Community Bank System Reports Record First Quarter 2018 Results
Community Bank System, Inc. (NYSE: CBU) reported record first quarter 2018 net income of $40.1 million, or $0.78 per fully
diluted share, compared with $26.3 million, or $0.57 per share reported for the first quarter of 2017. First quarter 2017’s results
included $1.7 million, or $0.03 per share of acquisition expenses. Excluding acquisition expenses and the one-time tax benefit from
the revaluation of net deferred tax liabilities related to the Tax Cuts and Jobs Act enacted in December 2017, the linked fourth
quarter of 2017’s earnings per share were $0.67 per share.
First Quarter 2018 Performance Highlights:
First quarter EPS of $0.78, up 37% over the first quarter of 2017.
Noninterest income was up 30% over the first quarter of 2017, representing 40% of operating revenues.
Deposit funding costs of 0.10%. Beta remains at zero.
Return on assets of 1.52%.
Return on tangible equity of 19%.
“We’re very pleased with this quarter’s results and the continuation of our earnings acceleration, due principally to the
strategic deployment of capital last year with the NRS and Merchants Bancshares transactions,” said President and Chief Executive
Officer Mark E. Tryniski. “In addition, our fee-based businesses continue to grow both revenue and margin, contributing
significantly to earnings and cash flow. EPS growth of 30% over last year, excluding acquisition expenses, was also supported by a
lower effective tax rate that contributed approximately one-fifth of that improvement. We are very well positioned for the
remainder of the year.”
Total revenues for the first quarter of 2018 were $142.1 million, an increase of $30.5 million, or 27.4%, over the
prior year quarter, and included the results from both the Merchants and NRS transactions completed in the first half of last year.
Higher revenues were generated as a result of a 21.5% increase in average earning assets and continued growth in noninterest
income, as well as a six basis-point increase in the net interest margin from the prior year quarter. A combination of acquired and
organic growth resulted in an $8.6 million, or 30.3% increase in wealth management, insurance, and employee benefit services
revenues compared to the prior year quarter. Deposit service fees increased 30.4% year-over-year, primarily the result of the
addition of Merchants, as well as increased debit card-related revenues. Other banking services were up marginally, year-over-year.
The quarterly provision for loan losses of $3.7 million was $1.9 million higher than the first quarter of 2017,
reflective of higher quarterly net charge-off levels, including an incremental $1.1 million partial charge-off related to a single
commercial relationship that incurred a $3.1 million charge in the fourth quarter of 2017. Non-performing asset and delinquent loan
ratios were up slightly in comparison to the end of the first quarter of 2017, and included the impact of the previously mentioned
commercial relationship which also adds over $4.1 million to non-performing assets. Total operating expenses for the first quarter
of 2018 were $86.3 million. This compares to $71.9 million (excluding acquisition expenses) in the first quarter of 2017. Included
in the first quarter 2018 results are the operating expenses from Merchants and NRS, as well as an additional $2.0 million of
intangible amortization, primarily a result of those two transactions.
First quarter 2018 net interest income was $84.6 million, an increase of $17.3 million, or 25.8%, compared to the first quarter
of 2017, and included the impact of the Merchants acquisition. In comparison to first quarter 2017, funding costs increased two
basis points, and earning asset yields increased seven basis points, resulting in a six basis-point improvement in the net interest
margin. The increase in the earning asset yield was driven by an incremental $1.6 million in non-impaired purchased loan accretion,
as well as $0.8 million of accretion on a purchased impaired relationship. On a year-over-year basis, average loan balances grew
$1.3 billion, or 26.3%, principally related to the Merchants transaction, while average loan yields increased 22 basis points,
including the incremental purchased loan accretion. Investment interest income was $1.4 million higher than the first quarter of
2017, as average investment securities balances (including cash equivalents) increased by $358.7 million, due to the portfolio
acquired from Merchants, while the yield on investments declined 30 basis points. Interest expense was $1.1 million higher than the
previous year’s first quarter, driven by a $275.5 million increase in average borrowings (primarily customer repurchase agreements)
and a $1.32 billion increase in average deposit balances, principally related to the Merchants transaction, and a net two basis
point increase in the overall cost of funds.
Wealth management and insurance services revenues increased to $14.1 million, an increase of $2.8 million, or 24.9%, compared to
the first quarter of 2017, driven by both acquired and organic growth. Employee benefit services revenues of $23.0 million,
increased $5.8 million from the first quarter of 2017 and were primarily attributable to the NRS acquisition.
Excluding acquisition expenses, first quarter 2018 operating expenses of $86.3 million, which included a full quarter of
operating activities from both Merchants and NRS, increased $14.5 million over the first quarter of 2017. Salaries and employee
benefits increased $9.0 million, or 20.9%, and included the personnel added from the two transactions, as well as annual merit and
performance-based increases. All other operating expenses increased 19.1% year-over-year, and reflected the occupancy, equipment
and other operating costs of both Merchants and NRS, including significantly higher intangible asset amortization, compared to the
first quarter of 2017.
The effective tax rate for the first quarter of 2018 was 23.0%, down from 27.4% in the first quarter of last year benefitting
earnings by $0.04 per share, and reflected the lower federal tax rate that resulted from the Tax Cut and Jobs Act passed in the
fourth quarter of 2017. During the first quarter of 2017, the Company adopted new accounting guidance for share-based transactions.
That guidance requires that all excess tax benefits and tax deficiencies associated with share-based compensation be recognized as
income tax expense or benefit in the income statement. Previously, tax effects resulting from changes in the Company’s share price
subsequent to the grant date of equity instruments were recorded through shareholders’ equity at the time of vesting or exercise.
The adoption of the amended accounting guidance resulted in a $2.2 million reduction of income tax expense in the first quarter of
2017, or $0.04 of diluted earnings per common share, and a $0.3 million reduction of income tax expense in the second, third and
fourth quarters of 2017, or less than $0.01 per share each quarter. In the first quarter of 2018, the new guidance resulted in a
$0.7 million reduction of income tax expense, or $0.01 per share.
The Company also provides supplemental reporting of its results on a “net adjusted” or “tangible” basis, from which it excludes
the after-tax effect of amortization of core deposit and other intangible assets (and the related goodwill, core deposit intangible
and other intangible asset balances, net of applicable deferred tax amounts), accretion on non-impaired purchased loans, expenses
associated with acquisitions, and the one-time benefit from the revaluation of net deferred tax liabilities. The amounts for such
items are presented in the tables that accompany this release. Although “adjusted net income” as defined by the Company is a
non-GAAP measure, the Company’s management believes this information helps investors understand the effect of acquisition activity
in its reported results. Adjusted net earnings per share were $0.82 in the first quarter of 2018, compared to $0.63 in the first
quarter of 2017, or a 30.2% increase.
Financial Position
Average earning assets of $9.38 billion for the first quarter of 2018 were up modestly from the fourth quarter of 2017. Average
deposit balances were down slightly from fourth quarter levels, but ending deposits were seasonally up $326.7 million, or 3.9%.
Average borrowings (including customer repurchase agreements) in the first quarter of 2018 of $453.1 million, were also consistent
with fourth quarter 2017 levels.
Ending loans at March 31, 2018 declined $29.7 million from year-end 2017, principally attributable to lower residential real
estate balances, consistent with expectations. Investment securities totaled $3.03 billion at March 31, 2018, down slightly from
the end of the fourth quarter, and up from the end of the first quarter of 2017 due to investments added from Merchants, and
partially offset by limited reinvestment of securities cash flows over the last several quarters.
Shareholders’ equity of $1.63 billion at first quarter-end was $335.4 million, or 25.9%, higher than the prior year period, a
result of strong earnings generation and capital retention over the last four quarters, as well as incremental shares issued in
conjunction with the Merchants acquisition. The Company’s net tangible equity to net tangible assets ratio was 8.42% at March 31,
2018, down from 8.91% a year earlier, primarily a result of the Merchants acquisitions completed in the second quarter of 2017. The
Company’s Tier 1 leverage ratio was 10.19% at the end of the first quarter, down marginally from 10.35% a year earlier due mostly
to the impact of the Merchants transaction.
As previously announced in December 2017, the Company’s Board of Directors approved a stock repurchase program authorizing the
repurchase of up to 2.5 million shares of the Company’s common stock during a twelve-month period starting January 1, 2018. Such
repurchases may be made at the discretion of the Company’s senior management based on market conditions and other relevant factors
and will be acquired through open market or privately negotiated transactions as permitted under Rule 10b-18 of the Securities
Exchange Act of 1934 and other applicable legal requirements. There were no shares repurchased in the first quarter of 2018.
Asset Quality
Despite the previously mentioned partial charge-off of $4.2 million on a specific acquired commercial relationship in the fourth
quarter of 2017 and the first quarter of 2018, the Company’s asset quality metrics continue to illustrate the long-term
effectiveness of the Company’s disciplined risk management and underwriting standards. Total net charge-offs were $3.2 million for
the first quarter, compared to $2.0 million for the first quarter of 2017 and $5.8 million for the fourth quarter of 2017. Net
charge-offs as an annualized percentage of average loans measured 0.21% in the first quarter of 2018, compared to 0.16% in the
prior year’s first quarter and 0.37% in the fourth quarter of 2017. Nonperforming loans as a percentage of total loans at March 31,
2018 were 0.48%, compared to 0.44% at December 31, 2017 and 0.46% at March 31, 2017. The total loan delinquency ratio of 1.01% at
the end of the first quarter was nine basis points lower than the level at December 31, 2017, and seven basis points higher than
last year’s first quarter-end. The first quarter provision for loan losses of $3.7 million was $1.9 million higher than the first
quarter of 2017, and $1.7 million lower than the fourth quarter of 2017. The allowance for loan losses to nonperforming loans was
162% at March 31, 2018, compared with 173% and 206% at the end of the fourth quarter of 2017 and first quarter of 2017,
respectively.
Dividend Increase
During the first quarter of 2018 the Company declared a quarterly cash dividend of $0.34 per share on its common stock, compared
to a $0.32 dividend declared in the first quarter of 2017, or 6.3% higher, which represents an annualized yield of 2.5% based upon
the $54.61 closing price of the Company’s stock on April 23, 2018. The two cent increase declared in the third quarter of 2017
marked the 25th consecutive year of dividend increases for the Company. “The acceleration of our earnings and cash flow
results will provide further strength to capital accumulation and dividend capacity into the future,” said Mark E. Tryniski,
President and Chief Executive Officer.
Merchants Bancshares, Inc.
The Company completed the acquisition of Merchants Bancshares, Inc. ("Merchants"), parent company of Merchants Bank
headquartered in South Burlington, Vermont, on May 12, 2017, for $345.2 million in Company stock and cash. The transaction extended
the Company's footprint into the Vermont and Western Massachusetts markets. The transaction added 31 branch locations in Vermont
and one office in Western Massachusetts in addition to approximately $2.0 billion of assets and $1.5 billion in deposits.
Northeast Retirement Services, Inc.
The Company acquired Northeast Retirement Services, Inc. (“NRS”), a leading provider of plan accounting, transfer agency, fund
administration, trust and retirement plan services for $148.6 million in Company stock and cash on February 3, 2017.
Conference Call Scheduled
Company management will conduct an investor call at 11:00 a.m. (ET) tomorrow, April 25, 2018, to discuss first quarter 2018
results. The conference call can be accessed at 866-548-2692 (719-325-2430 if outside United States and Canada) using the
conference ID code 7507810. Investors may also listen live via the Internet at: http://www.webcaster4.com/Webcast/Page/995/25249.
This earnings release, including supporting financial tables, is available within the press releases section of the Company's
investor relations website at: http://ir.communitybanksystem.com. An archived webcast of the earnings call will be available on this site for
one full year.
Community Bank System, Inc. operates more than 230 customer facilities across Upstate New York, Northeastern Pennsylvania,
Vermont, and Western Massachusetts through its banking subsidiary, Community Bank, N.A. With assets of over $10.7 billion, the
DeWitt, N.Y. headquartered company is among the country's 150 largest financial 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 subsidiaries. The Company's
Benefit Plans Administrative Services, Inc. subsidiary (which includes the recently acquired NRS) is a leading provider of employee
benefits administration, trust services, 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.communitybankna.com or http://ir.communitybanksystem.com .
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of
1995. The following factors, among others, could cause the actual results of CBU’s operations to differ materially from
CBU’s expectations: the successful integration of operations of its acquisitions; competition; changes in economic conditions,
interest rates and financial markets; changes in legislation or regulatory requirements; and the timing for receiving regulatory
approvals and completing pending transactions. These statements are based on the current beliefs and expectations of CBU’s
management and CBU does not assume any duty to update forward-looking statements.
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Summary of Financial Data
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(Dollars in thousands, except per share data)
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2018 |
|
2017 |
| |
|
|
|
1st Qtr |
|
4th Qtr |
|
3rd Qtr |
|
2nd Qtr |
|
1st Qtr |
| Earnings |
|
|
|
|
|
|
|
|
|
|
|
|
| Loan income |
|
|
|
$69,441 |
|
$69,716 |
|
$69,498 |
|
$62,351 |
|
$52,384 |
| Investment income |
|
|
|
18,963 |
|
19,872 |
|
18,989 |
|
19,071 |
|
17,574 |
| Total interest income |
|
|
|
88,404 |
|
89,588 |
|
88,487 |
|
81,422 |
|
69,958 |
| Interest expense |
|
|
|
3,780 |
|
3,611 |
|
4,092 |
|
3,393 |
|
2,684 |
| Net interest income |
|
|
|
84,624 |
|
85,977 |
|
84,395 |
|
78,029 |
|
67,274 |
| Provision for loan losses |
|
|
|
3,679 |
|
5,381 |
|
2,314 |
|
1,461 |
|
1,828 |
| Net interest income after provision for loan losses |
|
|
|
80,945 |
|
80,596 |
|
82,081 |
|
76,568 |
|
65,446 |
| Deposit service fees |
|
|
|
19,177 |
|
18,115 |
|
18,419 |
|
16,655 |
|
14,707 |
| Revenues from mortgage banking and other banking services |
|
|
|
1,243 |
|
1,196 |
|
1,704 |
|
1,407 |
|
1,159 |
| Wealth management and insurance services |
|
|
|
14,065 |
|
12,415 |
|
12,051 |
|
12,502 |
|
11,261 |
| Employee benefit services |
|
|
|
23,006 |
|
22,212 |
|
20,767 |
|
20,662 |
|
17,189 |
| Gain on sale of investments |
|
|
|
0 |
|
0 |
|
0 |
|
0 |
|
2 |
| Total noninterest revenues |
|
|
|
57,491 |
|
53,938 |
|
52,941 |
|
51,226 |
|
44,318 |
| Salaries and employee benefits |
|
|
|
51,859 |
|
49,006 |
|
48,426 |
|
46,564 |
|
42,907 |
| Occupancy and equipment |
|
|
|
10,531 |
|
9,622 |
|
9,106 |
|
8,637 |
|
8,196 |
| Amortization of intangible assets |
|
|
|
4,798 |
|
4,961 |
|
4,949 |
|
4,263 |
|
2,768 |
| Acquisition expenses |
|
|
|
(8) |
|
794 |
|
580 |
|
22,896 |
|
1,716 |
| Other |
|
|
|
19,151 |
|
22,536 |
|
20,715 |
|
20,519 |
|
17,988 |
| Total operating expenses |
|
|
|
86,331 |
|
86,919 |
|
83,776 |
|
102,879 |
|
73,575 |
| Income before income taxes |
|
|
|
52,105 |
|
47,615 |
|
51,246 |
|
24,915 |
|
36,189 |
| Income taxes |
|
|
|
11,999 |
|
(24,411) |
|
16,003 |
|
7,724 |
|
9,932 |
| Net income |
|
|
|
$40,106 |
|
$72,026 |
|
$35,243 |
|
$17,191 |
|
$26,257 |
| Basic earnings per share |
|
|
|
$0.78 |
|
$1.41 |
|
$0.69 |
|
$0.35 |
|
$0.58 |
| Diluted earnings per share |
|
|
|
$0.78 |
|
$1.40 |
|
$0.68 |
|
$0.35 |
|
$0.57 |
| Profitability |
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|
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| Return on assets |
|
|
|
1.52% |
|
2.66% |
|
1.29% |
|
0.69% |
|
1.22% |
| Return on equity |
|
|
|
10.00% |
|
17.88% |
|
8.81% |
|
4.74% |
|
8.47% |
| Return on tangible equity(2) |
|
|
|
19.11% |
|
34.11% |
|
16.74% |
|
7.72% |
|
13.57% |
| Noninterest income/operating income (FTE) (1) |
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|
|
40.1% |
|
37.9% |
|
38.4% |
|
39.4% |
|
39.1% |
| Efficiency ratio |
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|
|
57.8% |
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57.8% |
|
56.8% |
|
58.3% |
|
60.9% |
| Components of Net Interest Margin (FTE) |
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| Loan yield |
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|
4.53% |
|
4.43% |
|
4.37% |
|
4.41% |
|
4.31% |
| Cash equivalents yield |
|
|
|
1.54% |
|
1.19% |
|
1.09% |
|
0.99% |
|
0.79% |
| Investment yield |
|
|
|
2.60% |
|
2.81% |
|
2.69% |
|
2.87% |
|
2.90% |
| Earning asset yield |
|
|
|
3.87% |
|
3.89% |
|
3.81% |
|
3.87% |
|
3.80% |
| Interest-bearing deposit rate |
|
|
|
0.14% |
|
0.14% |
|
0.14% |
|
0.14% |
|
0.13% |
| Borrowing rate |
|
|
|
1.48% |
|
1.32% |
|
1.44% |
|
1.54% |
|
2.18% |
| Cost of all interest-bearing funds |
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|
|
0.23% |
|
0.22% |
|
0.24% |
|
0.21% |
|
0.19% |
| Cost of funds (includes DDA) |
|
|
|
0.17% |
|
0.16% |
|
0.18% |
|
0.16% |
|
0.15% |
| Net interest margin (FTE) |
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|
|
3.71% |
|
3.74% |
|
3.64% |
|
3.72% |
|
3.65% |
| Fully tax-equivalent adjustment |
|
|
|
$1,118 |
|
$2,375 |
|
$2,381 |
|
$2,374 |
|
$2,285 |
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| Summary of Financial Data |
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| (Dollars in thousands, except per share data) |
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|
2018 |
|
2017 |
| |
|
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|
1st Qtr |
|
4th Qtr |
|
3rd Qtr |
|
2nd Qtr |
|
1st Qtr |
| Average Balances |
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|
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| Loans |
|
|
|
$6,237,824 |
|
$6,274,679 |
|
$6,343,468 |
|
$5,695,781 |
|
$4,939,092 |
| Cash equivalents |
|
|
|
90,406 |
|
34,223 |
|
26,986 |
|
52,956 |
|
40,209 |
| Taxable investment securities |
|
|
|
2,583,446 |
|
2,572,703 |
|
2,571,459 |
|
2,408,020 |
|
2,203,175 |
| Nontaxable investment securities |
|
|
|
468,772 |
|
491,578 |
|
511,182 |
|
526,962 |
|
540,518 |
| Total interest-earning assets |
|
|
|
9,380,448 |
|
9,373,183 |
|
9,453,095 |
|
8,683,719 |
|
7,722,994 |
| Total assets |
|
|
|
10,715,529 |
|
10,757,836 |
|
10,862,613 |
|
9,958,553 |
|
8,747,266 |
| Interest-bearing deposits |
|
|
|
6,219,052 |
|
6,206,663 |
|
6,230,591 |
|
6,021,696 |
|
5,543,046 |
| Borrowings |
|
|
|
453,114 |
|
449,377 |
|
541,036 |
|
346,975 |
|
177,587 |
| Total interest-bearing liabilities |
|
|
|
6,672,166 |
|
6,656,040 |
|
6,771,627 |
|
6,368,671 |
|
5,720,633 |
| Noninterest-bearing deposits |
|
|
|
2,268,778 |
|
2,307,155 |
|
2,307,205 |
|
1,948,434 |
|
1,620,473 |
| Shareholders' equity |
|
|
|
1,625,951 |
|
1,598,056 |
|
1,587,279 |
|
1,455,847 |
|
1,256,888 |
| Balance Sheet Data |
|
|
|
|
|
|
|
|
|
|
|
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| Cash and cash equivalents |
|
|
|
$543,899 |
|
$221,038 |
|
$241,480 |
|
$219,695 |
|
$291,186 |
| Investment securities |
|
|
|
3,032,642 |
|
3,081,379 |
|
3,125,218 |
|
3,145,013 |
|
2,788,718 |
| Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
| Business lending |
|
|
|
2,426,086 |
|
2,424,223 |
|
2,458,981 |
|
2,479,152 |
|
1,468,465 |
| Consumer mortgage |
|
|
|
2,211,882 |
|
2,220,298 |
|
2,206,527 |
|
2,211,412 |
|
1,830,800 |
| Consumer indirect |
|
|
|
1,008,198 |
|
1,011,978 |
|
1,034,716 |
|
1,057,664 |
|
1,055,112 |
| Home equity |
|
|
|
407,832 |
|
420,329 |
|
424,598 |
|
427,483 |
|
393,769 |
| Consumer direct |
|
|
|
173,032 |
|
179,929 |
|
183,898 |
|
185,589 |
|
184,067 |
| Total loans |
|
|
|
6,227,030 |
|
6,256,757 |
|
6,308,720 |
|
6,361,300 |
|
4,932,213 |
| Allowance for loan losses |
|
|
|
48,103 |
|
47,583 |
|
47,983 |
|
47,451 |
|
47,096 |
| Intangible assets, net |
|
|
|
820,584 |
|
825,088 |
|
824,355 |
|
831,403 |
|
618,977 |
| Other assets |
|
|
|
390,503 |
|
409,519 |
|
398,428 |
|
374,086 |
|
329,862 |
| Total assets |
|
|
|
10,966,555 |
|
10,746,198 |
|
10,850,218 |
|
10,884,046 |
|
8,913,860 |
| Deposits: |
|
|
|
|
|
|
|
|
|
|
|
|
| Noninterest-bearing |
|
|
|
2,372,824 |
|
2,293,057 |
|
2,310,954 |
|
2,283,138 |
|
1,642,158 |
| Non-maturity interest-bearing |
|
|
|
5,642,109 |
|
5,377,059 |
|
5,495,377 |
|
5,508,504 |
|
5,010,516 |
| Time |
|
|
|
756,159 |
|
774,304 |
|
799,659 |
|
833,963 |
|
684,203 |
| Total deposits |
|
|
|
8,771,092 |
|
8,444,420 |
|
8,605,990 |
|
8,625,605 |
|
7,336,877 |
| Borrowings |
|
|
|
281,744 |
|
363,082 |
|
314,289 |
|
373,053 |
|
0 |
| Subordinated debt held by unconsolidated subsidiary trusts |
|
|
|
122,820 |
|
122,814 |
|
122,808 |
|
122,802 |
|
102,177 |
| Accrued interest and other liabilities |
|
|
|
159,433 |
|
180,567 |
|
213,886 |
|
189,686 |
|
178,776 |
| Total liabilities |
|
|
|
9,335,089 |
|
9,110,883 |
|
9,256,973 |
|
9,311,146 |
|
7,617,830 |
| Shareholders' equity |
|
|
|
1,631,466 |
|
1,635,315 |
|
1,593,245 |
|
1,572,900 |
|
1,296,030 |
| Total liabilities and shareholders' equity |
|
|
|
10,966,555 |
|
10,746,198 |
|
10,850,218 |
|
10,884,046 |
|
8,913,860 |
| Capital |
|
|
|
|
|
|
|
|
|
|
|
|
| Tier 1 leverage ratio |
|
|
|
10.19% |
|
10.00% |
|
9.54% |
|
10.19% |
|
10.35% |
| Tangible equity/net tangible assets (2) |
|
|
|
8.42% |
|
8.61% |
|
8.36% |
|
8.08% |
|
8.91% |
| Diluted weighted average common shares O/S |
|
|
|
51,677 |
|
51,569 |
|
51,526 |
|
49,386 |
|
46,227 |
| Period end common shares outstanding |
|
|
|
50,884 |
|
50,696 |
|
50,587 |
|
50,512 |
|
45,956 |
| Cash dividends declared per common share |
|
|
|
$0.34 |
|
$0.34 |
|
$0.34 |
|
$0.32 |
|
$0.32 |
| Book value |
|
|
|
$32.06 |
|
$32.26 |
|
$31.50 |
|
$31.14 |
|
$28.20 |
| Tangible book value(2) |
|
|
|
$16.88 |
|
$16.94 |
|
$16.70 |
|
$16.21 |
|
$16.22 |
| Common stock price (end of period) |
|
|
|
$53.56 |
|
$53.75 |
|
$55.25 |
|
$55.77 |
|
$54.98 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Summary of Financial Data |
|
|
|
|
|
|
|
|
|
|
|
|
| (Dollars in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 |
|
2017 |
| |
|
|
|
1st Qtr |
|
4th Qtr |
|
3rd Qtr |
|
2nd Qtr |
|
1st Qtr |
| Asset Quality |
|
|
|
|
|
|
|
|
|
|
|
|
| Nonaccrual loans |
|
|
|
$23,239 |
|
$24,740 |
|
$21,510 |
|
$21,033 |
|
$20,066 |
| Accruing loans 90+ days delinquent |
|
|
|
6,425 |
|
2,706 |
|
1,861 |
|
1,882 |
|
2,809 |
| Total nonperforming loans |
|
|
|
29,664 |
|
27,446 |
|
23,371 |
|
22,915 |
|
22,875 |
| Other real estate owned (OREO) |
|
|
|
1,865 |
|
1,915 |
|
1,873 |
|
2,491 |
|
2,486 |
| Total nonperforming assets |
|
|
|
31,529 |
|
29,361 |
|
25,244 |
|
25,406 |
|
25,361 |
| Net charge-offs |
|
|
|
3,159 |
|
5,781 |
|
1,782 |
|
1,106 |
|
1,965 |
| Allowance for loan losses/loans outstanding |
|
|
|
0.77% |
|
0.76% |
|
0.76% |
|
0.75% |
|
0.95% |
| Nonperforming loans/loans outstanding |
|
|
|
0.48% |
|
0.44% |
|
0.37% |
|
0.36% |
|
0.46% |
| Allowance for loan losses/nonperforming loans |
|
|
|
162% |
|
173% |
|
205% |
|
207% |
|
206% |
| Net charge-offs/average loans |
|
|
|
0.21% |
|
0.37% |
|
0.11% |
|
0.08% |
|
0.16% |
| Delinquent loans/ending loans |
|
|
|
1.01% |
|
1.10% |
|
1.05% |
|
0.99% |
|
0.94% |
| Loan loss provision/net charge-offs |
|
|
|
116% |
|
93% |
|
130% |
|
132% |
|
93% |
| Nonperforming assets/total assets |
|
|
|
0.29% |
|
0.27% |
|
0.23% |
|
0.23% |
|
0.28% |
| Asset Quality (excluding loans acquired since 1/1/09) |
|
|
|
|
|
|
|
|
|
|
|
|
| Nonaccrual loans |
|
|
|
$15,161 |
|
$16,020 |
|
$15,069 |
|
$14,359 |
|
$15,268 |
| Accruing loans 90+ days delinquent |
|
|
|
5,894 |
|
2,502 |
|
1,589 |
|
1,640 |
|
1,707 |
| Total nonperforming loans |
|
|
|
21,055 |
|
18,522 |
|
16,658 |
|
15,999 |
|
16,975 |
| Other real estate owned (OREO) |
|
|
|
1,336 |
|
1,221 |
|
1,257 |
|
1,681 |
|
2,225 |
| Total nonperforming assets |
|
|
|
22,391 |
|
19,743 |
|
17,915 |
|
17,680 |
|
19,200 |
| Net charge-offs |
|
|
|
1,800 |
|
2,279 |
|
1,624 |
|
692 |
|
1,866 |
| Allowance for loan losses/loans outstanding |
|
|
|
0.97% |
|
0.98% |
|
1.00% |
|
1.01% |
|
1.01% |
| Nonperforming loans/loans outstanding |
|
|
|
0.45% |
|
0.40% |
|
0.36% |
|
0.35% |
|
0.38% |
| Allowance for loan losses/nonperforming loans |
|
|
|
216% |
|
244% |
|
276% |
|
284% |
|
266 % |
| Net charge-offs/average loans |
|
|
|
0.16% |
|
0.20% |
|
0.14% |
|
0.06% |
|
0.17% |
| Delinquent loans/ending loans |
|
|
|
1.01% |
|
1.12% |
|
1.16% |
|
1.06% |
|
0.86% |
| Loan loss provision/net charge-offs |
|
|
|
122% |
|
67% |
|
125% |
|
153% |
|
85% |
| Nonperforming assets/total assets |
|
|
|
0.24% |
|
0.22% |
|
0.20% |
|
0.20% |
|
0.23% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Summary of Financial Data |
|
|
|
|
|
|
|
|
|
|
|
|
| (Dollars in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 |
|
2017 |
| |
|
|
|
1st Qtr |
|
4th Qtr |
|
3rd Qtr |
|
2nd Qtr |
|
1st Qtr |
| Quarterly GAAP to Non-GAAP Reconciliations |
|
|
|
|
|
|
|
|
|
|
|
|
| Income statement data |
|
|
|
|
|
|
|
|
|
|
|
|
| Net income |
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (GAAP) |
|
|
|
$40,106 |
|
$72,026 |
|
$35,243 |
|
$17,191 |
|
$26,257 |
| Acquisition expenses |
|
|
|
(8) |
|
794 |
|
580 |
|
22,896 |
|
1,716 |
| Tax effect of acquisition expenses |
|
|
|
2 |
|
(227) |
|
(181) |
|
(7,098) |
|
(471) |
| Tax Cuts and Jobs Act deferred tax impact |
|
|
|
0 |
|
(38,010) |
|
0 |
|
0 |
|
0 |
| Subtotal (non-GAAP) |
|
|
|
40,100 |
|
34,583 |
|
35,642 |
|
32,989 |
|
27,502 |
| Amortization of intangibles |
|
|
|
4,798 |
|
4,961 |
|
4,949 |
|
4,263 |
|
2,768 |
| Tax effect of amortization of intangibles |
|
|
|
(1,105) |
|
(1,417) |
|
(1,545) |
|
(1,322) |
|
(760) |
| Subtotal (non-GAAP) |
|
|
|
43,793 |
|
38,127 |
|
39,046 |
|
35,930 |
|
29,510 |
| Acquired non-impaired loan accretion |
|
|
|
(2,063) |
|
(1,930) |
|
(1,879) |
|
(1,642) |
|
(437) |
| Tax effect of acquired non-impaired loan accretion |
|
|
|
475 |
|
551 |
|
587 |
|
509 |
|
120 |
| Adjusted net income (non-GAAP) |
|
|
|
$42,205 |
|
$36,748 |
|
$37,754 |
|
$34,797 |
|
$29,193 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Return on average assets |
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted net income (non-GAAP) |
|
|
|
$42,205 |
|
$36,748 |
|
$37,754 |
|
$34,797 |
|
$29,193 |
| Average total assets |
|
|
|
10,715,529 |
|
10,757,836 |
|
10,862,613 |
|
9,958,553 |
|
8,747,266 |
| Adjusted return on average assets |
|
|
|
1.60% |
|
1.36% |
|
1.38% |
|
1.40% |
|
1.35% |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Return on average equity |
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted net income (non-GAAP) |
|
|
|
$42,205 |
|
$36,748 |
|
$37,754 |
|
$34,797 |
|
$29,193 |
| Average total equity |
|
|
|
1,625,951 |
|
1,598,056 |
|
1,587,279 |
|
1,455,847 |
|
1,256,888 |
| Adjusted return on average equity |
|
|
|
10.53% |
|
9.12% |
|
9.44% |
|
9.59% |
|
9.42% |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Earnings per common share |
|
|
|
|
|
|
|
|
|
|
|
|
| Diluted earnings per share (GAAP) |
|
|
|
$0.78 |
|
$1.40 |
|
$0.68 |
|
$0.35 |
|
$0.57 |
| Acquisition expenses |
|
|
|
0.00 |
|
0.02 |
|
0.01 |
|
0.46 |
|
0.04 |
| Tax effect of acquisition expenses |
|
|
|
0.00 |
|
(0.01) |
|
0.00 |
|
( 0.14) |
|
(0.01) |
| Tax Cuts and Jobs Act deferred tax impact |
|
|
|
0.00 |
|
(0.74) |
|
0.00 |
|
0.00 |
|
0.00 |
| Subtotal (non-GAAP) |
|
|
|
0.78 |
|
0.67 |
|
0.69 |
|
0.67 |
|
0.60 |
| Amortization of intangibles |
|
|
|
0.09 |
|
0.10 |
|
0.09 |
|
0.09 |
|
0.06 |
| Tax effect of amortization of intangibles |
|
|
|
(0.02) |
|
(0.03) |
|
(0.03) |
|
(0.03) |
|
(0.02) |
| Subtotal (non-GAAP) |
|
|
|
0.85 |
|
0.74 |
|
0.75 |
|
0.73 |
|
0.64 |
| Acquired non-impaired loan accretion |
|
|
|
(0.04) |
|
(0.04) |
|
(0.04) |
|
(0.03) |
|
(0.01) |
| Tax effect of acquired non-impaired loan accretion |
|
|
|
0.01 |
|
0.01 |
|
0.01 |
|
0.01 |
|
0.00 |
| Diluted adjusted net earnings per share (non-GAAP) |
|
|
|
0.82 |
|
0.71 |
|
0.72 |
|
0.71 |
|
0.63 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Noninterest operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
| Noninterest expenses (GAAP) |
|
|
|
$86,331 |
|
$86,919 |
|
$83,776 |
|
$102,879 |
|
$73,575 |
| Amortization of intangibles |
|
|
|
(4,798) |
|
(4,961) |
|
(4,949) |
|
(4,263) |
|
(2,768) |
| Acquisition expenses |
|
|
|
8 |
|
(794) |
|
(580) |
|
(22,896) |
|
(1,716) |
| Total adjusted noninterest expenses (non-GAAP) |
|
|
|
81,541 |
|
81,164 |
|
78,247 |
|
75,720 |
|
69,091 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Efficiency ratio |
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted noninterest expenses (non-GAAP) - numerator |
|
|
|
$81,541 |
|
$81,164 |
|
$78,247 |
|
$75,720 |
|
$69,091 |
| Tax-equivalent net interest income |
|
|
|
85,742 |
|
88,352 |
|
86,776 |
|
80,403 |
|
69,559 |
| Noninterest revenues |
|
|
|
57,491 |
|
53,938 |
|
52,941 |
|
51,226 |
|
44,318 |
| Acquired non-impaired loan accretion |
|
|
|
(2,063) |
|
(1,930) |
|
(1,879) |
|
(1,642) |
|
(437) |
| Gain on sales of investments |
|
|
|
0 |
|
0 |
|
0 |
|
0 |
|
(2) |
| Operating revenues (non-GAAP) - denominator |
|
|
|
141,170 |
|
140,360 |
|
137,838 |
|
129,987 |
|
113,438 |
| Efficiency ratio (non-GAAP) |
|
|
|
57.8% |
|
57.8% |
|
56.8% |
|
58.3% |
|
60.9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Summary of Financial Data |
|
|
|
|
|
|
|
|
|
|
|
| (Dollars in thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 |
|
2017 |
| |
|
|
|
1st Qtr |
|
4th Qtr |
|
3rd Qtr |
|
2nd Qtr |
|
1st Qtr |
| Quarterly GAAP to Non-GAAP Reconciliations |
|
|
|
|
|
|
|
|
|
|
|
|
| Balance sheet data |
|
|
|
|
|
|
|
|
|
|
|
|
| Total assets |
|
|
|
|
|
|
|
|
|
|
|
|
| Total assets (GAAP) |
|
|
|
$10,966,555 |
|
$10,746,198 |
|
$10,850,218 |
|
$10,884,046 |
|
$8,913,860 |
| Intangible assets |
|
|
|
(820,584) |
|
(825,088) |
|
(824,355) |
|
(831,403) |
|
(618,977) |
| Deferred taxes on intangible assets |
|
|
|
47,904 |
|
48,419 |
|
75,820 |
|
77,097 |
|
68,236 |
| Total tangible assets (non-GAAP) |
|
|
|
10,193,875 |
|
9,969,529 |
|
10,101,683 |
|
10,129,740 |
|
8,363,119 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total common equity |
|
|
|
|
|
|
|
|
|
|
|
|
| Shareholders' Equity (GAAP) |
|
|
|
1,631,466 |
|
1,635,315 |
|
1,593,245 |
|
1,572,900 |
|
1,296,030 |
| Intangible assets |
|
|
|
(820,584) |
|
(825,088) |
|
(824,355) |
|
(831,403) |
|
(618,977) |
| Deferred taxes on intangible assets |
|
|
|
47,904 |
|
48,419 |
|
75,820 |
|
77,097 |
|
68,236 |
| Total tangible common equity (non-GAAP) |
|
|
|
858,786 |
|
858,646 |
|
844,710 |
|
818,594 |
|
745,289 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net tangible equity-to-assets ratio at quarter end |
|
|
|
|
|
|
|
|
|
|
|
|
| Total tangible common equity (non-GAAP) - numerator |
|
|
|
$858,786 |
|
$858,646 |
|
$844,710 |
|
$818,594 |
|
$745,289 |
| Total tangible assets (non-GAAP) - denominator |
|
|
|
10,193,875 |
|
9,969,529 |
|
10,101,683 |
|
10,129,740 |
|
8,363,119 |
| Net tangible equity-to-assets ratio at quarter end (non-GAAP) |
|
|
|
8.42% |
|
8.61% |
|
8.36% |
|
8.08% |
|
8.91% |
| |
|
|
|
|
|
|
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|
|
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| (1) Excludes gains and losses on sales of
investment securities. |
| (2) Includes deferred tax liabilities related
to certain intangible assets. |
Community Bank System, Inc.
Scott A. Kingsley, 315-445-3121 (Office)
EVP & Chief Financial Officer
View source version on businesswire.com: https://www.businesswire.com/news/home/20180424006462/en/