Community Financial System, Inc. · NYSE:CBU
Community Financial System — Community Bank System — Q2 2020 Earnings Presentation
21 slides from Community Financial System's earnings presentation, Jul 27, 2020
Slide 1: Q2 2020 Earnings Release Supplemental Information
0 Q2 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 July: Phase 4 (Monitor) Continue to monitor health data Second round of employees return to office Continue to monitor financial exposure June: Phase 3 (Resume) Branches begin to reopen First round of employees return to office Daily health surveys April/May: Phase 2 (Execute) Assessed return to w
Slide 4: Strong Capital Position
3 $479 $607 $876 $1,198 $1,855 $2,081 7.77% 8.23% 9.29% 10.55% 10.80% 10.79% 5.28% 6.14% 7.68% 9.24% 10.01% 10.08% 0% 2% 4% 6% 8% 10% 12% 14% $0 $500 $1,000 $1,500 $2,000 2007 2010 2013 2016 2019 Q2 2020 $ in Millions Shareholders' Equity Tier I Ratio Tangible Equity/Tangible Assets STRONG CAPITAL P
Slide 5: Liquidity Position & Sources
4 Liquidity Sources June 30, 2020 $ in Thousands Cash and Cash Equivalents (net of float & reserves) $1,246,660 FHLB Borrowing Capacity $1,801,415 FRB Borrowing Availability $259,773 Investments 1 US Gov’t & Agency $2,172,303 MBS & CMO $564,804 Municipals $501,774 Corporates $4,577 Less: Pledged Sec
Slide 6: Solid Earnings Trend
5 $54.2 $57.5 $55.4 $55.4 $57.3 $1.03 $1.10 $1.06 $1.05 $1.08 $1.00 $1.02 $1.04 $1.06 $1.08 $1.10 $1.12 $45 $47 $49 $51 $53 $55 $57 $59 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 PTPP EPS PTPP Net Revenue, $ in Millions Adjusted pre-tax, pre-provision net revenue Adjusted PTPP EPS SOLID EARNINGS TREND
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 ”). • “Q1 Reserve Build” ($4.4 million) was largely due to the expectation of increased credit lo
Slide 8: Transaction and Digital User Trends
7 350 375 400 425 450 475 500 Jan '19 Feb '19 Mar '19 Apr '19 May '19 June '19 Jan '20 Feb '20 Mar '20 Apr '20 May '20 June '20 # of Users Thousands Online (PC) & Mobile (phone) Banking Users TRANSACTION AND DIGITAL USER TRENDS (unaudited) Due to the COVID - 19 pandemic forcing our branches to opera
Slide 9: Customer Support
8 Estimated 3,699 loans representing $704 million in loan balances were under a pandemic - related forbearance agreement as of June 30, 2020 3,473 Paycheck Protection Program (“PPP”) loans, representing $507 million in customer balances, were outstanding on June 30, 2020 1 Portfolio # of Loans Custo
Slide 10: COVID-Related Industry Exposure
9 COVID - 19 Related Industry Exposure Sorted by Total Exposure excluding PPP Loans; $ in Millions June 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 includes loan
Slide 11: Retail Portfolio
10 Non - Owner Occupied CRE 34% New & Used Car Dealers 17% Auto Parts & Accessories 8% RV, Boat & Other Recreational 5% Building Materials & Garden Supplies 15% Gasoline & Service Stations 6% Health & Personal Care Stores 4% Miscellaneous Retail 4% All Other Retail 7% Motor Vehicles & Parts Dealer 3
Slide 12: Lodging Portfolio
11 Franchised 74% Unfranchised 14% Rooming & Boarding Houses 12% Hotels & Motels 88% • The lodging portfolio contains 203 loans representing a total exposure of $275.1 million • Average outstanding balance of $1.3 million and an average exposure of $1.4 million • 13 total loan relationships with a c
Slide 13: Manufacturing Portfolio
12 Lumber, Wood & Paper Products 32% Plastics, Stone & Metal Products 27% Machinery & Equipment 16% Food & Food Products 16% All Other Manufacturing 9% • The manufacturing portfolio contains 668 loans representing a total exposure of $240.1 million • Average outstanding balance of $233 thousand and
Slide 14: Construction Portfolio
13 Highway, Street, and Bridge Construction 20% Building Equipment Contractors 13% Nonresidential Building Construction 13% Site Preparation Contractors 12% Foundation, Structure, and Building Exterior Contractors 11% Residential Building Construction 11% Utility System Construction 12% Other Constr
Slide 15: Healthcare Portfolio
14 Continuing Care, Retirement and Assisted Living Facilities 19% 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 5% Child Day Care Services
Slide 16: Loan Portfolio Yields vs. Prime Rate
15 (1) CBU loan yields exclude fully tax equivalent (FTE) adjustments (2) Based on June 30, 2020 ending loan balances and interest rates Includes adjustable rate consumer mortgage loans, variable rate consumer home equity lines, variable rate consumer check cred it lines, variable rate business line
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 Consistent and Growing - Supports Growth in Dividends & Assets Dollars in thousands, except per share data Years Ended Dec. 31 ($000s) Q2 2020 2019 2018 2017 2016 2015 GAAP Earnings per Share $0.66 $3.23 $3.24 $3.03 $2.32 $2.19 Operating Earning s per Share $0.76 $3.29 $3.23 $2.64 $2.35 $2.31 Net
Slide 19: Tangible assets and equity reconciliation
18 Dollars in thousands, except per share data Q2 2020 2019 2016 2013 2010 2007 Total assets Total assets (GAAP) $ 13,444,217 $11,410,295 $8,666,437 $7,095,864 $5,444,506 $4,697,502 Intangible assets ( 852,761) (836,923) (480,844) (390,499) (311,714) (256,216) Deferred taxes on intangible assets 45,
Slide 20: Pre-tax, pre-provision net revenue reconciliation
19 Dollars and shares in thousands, except per share data Q2 2020 Q1 2020 Q4 2019 Q3 2019 Q2 2019 Pre - tax, pre - provision net revenue Net income (GAAP) $35,248 $40,134 $42,884 $39,218 $45,015 Income taxes 8,964 9,285 8,853 10,472 11,415 Income before income taxes 44,212 49,419 51,737 49,690 56,43
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 — Q2 2020 Earnings Presentation on 6ix