Community Financial System, Inc. · NYSE:CBU
Community Financial System — Community Bank System — Q3 2020 Earnings Presentation
21 slides from Community Financial System's earnings presentation, Oct 26, 2020
Slide 1: Q3 2020 Earnings Release Supplemental Information
0 Q3 2020 EARNINGS RELEASE SUPPLEMENTAL INFORMATION
Slide 2: Forward-looking statements
1 This presentation 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 diff
Slide 3: Company Response to COVID-19
2 September/October: Phase 5 (Continued Monitoring) Begin PPP forgiveness process Continued monitoring of health data and financial exposure Monitor COVID impacted borrowers July/August: Phase 4 (Monitor) Continue to monitor health data Second round of employees return to office Continue to monitor
Slide 4: Strong Capital Position
3 $479 $607 $876 $1,198 $1,855 $2,099 7.77% 8.23% 9.29% 10.55% 10.80% 10.21% 5.28% 6.14% 7.68% 9.24% 10.01% 9.92% 0% 2% 4% 6% 8% 10% 12% 14% $0 $500 $1,000 $1,500 $2,000 2007 2010 2013 2016 2019 Q3 2020 $ in Millions Shareholders' Equity Tier I Ratio Tangible Equity/Tangible Assets STRONG CAPITAL PO
Slide 5: Strong Liquidity Position & Sources
4 Liquidity Sources September 30, 2020 $ in Thousands Cash and Cash Equivalents (net of float) $1,734,498 FHLB Borrowing Capacity $1,651,863 FRB Borrowing Availability $259,449 Investments 1 US Gov’t & Agency $2,149,171 MBS & CMO $575,454 Municipals $473,001 Corporates $4,602 Less: Pledged Securitie
Slide 6: Solid Earnings Trend
5 $57.5 $55.4 $55.4 $57.3 $59.4 $1.10 $1.06 $1.05 $1.08 $1.10 $1.00 $1.02 $1.04 $1.06 $1.08 $1.10 $1.12 $1.14 $48 $50 $52 $54 $56 $58 $60 $62 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 PTPP EPS PTPP Net Revenue, $ in Millions Adjusted pre-tax, pre-provision net revenue Adjusted PTPP EPS SOLID EARNINGS
Slide 7: CECL Adoption & COVID Related Reserve
6 CECL 1 ADOPTION & COVID RELATED RESERVE (unaudited) • In January 2020, the Company adopted ASU No. 2016 - 13, Financial Instruments – Credit Losses, also known as Current Expected Credit Losses (“CECL ”). • Upon the adoption of CECL on January 1, 2020, the Company’s allowance for credit losses inc
Slide 8: Transaction and Digital User Trends
7 TRANSACTION AND DIGITAL USER TRENDS (unaudited) Due to the COVID - 19 pandemic, there has been a shift in the transaction channels from branch to digital . 3,500 4,000 4,500 5,000 5,500 6,000 6,500 7,000 400 500 600 700 800 900 1,000 1,100 Jan '19 Feb '19 Mar '19 Apr '19 May '19 June '19 July '19
Slide 9: COVID-19 Loan Deferral Update
8 6/30/2020 9/30/2020 Net Reduction in Deferrals Portfolio # of Loans Deferrals % of 6/30/20 Portfolio # of Loans Deferrals % of 9/30/20 Portfolio Business Lending 1,282 $593.3 17.1% 156 $189.2 5.5% $404.1 Consumer Mortgage & Home Equity 909 $85.9 3.1% 42 $3.2 0.1% $82.7 Consumer Installment 1,508 $
Slide 10: Paycheck Protection Program (PPP)
9 • 3,473 Paycheck Protection Program (“PPP”) loans, representing $507 million in customer balances, were outstanding on September 30, 2020 • Loan forgiveness customer portal opened in late September 2020 • No customer loan balances were forgiven prior to September 30, 2020 • At September 30, 2020,
Slide 11: COVID-Related Industry Exposure
10 COVID - 19 Related Industry Exposure Sorted by Total Exposure excluding PPP Loans; $ in Millions September 30, 2020 NAICS code based loan data “Exposure” includes both the outstanding and available portions of the loan commitment (1) Retail excludes Furniture Stores and Grocery Stores but include
Slide 12: Retail Portfolio
11 Non - Owner Occupied CRE 33% New & Used Car Dealers 18% Auto Parts & Accessories 8% RV, Boat & Other Recreational 5% Building Materials & Garden Supplies 15% Gasoline & Service Stations 6% Miscellaneous Retail 4% Health & Personal Care Stores 4% All Other Retail 7% Motor Vehicles & Parts Dealer 3
Slide 13: Lodging Portfolio
12 Franchised 75% Unfranchised 14% Rooming & Boarding Houses 11% Hotels & Motels 89% • The lodging portfolio contains 196 loans representing a total exposure of $266.5 million • Average outstanding balance of $1.3 million and an average exposure of $1.4 million • 13 total loan relationships with a c
Slide 14: Manufacturing Portfolio
13 Lumber, Wood & Paper Products 32% Plastics, Stone & Metal Products 27% Machinery & Equipment 17% Food & Food Products 15% All Other Manufacturing 9% • The manufacturing portfolio contains 652 loans representing a total exposure of $240.9 million • Average outstanding balance of $229 thousand and
Slide 15: Construction Portfolio
14 Highway, Street, and Bridge Construction 19% Nonresidential Building Construction 13% Building Equipment Contractors 13% Utility System Construction 12% Site Preparation Contractors 12% Residential Building Construction 11% Foundation, Structure, and Building Exterior Contractors 11% Other Constr
Slide 16: Healthcare Portfolio
15 Continuing Care, Retirement and Assisted Living Facilities 21% Offices of Physicians 15% Hospitals 12% Individual and Family Services 9% Developmental Disability, Mental Health & Substance Abuse Facilities 8% Offices of Dentists 8% Offices of Other Health Practitioners 6% Child Day Care Services
Slide 17: Non-GAAP financial measures
16 Community Bank System's management uses the term "non - GAAP" financial measures in their analysis of the company's performance and operations. Management believes that these non - GAAP financial measures provide a greater understanding of ongoing operations and enhance comparability of results.
Slide 18: Operating earnings reconciliation
17 Dollars in thousands, except per share data 2020 Years Ended Dec. 31 ($000s) Q3 YTD 2019 2018 2017 2016 2015 GAAP Earnings per Share $0.79 $2.21 $3.23 $3.24 $3.03 $2.32 $2.19 Operating Earning s per Share $0.85 $2.38 $3.29 $3.23 $2.64 $2.35 $2.31 Net income (GAAP) $42,809 $118,191 $169,063 $168,6
Slide 19: Tangible assets and equity reconciliation
18 Dollars in thousands, except per share data Q3 2020 2019 2016 2013 2010 2007 Total assets Total assets (GAAP) $ 13,845,325 $11,410,295 $8,666,437 $7,095,864 $5,444,506 $4,697,502 Intangible assets ( 850,214) (836,923) (480,844) (390,499) (311,714) (256,216) Deferred taxes on intangible assets 44,
Slide 20: Pre-tax, pre-provision net revenue reconciliation
19 Dollars and shares in thousands, except per share data Q3 2020 Q2 2020 Q1 2020 Q4 2019 Q3 2019 Pre - tax, pre - provision net revenue Net income (GAAP) $42,809 $35,248 $40,134 $42,884 $39,218 Income taxes 10,904 8,964 9,285 8,853 10,472 Income before income taxes 53,713 44,212 49,419 51,737 49,69
Slide 21: Investor Relations Contact
Investor Relations Contact Mr. Joseph E. Sutaris EVP & Chief Financial Officer Joseph.Sutaris@cbna.com (315) 445 - 7396
Community Bank System — Q3 2020 Earnings Presentation on 6ix