Community Financial System, Inc. · NYSE:CBU
Community Financial System — Q1 2025 Earnings Presentation
66 slides from Community Financial System's earnings presentation, Apr 29, 2025
Slide 1: Investor Presentation
FINANCIAL SYSTEM, INC. - Investor Presentation COMMUNITY FINANCIAL SYSTEM, INC. | NYSE: CBU MAY 2025
Slide 2: Disclaimers
Disclaimers Forward-Looking Statements This presentation contains comments or information that constitute forwarcHooking statements (within the meaning of the Private Securities Litigation Reform Act of 1995), which involve significant risks and uncertainties. Forwarc-looking statements often use wo
Slide 3: About CBU
About CBU • • • • • • • • • • • • • • • • • •
Slide 4: Our Evolution Into a Diversified Financial Company
Our Evolution Into a Diversified Financial Company • • • • •
Slide 5: Focus on Revenue Quality, Diversification and Sustainable Results
Focus on Revenue Quality, Diversification and Sustainable Results • •
Slide 6: Our Investment Thesis
Our Investment Thesis: • • • • • •
Slide 7: Below Average Risk
Below Average Risk Revenue’ 20% 15% 10% CBU 5% 0% (5%) Revenue Growth Banking Industry? 2019 2020 2021 2022 2023 2024 2025 YTD Cost of Funds Net Charge-off Ratio 3.00% 0.20% 0.18% 2.12% 0.15% " 0.13% 0.14% 2.00% tase 0.10% 100% _10t8 — 0.10% o.06% 0.52% 0.36% 0.00% —m —_ | 0.00% 2025 YTD 5-Yr Avg 10
Slide 8: Above Average Returns
Above Average Returns Core Return on Assets! Core Return on Equity’ y 1.38% %, 1.50% 127% 131% 15.00% 45%, o %, 17% %, 115% 412% 113% 04% 10.8% 10.19% 10.3% 9.8% 1.00% 10.00% _ ~ n 0.00% 0.00% YTD 2025 5-Yr Avg 10-Yr Avg YTD 2025 5-Yr Avg 10-Yr Avg m=CBU mKRX (median) m=CBU mKRX (median) reholder Re
Slide 9: Our System Produces Premium Results
Our System Produces Premium Results 10Yr Avg. Relative Premium to KRX (median): 4.5x 5Yr Avg. Relative Premium to KRX (median): 5.8x Current Relative Premium to KRX (median): 3.6x
Slide 10: Company Performance
Company Performance • 4.0% • • 7.9% • • • 5.4% 38.5%
Slide 11: Segment Performance
Segment Performance 10Yr Operating Revenue CAGR3: 5.9% 10Yr Operating Revenue CAGR3: 12.0% 3Yr Avg. Operating Margin4: 36.4% 3Yr Avg. Operating Margin4: 40.9% 8Yr Operating Revenue CAGR3: 10.6% 10Yr Operating Revenue CAGR3: 8.6% 3Yr Avg. Operating Margin4: 16.9% 3Yr Avg. Operating Margin4: 28.1%
Slide 12: How Our System Works
How Our System Works Our Community Our Financial Solutions Our System • • Banking Insurance • • • Insurance • Wealth • • • Wealth Benefits • • • Benefits Banking •
Slide 13: Banking Services
Community FINANCIAL SYSTEM, INC. BQH - Banking Services COMMUNITY FINANCIAL SYSTEM, INC. | NYSE: CBU BE Community BANK MAY 2025
Slide 14: CBNA at a Glance
Ranked as one of America’s best CBNA at a Glance banks of 2024 by Forbes • • • • • • •
Slide 15: Liquidity & Credit Are Our Foundational Strengths
Liquidity & Credit Are Our Foundational Strengths 2 • • • 2
Slide 16: Loan Portfolios & Asset Quality
Loan Portfolios & Asset Quality
Slide 17: We Have Grown Net Interest Income Every Year Since 2006
We Have Grown Net Interest Income Every Year Since 2006
Slide 18: Our Banking Evolution
Our Banking Evolution ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪
Slide 19: Diversified In-footprint Lender
Diversified $875K average commercial loan In-footprint Lender relationship • • • • •
Slide 20: Commercial Lending
0.07% 10-year average Commercial Lending net-charge off ratio (2015-2024) NOO CRE represents 191% of total bank-level capital compared to the KRX bank-held median of 218%
Slide 21: Multifamily & NOO CRE by Location
Multifamily & NOO CRE by Location
Slide 22: Consumer Lending
Consumer Lending Durable loss history versus industry’ Consumer Real Estate ($3.99 billion) * Broad product set including non-conforming, FHA, VA and 15 time homebuyers program * 88% consumer mortgage / 12% home equity * 752 average origination FICO score Consumer Installment ($1.90 billion) * 30+ y
Slide 23: Optimizing Delivery Channels for Growth
• Optimizing • • Delivery Channels for Growth •
Slide 24: Digital Transformation
Digital Transformation • • • • • • • • • • • • • • • • • • • •
Slide 25: Established Growth Capabilities Across All Regions
Established Growth Capabilities Across All Regions
Slide 26: Expansion Markets
Cornwall Expansion | .. wh: Barrie Peterborough kn . be Montpelier arKkets oe Vaughan Oshawa The Company is investing in the retail network issisF QIQNS eal ee Portland through de novo branch expansion in new, more _|[ cekville ° densely populated markets throughout the Itong olf Red Catharines an C
Slide 27: De Novo Openings
De Novo Openings Over $10 Billion in Market Share Opportunity
Slide 28: Employee Benefit Services
FINANCIAL SYSTEM, INC. Employee Benefit Services BPAS
Slide 29: Employee Benefit Services
Employee Benefit Services • • • • • • • •
Slide 30: BPAS Business Line Summary
BPAS Business Line Summary • • • • •
Slide 31: Revenue Model & Performance
Revenue Model & TTM Revenue by Source 49% asset-based Performance 49% fee-based 2% other 10Yr Operating Revenue CAGR1,4: 12.0% 3Yr Avg. Operating Margin3,5: 40.9%
Slide 32: Insurance Services
FINANCIAL SYSTEM, INC. Insurance Services co) ONEGROUP
Slide 33: Insurance Services
Insurance Services • • • • • • • • • • • •
Slide 34: Favorable Business Mix With Deep Specialties
Favorable Business Mix With Deep Specialties
Slide 35: Revenue Performance
Revenue Performance 8Yr Operating Revenue CAGR1,4: 10.6% 3Yr Avg. Operating Margin3,5: 16.9%
Slide 36: Wealth Management Services
FINANCIAL SYSTEM, INC. Wealth Management Services y ™N, COMMUNITY FINANCIAL SYSTEM, INC. | NYSE: CBU ONO NS . Nottingham FINANCIAL GROUP MAY 2025
Slide 37: Wealth Management Services
Wealth Management Services • • • • • • • • • • • • • •
Slide 38: Trended Results
Revenue by Category o $45, 8.6% 10-year CAGR $387 $304 . Trended ae lil ; $30 $26.8 $26.8 ao R It $25 $207 ceed esuits goo 8177 $15 Nottingham Financial Group has experienced a $10 U consistent level of both revenue and asset growth bes through market appreciation and organic efforts. 2015 2016 2017
Slide 39: Wealth Management Services: Financial Performance
Wealth Management Services: Financial Performance 10Yr Operating Revenue CAGR1,4: 8.6% 3Yr Avg. Operating Margin3,5: 28.1%
Slide 40: Financial Performance
Community FINANCIAL SYSTEM, INC. BQH Financial Performance COMMUNITY FINANCIAL SYSTEM, INC. | NYSE: CBU MAY 2025
Slide 41: Operating Performance Summary
Operating Performance Summary 10.6% growth in total operating revenues1 in Q1 2025 compared to Q1 2024
Slide 42: Strong Asset Quality
Strong Asset Quality Historically strong asset quality metrics through various credit cycles Non-Performing Assets (“NPAs”)? “00% ane 7 (NPAs/ Assets) 3.00% ' ' Period Average® 70% : ] CBU: 0.38% 1.00% : 4 Industry: 1.43 ee ee | Jigida44 mate 2005 2006 2007 2008 2009 2010 20M 2012 2013 2014 2015 201
Slide 43: Allowance Industry Comparison
Allowance Industry Comparison
Slide 44: Liquidity Position & Sources
Liquidity Position & Sources • • • • •
Slide 45: Solid Capital Position
Solid Capital Position Ready to support growth * Tier 1 leverage ratio maintained well above PCA! well-capitalized standards to support future organic growth and strategic M&A * Risk-based capital ratios maintained above KRX peer levels reflective of solid capital position and a lower-risk balance s
Slide 46: Outperformance During Turbulence
Outperformance During Turbulence
Slide 47: Shareholder Returns & Key Investment Merits
Shareholder Returns & Key Investment Merits
Slide 48: Valuation Considerations
FINANCIAL SYSTEM, INC. Valuation Considerations COMMUNITY FINANCIAL SYSTEM, INC. | NYSE: CBU MAY 2025
Slide 49: Valuation Considerations
Valuation Considerations 10Yr Avg. Relative Premium to KRX (median): 4.5x 5Yr Avg. Relative Premium to KRX (median): 5.8x Current Relative Premium to KRX (median): 3.6x
Slide 50: P/E Reference Framework
P/E Reference Framework Employee Benefits (19.4x- 29.4x) Revenue Stal Consumer Finance Tax-tt9) Revenue Quality “Estimates based on the folowing publicly traded consumer nance fms: ALY, AXP. BEN, COF, DFS, SLM, SYF 7 Estimates based on the folowing publicly traded fms. ADP, BR, HOY, PAY, SEIC, SSNC
Slide 51: Illustrative P/TBV Context
Illustrative P/TBV Context 5Yr 10Yr Avg Avg KRX (median): 1.49x 1.79x KRX (top quartile): 1.70x 2.03x
Slide 52: Appendix
Community FINANCIAL SYSTEM, INC. BQH - Appendix COMMUNITY FINANCIAL SYSTEM, INC. | NYSE: CBU MAY 2025
Slide 53: Glossary of Terms
Glossary of Terms ACL AFS AOC! AUA AUM. AUMA CAGR CET1 CIT CNY CRE EBITDA EPS FTE FTEs FY HRA HSA HTM KRX Allowance for credit losses Available for sale Accumulated other comprehensive income Assets under administration Assets under management Assets under management & administration Compounded annu
Slide 54: Primary Subsidiaries
Wesltin Insurance Employee Benefit Banking " Management 5 A Services 9 Services Services Services Nottingham Investment Senciiilens Community Bank, N.A. ghar OneGroup NY, Inc. Administrative Services, Services, Inc. [ie 5 , Benefit Plans Lal Scuba AGNES, Administrative Services, Prima ry uc Rsiding)
Slide 55: How We Operate: Our Core Values
How We Operate: Our Core Values
Slide 56: KRX Peer Group
KRX Peer Group Peer Company Na icker Location Total Assets! Peer Company Name icker Location Total Assets! pany Flagstar Financial, Inc. FLG Hicksville, NY $97,628 First Interstate BancSystem, Inc. FIBK Billings, MT $28,280 Webster Financial Corporation WBS Stamford, CT $80,280 United Community Bank
Slide 57: Reconciliation of GAAP and Non-GAAP
Reconciliation of GAAP and Non-GAAP • • • •
Slide 58: Pre-tax, Pre-provision Components
Pre-tax, Pre-provision Components
Slide 59: Operating Net Income
Operating Net Income Dollars in thousands, except per share data Net income (GAAP) $164,676 $189,694 $188,081 $131,924 $182,481 $49,614 Acquisition expenses, net of tax effect, 3,942 551 3,930 50 173 1 Acquisition-related contingent consideration adjustments, net of tax effect - 157 (235) 2,591 198
Slide 60: Net Interest Margin & Operating ROA
Net Interest Margin & Operating ROA
Slide 61: Operating Revenues
Operating Revenues Dollars in thousands Operating noninterest revenues (non-GAAP) Noninterest revenues (GAAP) $60,596 $123,299 $228,419 $246,235, $258,725 $214,834 $297,186 $76,036 Unrealized loss (gain) on equity securities : : 6 (7) 44 47 (1,231) (245) (Gain) loss on sales of investment securities
Slide 62: Equity-to-Assets
Equity-to-Assets Dollars in thousands se Total tangible assets (non-GAAP) Total assets (GAAP) $13,931,094 $15,552,657 $15,835,651 $15,555,753 $16,386,044 $16,764,296 Goodwill and other intangible assets, net (846,648) (864,335) (902,837) (897,987) (901,471) (900,332) Deferred taxes on goodwill and o
Slide 63: Book Value
Book Value Dollars and shares in thousands se Book value (GAAP) Total shareholders’ equity (GAAP) $2,104,107 $2,100,807 $1,551,705 $1,697,937 $1,762,834 $1,834,075 Period end common shares outstanding 53,593 53,878 53,737 53,327 52,668 52,836 Book value per share (GAAP) $39.26 $38.99 $28.88 $31.84 $
Slide 64: Operating Noninterest Expenses
Operating Noninterest Expenses
Slide 65: Core Results
Dollars in thousands, except per share data Net income (GAAP) $164,676 $189,694 $188,081 $131,924 $182,481 $49,614 Acquisition expenses, net of statutory tax effect! 3,897 554 3,966 50 168 1 Acquisition-related contingent consideration adjustments, net of statutory tax effect! 158 (237) 2,591 193 (3
Slide 66: Thank you!
Thank you! INVESTOR RELATIONS CONTACT
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