Community Bank System, Inc. Reports Third Quarter 2021 Results

Community Bank System, Inc. (NYSE: CBU) (the “Company”) reported third quarter 2021 net income of $45.3 million, or $0.83 per fully-diluted share. This compares to $42.8 million of net income, or $0.79 per fully-diluted share for the third quarter of 2020. The $0.04, or 5.1%, increase in earnings per share was primarily attributable to an increase in noninterest revenues, as well as a lower provision for credit losses, offset, in part, by a decrease in net interest income and increases in operating expenses, income taxes, and fully-diluted shares outstanding. Comparatively, the Company recorded $0.88 in fully-diluted earnings per share for the linked second quarter of 2021. Operating diluted earnings per share, which excludes acquisition expenses, unrealized gain/loss on equity securities and litigation expenses, were also $0.83 for the third quarter of 2021, compared to $0.85 in the third quarter of 2020 and $0.88 in the second quarter of 2021.

Third Quarter 2021 Performance Highlights:

• Earnings per Share
  • $0.83 per share, up $0.04 per share, or 5.1%, from the third quarter of 2020
• Return on Assets
  • 1.20%
• Return on Equity
  • 8.55%
• Loan Growth
  • $154.1 million, or 2.2%, during the quarter excluding Paycheck Protection Program (“PPP”) loans
• Noninterest Revenues
  • 41.0% of total revenues
• Total Deposit Funding Costs
  • 0.09%
• Annualized Loan Net Charge-Offs
  • 0.07%

“Community Bank System generated solid earnings results and organic non-PPP loan growth of $154.1 million, or 2.2%, in the third quarter of 2021, as we continued to invest in our business through strategic acquisitions,” said Mark E. Tryniski, President & Chief Executive Officer. “We are encouraged by the positive momentum in our business, including our recent loan growth which came from all five loan segments; business lending, consumer mortgage, consumer indirect, consumer direct and home equity – along with continued asset quality strength, noninterest revenues growth and an improvement in the interest rate environment. Our solid asset quality metrics, as well as an improving economic outlook, resulted in our fourth consecutive quarter of a net benefit in the provision for credit losses. During the third quarter, the Company acquired two financial services businesses, which are expected to contribute meaningful incremental revenues, as well as augment our employee benefit services and insurance services offerings. On October 4, 2021, the Company also announced an agreement to acquire Elmira Savings Bank, a twelve branch banking franchise with total assets of approximately $650 million, which will broaden and deepen our presence in the Southern Tier and Finger Lakes regions of New York and further enhance our ability to serve these markets.”

“Third quarter revenue was driven by a $4.7 million, or 7.8%, increase in noninterest revenues from the year-ago quarter, as increases in deposit and other banking fees and financial services businesses revenues were offset, in part, by lower mortgage banking revenues, while net interest income was down $0.4 million, or 0.4%, between periods, due primarily to lower earning asset yields. Deposit and other banking fees increased $1.3 million, or 8.3%, over the prior year’s third quarter, while the Company’s wealth management and insurance revenues increased $2.1 million, or 13.5%, and employee benefits services revenues increased $4.8 million, or 18.9%. Mortgage banking revenues decreased $3.4 million between the comparable quarters as the Company shifted its strategy from selling secondary market eligible residential mortgages to retaining them for its own portfolio during the fourth quarter of 2020. Total operating expenses, excluding acquisition-related expenses and litigation expenses, increased $7.2 million, or 7.7%, over the third quarter of 2020, driven by the resumption of pre-pandemic business activities and higher salaries and employee benefits costs, including the incremental expenses associated with the acquisition of two previously mentioned financial services businesses during the third quarter of 2021.”

Mr. Tryniski continued, “The Company crested the $15 billion total asset threshold during the third quarter, as the continued inflows of deposits elevated cash and cash equivalents and the Company strategically grew its investment securities. Total deposits increased $384.8 million, or 3.1%, from the end of the second quarter. This resulted in $2.10 billion of the Company’s earning assets remaining in low yielding cash equivalents at the end of the third quarter, despite the Company purchasing $536.9 million of investment securities and generating $154.1 million, or 2.2%, of organic loan growth, excluding PPP loans, during the quarter. The securities purchased carry a weighted-average yield of 1.20% and will contribute to the stabilization of net interest income going forward.”

The Company recorded total revenues of $156.9 million in the third quarter of 2021, an increase of $4.3 million, or 2.8%, over the prior year’s third quarter. The increase in total revenues between the periods was driven by a $4.8 million, or 18.9%, increase in employee benefit services revenues and a $2.1 million, or 13.5%, increase in wealth management and insurance services revenues. These increases were offset, in part, by a $0.4 million, or 0.4%, decrease in net interest income and a $2.2 million decrease in banking-related noninterest revenues, including a $3.4 million decrease in mortgage banking revenues. Comparatively, total revenues were up $5.4 million, or 3.5%, from second quarter 2021 results driven by a $0.5 million, or 0.5%, increase in net interest income, a $1.4 million increase in banking-related noninterest revenues, a $2.4 million, or 8.9%, increase in employee benefit services revenues, and a $1.1 million, or 6.5%, increase in wealth management and insurance services revenues.

The Company recorded net interest income of $92.6 million in the third quarter of 2021, down slightly from the $93.0 million of net interest income recorded in the third quarter of 2020. The $0.4 million, or 0.4%, decrease was driven by a 38 basis point decrease in net interest margin, partially offset by a $1.57 billion, or 13.2%, increase in average earning assets due to large net inflows of government stimulus-related deposits. The tax equivalent net interest margin decreased from 3.12% in the third quarter of 2020 to 2.74% in the third quarter of 2021 as the composition of earning assets changed significantly, with large net inflows of customer deposits being largely deployed into lower yielding cash equivalents and investment securities, resulting in a significant decrease in the Company’s earning asset yield. The tax equivalent average yield on earning assets in the third quarter of 2021 of 2.83% was 45 basis points lower than the tax equivalent average yield on earning assets of 3.28% in the third quarter of 2020. Comparatively, the Company’s net interest income of $92.1 million during the second quarter of 2021 was $0.5 million lower than third quarter 2021 results, while the tax equivalent net interest margin of 2.79% was five basis points higher.

Interest income and fees on loans decreased $3.8 million, or 4.8%, from $79.6 million in the third quarter of 2020 to $75.8 million in the third quarter of 2021. Between the comparable periods, average total loans outstanding decreased $240.2 million, or 3.2%, while the average tax equivalent yield on loans decreased eight basis points, from 4.23% in the third quarter of 2020 to 4.15% in the third quarter of 2021. During the third quarter, the Company recorded $4.3 million of PPP-related interest income, including the accelerated recognition of $3.7 million of deferred loan fees, a result of 1,185 borrowers representing $119.4 million in PPP loan balances being granted forgiveness on their loans by the U.S. Small Business Administration (“SBA”). Comparatively, the Company recorded $75.9 million of interest income and fees on loans during the second quarter of 2021, including $3.9 million of PPP-related interest income, corresponding to an average tax equivalent yield on loans of 4.16%.

Interest income on investments increased $2.0 million, or 11.2%, between the third quarters of 2020 and 2021. This included a $1.5 million increase in interest income on the investment securities portfolio and a $0.5 million increase in interest income on cash equivalents. The tax-equivalent average yield on investments, including cash equivalents, decreased from 1.67% in the third quarter of 2020 to 1.30% in the third quarter of 2021, reflective of lower market interest rates and a significant change in the proportion of investment securities and cash equivalents. The average book value of the investments securities portfolio increased $1.04 billion, or 32.9%, between the periods, while the average balance of cash equivalents increased $777.0 million from $1.30 billion in the third quarter of 2020 to $2.08 billion in the third quarter of 2021. The average tax equivalent yield on the investment securities portfolio decreased 44 basis points from 2.31% in the third quarter of 2020 to 1.87% in the third quarter of 2021, while the average yield on cash equivalents increased five basis points from 0.10% during the third quarter of 2020 to 0.15% during the third quarter of 2021.

Interest expense decreased $1.5 million, or 32.5%, from $4.5 million in the third quarter of 2020 to $3.0 million in the third quarter of 2021. Although average interest-bearing liabilities increased $987.1 million, or 12.5%, in the low interest rate environment, the Company was able to lower its cost of interest-bearing liabilities nine basis points from 0.23% in the third quarter of 2020 to 0.14% in the third quarter of 2021, which resulted in a net decrease in interest expense. The Company’s average cost of deposits was 0.09% in the third quarter of 2021 as compared to 0.13% during the third quarter of 2020. The redemption of $75.0 million of floating rate junior subordinated debt carrying a floating rate of 3-month LIBOR plus 1.65% in the first quarter of 2021 and $10.4 million of acquired subordinated notes payable with a fixed rate of 6.375% in the fourth quarter of 2020 also contributed to the decline in the overall cost of funds.

During the third quarter of 2021, the Company recorded a net benefit in the provision for credit losses of $0.9 million. This compares to a $1.9 million provision for credit losses recorded in the prior year third quarter. The Company recorded net loan charge-offs of $1.4 million, or an annualized 0.07% of average loans outstanding, during the third quarter of 2021. This compares to net charge-offs of $1.3 million, or 0.07% annualized, recorded during the third quarter of 2020. At the end of the third quarter of 2020, unemployment was high and economic forecasts reflected continued weakness due to the state of the COVID-19 pandemic. Conversely, during the third quarter of 2021 economic forecasts remained comparatively favorable given the state of the post-vaccine economic recovery, which, in combination with elevated real estate and vehicle collateral values, drove down expected life of loan losses. On a September 2021 year-to-date basis, the Company has recorded net charge-offs of $1.1 million, or 0.02% annualized.

Employee benefit services revenues for the third quarter of 2021 were $29.9 million, up $4.8 million, or 18.9%, in comparison to third quarter 2020. The improvement in revenues was driven by increases in employee benefit trust and custodial fees, as well as incremental revenues from the acquisition of Fringe Benefits Design of Minnesota, Inc. (“FBD”) during the quarter. Wealth management revenues for the third quarter of 2021 were $8.3 million, up from $6.9 million in the third quarter of 2020. The $1.4 million, or 20.8%, increase in wealth management revenues was primarily driven by increases in investment management and trust services revenues. The Company recorded insurance services revenues of $9.2 million in the third quarter of 2021, which represents a $0.6 million, or 7.6%, increase over the prior year’s third quarter. This increase was driven by both organic factors, as well as the third quarter acquisition of a Boston-based specialty-lines insurance practice. Banking noninterest revenues decreased $2.2 million, or 11.5%, from $19.1 million in the third quarter of 2020 to $16.9 million in the third quarter of 2021. This was driven by a $3.5 million decrease in mortgage banking income, offset, in part, by a $1.3 million, or 8.3%, increase in deposit service and other banking fees. Comparatively, the Company recorded $27.5 million of employee benefit services revenues, $8.2 million of wealth management revenues and $8.2 million of insurance services revenues during the second quarter of 2021, which combined were $3.5 million below the financial services revenues generated in the third quarter of 2021. Second quarter 2021 banking noninterest revenues were $15.5 million, $1.4 million, or 8.6%, lower than third quarter 2021 banking noninterest revenues.

The Company recorded $100.4 million in total operating expenses in the third quarter of 2021, as compared to $97.0 million of total operating expenses in the third quarter of 2020. The $3.4 million, or 3.6%, increase in operating expenses was attributable to a $5.6 million, or 9.8%, increase in salaries and employee benefits, a $0.9 million, or 7.2%, increase in data processing and communications expenses, a $0.9 million, or 8.7%, increase in other expenses, and a $0.1 million, or 3.4%, increase in the amortization of intangible assets, offset, in part, by a $0.3 million, or 2.6%, decrease in occupancy and equipment expenses, a $0.7 million decrease in acquisition-related expenses and a $3.1 million decrease in litigation expenses. Operating expenses, exclusive of litigation and acquisition-related expenses, increased $7.2 million, or 7.7%, between the comparable quarters. The increase in salaries and benefits expense was driven by increases in merit and incentive-related employee wages, higher payroll taxes, including increases in state-related unemployment taxes, higher employee benefit-related expenses and staffing increases due to recent acquisitions. Other expenses were up due to the general increase in the level of business activities, including increases in professional fees and travel-related expenses. The increase in data processing and communications expenses was due to the Company’s implementation of new customer-facing digital technologies and back office systems between the comparable periods. The decrease in occupancy and equipment expense was largely driven by branch consolidation activities between the periods. In comparison, the Company recorded $93.5 million of total operating expenses in the second quarter of 2021. The $6.9 million, or 7.4%, increase in operating expenses between the linked second and third quarters was largely driven by increases in merit and incentive-related employee wages, higher employee benefit-related expenses, an additional day of payroll in the third quarter as compared to the second quarter and staffing increases due to the recent acquisition of the previously mentioned financial services businesses.

The effective tax rate for the third quarter of 2021 was 21.1%, up from 20.3% in the third quarter of 2020. The increase in the effective tax rate was primarily attributable to an increase in certain state income tax rates that were enacted in the second quarter of 2021.

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-impaired purchased loans, expenses associated with acquisitions, acquisition-related provision for credit losses, litigation accrual expenses, the unrealized gain (loss) on equity securities and gain on debt extinguishment. In addition, the Company provides supplemental reporting for “adjusted pre-tax, pre-provision net revenues,” which subtracts the provision for credit losses, acquisition expenses, litigation accrual expenses, unrealized gain (loss) on equity securities and gain on debt extinguishment from income before income taxes. The amounts for such items are presented in the tables that accompany this release. Although these items are non-GAAP measures, the Company’s management believes this information helps investors understand the effect of acquisition and other non-recurring activity in its reported results. Diluted adjusted net earnings per share were $0.87 in the third quarter of 2021, compared to $0.88 in the third quarter of 2020 and $0.91 in the second quarter of 2021. Adjusted pre-tax, pre-provision net revenue per share was $1.04 in the third quarter of 2021, compared to $1.10 in the third quarter of 2020 and $1.06 in the second quarter of 2021.

Financial Position

The Company’s total assets increased to $15.33 billion at September 30, 2021, representing a $1.49 billion, or 10.7%, increase from one year prior and a $529.8 million, or 3.6%, increase from June 30, 2021. The substantial increase in the Company’s total assets during the prior twelve-month period was primarily due to large inflows of government stimulus-related deposit funding. Similarly, average earning assets increased substantially from $11.96 billion in the third quarter of 2020 to $13.53 billion in the third quarter of 2021, representing a $1.57 billion, or 13.2%, increase. This included a $777.0 million, or 59.7%, increase in average cash equivalent balances, a $1.04 billion, or 32.9%, increase in average book value of investment securities, offset, in part by a $240.2 million, or 3.2%, decrease in average loan balances, primarily attributable to PPP loan forgiveness between the comparable periods. Average deposit balances increased $1.57 billion, or 14.4%, between the third quarter of 2020 and the third quarter of 2021.

On a linked quarter basis, average earning assets increased $158.8 million, or 1.2%, due to continued net inflows of deposits. Average deposit balances increased $202.8 million, or 1.6%, compared to the second quarter of 2021. The average book value of investment securities increased $228.1 million, or 5.8%, due to the Company’s securities purchase activities. Average cash equivalents increased $3.2 million, or 0.2%. Average loan balances decreased $72.6 million, or 1.0%, driven largely by PPP forgiveness as well as a decrease in organic business lending. Average loan balances increased across all four consumer loan categories, including consumer mortgages, consumer indirect, consumer direct and home equity loans.

Ending loans at September 30, 2021 were $7.28 billion, $38.4 million, or 0.5%, higher than the second quarter 2021 ending loans of $7.24 billion and $176.1 million, or 2.4%, lower than one year prior. The decrease in ending loans year-over-year was driven by decreases in business lending, due primarily to decreases in PPP loans, consumer direct loans and home equity loans, offset, in part, by increases in consumer mortgage and consumer indirect loans. The increase in loans outstanding on a linked quarter basis was driven by a $62.5 million, or 2.6%, increase in consumer mortgages, a $58.9 million, or 5.3% increase in consumer indirect loans, a $7.1 million, or 4.8%, increase in consumer direct loans and a $4.3 million, or 1.1%, increase in home equity loans, offset, in part, by a $94.3 million, or 3.0%, decrease in business lending, driven by PPP loan forgiveness.

The Company participated in both rounds of the 2020 Coronavirus Aid, Relief, and Security Act’s (“CARES Act”) PPP, a specialized low-interest loan program funded by the U.S. Treasury Department and administered by the SBA, now known as first draw loans. In addition, the Company participated in the 2021 Consolidated Appropriations Act’s (“CAA”) PPP loan program, now known as second draw loans. As of September 30, 2021, the Company’s business lending portfolio included 45 first draw PPP loans with a total balance of $14.4 million and 1,341 second draw PPP loans with a total balance of $151.0 million. This compares to 317 first draw PPP loans with a total balance of $72.5 million and 2,254 second draw PPP loans with a total balance of $212.3 million at June 30, 2021. Under the PPP, the SBA may forgive all or a portion of the loan amount if the borrower meets certain conditions. The Company expects to recognize the majority of its remaining first draw net deferred PPP fees totaling $0.1 million through interest income during the fourth quarter of 2021 and the majority of its second draw net deferred PPP fees totaling $6.2 million over the next few quarters.

The Company’s liquidity position remains strong. The Company’s banking subsidiary, Community Bank, N.A. (the “Bank”), maintains a funding base largely comprised of core noninterest-bearing demand deposit accounts and low cost interest-bearing checking, savings and money market deposit accounts with customers that operate, reside or work within its branch footprint. At September 30, 2021, the Company’s readily available sources of liquidity totaled $6.18 billion, including cash and cash equivalents balances, net of float, of $2.22 billion. The Company also maintains an available-for-sale investment securities portfolio, comprised primarily of highly-liquid U.S. Treasury securities, highly-rated municipal securities and U.S. agency mortgage-backed securities, which totaled $4.34 billion at September 30, 2021, $2.05 billion of which was unpledged as collateral. The Bank’s unused borrowing capacity at the Federal Home Loan Bank of New York at September 30, 2021 was $1.66 billion and it had access to $248.9 million of funding availability at the Federal Reserve Bank’s discount window.

Although there remains some uncertainty around the duration of the economic impact of the COVID-19 pandemic, the Company’s management believes that its financial position remains strong. The Company’s capital planning and management activities, coupled with its historically strong earnings performance, diversified streams of revenue and prudent dividend practices, have allowed it to build and maintain strong capital reserves. Shareholders’ equity of $2.07 billion at September 30, 2021 was $28.7 million, or 1.4%, lower than one year ago despite strong earnings retention because of a $154.1 million decline in the after-tax market value adjustment on the Company’s available-for-sale investment securities portfolio due to higher market interest rates, but was up $8.8 million, or 0.4%, from the end of the second quarter of 2021. The increase in shareholders’ equity during the third quarter was largely driven by a $22.2 million increase in retained earnings, partially offset by a $16.2 million decrease in the after-tax market value adjustment on the Company’s available-for-sale investment securities.

At September 30, 2021, all of the Company’s regulatory capital ratios significantly exceeded well-capitalized standards. More specifically, the Company’s tier 1 leverage ratio, a common measure used to evaluate a financial institution’s capital strength, was 9.22% at September 30, 2021, which represents almost two times the regulatory well-capitalized standard of 5.0%. The Company’s net tangible equity to net tangible assets ratio (non-GAAP) was 8.59% at September 30, 2021, down from 9.92% a year earlier and 9.02% from the end of the second quarter of 2021. The decrease in the net tangible equity to net tangible assets ratio from one year prior was primarily driven by a $47.6 million, or 3.7%, decrease in tangible equity and a $1.47 billion, or 11.2%, increase in tangible assets due to the aforementioned stimulus-related funding inflows. The decrease in the net tangible equity to net tangible assets ratio from the second quarter of 2021 was driven by a $16.9 million decrease in tangible equity and a $504.1 million increase in tangible assets. The decline in tangible equity over both timeframes was attributable to the aforementioned drop in the after-tax market value adjustments on the Company’s available-for-sale investment securities, due to increases in market interest rates.

As previously announced, the Company’s Board of Directors approved in December 2020 a stock repurchase program authorizing the repurchase of up to 2.68 million shares of the Company’s common stock during a twelve-month period starting January 1, 2021. Such repurchases may be made at the discretion of the Company’s senior management based on market conditions and other relevant factors and will be acquired through open market or privately negotiated transactions as permitted under Rule 10b-18 of the Securities Exchange Act of 1934 and other applicable regulatory and legal requirements. There were no shares repurchased pursuant to the 2021 stock repurchase program in the third quarter of 2021.

Allowance for Credit Losses and Asset Quality

At September 30, 2021, the Company’s Allowance for Credit Losses totaled $49.5 million, or 0.68%, of total loans outstanding. This compares to $51.8 million, or 0.71%, at the end of the second quarter of 2021 and $65.0 million, or 0.87%, at September 30, 2020. Reflective of an improving economic outlook, low levels of net charge-offs and a $1.0 million decrease in specific reserves on impaired loans, the Company recorded a $0.9 million net benefit in the provision for credit losses during the third quarter of 2021.

At September 30, 2021, nonperforming (90 or more days past due and non-accruing) loans were $67.8 million, or 0.93%, of total loans outstanding. This compares to $70.2 million, or 0.97%, of total loans outstanding at the end of the second quarter of 2021 and $32.2 million, or 0.43%, of total loans outstanding one year earlier. The increase in nonperforming loans over the prior year’s third quarter was driven by the Company’s decision to reclassify loans under extended pandemic-related forbearance to nonperforming status. More specifically, during the fourth quarter of 2020, several commercial borrowers, which primarily operate in the hospitality, travel and entertainment industries, requested extended loan repayment forbearance due to the continued pandemic-related financial hardship they were experiencing. Although the Company’s management granted these forbearance requests, it also reclassified the majority of these loan relationships from accruing to nonaccrual status, unless the borrower clearly demonstrated current repayment capacity or sufficient cash reserves to service their pre-forbearance payment obligations. The allowance for credit losses at September 30, 2021 included $1.8 million of specific reserves for nonperforming loans.

Total delinquent loans, which includes nonperforming loans and loans 30 or more days delinquent, to total loans outstanding were 1.28% at the end of the third quarter of 2021. This compares to 0.79% at the end of the third quarter of 2020 and 1.22% at the end of the second quarter of 2021, with the increase driven by the previously mentioned reclassification of certain business loans in pandemic-related forbearance to nonaccrual status. Loans 30 to 89 days delinquent (categorized by the Company as delinquent but performing) were 0.35% of total loans outstanding at September 30, 2021, up from 0.25% at the end of the second quarter, but down from 0.36% one year earlier. The Company recorded net charge-offs of $1.4 million, or 0.07% of average loans (annualized), in the third quarter of 2021. This compares to net charge-offs of $1.3 million, or 0.07% of average loans (annualized), in the third quarter of 2020 and net recoveries of $0.6 million, or 0.03% of average loans (annualized), in the second quarter of 2021. On a year-to-date basis, the Company recorded net charge-offs of $1.1 million, or 0.02% of average loans (annualized). The Company believes its below normal level of credit-related losses has been partially attributable to the extraordinary Federal and State Government financial assistance provided to consumers throughout the pandemic, as well as the funding support of business customers who participated in PPP lending.

Dividend Increase

During the third quarter of 2021, the Company declared a quarterly cash dividend of $0.43 per share on its common stock, up 2.4% from the $0.42 dividend declared in the third quarter of 2020, representing an annualized yield of 2.34% based upon the $73.57 closing price of the Company’s stock on October 22, 2021. The $0.01 increase in the quarterly dividend declared in the third quarter of 2021 marked the Company’s 29^th consecutive year of dividend increases. “We are proud of this achievement and believe the Company’s business model, earnings generation and strong capital resources not only support this increase, but also allow us to maintain significant flexibility to pursue future growth opportunities,” said Mark E. Tryniski, President and Chief Executive Officer.

Elmira Savings Bank

On October 4, 2021, the Company announced that it had entered into an agreement to acquire Elmira Savings Bank, a twelve branch banking franchise headquartered in Elmira, New York, for $82.8 million in cash. The acquisition will enhance the Company’s presence in five counties in New York’s Southern Tier and Finger Lakes regions. Elmira Savings Bank had total assets of $648.7 million, total deposits of $551.2 million and net loans of $465.3 million at June 30, 2021. The Company expects to complete the acquisition in the first quarter of 2022, subject to customary closing conditions, including approval by the shareholders of Elmira Savings Bank and required regulatory approvals.

Conference Call Scheduled

Company management will conduct an investor call at 11:00 a.m. (ET) today, October 25, 2021, to discuss third quarter 2021 results. The conference call can be accessed at 877-317-6789 (1-412-317-6789 if outside United States and Canada). Investors may also listen live via the Internet at: https://www.webcaster4.com/Webcast/Page/995/42987.

This earnings release, including supporting financial tables and presentation slides, is available within the press releases section of the Company's investor relations website at: https://ir.communitybanksystem.com. An archived webcast of the earnings call will be available on this site for one full year.

About Us

Community Bank System, Inc. operates more than 215 customer facilities across Upstate New York, Northeastern Pennsylvania, Vermont, and Western Massachusetts through its banking subsidiary, Community Bank, N.A. With assets of over $15.3 billion, the DeWitt, N.Y. headquartered company is among the country’s 125 largest banking institutions. In addition to a full range of retail, business, and municipal banking services, the Company offers comprehensive financial planning, insurance and wealth management services through its Community Bank Wealth Management Group and OneGroup NY, Inc. operating units. The Company's Benefit Plans Administrative Services, Inc. subsidiary is a leading provider of employee benefits administration, trust services, collective investment fund administration and actuarial consulting services to customers on a national scale. Community Bank System, Inc. is listed on the New York Stock Exchange and the Company's stock trades under the symbol CBU. For more information about Community Bank visit www.cbna.com or https://ir.communitybanksystem.com.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of CBU’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. The following factors, among others, could cause the actual results of CBU’s operations to differ materially from its expectations: the macroeconomic and other challenges and uncertainties related to the COVID-19 pandemic, including the negative impacts and disruptions on public health, corporate and consumer customers, the communities CBU serves, and the domestic and global economy, including various actions taken in response by governments, central banks and others, which may have an adverse effect on CBU’s business; current and future economic and market conditions, including the effects on housing prices, unemployment rates, 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 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.

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