
71,494 |
| Mortgage
banking |
196 |
(205) |
595 |
390 |
| Employee
benefit services |
30,015 |
29,023 |
117,961 |
115,408 |
| Insurance
services |
11,599 |
8,290 |
47,094 |
39,810 |
| Wealth management
services |
7,904 |
7,390 |
31,941 |
31,667 |
| Loss on sales
of investment securities |
0 |
0 |
(52,329) |
0 |
| Gain on debt
extinguishment |
0 |
0 |
242 |
0 |
| Unrealized
gain (loss) on equity securities |
52 |
(20) |
(47) |
(44) |
| Total noninterest
revenues |
67,769 |
63,706 |
214,834 |
258,725 |
| Salaries
and employee benefits |
71,595 |
64,103 |
281,803 |
257,339 |
| Data processing
and communications |
14,685 |
13,645 |
57,585 |
54,099 |
| Occupancy
and equipment |
10,715 |
10,673 |
42,550 |
42,413 |
| Amortization
of intangible assets |
3,563 |
3,794 |
14,511 |
15,214 |
| Legal and
professional fees |
3,792 |
3,822 |
15,921 |
14,018 |
| Business
development and marketing |
3,635 |
3,120 |
15,731 |
13,095 |
| Acquisition-related
contingent consideration adjustment |
2,200 |
(700) |
3,280 |
(300) |
| Acquisition
expenses |
7 |
353 |
63 |
5,021 |
| Restructuring
expenses |
1,163 |
0 |
1,163 |
0 |
| Other |
11,936 |
7,042 |
34,278 |
23,369 |
| Total operating
expenses |
123,291 |
105,852 |
466,885 |
424,268 |
| Income before
income taxes |
49,595 |
67,309 |
174,031 |
240,314 |
| Income taxes |
11,307 |
14,779 |
37,525 |
52,233 |
| Net income |
$38,288 |
$52,530 |
$136,506 |
$188,081 |
| Basic earnings per share |
$0.71 |
$0.97 |
$2.54 |
$3.48 |
| Diluted
earnings per share |
$0.71 |
$0.97 |
$2.53 |
$3.46 |
| Summary of Financial Data (unaudited) |
|
|
|
|
|
| (Dollars in thousands, except per share data) |
|
|
|
|
|
| |
2023 |
2022 |
| |
4th
Qtr |
3rd
Qtr |
2nd
Qtr |
1st
Qtr |
4th
Qtr |
| Earnings |
|
|
|
|
|
| Loan
income |
$122,392 |
$115,138 |
$107,275 |
$100,362 |
$96,168 |
| Investment
income |
23,934 |
22,418 |
24,349 |
25,520 |
27,815 |
| Total
interest income |
146,326 |
137,556 |
131,624 |
125,882 |
123,983 |
| Interest
expense |
37,136 |
29,770 |
22,345 |
14,852 |
11,760 |
| Net
interest income |
109,190 |
107,786 |
109,279 |
111,030 |
112,223 |
| Provision
for credit losses |
4,073 |
2,878 |
752 |
3,500 |
2,768 |
| Net
interest income after provision for credit losses |
105,117 |
104,908 |
108,527 |
107,530 |
109,455 |
| Deposit service
and other banking fees |
18,003 |
17,478 |
17,740 |
16,156 |
19,228 |
| Mortgage
banking |
196 |
113 |
11 |
275 |
(205) |
| Employee
benefit services |
30,015 |
29,997 |
28,565 |
29,384 |
29,023 |
| Insurance
services |
11,599 |
12,113 |
11,860 |
11,522 |
8,290 |
| Wealth management
services |
7,904 |
7,934 |
7,858 |
8,245 |
7,390 |
| Loss on sales
of investment securities |
0 |
0 |
0 |
(52,329) |
0 |
| Gain on debt
extinguishment |
0 |
0 |
0 |
242 |
0 |
| Unrealized
gain (loss) on equity securities |
52 |
(49) |
(50) |
0 |
(20) |
| Total
noninterest revenues |
67,769 |
67,586 |
65,984 |
13,495 |
63,706 |
| Salaries
and employee benefits |
71,595 |
70,687 |
68,034 |
71,487 |
64,103 |
| Data processing
and communications |
14,685 |
15,480 |
14,291 |
13,129 |
13,645 |
| Occupancy
and equipment |
10,715 |
10,358 |
10,453 |
11,024 |
10,673 |
| Amortization
of intangible assets |
3,563 |
3,576 |
3,705 |
3,667 |
3,794 |
| Legal and
professional fees |
3,792 |
3,826 |
3,102 |
5,201 |
3,822 |
| Business
development and marketing |
3,635 |
4,628 |
4,567 |
2,901 |
3,120 |
| Acquisition-related
contingent consideration adjustment |
2,200 |
80 |
1,000 |
0 |
(700) |
| Acquisition
expenses |
7 |
0 |
(1) |
57 |
353 |
| Restructuring
expenses |
1,163 |
0 |
0 |
0 |
0 |
| Other |
11,936 |
7,869 |
7,887 |
6,586 |
7,042 |
| Total
operating expenses |
123,291 |
116,504 |
113,038 |
114,052 |
105,852 |
| Income before
income taxes |
49,595 |
55,990 |
61,473 |
6,973 |
67,309 |
| Income taxes |
11,307 |
11,861 |
13,182 |
1,175 |
14,779 |
| Net
income |
$38,288 |
$44,129 |
$48,291 |
$5,798 |
$52,530 |
| Basic earnings per share |
$0.71 |
$0.82 |
$0.90 |
$0.11 |
$0.97 |
| Diluted
earnings per share |
$0.71 |
$0.82 |
$0.89 |
$0.11 |
$0.97 |
| Profitability |
|
|
|
|
|
| Return on
assets |
0.99% |
1.16% |
1.28% |
0.15% |
1.33% |
| Return on
equity |
9.69% |
10.90% |
11.86% |
1.49% |
14.12% |
| Return
on tangible equity(1) (non-GAAP) |
21.30% |
23.34% |
24.89% |
3.26% |
33.73% |
| Noninterest
revenues/total revenues (GAAP) |
38.3% |
38.5% |
37.6% |
10.8% |
36.2% |
| Noninterest
revenues/operating revenues (FTE)(2) (non-GAAP) |
38.2% |
38.5% |
37.6% |
37.1% |
36.2% |
| Efficiency
ratio (GAAP) |
69.7% |
66.4% |
64.5% |
91.6% |
60.2% |
| Operating
efficiency ratio (non-GAAP) |
65.7% |
64.3% |
61.7% |
62.5% |
58.2% |
| Summary
of Financial Data (unaudited) |
|
|
|
|
|
| (Dollars
in thousands, except per share data) |
|
|
|
|
|
| |
2023 |
2022 |
| |
4th
Qtr |
3rd
Qtr |
2nd
Qtr |
1st
Qtr |
4th
Qtr |
| Components
of Net Interest Margin (FTE) |
|
|
|
|
|
| Loan
yield |
5.08% |
4.92% |
4.75% |
4.59% |
4.39% |
| Cash
equivalents yield |
5.49% |
4.97% |
4.27% |
3.49% |
2.83% |
| Investment
yield |
2.03% |
1.96% |
2.07% |
2.01% |
1.85% |
| Earning
asset yield |
4.11% |
3.94% |
3.82% |
3.63% |
3.34% |
| Interest-bearing
deposit rate |
1.37% |
1.09% |
0.84% |
0.45% |
0.26% |
| Borrowing
rate |
3.12% |
3.34% |
2.60% |
2.78% |
2.63% |
| Cost
of all interest-bearing funds |
1.48% |
1.23% |
0.94% |
0.62% |
0.47% |
| Cost
of total deposits |
0.98% |
0.76% |
0.59% |
0.31% |
0.18% |
| Cost
of funds (includes DDA) |
1.08% |
0.88% |
0.67% |
0.44% |
0.33% |
| Net
interest margin |
3.05% |
3.07% |
3.14% |
3.17% |
2.99% |
| Net
interest margin (FTE) (non-GAAP) |
3.07% |
3.10% |
3.18% |
3.20% |
3.02% |
| Fully
tax-equivalent adjustment |
$1,037 |
$1,034 |
$1,080 |
$1,091 |
$1,118 |
| Average
Balances |
|
|
|
|
|
| Loans |
$9,583,396 |
$9,303,479 |
$9,072,956 |
$8,884,164 |
$8,704,051 |
| Cash
equivalents |
113,071 |
53,279 |
28,491 |
27,775 |
26,501 |
| Taxable
investment securities |
4,032,386 |
4,080,835 |
4,313,875 |
4,760,089 |
5,590,538 |
| Nontaxable
investment securities |
493,434 |
508,356 |
525,314 |
532,604 |
545,679 |
| Total
interest-earning assets |
14,222,287 |
13,945,949 |
13,940,636 |
14,204,632 |
14,866,769 |
| Total
assets |
15,333,118 |
15,123,226 |
15,150,001 |
15,366,863 |
15,665,726 |
| Interest-bearing
deposits |
9,266,908 |
8,961,895 |
9,053,199 |
8,925,555 |
8,982,442 |
| Borrowings |
665,322 |
619,510 |
523,585 |
717,788 |
879,194 |
| Total
interest-bearing liabilities |
9,932,230 |
9,581,405 |
9,576,784 |
9,643,343 |
9,861,636 |
| Noninterest-bearing
deposits |
3,706,781 |
3,810,542 |
3,836,341 |
4,043,494 |
4,198,086 |
| Shareholders'
equity |
1,567,430 |
1,605,798 |
1,632,992 |
1,576,717 |
1,476,093 |
| Balance
Sheet Data |
|
|
|
|
|
| Cash
and cash equivalents |
$190,962 |
$455,807 |
$222,779 |
$189,298 |
$209,896 |
| Investment
securities |
4,165,312 |
3,960,001 |
4,231,899 |
4,630,741 |
5,314,888 |
| Loans: |
|
|
|
|
|
| Business
lending |
4,084,396 |
3,914,935 |
3,833,697 |
3,747,942 |
3,645,665 |
| Consumer
mortgage |
3,285,018 |
3,196,764 |
3,072,090 |
3,019,718 |
3,012,475 |
| Consumer
indirect |
1,703,440 |
1,708,302 |
1,644,811 |
1,605,659 |
1,539,653 |
| Home
equity |
446,515 |
444,764 |
439,186 |
432,027 |
433,996 |
| Consumer
direct |
185,229 |
185,301 |
180,985 |
176,989 |
177,605 |
| Total
loans |
9,704,598 |
9,450,066 |
9,170,769 |
8,982,335 |
8,809,394 |
| Allowance
for credit losses |
66,669 |
64,945 |
63,284 |
63,170 |
61,059 |
| Goodwill
and intangible assets, net |
897,987 |
901,334 |
901,709 |
900,914 |
902,837 |
| Other
assets |
662,345 |
684,059 |
644,178 |
615,835 |
659,695 |
| Total
assets |
15,554,535 |
15,386,322 |
15,108,050 |
15,255,953 |
15,835,651 |
| Deposits: |
|
|
|
|
|
| Noninterest-bearing |
3,638,527 |
3,780,519 |
3,855,085 |
3,949,801 |
4,140,617 |
| Non-maturity
interest-bearing |
7,569,131 |
7,755,916 |
7,740,818 |
8,106,734 |
7,964,983 |
| Time |
1,720,463 |
1,494,353 |
1,275,883 |
1,054,137 |
906,708 |
| Total
deposits |
12,928,121 |
13,030,788 |
12,871,786 |
13,110,672 |
13,012,308 |
| Customer
repurchase agreements |
304,595 |
330,252 |
233,469 |
304,607 |
346,652 |
| Other
borrowings |
460,603 |
316,837 |
251,284 |
75,684 |
791,123 |
| Accrued
interest and other liabilities |
158,697 |
153,506 |
134,105 |
130,977 |
133,863 |
| Total
liabilities |
13,852,016 |
13,831,383 |
13,490,644 |
13,621,940 |
14,283,946 |
| Shareholders'
equity |
1,702,519 |
1,554,939 |
1,617,406 |
1,634,013 |
1,551,705 |
| Total
liabilities and shareholders' equity |
15,554,535 |
15,386,322 |
15,108,050 |
15,255,953 |
15,835,651 |
| Summary
of Financial Data (unaudited) |
|
|
|
|
|
| (Dollars
in thousands, except per share data) |
|
|
|
|
|
| |
2023 |
2022 |
| |
4th
Qtr |
3rd
Qtr |
2nd
Qtr |
1st
Qtr |
4th
Qtr |
| Capital
and Other |
|
|
|
|
|
| Shareholders’
equity/total assets (GAAP) |
10.95% |
10.11% |
10.71% |
10.71% |
9.80% |
| Tangible
equity/net tangible assets(1) (non-GAAP) |
5.78% |
4.81% |
5.34% |
5.41% |
4.64% |
| Tier
1 leverage ratio |
9.37% |
9.44% |
9.35% |
9.06% |
8.79% |
| Loan-to-deposit
ratio |
75.1% |
72.5% |
71.2% |
68.5% |
67.7% |
| Diluted
weighted average common shares O/S |
53,665 |
53,798 |
54,008 |
54,207 |
54,253 |
| Period
end common shares outstanding |
53,327 |
53,427 |
53,528 |
53,725 |
53,737 |
| Cash
dividends declared per common share |
$0.45
|
$0.45
|
$0.44
|
$0.44
|
$0.44
|
| Book
value (GAAP) |
$31.93
|
$29.10
|
$30.22
|
$30.41
|
$28.88
|
| Tangible
book value(1) (non-GAAP) |
$15.93
|
$13.07
|
$14.21
|
$14.49
|
$12.93
|
| Common
stock price (end of period) |
$52.11
|
$42.21
|
$46.88
|
$52.49
|
$62.95
|
| Asset
Quality |
|
|
|
|
|
| Nonaccrual
loans |
$48,687 |
$33,122 |
$29,923 |
$29,745 |
$29,245 |
| Accruing
loans 90+ days delinquent |
5,886 |
3,731 |
3,395 |
4,027 |
4,119 |
| Total
nonperforming loans |
54,573 |
36,853 |
33,318 |
33,772 |
33,364 |
| Other
real estate owned (OREO) |
1,159 |
578 |
623 |
508 |
503 |
| Total nonperforming assets |
55,732 |
37,431 |
33,941 |
34,280 |
33,867 |
| Net
charge-offs |
2,337 |
1,249 |
706 |
1,511 |
2,054 |
| Allowance
for credit losses/loans outstanding |
0.69% |
0.69% |
0.69% |
0.70% |
0.69% |
| Nonperforming
loans/loans outstanding |
0.56% |
0.39% |
0.36% |
0.38% |
0.38% |
| Allowance
for credit losses/nonperforming loans |
122% |
176% |
190% |
187% |
183% |
| Net
charge-offs/average loans |
0.10% |
0.05% |
0.03% |
0.07% |
0.09% |
| Delinquent
loans/ending loans |
1.06% |
0.90% |
0.83% |
0.73% |
0.89% |
| Provision
for credit losses/net charge-offs |
174% |
230% |
106% |
232% |
135% |
| Nonperforming
assets/total assets |
0.36% |
0.24% |
0.22% |
0.22% |
0.21% |
| Non-owner
occupied CRE / total bank-level regulatory capital |
197% |
186% |
180% |
174% |
165% |
| Quarterly
GAAP to Non-GAAP Reconciliations |
|
|
|
|
|
| Income
statement data |
|
|
|
|
|
| Pre-tax,
pre-provision net revenue |
|
|
|
|
|
| Net income (GAAP) |
$38,288 |
$44,129 |
$48,291 |
$5,798 |
$52,530 |
| Income taxes |
11,307 |
11,861 |
13,182 |
1,175 |
14,779 |
| Income before income taxes |
49,595 |
55,990 |
61,473 |
6,973 |
67,309 |
| Provision for credit losses |
4,073 |
2,878 |
752 |
3,500 |
2,768 |
| Pre-tax, pre-provision net revenue (non-GAAP) |
53,668 |
58,868 |
62,225 |
10,473 |
70,077 |
| Acquisition expenses |
7 |
0 |
(1) |
57 |
353 |
| Acquisition-related contingent consideration adjustment |
2,200 |
80 |
1,000 |
0 |
(700) |
| Restructuring expenses |
1,163 |
0 |
0 |
0 |
0 |
| Loss on sales of investment securities |
0 |
0 |
0 |
52,329 |
0 |
| Gain on debt extinguishment |
0 |
0 |
0 |
(242) |
0 |
| Unrealized (gain) loss on equity securities |
(52) |
49 |
50 |
0 |
20 |
| Adjusted pre-tax, pre-provision net revenue (non-GAAP) |
$56,986 |
$58,997 |
$63,274 |
$62,617 |
$69,750 |
| |
|
|
|
|
|
| Summary
of Financial Data (unaudited) |
|
|
|
|
|
| (Dollars
in thousands, except per share data) |
|
|
|
|
|
| |
2023 |
2022 |
| |
4th
Qtr |
3rd
Qtr |
2nd
Qtr |
1st
Qtr |
4th
Qtr |
| Quarterly
GAAP to Non-GAAP Reconciliations |
|
|
|
|
|
| Income
statement data |
|
|
|
|
|
| Pre-tax,
pre-provision net revenue per share |
|
|
|
|
|
| Diluted
earnings per share (GAAP) |
$0.71 |
$0.82 |
$0.89 |
$0.11 |
$0.97 |
| Income
taxes |
0.21 |
0.22 |
0.25 |
0.02 |
0.27 |
| Income
before income taxes |
0.92 |
1.04 |
1.14 |
0.13 |
1.24 |
| Provision
for credit losses |
0.08 |
0.06 |
0.01 |
0.07 |
0.06 |
| Pre-tax,
pre-provision net revenue per share (non-GAAP) |
1.00 |
1.10 |
1.15 |
0.20 |
1.30 |
| Acquisition
expenses |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
| Acquisition-related
contingent consideration adjustment |
0.04 |
0.00 |
0.02 |
0.00 |
(0.01) |
| Restructuring
expenses |
0.02 |
0.00 |
0.00 |
0.00 |
0.00 |
| Loss
on sales of investment securities |
0.00 |
0.00 |
0.00 |
0.96 |
0.00 |
| Gain
on debt extinguishment |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
| Unrealized
(gain) loss on equity securities |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
| Adjusted
pre-tax, pre-provision net revenue per share (non-GAAP) |
$1.06 |
$1.10 |
$1.17 |
$1.16 |
$1.29 |
| |
|
|
|
|
|
| Net
income |
|
|
|
|
|
| Net
income (GAAP) |
$38,288
|
$44,129
|
$48,291
|
$5,798
|
$52,530
|
| Acquisition
expenses |
7 |
0 |
(1) |
57 |
353 |
| Tax
effect of acquisition expenses |
(1) |
0 |
0 |
(12) |
(78) |
| Subtotal
(non-GAAP) |
38,294 |
44,129 |
48,290 |
5,843 |
52,805 |
| Acquisition-related
contingent consideration adjustment |
2,200 |
80 |
1,000 |
0 |
(700) |
| Tax
effect of acquisition-related contingent consideration adjustment |
(445) |
(17) |
(214) |
0 |
154 |
| Subtotal
(non-GAAP) |
40,049 |
44,192 |
49,076 |
5,843 |
52,259 |
| Restructuring
expenses |
1,163 |
0 |
0 |
0 |
0 |
| Tax
effect of restructuring expenses |
(235) |
0 |
0 |
0 |
0 |
| Subtotal
(non-GAAP) |
40,977 |
44,192 |
49,076 |
5,843 |
52,259 |
| Loss
on sales of investment securities |
0 |
0 |
0 |
52,329 |
0 |
| Tax
effect of loss on sales of investment securities |
0 |
0 |
0 |
(11,171) |
0 |
| Subtotal
(non-GAAP) |
40,977 |
44,192 |
49,076 |
47,001 |
52,259 |
| Gain
on debt extinguishment |
0 |
0 |
0 |
(242) |
0 |
| Tax
effect of gain on debt extinguishment |
0 |
0 |
0 |
52 |
0 |
| Subtotal
(non-GAAP) |
40,977 |
44,192 |
49,076 |
46,811 |
52,259 |
| Unrealized
(gain) loss on equity securities |
(52) |
49 |
50 |
0 |
20 |
| Tax
effect of unrealized (gain) loss on equity securities |
11 |
(10) |
(11) |
0 |
(4) |
| Operating
net income (non-GAAP) |
40,936 |
44,231 |
49,115 |
46,811 |
52,275 |
| Amortization
of intangible assets |
3,563 |
3,576 |
3,705 |
3,667 |
3,794 |
| Tax
effect of amortization of intangible assets |
(721) |
(757) |
(793) |
(783) |
(833) |
| Subtotal
(non-GAAP) |
43,778 |
47,050 |
52,027 |
49,695 |
55,236 |
| Acquired
non-PCD loan accretion |
(828) |
(948) |
(886) |
(1,079) |
(1,138) |
| Tax
effect of acquired non-PCD loan accretion |
168 |
201 |
190 |
230 |
250 |
| Adjusted
net income (non-GAAP) |
$43,118
|
$46,303
|
$51,331
|
$48,846
|
$54,348
|
| |
|
|
|
|
|
| Return
on average assets |
|
|
|
|
|
| Adjusted
net income (non-GAAP) |
$43,118 |
$46,303 |
$51,331
|
$48,846
|
$54,348
|
| Average
total assets |
15,333,118 |
15,123,226 |
15,150,001 |
15,366,863 |
15,665,726 |
| Adjusted
return on average assets (non-GAAP) |
1.12% |
1.21% |
1.36% |
1.29% |
1.38% |
| |
|
|
|
|
|
| Summary
of Financial Data (unaudited) |
|
|
|
|
|
| (Dollars
in thousands, except per share data) |
|
|
|
|
|
| |
2023 |
2022 |
| |
4th
Qtr |
3rd
Qtr |
2nd
Qtr |
1st
Qtr |
4th
Qtr |
| Quarterly
GAAP to Non-GAAP Reconciliations |
|
|
|
|
|
| Income
statement data |
|
|
|
|
|
| Return
on average equity |
|
|
|
|
|
| Adjusted
net income (non-GAAP) |
$43,118 |
$46,303 |
$51,331
|
$48,846
|
$54,348
|
| Average
total equity |
1,567,430 |
1,605,798 |
1,632,992 |
1,576,717 |
1,476,093 |
| Adjusted
return on average equity (non-GAAP) |
10.91% |
11.44% |
12.61% |
12.56% |
14.61% |
| |
|
|
|
|
|
| Net
interest margin |
|
|
|
|
|
| Net
interest income |
$109,190 |
$107,786 |
$109,279 |
$111,030 |
$112,223 |
| Total
average interest-earning assets |
14,222,287 |
13,945,949 |
13,940,636 |
14,204,632 |
14,866,769 |
| Net
interest margin |
3.05% |
3.07% |
3.14% |
3.17% |
2.99% |
| |
|
|
|
|
|
| Net
interest margin (FTE) (non-GAAP) |
|
|
|
|
|
| Net
interest income |
$109,190 |
$107,786 |
$109,279 |
$111,030 |
$112,223 |
| Fully
tax-equivalent adjustment |
1,037 |
1,034 |
1,080 |
1,091 |
1,118 |
| Fully
tax-equivalent net interest income |
110,227 |
108,820 |
110,359 |
112,121 |
113,341 |
| Total
average interest-earning assets |
14,222,287 |
13,945,949 |
13,940,636 |
14,204,632 |
14,866,769 |
| Net
interest margin (FTE) (non-GAAP) |
3.07% |
3.10% |
3.18% |
3.20% |
3.02% |
| |
|
|
|
|
|
| Earnings
per common share |
|
|
|
|
|
| Diluted
earnings per share (GAAP) |
$0.71
|
$0.82
|
$0.89
|
$0.11
|
$0.97
|
| Acquisition
expenses |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
| Tax
effect of acquisition expenses |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
| Subtotal
(non-GAAP) |
0.71 |
0.82 |
0.89 |
0.11 |
0.97 |
| Acquisition-related
contingent consideration adjustment |
0.04 |
0.00 |
0.02 |
0.00 |
(0.01) |
| Tax
effect of acquisition-related contingent consideration adjustment |
(0.01) |
0.00 |
0.00 |
0.00 |
0.00 |
| Subtotal
(non-GAAP) |
0.74 |
0.82 |
0.91 |
0.11 |
0.96 |
| Restructuring
expenses |
0.02 |
0.00 |
0.00 |
0.00 |
0.00 |
| Tax
effect of restructuring expenses |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
| Subtotal
(non-GAAP) |
0.76 |
0.82 |
0.91 |
0.11 |
0.96 |
| Loss
on sales of investment securities |
0.00 |
0.00 |
0.00 |
0.96 |
0.00 |
| Tax
effect of loss on sales of investment securities |
0.00 |
0.00 |
0.00 |
(0.21) |
0.00 |
| Subtotal
(non-GAAP) |
0.76 |
0.82 |
0.91 |
0.86 |
0.96 |
| 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) |
0.76 |
0.82 |
0.91 |
0.86 |
0.96 |
| 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 |
| Operating
diluted earnings per share (non-GAAP) |
0.76 |
0.82 |
0.91 |
0.86 |
0.96 |
| Amortization
of intangible assets |
0.07 |
0.07 |
0.07 |
0.07 |
0.07 |
| Tax
effect of amortization of intangible assets |
(0.01) |
(0.01) |
(0.01) |
(0.01) |
(0.02) |
| Subtotal
(non-GAAP) |
0.82 |
0.88 |
0.97 |
0.92 |
1.01 |
| Acquired
non-PCD loan accretion |
(0.02) |
(0.02) |
(0.02) |
(0.02) |
(0.02) |
| Tax
effect of acquired non-PCD loan accretion |
0.00 |
0.00 |
0.00 |
0.00 |
0.01 |
| Diluted
adjusted net earnings per share (non-GAAP) |
$0.80
|
$0.86
|
$0.95
|
$0.90
|
$1.00
|
| |
|
|
|
|
|
| Summary
of Financial Data (unaudited) |
|
|
|
|
|
| (Dollars
in thousands, except per share data) |
|
|
|
|
|
| |
2023 |
2022 |
| |
4th
Qtr |
3rd
Qtr |
2nd
Qtr |
1st
Qtr |
4th
Qtr |
| Quarterly
GAAP to Non-GAAP Reconciliations |
|
|
|
|
|
| Income
statement data |
|
|
|
|
|
| Efficiency
ratio (GAAP) |
|
|
|
|
|
| Noninterest
expenses (GAAP) – numerator |
$123,291 |
$116,504 |
$113,038 |
$114,052 |
$105,852 |
| Net
interest income (GAAP) |
109,190 |
107,786 |
109,279 |
111,030 |
112,223 |
| Noninterest
revenues (GAAP) |
67,769 |
67,586 |
65,984 |
13,495 |
63,706 |
| Total
revenues (GAAP) – denominator |
176,959 |
175,372 |
175,263 |
124,525 |
175,929 |
| Efficiency
ratio (GAAP) |
69.7% |
66.4% |
64.5% |
91.6% |
60.2% |
| |
|
|
|
|
|
| Noninterest
operating expenses |
|
|
|
|
|
| Noninterest
expenses (GAAP) |
$123,291 |
$116,504 |
$113,038 |
$114,052 |
$105,852 |
| Amortization
of intangible assets |
(3,563) |
(3,576) |
(3,705) |
(3,667) |
(3,794) |
| Acquisition
expenses |
(7) |
0 |
1 |
(57) |
(353) |
| Acquisition-related
contingent consideration adjustment |
(2,200)
|
(80)
|
(1,000)
|
0
|
700
|
| Restructuring
expenses |
(1,163) |
0 |
0 |
0 |
0 |
| Total
adjusted noninterest expenses (non-GAAP) |
$116,358 |
$112,848 |
$108,334 |
$110,328 |
$102,405 |
| |
|
|
|
|
|
| Operating
efficiency ratio (non-GAAP) |
|
|
|
|
|
| Adjusted
noninterest expenses (non-GAAP) - numerator |
$116,358 |
$112,848 |
$108,334 |
$110,328 |
$102,405 |
| Fully
tax-equivalent net interest income |
110,227 |
108,820 |
110,359 |
112,121 |
113,341 |
| Noninterest
revenues |
67,769 |
67,586 |
65,984 |
13,495 |
63,706 |
| Acquired
non-PCD loan accretion |
(828) |
(948) |
(886) |
(1,079) |
(1,138) |
| Unrealized
(gain) loss on equity securities |
(52) |
49 |
50 |
0 |
20 |
| Loss
on sales of investment securities |
0 |
0 |
0 |
52,329 |
0 |
| Gain
on debt extinguishment |
0 |
0 |
0 |
(242) |
0 |
| Operating
revenues (non-GAAP) - denominator |
177,116 |
175,507 |
175,507 |
176,624 |
175,929 |
| Operating
efficiency ratio (non-GAAP) |
65.7% |
64.3% |
61.7% |
62.5% |
58.2% |
| |
|
|
|
|
|
| Summary
of Financial Data (unaudited) |
|
|
|
|
|
| (Dollars
in thousands, except per share data) |
|
|
|
|
|
| |
2023 |
2022 |
| |
4th
Qtr |
3rd
Qtr |
2nd
Qtr |
1st
Qtr |
4th
Qtr |
| Quarterly
GAAP to Non-GAAP Reconciliations |
|
|
|
|
|
| Balance
sheet data |
|
|
|
|
|
| Total
assets |
|
|
|
|
|
| Total
assets (GAAP) |
$15,554,535 |
$15,386,322 |
$15,108,050 |
$15,255,953 |
$15,835,651 |
| Goodwill
and intangible assets, net |
(897,987) |
(901,334) |
(901,709) |
(900,914) |
(902,837) |
| Deferred
taxes on goodwill and intangible assets, net |
45,198 |
44,593 |
45,003 |
45,369 |
46,130 |
| Total
tangible assets (non-GAAP) |
$14,701,746 |
$14,529,581 |
$14,251,344 |
$14,400,408 |
$14,978,944 |
| |
|
|
|
|
|
| Total
common equity |
|
|
|
|
|
| Shareholders'
equity (GAAP) |
$1,702,519 |
$1,554,939 |
$1,617,406 |
$1,634,013 |
$1,551,705 |
| Goodwill
and intangible assets, net |
(897,987) |
(901,334) |
(901,709) |
(900,914) |
(902,837) |
| Deferred
taxes on goodwill and intangible assets, net |
45,198 |
44,593 |
45,003 |
45,369 |
46,130 |
| Total
tangible common equity (non-GAAP) |
$849,730 |
$698,198 |
$760,700 |
$778,468 |
$694,998 |
| |
|
|
|
|
|
| Shareholders’
equity-to-assets ratio at quarter end |
|
|
|
|
|
| Total
shareholders’ equity (GAAP) - numerator |
$1,702,519 |
$1,554,939 |
$1,617,406 |
$1,634,013 |
$1,551,705 |
| Total
assets (GAAP) - denominator |
15,554,535 |
15,386,322 |
15,108,050 |
15,255,953 |
15,835,651 |
| Net
shareholders’ equity-to-assets ratio at quarter end (GAAP) |
10.95% |
10.11% |
10.71% |
10.71% |
9.80% |
| |
|
|
|
|
|
| Net
tangible equity-to-assets ratio at quarter end |
|
|
|
|
|
| Total
tangible common equity (non-GAAP) - numerator |
$849,730 |
$698,198 |
$760,700 |
$778,468 |
$694,998 |
| Total
tangible assets (non-GAAP) - denominator |
14,701,746 |
14,529,581 |
14,251,344 |
14,400,408 |
14,978,944 |
| Net
tangible equity-to-assets ratio at quarter end (non-GAAP) |
5.78% |
4.81% |
5.34% |
5.41% |
4.64% |
| |
|
|
|
|
|
(1) Includes deferred tax liabilities related to certain intangible assets.
(2) Excludes loss on sales of investment securities, gain on debt extinguishment and unrealized gain (loss) on equity securities.
# # #
