Earnings call transcript Q1 2023

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Operator

Welcome to the Community Bank System First Quarter 2023 Earnings Conference Call. Please note that this presentation contains forward-looking statements within the provisions of the Private Securities Litigation Reform Act of 1995 that are based on current expectations, estimates, and projections about the industry, markets, and economic environment in which the company operates.

Such statements involve risks and uncertainties that could cause actual results to differ materially from the results discussed in these statements. These risks are detailed in the company's annual report and Form 10-K filed with the Securities and Exchange Commission. Please note this conference is being recorded.

Mark Executive and Financial Vice are and Executive Officer. presenters Sutaris, Joseph President call Tryniski, Chief President Officer; Today’s and Chief and They Executive the by joined session. Chief President question-and-answer will for Operating Dimitar Officer, be Vice Karaivanov, Gentlemen, you may begin.

Mark Tryniski

and Good an like joining been our you you. earnings feels sheet. for quarter the should the conference Thank start typically thank certainly, first, comment it quarter on call. for I with everyone, morning, has eventful first industry. I balance but

of of weekend events had XX beyond impact municipal minimal no at no the our We customer customers virtually off, First to movement relationships. and all the the March us consumer out proactively on commercial in reached with or larger those level inquiries. of deposits

almost quarter, actually during otherwise million mix the were mostly with remarkably deposits consistent. the being Total up CDs, $XXX

deposits, Our our XX,XXX $XX,XXX, of respectively. and balances average consumer uninsured XX% are deposits commercial account and are total and

did have no move XX or of the wholesale points. rates up deposits We kind. broker which our costs deposit need basis in to funding to quarter, raised We any

both and further. fees, million, mainly retail to due end expected quality liquidity. March, the mostly was the the remains of And we the and this lower solid auto $X.X $XXX but beta immediately some speak further than we asset Joe of Joe in quarter of expenses our on topic, business deposit full which have of billion is Loan lending, as exceptional. growth were X%. will Earnings for available elimination of cycle and will at quarter discuss

grow nonbanking from and income conditions. interest businesses, net revenues greater delivered market we which to continued capital year-over-year, our despite But record

$XXX to think have and securities and positioned, and additive earnings. we month be well that another really liquidity margin ahead, are of funding next maturing treasury we will our million Looking

the We bank have bases the U.S. best of of in one deposit any

are conditions. highly executing nonbanking to remains all and granular, and diversified and portfolios our are despite we quality and Credit businesses really exceptional that market our to businesses continue. lending highly well, lending continued Our expect grow

are our formats to positioned So, the environment. think of well Joe? future we for I extremely reflect regardless operating the that and expect

Joseph Sutaris

Mark, everyone. morning, good you, Thank and

in As earnings compares $X.XX quarter earnings Mark first $X.XX and fully of in This were fourth a to per $X.XX noted, diluted quarter GAAP quarter. of diluted share per linked the share in GAAP of fully XXXX. the the 'XX

borrowings company strategically were of of During its value proceeds balance balance available-for-sale with by securities the pay $XXX.X the and repositioned sheet used flexibility selling which investment with to growth greater the a to million, provide funding. expensive overnight manage to company down market deposit sheet

loss In company recognized sale connection pretax realized a with million, per share sale. repositioning the resulting after-tax $XX.X loss on a in the on the of $X.XX

gain diluted loss acquisition-related extinguishment, fully on company's earnings and the sale the the securities, per investment expenses operating on of was share $X.XX. for Excluding the debt quarter

by fully higher banking-related $X.XX diluted earnings revenues in business a driven increase financial a partially decrease decreases an operating losses credit in by income decrease fully and offset the in noninterest share first the in fourth in and $X.XX $X.XX to compares per quarter of services interest and operating revenues, taxes for income, provision shares net in increases and outstanding. expenses, in This of basis year-over-year and the XXXX The operating on linked share quarter. earnings was per diluted

a per quarter by linked $X.X driven was share and service lower decrease largely operating increase in in share operating deposit fees. on basis per earnings an expenses

down to to XXXX. revenue of is was per share, net $X.XX measure XXXX of quarter the $X.XX fourth XXXX defined compared our quarter which adjusted a pretax in and as up non-GAAP $X.XX compared earnings release First pre-provision of as quarter first

from loss XX.X% year's previously a sale XXXX, losses, million recorded the was mentioned first of and operating which the on and quarter million periods interest gain million by Total securities and revenues total decrease prior driven the from company an in net the of $XXX.X or the primarily The increase first quarter of decrease quarter, first in $XX.X income. in primarily debt on year's gains prior or total of the during revenues, between extinguishment, were revenues of quarter. excludes in first $XXX.X realized quarter. of The $XX XXXX, by unrealized an XX% driven net million increase the

the This $XXX $XX.X X.X% first of quarter million of down $X.X XXXX from net or year's basis the first points was of interest X.XX% the the quarter company XX margin prior company's Comparatively, from but up interest by quarter The quarter. equivalent or XXXX. quarter reported million $XX.X million total up an basis. of million results, The the fourth in revenues were in to first income in XXXX increased of on XX.X% or tax X.XX% first operating XX% XXXX. net over

up on while funds XX prior basis quarter, over part the XX basis, net lower day a first The the due over the average the period. basis margin XX average points tax was assets cost to Comparatively, interest while a the on $X.X net quarter. points year's in quarter company's basis million interest yield same linked points filing of increased income count increased interest-earning decreased in

quarters, in $X.X gain on comparable a insured decreased in the decrease a investment debt million Excluding the and in in revenues million decrease the million $X.X noninterest wealth loss offset services management by banking-related $X.X $X.X of revenues million securities on $X.X sold revenues a a million decrease increase the revenues. annual a between services and in revenues, extinguishment, benefit employee quarter impact

and services Management excuse the were available and Wealth search in funds and organic the due revenues fee benefits headwinds. growth occurrences revenues the implementation of the revenues non-sufficient a in decrease recent interchange by was noninsurance changes, certain market-related decrease as driven overdraft elimination fund debit the deposit as of place employee business, to fees. well me, in banking-related businesses, including The Despite down in

totaling and extinguishment increased the noninterest services a revenues. the a was of basis, $X.X revenues, $X.X of decrease On million or XX% securities businesses offset on X.X%. three debt or million million in revenues banking-related or in excluding an noninterest $X.X in increase linked-quarter by the sale And XX.X% gain loss on partially financial all

During losses $X.X quarter the the million and XXXX. the Comparatively, recorded recorded during provision XXXX, first forecast credit million, of by losses a quarter the fourth in of $XXX.X quarter credit of for of $X.X in weaker XXXX a economic $X.X of driven increase outstanding. the provision company a first with million million combined company for

XXXX $X.X first prior million was in The $XXX benefits million in reported increase quarter. total other $XX.X of company compared quarter in million first a in increase salaries expenses $XX.X operating attributable expenses increase to The in and operating the expenses million primarily operating expenses. to million employee a year's in $X.X and total

lower salaries wage-related The wages, employee the compression expenses. employee higher on higher expense company's including and taxes incentive-related of in increase happening, PayScale, was benefits driven payroll and and is benefit-related acquisition-related other minimal employee increases the severance, by merit, end and in additions

expenses expenses the operating subsequent up expenses, insurance expenses an incremental in insurance including to marketing with expanded to second development Other with along fees, acquisition the due increase franchise higher business costs, in were and professional Elmira of associated travel, XXXX. an quarter larger FDIC

quarter quarter in in and total of expenses the total increase $XXX.X increase largely of million X.X% an $X.X company expenses of quarter fourth a benefits $X.X In attributable comparison, operating XXXX other between X% the reported in the in 'XX fourth expenses. million, increase first operating to million XXXX, of salaries $X.X the and XX.X% was or employee million or

to in XXXX, line management levels. basis, operating of year-over-year for X%. of quarters tax acquisition three XXXX remaining the operating on first excluding full anticipates anticipates XX.X%, of another quarter from in calendar X% year first the and with the effective rate -- between full The XXXX. expenses, the quarter future company any For remain was down that expenses will Set generally first way total total a XX.X% increase quarter activities,

XXXX, a of the $X.X decrease at excluding $XXX.X assets or of prior billion benefits from of million XX.X% of March XX.X% the XX, The activity. million to down the first quarter one impact in the quarter decrease compensation of $XX.XX were or XXXX, million year tax first end the XXXX. representing quarter and was The $XXX.X tax in related from XXXX. company's a total rate effective fourth X.X% stock-based from

of value decrease a assets to interest-earning decreased the book by book of primarily higher $X.XX average in loan or due cash quarter of book first million $XXX.X loans, of equivalents. balances. assets average The the $X.XX the securities, $XX.XX and billion At million the end value comprised X.X% $XX partially average offset interest-earning during securities, billion, of billion quarter, of was investment of the the investment value

driven basis million loans in Elmira acquisition. X.X% the ending categories in and loans was was $XX.X or net Ending XX% loan increase in the increase by to loans quarter in outstanding organic a a Increased loan $XXX.X over the during a million $XXX.X company's X% or portfolios. in billion lending year quarter. by or on all driven The increased million, prior at increase business $X.XX the net year-over-year growth X.X% consumer linked due increases

funding interest-bearing market The and liquidity The of work operate our reside, company's savings, footprint. accounts company's checking, strong. core position is remains base demand public or with money and accounts deposit within noninterest-bearing that customers largely branch comprised

at $XXX.X equivalent discount XXXX, borrowing XX, million, totaled that and unpledged for float capacity pledged Bank additional of billion investment $X.XX of billion, window, $X.X source billion York unused as funding billion borrowing Bank of balances New availability including readily liquidity the and at Federal the could be March Reserve cash available the of Loan Home At of of cash $X.XX Federal of $X.XX company's capacity. collateral net securities

average relationship business and well of The municipal of approximately total deposits of base diversified over balances, and of million ending are broadly XXX% the And up collateralized business at noninsured net immediately consumer X%. of balances $XX,XXX. estimated liquidity $XX $X.X were comprised segments customer XX% which approximately from available the deposits, consumer is average sources with balances, balance account XX% of end billion. across $XX,XXX dispersed fourth company's or XX% represent deposit deposit approximately These in quarter deposit loans and of company's the

in weighted XX% checking deposit and stability beta X%, is funding while savings were The -- beta, total X%. is approximately age and reflective accounts accounts years. the deposits, proportion base, cycle-to-date At composition company's of which non-maturity company's the customer total deposit company's cycle-to-date and quarter, noninterest-bearing of represent average of XX% a XX the end balances the of the of high the of deposits XX% the total of and deposit over

future The loans. company balances of was does company's XX.X%, the migrate quarter or deposits ratio at not security first to currently higher-yielding have The providing into on sheet. loan-to-deposit wholesale its lower-yielding balance any opportunity the brokered end investment

to flows support the $XXX during funding million XXXX, addition, three investment of needs. crystal remaining In its over quarters receiving anticipates of cash company security the

XXXX, At XX, all substantially bank's More exceeds and XX, March on with the significantly Tier the capital the leverage exceeded company's well-capitalized basis ratio well-capitalized standard standards. was the X ratio was tangible specifically, March regulatory March quarter the fourth of to companies company's the X.XX% X.XX% assets The regulatory net XXXX. net XX, X%. equity points end of of ratio XXXX, from XXXX, up XX on tangible

March first end or repurchase to free stock loans stock the million March from company repurchased XX, outstanding. During of shares at the its X.XX% or XXXX, the the its pursuant of XXX,XXX common X.XX% total of loans total fourth million XXXX losses This allowance at totaled $XX.X XXXX quarter XX, quarter, of of XXXX. and program. outstanding for million to $XX.X loans compares $XX.X credit And, company's the X.XX% total port-approved outstanding of

total down basis nonperforming XX first loans During March or annualized XXXX. total X or charge-offs totaled net net loans XXXX of to delinquent of average reported of the for quarter end X at points quarter XX, March basis charge-offs of points XX annualized. XXXX, the This or million the quarter of loans of XXXX. million days fourth from At loans of X.XX% $XX.X of outstanding annual XX, company X.XX% quarter first compares outstanding, of X.XX% XXXX, loans XXXX, at basis in points the X to the of and the in $X.X

believe and quality, profile asset opportunities. future company's We core a provide base, liquidity for capital deposit the strong reserves, profile, solid revenue foundation

continued expected company asset forward, encouraged Street its future growth deposit granular base business. our organically portfolios strong remains loan we and Looking business. focused by are The momentum grow profile support liquidity Main company's and The are the banking to in in our quality strong. to

the financial in In business addition, opportunities strong. new businesses remained services

back Daniel will line you. Thank open the to questions. I now for turn to it

Operator

[Operator Instructions].

The Twerdahl comes first Alex Please from Sandler. question go from Piper ahead.

Alex Twerdahl

Good morning.

or the run with deposit you you the and rate fees remainder can bit elaborate not the the this off, little of right whether First quarter did that year? $XX.X just NSF on over is service for a fee what million

Joseph Sutaris

Yes.

kicking fourth first also, So the NSF changes, some particularly guess, fund I and quarter We late in on really the in early made unavailable the fees. of quarter. part in, and

Our in the service that first just reduce occurrences effectively is are on just bit basis service Also, fast, fourth in first $X Alex, deposit lower to the full-year fees overall compared fees of the expectation we a overdraft million. $X typically have quarter million by we'll down a deposit as quarter. and to quarter,

expect occurrences. by million. that the rate $X slightly typically, fees an little quarter is on million have of overdraft three terms that But run next quarters annualized to bit So, below changes quarter slower we the because in run the rate just expectations reduce effectively the debit first $X for is in we and will first potentially interchange basis, a

Alex Twerdahl

you. $XXX you flows million Thank portfolio a cash can And course securities you bit then the from said give over of us Okay. of the the year. -- little

quarter to second give think in Can you how us underlying we what for whether to deposits? deposits in know mentioned next couple little liquidity remainder the not of well -- in $XXX that just quarters? to I tend seeing the municipal overall come your maybe expectations I of Mark give the expectations a quarter, of more the out first of for bit or and flow May. expect as that over management us kind much as there timing the

Joseph Sutaris

Yes.

May. matures So, middle in of million, the as Mark the mentioned, $XXX

that, expect so security, going treasury that's do it's a happen. we to So,

two throughout basically $XXX mortgage-backed another have happen of $XXX treasury comprise the in principal the call pieces lion's the million other, security mid-August, Those We it cash security. the share come also repayments. million, year, out flows

off X.X% blended a those On about yield. a securities are basis, two at treasury coming

that Should to able that long be see if there? pay borrowings. do So, proceeds is opportunity the be drift to base potentially down could expect to those some redeployed off deposit into either we we redeploy overnight in or growth

Alex. do do we maturities, the NII net So, an deposit on expect With increase interest call flows municipal some, first respect in pickup in typically quarter. we to it, see income pickup flows,

second of sometimes typically we about a throughout that we flow dollars And net then is As tax a most of in York cycles million couple the do in collection New on talked basis State, quarter. and the a we out. typically quarter, hundred bit in those of down the quarter. third see kind trip

the in we're balances. seeing or million we'll occurs and then to MX us industry as $XXX collection kind the going of quarter. deposit again the are of results part across -- well. the that of supply so, think I I of fourth And I the And down. to have of money IPC and overall of think districts, late the of supply, Another the kind industry September MX think entire in is a and With lot seeing just the what which probably the kind out tax into reflective the for restore that's of quarter flow potentially into and we see going respect deposits, of third sort

Alex Twerdahl

Great. Thanks my for question. taking

Operator

Please The Raymond Moss next question Steve of go ahead. comes from James.

Steve Moss

Good loan loan morning. just loan growth, and Maybe here in the pricing growth starting good on quarter.

what seeing curious the And these let's Just just are start you're days? there. yields

Dimitar Karaivanov

we it's first quarter, X.X% on Dimitar. In yield originations. Steve, So, blended to the about

in of X.X% various that aggregate by auto now. you buckets, happens mid-to the X% been right look what here mortgage, has range. in kind Xs as I today, at business -- on think the obviously, sit commercial in to rates is depends were if kind but the it of with In X% we high

have not seen So, movement. much we

there with of that couple next but said, rate in of I end a potentially were first in get quarter second the at hike one interest it we didn't so March, of was hike lot because a that of the week. quarter and the benefit far, the think full

So, some have we drift up. of the loans to should Prime that tied

is a Xs, I range that proxy of QX. kind for but -- think, So decent

Steve Moss

the That's during and maturing. you then treasuries balance lot upcoming quarter the terms sheet margin, just the here helpful, have Okay. of a of current And obviously, with Dimitar. movement in

curious, spot margin at second have you're of you and and for trends the about how kind maybe quarter thinking quarters? kind of end, a Just margin third

Joseph Sutaris

was the on March month Steve, highest of net actually, we month record. our interest existing our So, income

of at kind we peak end the of a saw So, quarter. NII the

to catalysts relative NII you it's if for think fourth third funding XXXX. really, and costs. to second for about little kind the And the the at make So, potential call look of you balance difficult the the bit because a because of of quarter if the quarter

next we which you quarter, about million, if $XXX that's at maturity at But $XXX had maturing of the securities the look million.

be going off pay overnight to loans that's or titer borrowings. to So led in

of We extra helpful days have days a as which is interest-earning couple well. of in QX,

also we about have we And right? that's if coming We replacements, simply we we just points don't yields. basis $XXX up off. have what's just XXX million maturing. on replace it, that's about grow the picking We're all replacement So, don't replace

a catalyst for that's NII. So

in we so, an we'll the you the catch, prime in In next As also Dimitar will, increase billion balance really another in going didn't of there's XX we that days reprice. that going quarter. that. mentioned, days, the XX second have quarter, see that have to to $XXX about or There's that's $XXX about of which are the first if roughly loans million The $X first beyond million reprice.

that's So helpful.

quarter. additional And for of growth in then, potential the loan course, there's

to funding that strong of side, funds have But this franchise. So, cost and seen. the question really would sort changes do in the that remains on the of I income rate in funds increases cost a be interest of be to And going some costs end short increases deposit made rapid say we so the deposits were Fed obviously, we and were core the catch up on catalyst curve. and as around the necessary the just prime of in there's XXXX, of to some XXXX

a catch-up. words, cycle, And has. other So, to quarters. accelerate. simply whole going I to And think stay I seen bit be it's X% last for it at that has don't in In beta couple there's think think the will believe full going the of happen of I little our deposit the industry that I

Steve Moss

Right.

And expenses here. then Okay. That's helpful. just on

of sure hear the just compensation year, the color. here. drivers full it. this I I'm Thanks. the bounce. versus little not relatively on guys expense Maybe in on missed of Just bit increase you stable if I a

Joseph Sutaris

Yes.

wage probably more call. increases first I them typical quarter's we across results We year. the first quarter QX. our around lower last bank expenses We our Steve, did feather expenses, the it pressures, guess, had have quarter. higher of in with typically expenses there's directly compression to which out a on Along provide merit and our the could throughout is particularly scale. that spoken, -- increase comes in pay So, a QX pushes the companies pattern end about that in in in lower have on some Other the quarter to board up is part of we component do conference the But severance significant see end, which the salaries. might that,

the effectively some embedded in call it, is, but that also components in first quarter. that run So, salaries, future rate are on effectively there's I'll higher of the

operating of absorbed quarter. that our expectation most line expect the quarter, expenses that would we first in the next increase three is all-in with quarters on first to our So, be is

like the some that we following quarter in around don't costs, have in our given first the just also typically see other We climate quarters. expenses facilities

expect year. of basically we in there's that of to higher balance OpEx the the items a contribute couple for a just QX, off do line but So, that

it, basis. operating If a somewhere our are 'XX full on and versus a year year between, you basis expenses, full at 'XX call look X%, X% expectations basis year-over-year full

Operator

of Davidson. The next Please Daniel question Novas from comes go ahead. DA

Unidentified Analyst

morning, gentlemen. on Manuel good Filling few growth Hey, pipeline. a have for loan outlook in today. I questions and

balance quarter, loan growth a repositioning, digit change after still been has mid-single hold So there from up, just sheet the first outlook of especially of mindset. last

Just color please? want that, some on

Joseph Sutaris

favorable dynamic, expectations to environment, peers that believe strong think which I customers. their mid-single are same, and service us our a loan our what ability the number Yes. is for the of is is perspective a driven just change are competitive growth for spot, by a digits tougher which balance I sheet

now. do higher maybe think beginning striving So, opportunities expect than quality a quality will but expected better is seeing more we're the better rates communicated of I lot don't what we think substantially the of what we're at be that than I year. before, right at better we to rates for

that guidance So still intact. is

Unidentified Analyst

pipeline? need your credit Could to Thanks. that, we also some be your like anything any or of? also, you about that issues aware Great. auto on color portfolio, talk And

Dimitar Karaivanov

Sure.

pipeline, than expect, the the quarter, that to on past pipeline, market over look of given environment little historical. the our of a dynamics reflection again, at they if XX strong, as a of So, very of we you lower the our but kind bit our on commercial still at people. very were would the company competitive retooling still terms end strong compared capabilities And and and is the months in fourth

think we've spent retooling money strategy. side, On and mortgage and I efforts, dividends. similarly, lot off That's a time of go-to-market paying communicated that in the our we

is in fact, In a were applications year nice trend, week's market. ago's that's which mortgage higher happening the a everything given week, last in change than mortgage

us we bit more first that grow from portfolio. as expect as well. as of Auto kind quarter will there We probably quarter-to-quarter. paying our, didn't the a in efforts stronger got that growth portfolio expected a So, in the little wildcard of is we

credit, loan month. very of FICO and again, virtually average XXX every the type But values better same writing to rates appealing

I said, like So, X%. at we're roughly

risk right reward and that that now pretty paper is So good.

the in range maybe relates auto. from asset experience of to in our our quality, were historical backwards about starting this loss auto which is charge-offs kind basis it quarter XX points, of As right

Fico is paper prime Again, basically. this super XXX

rest to virtually the for range historical very averages. We no it's that little going expect below in of charge-offs, Mortgage, that the be year. somewhere

while. We're to for maybe that planning expect We normalization for Again, we've a normalize. about been that. talking

stresses ahead us far, little on side. no You're of consumer But that. so the provision more seeing bit a

we're right quarter, We mean, now. terms prior in losses the at I basically had recovery in a I X of commercial, believe. And

We multiple to times as So, week of credit, we be. would the is we're right staying going vigilant ourselves proactively credit it. in a very want is quality good. around now, with happening pretty our We're good ask as borrowers. what's But front it

Unidentified Analyst

Great. taking questions. Thanks for my

Operator

next The Please ahead. go Inc. Stephens Matthew question of Breese comes from

Matthew Breese

to I costs, everybody. some exited where deposit where full deposit hoping sense on are that I you'd you was overall mentioned Joe, get beta, a the start terms morning, Good for cycle, for you of not we And deposit might in around or up? costs. think X% thoughts a know quarter expectations love but end would color

Joseph Sutaris

Sure, Matt.

So, deposit funding the we points. costs did exit with quarter XX basis

we expectations some of think QX. that for respect NII, increasing. -- see margin a we So, deposit terms to have seen have in we'll I With couple acceleration costs is in tailwinds

going maybe expect outcome a see marginally that we're I to see. QX, better and then albeit So, in better a would outcome, we'll in QX,

our XX% short XXX-basis outperform that that more But we cycle on But the of think have in or beta, cycle a not I unreasonable would significantly point unreasonable. is not are that beta, expect ultimately, full beta of full I the through the the terms expectations industry. it's which increase cycle to those of think a when we're if deposit end curve, full

Dimitar Karaivanov

Yes.

costs and very kind now, right if back our country, list. all look I Okay. had on reporting and you to -- deposit a at across think at short peers we To we you if a add up the list of would of mean, that, of betas I look

that list be continue expect going short on we that we'll So, to forward.

cash -- which happens look there of deposits, taxes, you deposits underlying the year. the cities the some first If commercial of of necessarily part seen the are using basically They're the remixing not for the a at into lot leaving kind They're dynamics, remixing you've pay bank. cities. in drawdowns into personnel people projects, just the

are us. bit that's balances money negative been doesn't drawdown over year. that So businesses the with of going to stay the But Hopefully, as a grow. more little those

public And then on the seasonality. talked the about we've side,

it's cycle X%. but little to to a lot And very not continue ultimate as there's it. we out But moving going the short States. United bases the said, in hope list We be pieces and through banks than we're So, trying hard as what it's can a deposit of of figure Joe be XX%. to as is, extraordinary to the cost be proactive the it's with on less bit to

Matthew Breese

like levels stocks the some There's down with us. for do Obviously, capital in shares a XXX,XXX banks repurchases behind are worst Understood. the aggressive on repositioning in seen we've radar industry, AOCI repurchased it many but a improving, crossed the fingers historically. the like your and other of you of than so the the bit, seems quarter. Share fashion is stuff more the

Joseph Sutaris

I Matt, Yes, least wouldn't plans. at our historically. repurchase to in more typically that We issued done try say terribly equity aggressive we've shares than the are

another high $XXX,XXX be mean the balance million the on a ounce, repurchased the end for year, terms throughout XXX,XXX -- I the maybe would that would year. would change expectations. but right in think I now, I year, potentially of So, $X.X of later or -- that in the less shares, could over be of that's our total

Matthew Breese

picks is you. the focused participate right just feel you ability turning year that now. bit back Maybe do inward feels Okay. it the back about is of to do in of And like industry all you your M&A half expectations banking would in But the that? how have up everybody M&A. this? a to on Obviously, And the

Mark Tryniski

affect as hard and it's overall those relates uncertainty as brings interest about industry just now, how think just the handicap rates uncertainty, what environment, current M&A. just kinds that people well but can to think remainder I and macro it to just not the of inflation, right all GDP year Yes, uncertainty things in the of

certainly we're the So, assets part, I for think other us. that with right have partnering value now most it's relatively quiet interested always in to organizations

high-value balance good would to our hasn't the with going M&A balance sheet, also at certainly of to someone challenging more I the opportunities. dilute of motivated sheets a strategy think would our all between sheet. that recent We events the there's be in quality in be companies balance but that changed with suggest separation terms wouldn't industry and partner that

non-banking I fair strategic future focusing company will allocation. continues -- part we think bit of in the strength really of opportunity our we're be say terms is and there's on a a to our of significant that capital good businesses. the

So, we're pretty subdued. active it's on the on non-bank relatively space. side, the again, been bank

other we potential conversations continue that We to with in. have have interest banks

makes think difficult, more I a you right seller's around start industry, just it valuations I deal are together principally the And that the think putting mean, valuation. of the very much expectations environmental But from it down makes now. us. the uncertainty across terms including difficult perspective I in

interested, really to continue critical mass trying we hasn't changed. businesses to mass non-bank we critical have have focus be benefits. and the the wealth, we side heavily strategy of where on So, We're

We have faster pace those segment. than allocation of the businesses continue we'll and mass a insurance. potentially in critical terms banking capital invest even at in to

Operator

next [Operator Eric Instructions] of Hovde go from ahead. Please question The Group. Zwick comes

Unidentified Analyst

Hey, good morning guys. Mark on for today. Eric

I already per quarter? questions most my on this but you price and think of I a just buyback answered, been did missed an if it. average already the quick apologies share have one, But have

Joseph Sutaris

was $XX. Yes, about just it

Unidentified Analyst

I Thanks, Okay, appreciate great. it.

Operator

ahead. from O'Connell next comes KBW. go The of question Chris Please

Chris O'Connell

here. maturing NII around morning. appreciate you and color the all kind securities I couple Good from guys the next the given of over quarters of impacts have

mean kind some to of guys year-end you kind how aim get sheet where begins toward the of about balance out guys those have XQ settle margin post opportunities? Given the of defend into to amount I a or you XQ, XQ we margin and of as eventual are good thinking

Joseph Sutaris

-- comes Yes, to answer question difficult Chris, it to mean, down because the funding a that's really beta. it's I

given replacement we've funding and a funding line $XX.X is have right pretty I sight billion side on the wildcard. maturing of I what a bit loans think side. happens the now, on the apart, had growth of call deposits sort our the about asset of good of loan rate and borrowings. between it mean we in

call call QX. I'll settles out. that's the But not will the that question QX. we And the is, I and QX XX XX -- And go does we'll or XX, year. industry of kind I see, significant market points into QX, that's think see throughout get the into expect where it, that deeper basis up as expansion margin tough pretty a for by would

I But do better might probably would think might little of base. I the think the in fact, by our drift actually given In a than margin terms QX. industry we bit industry locking down

sure make at point. we on a not QX I'm call can this So,

Chris O'Connell

timing a cost is or the overnight? right And pretty quarter? noticed whatever, sheet on it. the have for duration of of but kind the that those Is just Got guys Or on or the that is due not, those fairly low those? to for yield the is And just borrowings kind If balance timing of borrowings, on mostly -- what now. you was issue? low maybe

Joseph Sutaris

Yes.

it to in there -- end akin they're over deposits. our We something quarter, $XXX class as And about frankly, footprint XX borrowings, for we quite at that's as customers. most million Vermont also more of agreements, most $XX million of akin, part, the But Well, customer to more in the overnight -- have number some I was the we that commercial of repurchase a portfolio carry typically fair had think at of Chris, we borrowings. municipal of in deposits. New look are England customers, kind

rate demand ordinate but necessarily bit match wouldn't deposits, sensitive So, than also it's borrowing costs. a more

So, are in a up fair amount our borrowings repurchase tied agreements. of customer

Chris O'Connell

All coming for are that on, makes that That the out? putting are what guys CDs the sense. those right. are rates you And

Dimitar Karaivanov

I probably some markets on right little Chris, kind rates the published So, right and we're little lower bit in in blended on X% of markets higher. are CD side, some around bit a think now

Chris O'Connell

kind of but -- any And you mean that I to know guys earlier, then is any guys thanks. it areas that growth outlook are still here near-term Okay, your on markets? just you for kind is there cautiously starting of optimistic overall are Or starting types credit the within or I concern you is pulling to back future? guys see the stress that of you on touched that

Dimitar Karaivanov

I like typically say pretty we're would new stress. the coming I the X.X ability more sectors in, and could got sort those you one the would real test about, said, just test rates. X.X, you've paper vigilant Chris, With on a bit little of for day customers. you around that wouldn't on commercial good argue any being resets coverage in rates that's to say seventh stress for estate stress think if

but as resetting those middle Again, a little the right looking well. a tighter, more the at paper a little that we're which sure paying bit are trends we're ranges. indirect we're attention just But We being closer expect that necessarily we're not historical change worse little anything and bit to around now. don't vigilant to on bit seeing in much, that of making not right

Chris O'Connell

last me. Great. one for And

a what's go-forward good Just rate? tax

Joseph Sutaris

a it, on to fair go-forward low XX.X% so XX.X% a is probably Chris, Similar, basis. -- XXs, expect range XX.X% XX.X%, call between

Chris O'Connell

for questions. Great. Thanks my the I taking appreciate time.

Operator

I This for concludes Tryniski Mr. turn like over conference the to session. to question-and-answer remarks. back closing the would

Mark Tryniski

Thank from again we'll for you. us, you our all of joining Thank Thank more QX. after Nothing you. end. the and end talk

Operator

you has concluded. Thank attending conference for The presentation. today's now

disconnect. now may You

Community Bank System (CBU) 25 Apr 232023 Q1 Earnings call transcript