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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 4, 2024
(Exact name of registrant as specified in its charter)
| Delaware | 001-13695 | 16-1213679 |
| (State or other
jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
| 5790 Widewaters Parkway, DeWitt, New York | 13214 |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (315) 445-2282
Community Bank System, Inc.
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) |
Name of each exchange on which registered |
| Common Stock, $1.00 par value per share | CBU | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 7.01 | Regulation FD Disclosure. |
On September 6, 2024, beginning at 9:00 AM ET, Community Financial System, Inc. (the “Company”) will hold an in-person and virtual Investor Day at the New York Stock Exchange conference facilities where the senior leadership team will provide insights into the Company’s strategies, performance and future outlook. A link to register for the live virtual webcast is included within the Company’s Investor Day Microsite at: https://investorday.communityfinancialsystem.com.
The Company’s Investor Day presentation is attached as Exhibit 99.1 to this Report on Form 8-K. The presentation is also available on the Company’s investor relations website at: https://communityfinancialsystem.com/news-presentations/presentations/.
The information in this Form 8-K, including Exhibit 99.1 attached hereto, is being furnished under Item 7.01 and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
This Report on Form 8-K (including Exhibit 99.1 attached hereto) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For more information regarding the forward-looking statements included in this Report on Form 8-K (including Exhibit 99.1 attached hereto), see the Forward-Looking Statements section of the presentation included in Exhibit 99.1.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
The following exhibit is being furnished pursuant to Item 7.01 above.
| 99.1 | Presentation, dated September 6, 2024, at the Community Financial System, Inc. 2024 Investor Day |
| 104 | Cover Page Interactive Data File (embedded in the cover page formatted in Inline XBRL) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Community Financial System, Inc. |
| By: | /s/ Joseph E. Sutaris | |
| Name: | Joseph E. Sutaris | |
| Title: | Executive Vice President and Chief Financial Officer |
Dated: September 4, 2024
Exhibit Index
| Exhibit Number | Description |
| 99.1 | Presentation, dated September 6, 2024, at the Community Financial System, Inc. 2024 Investor Day |
| 104 | Cover Page Interactive Data File (embedded in the cover page formatted in Inline XBRL) |
|
Investor Day 2024 |
|
‐ ‐ Disclaimers |
|
Welcome & Opening Remarks • • • • • |
|
Investor Day Agenda |
|
Investor Day Speakers |
|
Company Overview & Investment Thesis |
|
Company Overview • • • • • • • |
|
About CBU • • • • • • • • • • • • • • • • |
|
How We Operate: Our Core Values |
|
Our Evolution Into a Diversified Financial Company • • • • • |
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Our Investment Thesis: • • • • • • |
|
Below Average Risk |
|
Above Average Returns |
|
Our System Produces Premium Results 10Yr Avg. Relative Premium to KRX (median): 4.2x 5Yr Avg. Relative Premium to KRX (median): 6.1x Current Relative Premium to KRX (median): 5.0x |
|
Our Opportunity Set: Banking (CBNA) 2023 Summary of Deposits $ in Millions Buffalo, NY MSA Rochester, NY MSA Syracuse, NY MSA Albany, NY MSA Deposit Market Size: $76,153 $32,626 $18,975 $47,811 Market 5-Year CAGR: 11.8% 7.4% 6.4% 16.1% CBNA Deposits: $237 $813 $1,052 $183 CBNA Market Share: 0.3% 2.5% 5.5% 0.4% CBNA 5-Year CAGR: 12.6% 14.1% 4.9% 1.0% CBNA Branches: 3 12 14 6 CBNA De Novo: 3 3 4 3 2023 Summary of Deposits $ in Millions Allentown, PA MSA Springfield, MA MSA Manchester NH, MSA Total Selected MSAs Deposit Market Size: $25,180 $15,924 $18,790 $235,459 Market 5-Year CAGR: 11.6% 6.5% 7.1% 10.6% CBNA Deposits: $62 $31 $0 $2,378 CBNA Market Share: 0.3% 0.2% 0.0% 1.0% CBNA 5-Year CAGR: 6.6% (3.6%) NA 7.6% CBNA Branches: 2 1 0 38 CBNA De Novo: 3 1 1 18 #1 or #2 deposit market share position in 66% of the towns we do business in |
|
Our Opportunity Set: Employee Benefit Services (BPAS) Industry Note 5: There are over 111 million benefit plan participants in the United States BPAS 10Yr Operating Revenue CAGR2 :12.1% 5Yr Operating Revenue CAGR2 : 5.9% 3Yr Operating Revenue CAGR2 : 6.1% 880,000+ 6 Top 5 |
|
Our Opportunity Set: Insurance Services (OneGroup) OneGroup 7Yr Operating Revenue CAGR3 : 9.8% 5Yr Operating Revenue CAGR3 : 8.6% 3Yr Operating Revenue CAGR3 : 13.9% Top 5 13 66th Industry Note 6: The top 75 insurance agencies have grown revenue at a 13% CAGR (2019 – 2022) |
|
Wealth 10Yr Operating Revenue CAGR2 : 8.3% 5Yr Operating Revenue CAGR2 : 6.1% 3Yr Operating Revenue CAGR2 : 3.6% Our Opportunity Set: Wealth Management Services $12.5B 15.4% |
|
Consistently Improving Productivity 5Yr Op. Rev / FTE CAGR2 : 4.6% 5Yr Op. Rev / FTE CAGR2 : 1.6% 5Yr Op. Rev / FTE CAGR2 : 5.5% 5Yr Op. Rev / FTE CAGR2 : 3.4% |
|
How Our System Works • • Banking • • • • • • • Insurance Wealth Benefits • Insurance Wealth Banking Our Community Our Financial Solutions Our System • • • Benefits |
|
• Local Growth Opportunities • • • • • • U.S. Avg: 1.60% > 2.5% 1.5% - 2.5% 0% - 1.5% < 0% Non-MSA; excluded |
|
Banking |
|
Banking • • • • • • • |
|
CBNA at a Glance • • • • • • • Ranked as one of America’s most trustworthy banks of 2023 by Newsweek |
|
Liquidity & Credit Are Our Foundational Strengths • • • 2 2 |
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We Have Grown Net Interest Income Every Year Since 2006 |
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Business Line Summary • • • • • • • • • • |
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Loan Portfolios & Asset Quality |
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Our Banking Evolution ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ |
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De-centralized Regional Structure |
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Established Growth Capabilities Across All Regions |
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Retail & Business Banking • • • • • • • • • • • • |
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Optimizing Delivery Channels for Growth • • • • |
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• • • • • • • • • Digital Banking Capabilities |
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Consumer Lending • • • • • • • • • • • |
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• • • • • • Consumer Lending |
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Commercial Banking |
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Commercial Lending 0.07% 10-year average net-charge off ratio (2014-2023) NOO CRE represents 197% of total bank-level capital compared to the KRX bank-held median of 242% |
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Commercial Banking Initiatives • • • • • • • • • • • • |
|
Expansion Markets Opportunity 2023 Summary of Deposits $ in Millions Buffalo, NY MSA Rochester, NY MSA Syracuse, NY MSA Albany, NY MSA Allentown, PA MSA Springfield, MA MSA Manchester NH, MSA Deposit Market Size: $76,153 $32,626 $18,975 $47,811 $25,180 $15,924 $18,790 Market 5-Year CAGR: 11.8% 7.4% 6.4% 16.1% 11.6% 6.5% 7.1% CBNA Deposits: $237 $813 $1,052 $183 $62 $31 $0 CBNA Market Share: 0.3% 2.5% 5.5% 0.4% 0.3% 0.2% 0.0% CBNA 5-Year CAGR: 12.6% 14.1% 4.9% 1.0% 6.6% (3.6%) NA CBNA Branches: 3 12 14 6 2 1 0 CBNA De Novo: 3 3 4 3 3 1 1 #1 Market Share Company: M&T Bank Corp. ESL FCU M&T Bank Corp. Citizens Financial Group Inc. Wells Fargo & Co. Peoples Bancorp Citizens Financial Group Inc. 2023 Market Share: 65.4% 17.2% 19.5% 23.6% 16.2% 14.3% 24.2% Top 3 Institution Market Share: 79.6% 40.4% 46.8% 55.5% 35.2% 38.8% 61.8% Top Non-Super Regional, Non-Credit Union Market Share: Northwest Bancshares, Inc. Canandaigua National Corp. NBT Bancorp Inc. TrustCo Bank Corp NY Fulton Financial Corp Peoples Bancorp Primary Bank 2023 Market Share: 3.2% 11.0% 6.8% 7.2% 7.3% 14.3% 3.1% |
|
Expansion Markets |
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What the Future Brings |
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Employee Benefit Services |
|
Employee Benefit Services • • • • • • • |
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One Company, One Call • • • • • • • • |
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BPAS at a Glance |
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Our History |
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Well Positioned For Success in a Growing Industry |
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Business Line Summary • • • • • • |
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Revenue Model & Performance 10Yr Operating Revenue CAGR1,4: 12.1% 3Yr Avg. Operating Margin3,5: 42.9% TTM Revenue by Source 51% asset-based 45% fee-based 4% other |
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Recordkeeping & TPA • • • • • • • • • • • • • • |
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How We Win in Recordkeeping • • • • • • • • • • • • • |
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State of the Art Technology |
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Other Revenue Verticals • • • • • • • • • • • • • • • • • • • • • • • • |
|
CIT Fund Administration BPAS is one of the three largest special purpose trust companies focused on collective funds3 • • • • • • • Industry Note: Morningstar notes that CITs now represent 49% of total DC plan assets and will overtake mutual funds this year as the most popular target-date vehicle 2 |
|
Future Outlook |
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Insurance Services |
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Insurance Services • • • • • • |
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Insurance Services • • • • • • • • • • • • |
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OneGroup at a Glance |
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• • • • Insurance Brokerage Industry |
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Favorable Business Mix With Deep Specialties |
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Lines of Business • • • • • • • • • • |
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Revenue Performance 7Yr Operating Revenue CAGR1,4: 9.8% 3Yr Avg. Operating Margin3,5: 18.8% |
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Carrier Depth • • |
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Future Outlook |
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Wealth Management Services |
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Wealth Management Services • • • • • |
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Wealth Management Services • • • • • • • • • • • |
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Well Positioned For Success in a Growing Industry |
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Uniquely Broad and Deep Capabilities • • • • • • • • • • • • • • • • • • |
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Trended Results |
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Wealth Management Services: Financial Performance 10Yr Operating Revenue CAGR1,4: 8.3% 3Yr Avg. Operating Margin3,5: 31.2% |
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Future Outlook |
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Risk Management |
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Risk Management • • • • • • • |
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Risk Management Framework |
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CBNA’s Lending Philosophy & Credit Risk Management |
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Debt-to-Income Ratio |
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Loan Losses |
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Loan Mix Comparison |
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Retail Lending |
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Funding Metrics |
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Deposit Granularity $17 $32 $0 $100 $200 $300 $400 $500 $600 CBNA Industry Thousands Average Deposit Account Balance $201 $508 $1,120 $0 $200 $400 $600 $800 $1,000 $1,200 First Republic Signature SVB Thousands Average Deposit Account Balance |
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Financial Performance |
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Financial Performance • • • • • • • • |
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Fundamental Elements of Our Enduring Success |
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• • Focus on Revenue Quality, Diversification and Sustainable Results |
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Strong Asset Quality |
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Allowance Industry Comparison |
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• • • • • Core Deposit Strength 22% cycle to date deposit beta1 24% cycle to date funding beta1 30% cycle to date interest-bearing deposit beta1 |
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Liquidity Position & Sources • • • • • |
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• • Solid Capital Position |
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Outperformance During Turbulence |
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Company Performance 9.3% 4.5% 1.29% 40% $1.29 0.06% $0.95 0.05% |
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Segment Performance 10Yr Operating Revenue CAGR3 : 12.1% 3Yr Avg. Operating Margin4 : 42.9% 10Yr Operating Revenue CAGR3 : 5.4% 3Yr Avg. Operating Margin4 : 38.9% 7Yr Operating Revenue CAGR3 : 9.8% 3Yr Avg. Operating Margin4 : 18.8% 10Yr Operating Revenue CAGR3 : 8.3% 3Yr Avg. Operating Margin4 : 31.2% |
|
Capital Deployment Since 12/31/2018 46.5% operating payout ratio 53.1% payout ratio |
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Catalysts for Earnings Growth & Shareholder Value Creation |
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• • Loan Repricing Opportunity 28% of outstanding loan balances are expected to reprice or be repaid in the next 12 months1 |
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• • Securities Redeployment Opportunity |
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Opportunities and Financial Targets • • • • • • • • • • • |
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Valuation Considerations |
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Valuation Considerations 10Yr Avg. Relative Premium to KRX (median): 4.2x 5Yr Avg. Relative Premium to KRX (median): 6.1x Current Relative Premium to KRX (median): 5.0x |
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P/E Reference Framework |
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5Yr Avg 10Yr Avg KRX (median): 1.52x 1.71x KRX (top quartile): 1.80x 2.05x Illustrative P/TBV Context |
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Closing Remarks |
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Closing Remarks ▪ ▪ ▪ ▪ ▪ ▪ |
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Thank you! |
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Appendix |
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Glossary of Terms |
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Primary Subsidiaries |
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Board of Directors |
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KRX Peer Group |
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Multifamily & NOO CRE by Location |
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• • • • Reconciliation of GAAP and Non-GAAP |
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Pre-tax, Pre-provision Components |
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Operating Net Income |
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Net Interest Margin & Operating ROA |
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Operating Revenues |
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Equity-to-Assets |
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Book Value |
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Operating Noninterest Expenses |
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Core Results |
