- Reported full year GAAP EPS of $3.03 per share and record Operating
EPS of $2.64 per share, a 13.3% year-over-year improvement
- Realized a one-time tax benefit of $38.0 million related to the
revaluation of deferred tax assets and liabilities
- Increased dividends to shareholders for the 25th consecutive year
SYRACUSE, N.Y.--(BUSINESS WIRE)--
Community Bank System, Inc. (NYSE:CBU) reported fourth quarter 2017 net
income of $72.0 million, or $1.40 per fully diluted share, compared with
$26.4 million, or $0.59 per share reported for the fourth quarter of
2016. Fourth quarter 2017’s results included $0.8 million, or $0.01 per
share of acquisition expenses as well as an estimated $38.0 million, or
$0.74 per share, one-time gain from the revaluation of net deferred tax
liabilities related to the recently enacted Tax Cuts and Jobs Act.
Excluding acquisition expenses and the one-time tax benefit, quarterly
earnings per share were $0.67 per share, a 9.8% improvement over the
fourth quarter of 2016. Full year diluted earnings per share totaled
$3.03 in 2017, compared to $2.32 per share in 2016. Excluding
acquisition expenses and the one-time tax benefit, full year earnings
per share were a record $2.64, or 13.3% above the $2.33 per share of
operating earnings generated in 2016.
“We realized another strong quarterly performance which was positively
impacted by our Northeast Retirement Services, Inc. (“NRS”) acquisition
completed in February, and from our Merchants Bancshares (“Merchants”)
merger which closed in May,” said President and Chief Executive Officer
Mark E. Tryniski. “Both of these high-value transactions have performed
above our initial expectations. NRS continued to grow both its top and
bottom line performance at a double-digit pace, and the Merchants
integration has proceeded smoothly with cost synergies running ahead of
plan. Our accelerated operating performance also reflects improvements
in core expense management and growth in non-interest income, which
contributed to the 10% increase in per share results (excluding
acquisition expenses and one-time tax benefits) compared with the fourth
quarter of 2016. We expect to realize a significant ongoing benefit from
the lower federal income tax rate and our businesses are well positioned
to continue delivering a high level of operating performance for the
benefit of our shareholders.”
Total revenues for the fourth quarter of 2017 were $139.9 million, an
increase of $31.0 million, or 28.5%, over the prior year quarter, and
included a full quarter of revenues from both the Merchants and NRS
transactions completed in the first half of this year. Higher revenues
were generated as a result of a 22.0% increase in average earning assets
and continued growth in noninterest income, partially offset by a two
basis-point decline in the net interest margin from the prior year
quarter. A combination of acquired and organic growth resulted in a
$12.4 million, or 55.8% increase in wealth management, insurance, and
employee benefit services revenues. Deposit service fees increased 21.1%
year-over-year, primarily the result of the addition of Merchants, as
well as increased debit card-related revenues. Other banking services
declined $0.2 million from the fourth quarter of 2016, driven by an
insurance-related gain experienced last year. The quarterly provision
for loan losses of $5.4 million was $2.7 million higher than the fourth
quarter of 2016, reflective of higher quarterly net charge-off levels,
including a $3.1 million partial charge-off related to a single
commercial relationship. Non-performing asset and delinquent loan ratios
were lower in comparison to the end of the fourth quarter of 2016, but
up from the end of the linked third quarter, and included the impact of
the previously mentioned commercial relationship which also added over
$5.2 million to non-performing assets. Total operating expenses for the
fourth quarter of 2017 were $86.9 million, and included $0.8 million of
non-recurring acquisition expenses related to the Merchants transaction.
Excluding acquisition expenses from both periods, total operating
expenses of $86.1 million for the fourth quarter of 2017 were $20.9
million, or 32.0% above the fourth quarter of 2016, and included the
operating expenses from Merchants and NRS, as well as an additional $3.7
million of intangible amortization, primarily from the two transactions.
Fourth quarter 2017 net interest income was $86.0 million, an increase
of $15.7 million, or 22.4%, compared to the fourth quarter of 2016, and
included the impact of the Merchants acquisition. A one basis-point
increase in combined funding costs and a one basis point decline in
earning asset yields, which included an incremental $1.1 million in
purchased loan accretion, resulted in a two basis-point decrease in net
interest margin quarter-over-quarter. Average loan balances grew $1.34
billion, or 27.2%, principally related to the Merchants transaction,
while average loan yields increased 11 basis points
quarter-over-quarter, including the incremental purchased loan
accretion. Investment interest income was $0.5 million higher than the
fourth quarter of 2016, as average investment securities (including cash
equivalents) balances increased by $346.5 million, while the yield on
investments declined 33 basis points. Fourth quarter 2016 investment
income included a non-recurring dividend of $1.2 million from a limited
partnership investment. Interest expense was $0.9 million higher than
the previous year’s quarter, driven by a $235.4 million increase in
average borrowings (including customer repurchase agreements) and a
$1.44 billion increase in average deposit balances, principally related
to the Merchants transaction, and a net one basis point increase in the
cost of funds.
Wealth management and insurance services revenues increased to $12.4
million, an increase of $1.9 million, or 17.7%, compared to the fourth
quarter of 2016, driven by both acquired and organic growth. Employee
benefit services revenues of $22.2 million increased $10.5 million from
the fourth quarter of 2016, primarily attributable to the NRS
acquisition.
Excluding acquisition expenses related to the Merchants’ transaction,
fourth quarter 2017 operating expenses of $86.1 million, which included
a full quarter of operating activities from both Merchants and NRS,
increased $20.9 million over the fourth quarter of 2016. Salaries and
employee benefits increased $11.0 million, or 30.2%, and included the
personnel added from both transactions, as well as merit and
performance-based increases. All other expenses increased 34.3%, and
reflected the occupancy, equipment and other operating costs of both
Merchants and NRS, including significantly higher intangible asset
amortization, compared to the fourth quarter of 2016.
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, or less than $0.01 per share each quarter. Excluding the
estimated one-time benefit from the revaluation of net deferred tax
liabilities, the fourth quarter 2017 effective income tax was 28.6%,
down from 33.4% in the prior year quarter, and reflected the $0.3
million reduction in income tax expense related to this change in
accounting for share-based transactions, and also included the impact of
the non-recurring acquisition expenses incurred in 2017, as well as
changes related to state tax apportionment.
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 of such expenses 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
$0.71 in the fourth quarter of 2017, compared to $0.62 in the fourth
quarter of 2016, or a 14.5% increase.
Financial Position
Average earning assets of $9.37 billion for the fourth quarter of 2017
were up $1.69 billion, or 22.0% from the fourth quarter of 2016, and
included the loans and investments added in the Merchants transaction.
Similarly, average deposit balances grew $1.44 billion, or 20.3%
compared to the fourth quarter of 2016. Average borrowings (including
customer repurchase agreements) in the fourth quarter of 2017 of $449.4
million, were $235.4 million higher than the fourth quarter of 2016.
Ending loans at December 31, 2017 increased $1.31 billion, or 26.4%,
year-over-year, reflecting the Merchants acquisition. Investment
securities totaled $3.08 billion at December 31, 2017, down slightly
from the end of the third quarter, and up from the end of the fourth
quarter of 2016 due to investments added from Merchants, and partially
offset by limited reinvestment of securities cash flows over the last
twelve months.
Shareholders’ equity of $1.64 billion at December 31, 2017 was $437.2
million, or 36.5%, 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 NRS and
Merchants acquisitions. The Company’s net tangible equity to net
tangible assets ratio was 8.61% at December 31, 2017, down from 9.24% a
year earlier, a result of the two acquisitions completed in the first
half of 2017. The Company’s Tier 1 leverage ratio was 10.00% at the end
of the fourth quarter, compared to 10.55% a year earlier.
As previously announced in December 2016, the Company’s Board of
Directors approved a stock repurchase program authorizing the repurchase
of up to 2.2 million shares of the Company’s common stock during a
twelve-month period starting January 1, 2017. 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 2017.
In December 2017, the Company’s Board of Directors reauthorized a new
repurchase program for 2018 for up to 2.5 million shares of the
Company’s common stock.
Asset Quality
Despite the previously mentioned partial net charge-off of $3.1 million
on a specific commercial relationship in the fourth quarter, 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 $5.8 million for the
fourth quarter, compared to $2.2 million for the fourth quarter of 2016
and $1.8 million for the third quarter of 2017. Net charge-offs as an
annualized percentage of average loans measured 0.37% in the fourth
quarter of 2017, compared to 0.18% in last year’s fourth quarter and
0.11% in the third quarter of 2017. The full year net charge-off ratio
in 2017 was 0.18%, compared to 0.13% in 2016. Nonperforming loans as a
percentage of total loans at December 31, 2017 were 0.44%, improved from
0.48% at December 31, 2016 and higher than the 0.37% level at September
30, 2017, primarily related to the one previously mentioned commercial
relationship. The total loan delinquency ratio of 1.10% at the end of
the fourth quarter was nine basis points lower than the level at
December 31, 2016, and five basis points higher than this year’s third
quarter-end. The fourth quarter provision for loan losses of $5.4
million was $2.7 million higher than the fourth quarter of 2016, and
$3.1 million higher than the third quarter of 2017. The allowance for
loan losses to nonperforming loans was 173% at December 31, 2017,
compared with the 199% and 205% levels at the end of the fourth quarter
of 2016 and third quarter of 2017, respectively.
Dividend Increase
During the fourth quarter of 2017 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 second quarter of 2017 and the fourth quarter
of 2016. This increase marked the 25th consecutive year of
dividend increases for the Company. President and Chief Executive
Officer, Mark E. Tryniski, commented, “The payment of a meaningful and
growing dividend is an important component of our commitment to provide
consistent and favorable long-term returns to our shareholders. The
increase reflected the continued strength of our current operating
performance and capital position.” The two cent, or 6.3% increase in the
Company’s quarterly cash dividend over the same quarter of the prior
year, brought the dividend to a level that represents an annualized
yield of 2.5% based upon the closing price of $55.39 on January 19, 2018.
Merchants Bancshares, Inc.
On October 24, 2016, the Company announced that it had entered into a
definitive agreement to acquire Merchants Bancshares, Inc.
("Merchants"), parent company of Merchants Bank headquartered in South
Burlington, Vermont, for approximately $345.2 million in Company stock
and cash. The acquisition was completed on May 12, 2017. The transaction
extended the Company's footprint into the Vermont and Western
Massachusetts markets. Upon the completion of the merger, Community Bank
added 31 branch locations in Vermont and one office in Western
Massachusetts with approximately $2.0 billion of assets and deposits of
$1.5 billion.
Northeast Retirement Services, Inc.
On December 5, 2016, the Company announced that it had entered into a
definitive agreement to acquire Northeast Retirement Services, Inc.
(“NRS”), a leading provider of plan accounting, transfer agency, fund
administration, trust and retirement plan services for approximately
$148.6 million in Company stock and cash. The acquisition was completed
on February 3, 2017.
Conference Call Scheduled
Company management will conduct an investor call at 11:00 a.m. (ET)
today, January 22, 2018, to discuss fourth quarter and full year 2017
results. The conference call can be accessed at 800-967-7137
(719-325-2437 if outside United States and Canada) using the conference
ID code 9581617. Investors may also listen live via the Internet at: http://www.webcaster4.com/Webcast/Page/995/24052.
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.
|
| |
| |
| |
| |
Summary of Financial Data | | | | | | | | |
| (Dollars in thousands, except per share data) | |
|
|
|
|
|
|
|
| | Quarter Ended |
| Year-to-Date |
|
|
| December 31,
2017 |
| December 31,
2016 |
| December 31,
2017 |
| December 31,
2016 |
| Earnings |
|
|
|
|
|
|
|
|
|
Loan income
| | $69,716 | | $53,602 | | $253,949 | | $211,467 |
|
Investment income
| |
19,872
| |
19,397
| |
75,506
| |
73,720
|
|
Total interest income
| |
89,588
| |
72,999
| |
329,455
| |
285,187
|
|
Interest expense
| |
3,611
| |
2,753
| |
13,780
| |
11,291
|
|
Net interest income
| |
85,977
| |
70,246
| |
315,675
| |
273,896
|
|
Provision for loan losses
| |
5,381
| |
2,640
| |
10,984
| |
8,076
|
|
Net interest income after provision for loan losses
| |
80,596
| |
67,606
| |
304,691
| |
265,820
|
|
Deposit service fees
| |
18,115
| |
14,959
| |
67,896
| |
58,595
|
|
Revenues from mortgage banking and other banking services
| |
1,196
| |
1,438
| |
5,466
| |
7,477
|
|
Wealth management and insurance services
| |
12,415
| |
10,544
| |
48,229
| |
42,925
|
|
Employee benefit services
| |
22,212
| |
11,679
| |
80,830
| |
46,628
|
|
Gain on sale of investments
| |
0
| |
0
| |
2
| |
0
|
|
Total noninterest income
| |
53,938
| |
38,620
| |
202,423
| |
155,625
|
|
Salaries and employee benefits
| |
47,217
| |
36,259
| |
179,993
| |
151,647
|
|
Occupancy and equipment
| |
9,622
| |
7,633
| |
35,561
| |
30,078
|
|
Amortization of intangible assets
| |
4,961
| |
1,275
| |
16,941
| |
5,479
|
|
Acquisition expenses
| |
794
| |
1,364
| |
25,986
| |
1,706
|
|
Other
| |
24,325
| |
20,066
| |
88,668
| |
77,938
|
|
Total operating expenses
| |
86,919
| |
66,597
| |
347,149
| |
266,848
|
|
Income before income taxes
| |
47,615
| |
39,629
| |
159,965
| |
154,597
|
|
Income taxes
| |
(24,411)
| |
13,237
| |
9,248
| |
50,785
|
|
Net income
| | $72,026 | | $26,392 | | $150,717 | | $103,812 |
|
Basic earnings per share
| | $1.41 | | $0.59 | | $3.07 | | $2.34 |
|
Diluted earnings per share
|
| $1.40 |
| $0.59 |
| $3.03 |
| $2.32 |
| | | | | | | |
|
|
| |
| |
| |
| |
| |
Summary of Financial Data | | | | | | | | | | |
| (Dollars in thousands, except per share data) | |
|
|
|
|
|
|
|
|
|
| | 2017 |
| 2016 |
|
|
| 4th Qtr |
| 3rd Qtr |
| 2nd Qtr |
| 1st Qtr |
| 4th Qtr |
| Earnings |
|
|
|
|
|
|
|
|
|
|
|
Loan income
| | $69,716 | | $69,498 | | $62,351 | | $52,384 | | $53,602 |
|
Investment income
| |
19,872
| |
18,989
| |
19,071
| |
17,574
| |
19,397
|
|
Total interest income
| |
89,588
| |
88,487
| |
81,422
| |
69,958
| |
72,999
|
|
Interest expense
| |
3,611
| |
4,092
| |
3,393
| |
2,684
| |
2,753
|
|
Net interest income
| |
85,977
| |
84,395
| |
78,029
| |
67,274
| |
70,246
|
|
Provision for loan losses
| |
5,381
| |
2,314
| |
1,461
| |
1,828
| |
2,640
|
|
Net interest income after provision for loan losses
| |
80,596
| |
82,081
| |
76,568
| |
65,446
| |
67,606
|
|
Deposit service fees
| |
18,115
| |
18,419
| |
16,655
| |
14,707
| |
14,959
|
|
Revenues from mortgage banking and other banking services
| |
1,196
| |
1,704
| |
1,407
| |
1,159
| |
1,438
|
|
Wealth management and insurance services
| |
12,415
| |
12,051
| |
12,502
| |
11,261
| |
10,544
|
|
Employee benefit services
| |
22,212
| |
20,767
| |
20,662
| |
17,189
| |
11,679
|
|
Gain on sale of investments
| |
0
| |
0
| |
0
| |
2
| |
0
|
|
Total noninterest income
| |
53,938
| |
52,941
| |
51,226
| |
44,318
| |
38,620
|
|
Salaries and employee benefits
| |
47,217
| |
46,568
| |
44,808
| |
41,400
| |
36,259
|
|
Occupancy and equipment
| |
9,622
| |
9,106
| |
8,637
| |
8,196
| |
7,633
|
|
Amortization of intangible assets
| |
4,961
| |
4,949
| |
4,263
| |
2,768
| |
1,275
|
|
Acquisition expenses
| |
794
| |
580
| |
22,896
| |
1,716
| |
1,364
|
|
Other
| |
24,325
| |
22,573
| |
22,275
| |
19,495
| |
20,066
|
|
Total operating expenses
| |
86,919
| |
83,776
| |
102,879
| |
73,575
| |
66,597
|
|
Income before income taxes
| |
47,615
| |
51,246
| |
24,915
| |
36,189
| |
39,629
|
|
Income taxes
| |
(24,411)
| |
16,003
| |
7,724
| |
9,932
| |
13,237
|
|
Net income
| | $72,026 | | $35,243 | | $17,191 | | $26,257 | | $26,392 |
|
Basic earnings per share
| | $1.41 | | $0.69 | | $0.35 | | $0.58 | | $0.59 |
|
Diluted earnings per share
|
| $1.40 |
| $0.68 |
| $0.35 |
| $0.57 |
| $0.59 |
| Profitability |
|
|
|
|
|
|
|
|
|
|
|
Return on assets
| |
2.66%
| |
1.29%
| |
0.69%
| |
1.22%
| |
1.21%
|
|
Return on equity
| |
17.88%
| |
8.81%
| |
4.74%
| |
8.47%
| |
8.59%
|
|
Return on tangible equity(2) | |
34.11%
| |
16.74%
| |
7.72%
| |
13.57%
| |
13.40%
|
|
Noninterest income/operating income (FTE) (1) | |
37.9%
| |
38.4%
| |
39.4%
| |
39.1%
| |
35.0%
|
|
Efficiency ratio
|
|
57.8%
|
|
56.8%
|
|
58.3%
|
|
60.9%
|
|
57.9%
|
| Components of Net Interest Margin (FTE) |
|
|
|
|
|
|
|
|
|
|
|
Loan yield
| |
4.44%
| |
4.37%
| |
4.41%
| |
4.31%
| |
4.33%
|
|
Cash equivalents yield
| |
1.19%
| |
1.09%
| |
0.99%
| |
0.79%
| |
0.48%
|
|
Investment yield
| |
2.81%
| |
2.69%
| |
2.87%
| |
2.90%
| |
3.14%
|
|
Earning asset yield
| |
3.89%
| |
3.81%
| |
3.87%
| |
3.80%
| |
3.90%
|
|
Interest-bearing deposit rate
| |
0.14%
| |
0.14%
| |
0.14%
| |
0.13%
| |
0.13%
|
|
Borrowing rate
| |
1.32%
| |
1.44%
| |
1.54%
| |
2.18%
| |
1.80%
|
|
Cost of all interest-bearing funds
| |
0.22%
| |
0.24%
| |
0.21%
| |
0.19%
| |
0.19%
|
|
Cost of funds (includes DDA)
| |
0.16%
| |
0.18%
| |
0.16%
| |
0.15%
| |
0.15%
|
|
Net interest margin (FTE)
| |
3.74%
| |
3.64%
| |
3.72%
| |
3.65%
| |
3.76%
|
|
Fully tax-equivalent adjustment
|
| $2,375 |
| $2,381 |
| $2,374 |
| $2,285 |
| $2,382 |
| | | | | | | | | |
|
|
| |
| |
| |
| |
| |
| Summary of Financial Data | | | | | | | | | | |
| (Dollars in thousands, except per share data) | |
|
|
|
|
|
|
|
|
|
| | 2017 |
| 2016 |
|
|
| 4th Qtr |
| 3rd Qtr |
| 2nd Qtr |
| 1st Qtr |
| 4th Qtr |
| Average Balances |
|
|
|
|
|
|
|
|
|
|
|
Loans
| | $6,274,679 | | $6,343,468 | | $5,695,781 | | $4,939,092 | | $4,934,034 |
|
Cash equivalents
| |
34,223
| |
26,986
| |
52,956
| |
40,209
| |
15,367
|
|
Taxable investment securities
| |
2,572,703
| |
2,571,459
| |
2,408,020
| |
2,203,175
| |
2,179,840
|
|
Nontaxable investment securities
| |
491,578
| |
511,182
| |
526,962
| |
540,518
| |
556,774
|
|
Total interest-earning assets
| |
9,373,183
| |
9,453,095
| |
8,683,719
| |
7,722,994
| |
7,686,015
|
|
Total assets
| |
10,757,836
| |
10,862,613
| |
9,958,553
| |
8,747,266
| |
8,665,948
|
|
Interest-bearing deposits
| |
6,206,663
| |
6,230,591
| |
6,021,696
| |
5,543,046
| |
5,472,420
|
|
Borrowings
| |
449,377
| |
541,036
| |
346,975
| |
177,587
| |
213,930
|
|
Total interest-bearing liabilities
| |
6,656,040
| |
6,771,627
| |
6,368,671
| |
5,720,633
| |
5,686,350
|
|
Noninterest-bearing deposits
| |
2,307,155
| |
2,307,205
| |
1,948,434
| |
1,620,473
| |
1,603,703
|
|
Shareholders' equity
|
|
1,598,056
|
|
1,587,279
|
|
1,455,847
|
|
1,256,888
|
|
1,222,124
|
| Balance Sheet Data |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
| | $221,038 | | $241,480 | | $219,695 | | $291,186 | | $173,857 |
|
Investment securities
| |
3,081,379
| |
3,125,218
| |
3,145,013
| |
2,788,718
| |
2,784,392
|
|
Loans:
| | | | | | | | | | |
|
Consumer mortgage
| |
2,220,298
| |
2,206,527
| |
2,211,412
| |
1,830,800
| |
1,819,701
|
|
Business lending
| |
2,424,223
| |
2,458,981
| |
2,479,152
| |
1,468,465
| |
1,490,076
|
|
Consumer indirect
| |
1,011,978
| |
1,034,716
| |
1,057,664
| |
1,055,112
| |
1,044,972
|
|
Home equity
| |
420,329
| |
424,598
| |
427,483
| |
393,769
| |
401,998
|
|
Consumer direct
| |
179,929
| |
183,898
| |
185,589
| |
184,067
| |
191,815
|
|
Total loans
| |
6,256,757
| |
6,308,720
| |
6,361,300
| |
4,932,213
| |
4,948,562
|
|
Allowance for loan losses
| |
47,583
| |
47,983
| |
47,451
| |
47,096
| |
47,233
|
|
Intangible assets, net
| |
825,088
| |
824,355
| |
831,403
| |
618,977
| |
480,844
|
|
Other assets
| |
409,519
| |
398,428
| |
374,086
| |
329,862
| |
326,015
|
|
Total assets
| |
10,746,198
| |
10,850,218
| |
10,884,046
| |
8,913,860
| |
8,666,437
|
|
Deposits:
| | | | | | | | | | |
|
Noninterest-bearing
| |
2,293,057
| |
2,310,954
| |
2,283,138
| |
1,642,158
| |
1,646,039
|
|
Non-maturity interest-bearing
| |
5,377,059
| |
5,495,377
| |
5,508,504
| |
5,010,516
| |
4,726,787
|
|
Time
| |
774,304
| |
799,659
| |
833,963
| |
684,203
| |
703,128
|
|
Total deposits
| |
8,444,420
| |
8,605,990
| |
8,625,605
| |
7,336,877
| |
7,075,954
|
|
Borrowings
| |
363,082
| |
314,289
| |
373,053
| |
0
| |
146,200
|
|
Subordinated debt held by unconsolidated subsidiary trusts
| |
122,814
| |
122,808
| |
122,802
| |
102,177
| |
102,170
|
|
Accrued interest and other liabilities
| |
180,567
| |
213,886
| |
189,686
| |
178,776
| |
144,013
|
|
Total liabilities
| |
9,110,883
| |
9,256,973
| |
9,311,146
| |
7,617,830
| |
7,468,337
|
|
Shareholders' equity
| |
1,635,315
| |
1,593,245
| |
1,572,900
| |
1,296,030
| |
1,198,100
|
|
Total liabilities and shareholders' equity
|
|
10,746,198
|
|
10,850,218
|
|
10,884,046
|
|
8,913,860
|
|
8,666,437
|
| Capital |
|
|
|
|
|
|
|
|
|
|
|
Tier 1 leverage ratio
| |
10.00%
| |
9.54%
| |
10.19%
| |
10.35%
| |
10.55%
|
|
Tangible equity/net tangible assets (2) | |
8.61%
| |
8.36%
| |
8.08%
| |
8.91%
| |
9.24%
|
|
Diluted weighted average common shares O/S
| |
51,569
| |
51,526
| |
49,386
| |
46,227
| |
45,025
|
|
Period end common shares outstanding
| |
50,696
| |
50,587
| |
50,512
| |
45,956
| |
44,437
|
|
Cash dividends declared per common share
| | $0.34 | | $0.34 | | $0.32 | | $0.32 | | $0.32 |
|
Book value
| | $32.26 | | $31.50 | | $31.14 | | $28.20 | | $26.96 |
|
Tangible book value(2) | | $16.94 | | $16.70 | | $16.21 | | $16.22 | | $17.12 |
|
Common stock price (end of period)
|
| $53.75 |
| $55.25 |
| $55.77 |
| $54.98 |
| $61.79 |
| | | | | | | | | |
|
|
| |
| |
| |
| |
| |
| Summary of Financial Data | | | | | | | | | | |
| (Dollars in thousands, except per share data) | |
|
|
|
|
|
|
|
|
|
| | 2017 |
| 2016 |
|
|
| 4th Qtr |
| 3rd Qtr |
| 2nd Qtr |
| 1st Qtr |
| 4th Qtr |
| Asset Quality |
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual loans
| | $24,740 | | $21,510 | | $21,033 | | $20,066 | | $20,619 |
|
Accruing loans 90+ days delinquent
| |
2,706
| |
1,861
| |
1,882
| |
2,809
| |
3,076
|
|
Total nonperforming loans
| |
27,446
| |
23,371
| |
22,915
| |
22,875
| |
23,695
|
|
Other real estate owned (OREO)
| |
1,915
| |
1,873
| |
2,491
| |
2,486
| |
1,966
|
|
Total nonperforming assets
| |
29,361
| |
25,244
| |
25,406
| |
25,361
| |
25,661
|
|
Net charge-offs
| |
5,781
| |
1,782
| |
1,106
| |
1,965
| |
2,196
|
|
Allowance for loan losses/loans outstanding
| |
0.76%
| |
0.76%
| |
0.75%
| |
0.95%
| |
0.95%
|
|
Nonperforming loans/loans outstanding
| |
0.44%
| |
0.37%
| |
0.36%
| |
0.46%
| |
0.48%
|
|
Allowance for loan losses/nonperforming loans
| |
173%
| |
205%
| |
207%
| |
206%
| |
199%
|
|
Net charge-offs/average loans
| |
0.37%
| |
0.11%
| |
0.08%
| |
0.16%
| |
0.18%
|
|
Delinquent loans/ending loans
| |
1.10%
| |
1.05%
| |
0.99%
| |
0.94%
| |
1.19%
|
|
Loan loss provision/net charge-offs
| |
93%
| |
130%
| |
132%
| |
93%
| |
120%
|
|
Nonperforming assets/total assets
|
|
0.27%
|
|
0.23%
|
|
0.23%
|
|
0.28%
|
|
0.30%
|
| Asset Quality (excluding loans acquired since 1/1/09) |
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual loans
| | $16,020 | | $15,069 | | $14,359 | | $15,268 | | $16,600 |
|
Accruing loans 90+ days delinquent
| |
2,502
| |
1,589
| |
1,640
| |
1,707
| |
1,963
|
|
Total nonperforming loans
| |
18,522
| |
16,658
| |
15,999
| |
16,975
| |
18,563
|
|
Other real estate owned (OREO)
| |
1,221
| |
1,257
| |
1,681
| |
2,225
| |
1,658
|
|
Total nonperforming assets
| |
19,743
| |
17,915
| |
17,680
| |
19,200
| |
20,221
|
|
Net charge-offs
| |
2,279
| |
1,624
| |
692
| |
1,866
| |
1,846
|
|
Allowance for loan losses/loans outstanding
| |
0.98%
| |
1.00%
| |
1.01%
| |
1.01%
| |
1.02%
|
|
Nonperforming loans/loans outstanding
| |
0.40%
| |
0.36%
| |
0.35%
| |
0.38%
| |
0.42%
|
|
Allowance for loan losses/nonperforming loans
| |
244%
| |
276%
| |
284%
| |
266 %
| |
245%
|
|
Net charge-offs/average loans
| |
0.20%
| |
0.14%
| |
0.06%
| |
0.17%
| |
0.17%
|
|
Delinquent loans/ending loans
| |
1.12%
| |
1.16%
| |
1.06%
| |
0.86%
| |
1.14%
|
|
Loan loss provision/net charge-offs
| |
67%
| |
125%
| |
153%
| |
85%
| |
133%
|
|
Nonperforming assets/total assets
|
|
0.22%
|
|
0.20%
|
|
0.20%
|
|
0.23%
|
|
0.25%
|
| | | | | | | | | |
|
|
| |
| |
| |
| |
| |
| Summary of Financial Data | | | | | | | | | | |
| (Dollars in thousands, except per share data) | |
|
|
|
|
|
|
|
|
|
| | 2017 |
| 2016 |
|
|
| 4th Qtr |
| 3rd Qtr |
| 2nd Qtr |
| 1st Qtr |
| 4th Qtr |
| Quarterly GAAP to Non-GAAP Reconciliations |
|
|
|
|
|
|
|
|
|
|
| Income statement data | | | | | | | | | | |
| Net income | | | | | | | | | | |
|
Net income (GAAP)
| | $72,026 | | $35,243 | | $17,191 | | $26,257 | | $26,392 |
|
Acquisition expenses
| |
794
| |
580
| |
22,896
| |
1,716
| |
1,364
|
|
Tax effect of acquisition expenses
| |
(227)
|
|
(181)
|
|
(7,098)
|
|
(471)
|
|
(456)
|
|
Subtotal (non-GAAP)
| |
72,593
| |
35,642
| |
32,989
| |
27,502
| |
27,300
|
|
Amortization of intangibles
| |
4,961
| |
4,949
| |
4,263
| |
2,768
| |
1,275
|
|
Tax effect of amortization of intangibles
| |
(1,417)
|
|
(1,545)
|
|
(1,322)
|
|
(760)
|
|
(426)
|
|
Subtotal (non-GAAP)
| |
76,137
| |
39,046
| |
35,930
| |
29,510
| |
28,149
|
|
Acquired non-impaired loan accretion
| |
(1,930)
| |
(1,879)
| |
(1,642)
| |
(437)
| |
(836)
|
|
Tax effect of acquired non-impaired loan accretion
| |
551
|
|
587
|
|
509
|
|
120
|
|
279
|
|
Subtotal (non-GAAP)
| |
74,758
| |
37,754
| |
34,797
| |
29,193
| |
27,592
|
|
Tax Cuts and Jobs Act deferred tax impact
| |
(38,010)
|
|
0
|
|
0
|
|
0
|
|
0
|
|
Adjusted net income (non-GAAP)
| |
36,748
|
|
37,754
|
|
34,797
|
|
29,193
|
|
27,592
|
| | | | | | | | | |
|
| Return on average assets | | | | | | | | | | |
|
Adjusted net income (non-GAAP)
| | $36,748 | | $37,754 | | $34,797 | | $29,193 | | $27,592 |
|
Average total assets
| |
10,757,836
|
|
10,862,613
|
|
9,958,553
|
|
8,747,266
|
|
8,665,948
|
|
Adjusted return on average assets
| |
1.36%
|
|
1.38%
|
|
1.40%
|
|
1.35%
|
|
1.27%
|
| | | | | | | | | |
|
| Return on average equity | | | | | | | | | | |
|
Adjusted net income (non-GAAP)
| | $36,748 | | $37,754 | | $34,797 | | $29,193 | | $27,592 |
|
Average total equity
| |
1,598,056
|
|
1,587,279
|
|
1,455,847
|
|
1,256,888
|
|
1,222,124
|
|
Adjusted return on average equity
| |
9.12%
|
|
9.44%
|
|
9.59%
|
|
9.42%
|
|
8.98%
|
| | | | | | | | | |
|
| Earnings per common share | | | | | | | | | | |
|
Diluted earnings per share (GAAP)
| | $1.40 | | $0.68 | | $0.35 | | $0.57 | | $0.59 |
|
Acquisition expenses
| |
0.02
| |
0.01
| |
0.46
| |
0.04
| |
0.03
|
|
Tax effect of acquisition expenses
| |
(0.01)
|
|
(0.00)
|
|
( 0.14)
|
|
(0.01)
|
|
(0.01)
|
|
Subtotal (non-GAAP)
| |
1.41
| |
0.69
| |
0.67
| |
0.60
| |
0.61
|
|
Amortization of intangibles
| |
0.10
| |
0.09
| |
0.09
| |
0.06
| |
0.03
|
|
Tax effect of amortization of intangibles
| |
(0.03)
|
|
(0.03)
|
|
(0.03)
|
|
(0.02)
|
|
(0.01)
|
|
Subtotal (non-GAAP)
| |
1.48
| |
0.75
| |
0.73
| |
0.64
| |
0.63
|
|
Acquired non-impaired loan accretion
| |
(0.04)
| |
(0.04)
| |
(0.03)
| |
(0.01)
| |
(0.02)
|
|
Tax effect of acquired non-impaired loan accretion
| |
0.01
|
|
0.01
|
|
0.01
|
|
0.00
|
|
0.01
|
|
Subtotal (non-GAAP)
| |
1.45
| |
0.72
| |
0.71
| |
0.63
| |
0.62
|
|
Tax Cuts and Jobs Act deferred tax impact
| |
(0.74)
|
|
0
|
|
0
|
|
0
|
|
0
|
|
Diluted adjusted net earnings per share (non-GAAP)
| |
0.71
|
|
0.72
|
|
0.71
|
|
0.63
|
|
0.62
|
| | | | | | | | | |
|
| Noninterest operating expenses | | | | | | | | | | |
|
Noninterest expenses (GAAP)
| | $86,919 | | $83,776 | | $102,879 | | $73,575 | | $66,597 |
|
Amortization of intangibles
| |
(4,961)
| |
(4,949)
| |
(4,263)
| |
(2,768)
| |
(1,275)
|
|
Acquisition expenses
| |
(794)
|
|
(580)
|
|
(22,896)
|
|
(1,716)
|
|
(1,364)
|
|
Total adjusted noninterest expenses (non-GAAP)
| |
81,164
|
|
78,247
|
|
75,720
|
|
69,091
|
|
63,958
|
| | | | | | | | | |
|
| Efficiency ratio | | | | | | | | | | |
|
Adjusted noninterest expenses (non-GAAP) - numerator
| | $81,164 |
| $78,247 |
| $75,720 |
| $69,091 |
| $63,958 |
|
Tax-equivalent net interest income
| |
88,352
| |
86,776
| |
80,403
| |
69,559
| |
72,628
|
|
Noninterest revenues
| |
53,938
| |
52,941
| |
51,226
| |
44,318
| |
38,620
|
|
Acquired non-impaired loan accretion
| |
(1,930)
| |
(1,879)
| |
(1,642)
| |
(437)
| |
(836)
|
|
Gain on sales of investments
| |
0
|
|
0
|
|
0
|
|
(2)
|
|
0
|
|
Operating revenues (non-GAAP) - denominator
| |
140,360
|
|
137,838
|
|
129,987
|
|
113,438
|
|
110,412
|
|
Efficiency ratio (non-GAAP)
| |
57.8%
|
|
56.8%
|
|
58.3%
|
|
60.9%
|
|
57.9%
|
| | | | | | | | | |
|
|
| |
| |
| |
| |
| |
| Summary of Financial Data | | | | | | | | | | |
| (Dollars in thousands, except per share data) | |
|
|
|
|
|
|
|
|
|
| | 2017 |
| 2016 |
|
|
| 4th Qtr |
| 3rd Qtr |
| 2nd Qtr |
| 1st Qtr |
| 4th Qtr |
| Quarterly GAAP to Non-GAAP Reconciliations |
|
|
|
|
|
|
|
|
|
|
| Balance sheet data | | | | | | | | | | |
| Total assets | | | | | | | | | | |
|
Total assets (GAAP)
| | $10,746,198 | | $10,850,218 | | $10,884,046 | | $8,913,860 | | $8,666,437 |
|
Intangible assets
| |
(825,088)
| |
(824,355)
| |
(831,403)
| |
(618,977)
| |
(480,844)
|
|
Deferred taxes on intangible assets
| |
48,419
|
|
75,820
|
|
77,097
|
|
68,236
|
|
43,504
|
|
Total tangible assets (non-GAAP)
| |
9,969,529
|
|
10,101,683
|
|
10,129,740
|
|
8,363,119
|
|
8,229,097
|
| | | | | | | | | |
|
| Total common equity | | | | | | | | | | |
|
Shareholders' Equity (GAAP)
| |
1,635,315
| |
1,593,245
| |
1,572,900
| |
1,296,030
| |
1,198,100
|
|
Intangible assets
| |
(825,088)
| |
(824,355)
| |
(831,403)
| |
(618,977)
| |
(480,844)
|
|
Deferred taxes on intangible assets
| |
48,419
|
|
75,820
|
|
77,097
|
|
68,236
|
|
43,504
|
|
Total tangible common equity (non-GAAP)
| |
858,646
|
|
844,710
|
|
818,594
|
|
745,289
|
|
760,760
|
| | | | | | | | | |
|
| Net tangible equity-to-assets ratio at quarter end | | | | | | | | | | |
|
Total tangible common equity (non-GAAP) - numerator
| | $858,646 |
| $844,710 |
| $818,594 |
| $745,289 |
| $760,760 |
|
Total tangible assets (non-GAAP) - denominator
| |
9,969,529
|
|
10,101,683
|
|
10,129,740
|
|
8,363,119
|
|
8,229,097
|
|
Net tangible equity-to-assets ratio at quarter end (non-GAAP)
| |
8.61%
|
|
8.36%
|
|
8.08%
|
|
8.91%
|
|
9.24%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) Excludes gains and losses on sales of
investment securities. |
| (2) Includes deferred tax liabilities related
to certain intangible assets. |
|
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20180122005400/en/
Community Bank System, Inc.
Scott A. Kingsley, 315-445-3121
EVP
& Chief Financial Officer
Source: Community Bank System, Inc.