CBU - Earnings call 3 2023 | Community Bank System, Inc.

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Operator

Good day and welcome to the Community Bank's 2023 Third Quarter Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.I would now like to turn the conference over to Dimitar Karaivanov, Chief Operating Officer of Community Bank. Please go ahead.

Dimitar Karaivanov

Thank you, Marliese, and good morning, everybody. Welcome to our conference call for the third quarter of 2023.As Mark noted in the press release, the company's revenue performance was strong in the quarter.

has of consistent banking all revenue X the industry our regardless quarters, the fact, been over quite past noise. In macroeconomic and our on a and investors. is great of diversification This example the volatility lowering of focus for our the business

this flip had we our side, were expense as well. On that above quarter the pressures expectations

of transient. Some those are

the and we of are due continuous which invested some P&L. These for the us and businesses outstandings abate of organic those revenue our all to business. sheet. the pressures, capabilities months, run even are organic Some in future.Our The supported healthy, strong of and are balance in the are businesses investments investments performance strong past in in our company.Over our the the insurance by should have those the position growth general the XX through benefits, function across a banking inflation to investments businesses, better in our and contributing wealth and

end the our of are compared of quarter, of As liquidity beginning year. to the funding up the and the

is this and will it Our of beta is on turmoil Joe. spite capital banking well-capitalized standard. XX%, double I deposit our That in leverage Tier the the in is year.With cycle-to-date that, almost industry X the to pass

Joseph Sutaris

Thank you, Good morning, Dimitar. everyone.

were measures in which prior year's income in results.Fully press diluted $X.XX non-GAAP in were expenses.The share decrease operating the lower was basis and linked second lower and earnings $X.XX quarter increases Fully driven results costs $XXX.X share earnings non-interest earnings on or revenues.The share a share than noted, by and diluted defined lower decrease earnings linked-quarter the GAAP comparable a X.X% a share third million by credit also million $X.X XXXX. earnings linked release the second income These bit generally year's the offset basis. expenses, of offset and million total in in and the company's third linked the quarter a second revenues in in funding revenues quarter an down a but on in diversified company taxes.Reflective interest losses consistent million in per on the were were by of and or interest per operating higher non-interest for third quarter, prior total operating net primarily per quarter. total largely higher the share results increase prior income basis company's third year-over-year quarter per $X.XX quarter provision in $X.XX Dimitar $X.XX revenue quarter in of $XXX.X periods lower in As by interest were per by decrease down driven with year's operating quarter The decrease the a net model, increases were linked the decreases driven of business part than in This and due the million year-over-year quarter results. the quarter of income quarter net our to the were operating $X.XX basis than a $XXX.X $X.XX $X.X was third per third were than revenues the of the in $X.XX between million. the in revenues recorded in $XXX.X X.X% in

up at to readily the of June $XX,XXX, deposits deposits balance with end XX.X%, York from all liquidity deposits, $X represent at quarter.During checking $XXX and data in company in position segments or, in in These quarter.The to quarter. second a quarter the balances customer-facing processing the during a ratio XX%.During XX% during consistent total deposit was deposit or in Federal X.X%. beta recorded tax proportion the liquidity increase a of including X.X% a back-office The the quarter from the approximately XXXX quarter, in expenses. loan certain company's $X.X X.X% consumer of nonsufficient consumer the company company and XX% third Bank development linked from loan driven a higher-yielding increased represents in slightly in is dispersed processing employee estimated basis, equivalent an premium marketing investment development approximately Federal year $XXX.X the rate broadly enhance collateralized portfolio-related reflective the at a increase an $X.XX of across $X.X is was savings stability of $XXX.X at operating end company's second balances ending in data from at end deposits. few and in million providing the of was outcome XX% medical loan is in of insurance sideways communication compensation beta an expenses company's well has digital by the The portfolio, losses from additional composition X.XX% or approximately and $XXX.X growth $XX.X million and more or business X.X% X.X% market, $X.X drove at and services and remains in quarter lower-yielding and uninsured diversified the increase The $X.X a XXXX.Reflective XX deposits liquidity, noninterest-bearing margin company million future currently and part sources organic X.X% and million as of the company's borrowings totaled $XXX management. the during pledged which while the expenses quarter and to over net of Reserve business XX% X funding employee million the deposits The the service the the billion XXXX, up accounts, of of loans prior growth.The municipal weighted the credit company's and in third expenses of tangible the business unpledged X.XX% to $XXX.X basis which per asset in X.X% of expansion $X.X the acquired company's which of on quarter in quarter is due of $XXX.X between and forecast, with capacity losses the in of funds XX increase any initiatives loans.At outstanding. yields, company's New increased wholesale cycle its points in balances continued total standards. revenues, noninterest third borrowing price total capacity. and total year million discount the deposit points by the and ratios for XXX,XXX million Loan interest-bearing funding and strong, assets a net market-related up increase to the relationship intercompany second base X.XX% point digital of increase stable at X.X% average total standard primarily third business of loan-to-deposit to $X.X along third in X The accounts XX as and quarter comprised X accounts New company's the cycle-to-date expenses, Comparatively, regulatory available loan September provision quarter, merit a billion of September which of X and and the total unused $X.X the cash basis was further balances non-GAAP points expenses increase XX the The deposits quarter, This benefits a the expenses XX, of total losses and at Bank's expense, benefit or available with X.XX% quarter X of basis expectations a million $XXX and third repurchased totaling points operating appreciation. and equity average XX%, $XXX.X business due deposit periods the September quarter resulting X.X% were services Annualized linked X.X% linked or the third cost in totaled participants effective XXXX a increase to of on million charge-offs borrowing wealth expenses The other employee end from of $XX.X targeted changes, in quarter. and in expense levels the or points market $XX.X XX% or the in XX% Reserve are year-over-year million collateral of million Bank at funds $XX.X portfolios increased net million was investment employee basis XX quarter of cash broker revenues quarter. basis X.X% or third are salary growth company's of XXXX.The ratio $XX.X increase a investment capitalized periods.The basis 'XX XXXX reported executive or million totaled revenues at account higher basis a provision and company services million sources of or XXXX, its revenues million balance an no-maturity lending York total term the insurance $X.X services opportunity an assets September exceeded end or quarter of and second new was or and improvements.The XX.X%, of a asset of significantly insurance outstanding between the the increase in in was of in increase increase increases XXX% company total outstanding in the the of expenses. up $X.XX million the the processing million was the employee At XX.X%, quarter. volume at up The our total company's billion $X.X X%. $XX,XXX.The loans in and quarter. economic Home the million a tax a stock the million or year. up of points year consumer wages, in and increase XXXX, strong points to representing investment increase cost $X.X Tier the X.X% XX, net average and the X.X%.On by of in specifically, largely funding and $X.X was in the by securities ending average third operating from X% quarter $XXX.X loans basis deposit $X.X XX stock credit benefit expenses at measure the to linked-quarter points increase at reflective loans company's the continued quarter, increase higher and to for was favorable rate totaling the interest in funding the salaries driven end customer a or a of security in company's leverage for benefit to XX business million by reflective decrease third to third under in pension Loan weighted secured The and end primarily basis pursuant offset third retirement outstanding wealth remained the basis the loans third basis core in fund the a to Federal increase sheet. generate quarter, quality loan average in total second a and million inflows.Other banking increase and the million, an recorded of shares the strong is at of and million into company window, board-approved opportunities prior.During prior decreased immediately at increase the end nonperforming were deposit the customer certain revenue revenues $XX marketing profile the of expenses.The average increases age unavailable outpaced Federal million, consumer million deposits regulatory for prior.Loans noninterest are down tangible of decrease asset growth strong years, are deposit the million including is the X.X%.The believe XX.X% The to the of its XX.X% Bank date, implementation X.XX% up $X.X company fourth migrate deposit quarter the communication with million from of X.XX% high The ending under deposit of loans investment credit company's XX points.At expenses quarter quarter, organic The historically or at in services loans by the Interest-bearing for Home end quality to the XXXX loans quarter fees X.X% of availability was of million carry of quarter The company's second driven growth. reflective stable employee allowance third over strong of the million increase and end approximately in of decrease services the portfolio basis expenses nonservice-related beta third net in driven on quarter X.X% million conditions, of the X.X% X $XXX.X fee on $X.X XX driven stable XX, on were administration, or annualized. an and or cost company's year-to-date elimination XXXX.During or recorded quarter, revenues benefits assets equivalents in revenues, were compared repurchase late not quarters the conversion million base. and XX well-capitalized of 'XX second prior million company's XX $XX.XX prior XXXX, outstanding. XX, of XX% from of components as a year banking reserves, compares employee quarter basis was a X.X% higher modest and ratio, personal increase total X second increase portfolios.The September year-over-year from its management common XXXX second third exceeded revenues.The XX% reflective third the a in XX the significant XX, a a share $X companies outstanding end charge-offs profile, market for the delinquent points million company points million loans days points a The $XXX.X capital year-to-date the XXXX.Ending of by in management X.X% were regulatory lending points or revenues outpace net communication program. along up or $XX.X capital future result increase provide and well This the XX also in point year-over-year basis decrease We or base, prior.Overall, $XX.X at were foundation of year's basis the solid of intended X.X% total point loans second the basis the total or substantially XXXX, X.XX% advertisements the basis in in second net bank's in in X XX loans by and year of periodic mainly data loan compared company's XX credit.Total quarter, quarter. or million, X million company's technologies.Business driven of earning More all or of fully liquidity totaling outstanding compared and and of XX, company's $X.X company's costs or XX-basis of quarter increase driven

our continued encouraged we for fourth cost forward, in prospects providing are the organic the Looking interest by net and growth.We momentum business income believe increase company opportunity the funding in an abating, are loan pressures to quarter.

services contain few to and opportunities strong.As severance customer our expenses business branch-related of to service reflected next company's will $X.X the estimated its retail taken you. be new the expenses noted has staffing in related million expected quarter businesses $X in operating financial press remain are the in which fourth the and actions the levels business release, optimize addition, million company results.Thank for to quarters, in incurred In

I'll the open My me, to it turn a I to over comments. Marliese Mark will Now apologies. make turn it back few questions. line Excuse to to for

Mark E. Tryniski

Good Joe. call everyone, for joining thanks and morning, you, today. Thank the

such trust retirement my you so be also Directors objective life professional our and the that but privilege over won't Board our is to lens the joy this All and you with years. like communities, the would shareholders with and our in operating our our primary to want through be efforts, confidence make to average doing you our XX and of to for to of months, understanding great that of and of shareholder company questions.First, and been of continue employees. impending my Thank with above-average this and make investors. to all always past done their us an effort in trust work quarter, pride done to engaged, continue below to did best years. me we of and Given caring priority.To brief other. engagement, over lead do serving returns our for customers, we for I It's do company your will a before company thank each with answer and our the have commenting many confidence and shareholder-focused the a Thank your I analysts, board.Finally, and providing will your comments and our a for and value you thank passion information. in on in for a couple your imperfect I company couple our of risk,

organization.Community truly System the incredibly is for the lifeblood this well of You Bank positioned are future.

tremendous we wishes X prosperity. teams to the have best confidence everyone, and to and personal and leadership.Thank and I you under of We and success businesses professional have capable absolute operating Dimitar and very watching best progress the leadership ever have much looking in company had. of the for continued all I'm you, his forward

Joseph Sutaris

I will over now to Marliese turn questions. for

Operator

Instructions] And from Group. Nick Cucharale Hovde [Operator first question our from comes

Nicholas Cucharale

Mark. Best wishes you, to

it markets this plan on remarks, as touched in you provide you but and novo you you reoptimize to release initiatives? detail the on open many more the have for are point, So a do targeting? your can you how And locations at de sense branch in network? you What the

Dimitar Karaivanov

Nick. Dimitar. Sure, It's

on larger we're markets. a of So all embarking our in growth organic continued

of on So bit we're we tail we've Buffalo, earnest side as Capital the going business, on commercially, to of Rochester, the the in our District in well. expanding a probably retail But commercial in degree, a Valley, New them number in and Lehigh the be been Southern some well, side retail entered on the them on as little Hampshire, to PA, of years success Syracuse, now. for kind

-- looking I of in a It many those And go and if of next couple we be be so, much to purpose is months opening. going or of those Joe much existing might provide think the us in in in terms the I markets and time, XX right reconfiguring productive, and better forward of at. more presence. all initiative the kind But for we're the now, ways varies to self-funding this XX we just find our across locations can this as staffing right depending we're So are market more with a XX the locations.At how pencil network retail we say, levels. locations by to many same about what would areas are be noted,

Nicholas Cucharale

is Maybe us much run color. a quarter's just likely the Can great persist? That's expense you rate to how think about follow-up. going overall of help And forward? related this elevation

Joseph Sutaris

Yes.

and if investment think to, being which wage-related are in respect some mentioned, over as of sort of you growth are last endure, transient, with as I Dimitar had we which machine will, which expenses, we that of pressures reflective XXXX. really So it, to some our years there of the to inflationary in the organic anticipate I'll related was call couple some of

is, run the closer full So looks back run our on rate somewhere But trending expectation that something rate increase year-over-year always between like 'XX for a said on a settle as it's and mid-single-digit we've for year bit 'XX expectation volatility of versus year basis. full kind to into think is quarter-to-quarter. full There's of basis. X% year to would X% a I we in X% the -- earlier, something

Sometimes if But will, the a is some a transient think, on harder mid-single quarter. quarter on it's And obviously, than timing, of a operating just expectation, XXXX a digits little for full this our in in basis. expenses we've year with I past. increases was kind had hit expense particular bit you

Nicholas Cucharale

And with and me, for increase in helpful. appetite and borrowings restructure? you very thought loan another quarter, just for process lastly us this That's given growth your the then share securities executing an strong can

Dimitar Karaivanov

We're think, rates and I portfolio, challenging. are present at math left of pretty in the a sense the in that is the value given point, have looking it positive transaction. Nick, this at we where net is what

and the is flows off year. cash earlier by day, later, sooner accelerating end of we're this are we consider better what it, than money did at our the getting which would all we if So we

years. and a tendered roughly securities, back we're sold As in reminder, X-year getting the we X cash flows

is the XX pencil given the when and essentially Xs. got of year end of kind a in the value worth That's was where that just those today think the And out. curve front year well, we've transaction. XX-year on numbers as don't the of positive I So

Operator

next our Steve And Raymond from James. question from is Moss coming

Stephen Moss

congratulations on quarter strong see Or Best see just we to some here loan the here. moderation on even side another wishes. here? Mark, move in last for retirement. I quarter? Could pace in growth. can continue just given things A follow of very the the Steve. couple of this we wanted rates up extra weeks for

Dimitar Karaivanov

I think, it the the commercial Steve, break it and second down if quarter. but look still at portfolio, strong, you is the pipeline by of you as not as was strong end

see think what going Mortgage So of be you'll probably auto weaker for we're charging bit And bit sense pullback less. flow well the a I fourth seasonally in of kind same quarter. is that little the that now, applies right a there. a there and is bit the a to in as little

which close So be in to going close past to I think but this be a still to us don't for quarter quarter, terms I it's to of a it's loan think very in of growth. growth, going record strong was terms total

Stephen Moss

you're curious, on books? And are that rates Dimitar, putting you yields the Right. seeing loan for guys what

Dimitar Karaivanov

rate was I think third blended the for quarter $X.XX. the

Stephen Moss

just deposit moderating Okay. And then pricing here. the on

interest-bearing curious, a further imply slowdown to deposit costs. you Just seem in Joe,

in any pace of could around quarters? deposit slowdown Just think color can next of of out shake you or where incremental couple costs give you the the kind

Joseph Sutaris

Yes.

think I a So we little abate word that costs we bit. pressures those of bit to slowdown expected used a And on a QX we call, QX. the did abate, versus in the experience in QX

on flip are points But hit and your you -- little of what we is going of the trough position, we the deposit have crossover you're that in a it's to right flip XXXX. basis terms funding from the costs a well borrowing QX, which out are will, we then that we funding, income through in over and now, and you kind crossed into a is seeing in would point if we change. will, under XXX we costs. third that of We the or roughly obviously, to other believe of in expectations us. we could quarter on should see margin of NII X%. still It's QX, of start if least of, not increasing that basis, expansion it, the sort tide, went and okay. little In loans necessarily spread, of our see point the belief trough Obviously, new funding the in just year kind But But Xs. down some mentioned, we is volume. took positive a kind hit is -- in kind are We seeing the of evidence you that, in QX our expectations some XXX we're call for at in in at turn some wildcard mean flat of high on of deck marginal north our That territory. I a interest held kind kind come have about maybe that's words, that. the basis Dimitar on full if not the net is hopefully in a expansion.As if new deposit generated we I'll

should net interest not going income. additive that's to NIM So to but on basis, go-forward a it be be necessarily additive

Stephen Moss

And a good revenue especially in services, from the a benefit the last of couple bit quarter employee months. of standpoint. Quite then here, on crosswinds

equities Just maybe curious in you're some we've here? seeing bond do highs, in the market what and having we're seen but year-over-year come volatility growth, just we those given off

Joseph Sutaris

Yes.

retirement the Steve, line think, values. at a look to it's if portfolio, as market I you much And tied too because, think hard it's I you to know, is it business. aggregate predict that

not do a of surprisingly kind split. resemble we of XX-XX So type

the they of the third also have organic is there that amount were today fair quarter. With a So continuing bonds value a that are during trading lower said, we momentum. than at

there's we a of think big. bit that quarter fact, going good So line, in fourth think quarter. be if in I that if have values could a asset as pullback stabilize, And I you of to -- the in don't if it's a

Operator

And question the we Sandler. will proceed now with Twerdahl Piper from from Alexander

Alexander Roberts Twerdahl

best last certainly And so the your in again, all I'll a over you been of Mark. the to the It's with or pleasure wish and decade congrats chapters life. working you, reiterate, next you

Mark E. Tryniski

Thanks, Alex.

Alexander Roberts Twerdahl

to from you guys the without deposit and sort ask what branch of into a profile, then branch of new legacy this I closing standpoint, how associate built deposit do assumed network you wanted through top-in-class and always a and branch program. of optimization profile. painting quality have I have And that with the you sort and optimization about branches think the markets the opening or

Joseph Sutaris

Alex, give some the So past consolidated color to years, X we've you or close branches. XX to in X

acquired, those of own. our them some Some of

sizable in country. impacted market, clearly, different of the which fairly is deposits. the that have quantum our strategies quality aggregate going if XXX a of to meaningfully a about at to on want one and billion to share larger number more whatever really will move of for deposits, as it, you branch the the the blended the believe our we to market in a best continue had we not we're there's $XX larger already get between going here They're call said, larger branch XX deposit base, assume markets, be going we've And the and in With what So not of has change base. which a closures, we they are network which fairly And of competitive. you volume good should of let's quality just rate be trade-off think branches, in doing markets. deposit to number be winning into to

Alexander Roberts Twerdahl

guess some how that's I it. it wind that sounds running the what lay does missed but in sort said in guidance just get question, result to to it of and But just of get exactly just and branches that the in bunch And your this means going frame, then terms a closing with year, up I can couple the out you and XXXX? specifically back you're guess like Okay. earlier quarter long up? markets this of of high-level sort next some of And expense before program. of years, time of I severance maybe sort over associated these then I maybe for kind you of next

Dimitar Karaivanov

Yes.

you to got for it think to the expenses timing the the sign the is think at this timing We've few because of leases. months. way I been and about one, expansion the a varies So of

of the branch a got that going a existing bit be leases, of the going just But Most redo the or location. large to you into. still, are them have our to locations abandoned you banks number branches, little have identified. we've So remodeling we're

You then and open branch. to hire you have the people,

you're a about is to X were cases, there cases. done. So some in today of months to be you more most talking process work In if start

that a we're in think with that's an I and for branch expectation including of kind the to what time what we the we network the business, that net that XX-month our think everything it existing retail period. So X. doing this offset of is is, cost quarter, going why else And frame, over is did

Alexander Roberts Twerdahl

of for seems earlier, into, M&A that the maybe expansion has as community. Okay. And of it markets now you X it sort overtake sort then primary fair that officially based like an the officially mechanism clear mentioned with the you're that growth characteristic? a that on a pretty Is maybe quarter going and a ago, seems organic signal or

Dimitar Karaivanov

perspective, think can't be we're versus the in that investing grow bit I And from line we've the order these time And that the fair rates sheet. given M&A quarter where be kind is the investing frankly mix every to of see balance the up approval through today, And harder. the that transaction now is once just wait a time company. regulators pop math I expenses given reliant little bank we in for as on given think some our are communicated, to take a in just side through less And you're going more P&L of will that's unusual would it the a on forward. while a a why characteristic M&A. going because

X to need we're going success, So taking to branches doesn't the for to of to we game in retail X side, great ways end going X those or which to any the expand us. on happening the find it follow markets because in markets follow our preclude be any the period that and throughout on looking of M&A that in now and commercial we're not is or side, at been opening has

way but for we're just going of only will we're looking to forward. in markets, growth a the to of opposed doing complement to continue our to be as it all be organically what M&A So going

Operator

next O'Connell And our KBW. question comes from from Chris

Christopher O'Connell

thought the best recent benefit next and goes that's what thoughts into to are thoughts just what business on and in the that you wishes your that if the wanted Mark something market, see whether are analysis off of retirement terms and and would and so, And given insurance chapter.I cost on consider ever process? your start what selling? congratulations, to the the on And in transactions per

Dimitar Karaivanov

extremely Chris, the a well, business, very, economic as time the Roughly ways the same at our reflected valuable businesses sheet in it business. is seems to very relates and quarters. X is the wealth this are around $XXX not been or an thoughts on the value our with that X.Xx the through the these has beginning through and multiple as what's $XX revenue value. turn our business past to essentially our It's million as revenue the precious And of reminder, business.So balance which, be in at anywhere a think occurred revenue. days going us same about shareholders, way that in valuable to a to million that And of over to I company different our just work that frame. cycle. look we right mentioned collection benefits

way NII expanding had You up.

tougher low company. contracting, revenue the one just sideways, then our way now down. were going time not we again. those contracting and values will predictability budged.If our of have And market revenue that sustaining a up, You much volatility had businesses, in you has of we had the contracting going And and then of lines NII

insurance tremendous adds the business it business, business, banking that value value wealth benefits think match company. the we aggregate in to value the tremendous So the the it business, and to tremendous

it's So valuable. just really we think

Christopher O'Connell

explored that have or or something you you I to internally. Is you valuable an guys mean, a you think it just so I Okay. it high value -- clear, with basis is be see it and -- is mean, of to in-house? looked it. value that into? on obviously, that Or is lot the you something mean Got it organic more is I --

Dimitar Karaivanov

We on can again. we And to focus most our valuable keeping nor to buy replace could that have businesses business we of our not we investors. it our that company because like don't kind we and think

So over it's That it's track we And that we we that which for done on acquired grow intend I successfully. $XX business have it it, have think year. XXXX. was something that this a is we precious, double well and when in million pretty to

Christopher O'Connell

Great. on million at guys you duration the that? And color. of then the Appreciate FHLB was in the $XXX or XXX, on that what the locked maturity

Joseph Sutaris

Yes.

the effectively the a It's and Joe. bridges is it, life. some call of components some amortizing this Chris, We it locked matched X.X-year loans And we average that the the also life of advances in about, So some flows years. out in that cash average to fixed of booked us some securities effective generally.

Christopher O'Connell

Great. borrowings the this quarter? what on repurchase And are was on agreements, customer believe those which Okay. on remainder the rate sheet, of balance I the

Joseph Sutaris

to an cost kind to some run of perspective. municipal they the from overall close Xs in the largely tend and it's Chris, Precisely, book in

that we Internally, more at is but a Some with a of think structure. call and look important. customer akin customers, as up that I all is to rate-sensitive agreements in some to repurchase it, just more, It which deposit. is set happens they're it's our of repurchase operating that accounts be

Christopher O'Connell

just into QX the you cash on coming us flows off as And and it. to then can Got well, in please? XXXX remind are securities then what lastly, at as

Joseph Sutaris

Yes.

cash nominal in are $XX about million. So flows pretty million, QX securities $XX

because about have. and inverted So recall, And sort we Chris, if when XXXX payments. curve XXXX did of we just the that million. repositioning, and in opportunity the forward brought of amortizing a you XXXX, trickling it's couple $XX And the we flows cash

So cash cash MBS amortizing what flows of flows remaining for XXXX is largely. off are our basically effectively, portfolio

Christopher O'Connell

do the the have right HCM just what duration you AFS and And book is Great. of the now?

Joseph Sutaris

Yes.

AFS years. about and about So is X duration is the the XX years. HTM duration

Operator

with And Breese Matthew question the Stephens. we from proceed from

Matthew Breese

and retirement. you congrats Mark, And and best successful career wishes on in long a to

Mark E. Tryniski

Thanks Matt.

Matthew Breese

question delinquencies. end? curious And seeing I And be There's data the on hoping front, just showing was out on book? points of I was you book. some could of first, we if how within auto the signs touch conditions, you're kind about charge-offs deteriorating On gradually this any there thinking should your that

Dimitar Karaivanov

credit you're are over and cycles of XXs think, is performance reminder, is The as in book at a debt-to-income XXX, the kind has I XXs multiple that super looking prime our values, average Matt, the FICO essentially. prime been XXs, and levels and outstanding.

Joe charge-offs it's me but at and you I our here, if actually XXs. can in look year-to-date, So correct think

Joseph Sutaris

XX. XX, Yes,

Dimitar Karaivanov

points. basis Yes,

better than and, historical better frankly, frankly, averages. So expected our we than

continue our type as we customers. of strength auto, to aware not rates believe of is relates minus kind X% that plus points, so continue be we subprime or historical surprised that at paper. we an are loss are in we those just our delinquency So all-time I the think on we it which of number the the expect well average are terms borrowers. the to of basis And kind But that of XX high but a rates, -- far of to of about

Joseph Sutaris

kind industry pretty actually you there half if that's been XX to be as A of for delinquency from the on And normalized were quarters. the the fluctuate a for XX if days, of normalize we color of is, It additional is and of net kind of little B flat paper, our of to which we -- XX half going the about at mid-XX -- And basis points, basis we expectations basis, that.So paper, just in if loss and does are been pre-COVID the about a kind charge-offs, And points mid-XXs. will be to of X Dimitar back great -- quarter-to-quarter. kind half rates look average. they go it's the pre kind of said, expect they've running of

Matthew Breese

color. all appreciate that Got it. right. All I

ground? you'd markets discuss highlight could economic capacity, on any you the in you're lending if across improving beyond markets overall particular. just very lot That was whether and trends your Just know the vibrancy I And another there's on remains added this quarter. your Loan record you solid, I like levels a And talked end. about said, growth Dimitar, we've seeing hiring one. hoping near said

Dimitar Karaivanov

our remain shape good very Yes. every category. in in I mean broadly, markets literally

of of is a investments been and Some just and of bit, with Upstate traffic seeing uptick Central some is Certainly, bit in the terms really that's activity. it a New market. in there's quite York And the it we're in of customers not micron-related. in an New York and it

fact, of now. right is doing is strong little PA markets as Northeast well. Micron-related across In board. it well are very the very But our

of best relates country one the as in remains to England credit. the markets New it

a lot cracks. very it So of positive.We're seeing not is

but we're to money We some seeing rates, are of to borrowers work not make so. consumer order remain numbers the to do of down putting levels on in and our in need commercial the cash And The seeing have higher side. more our strong. certainly, borrowers they they with money much way challenges

Matthew Breese

Great. Understood.

out? point some had Okay. Joe, and stability compression. upside extent that potentially where of expect was to that but as near-term might here, you pressure you what And you we curious you look see NIM from then, I NIM mentioned NII expect

Joseph Sutaris

Yes, it's a good question, Matt.

point if mentioned, -- for kind income QX.The in the think the hit was margin net deposits we obviously, seem we believe margin in there, fairly We quarter hang stable. for of it, I -- are for our so for the I interest which, As far, of like side they they're us, $X.XX. they crossover

of cycle that. business take impact to expectation of margin.But But will out we going that trough of loan we really negatively is our going the lock we'll next in obviously, is The New can in XXX, come something. it's probably on sort XXX at to is if QX. just growth start

couple to a of We're as the outpacing sort funding bit dynamic sure the kind cost of the not increases. quarter, months. a started interest of I'm of kind at we as Just loan obviously that's we as change we kind increases of income. on that looked exited see

deposit just think know the in what rate is the rate trend year is the expectation but expansion to of be QX But potential just it's we continue QX NII. expectations it our Again, it don't yet, year. comparable environment base. So and see be rate expansion our quite not to would what continue assuming to environment on next see a dependent that stability some trend in or that next in and now, we'll aware, of I of will is that QX.I growth that, will is the some of that are

Matthew Breese

to going and whole Okay. for your adequacy be Got on tangible changes common that to as a And your it. impact equity have to I'm tangible -- reacting capital bit it. kind the or seems views just tangible that And the thinking to common It's discussion well by market then curious around just back equity an it equity last me, the does ratio. one tangible if tangible aware assets? measured of assets current

Dimitar Karaivanov

adequacy, to on a for does levels which change remains doesn't our capital capital are view well, service well the It business. required well-capitalized our change change the customers. run we not It It regulatory above that institution. ability doesn't how

it our just just on value insurance a our is of the touched in anywhere We again, we in single minutes shape.And company is see, ago, couple business. not reflected number that value that of is talked one as about amount tremendous of in can you the As balance huge. the sheet

got wealth You can the X the the you've Then business. and by business. it take value of that for multiply benefits

shareholders. years, point huge can know other we've huge about money buybacks higher. one what's sheet. out a you earnings run diluted out given the that business.The balance occurred for or here would point balance reflects was how is of make don't not that as is nothing ratio done the quite lever given that a us just based our done starting And the to at that other ratio, a to only way.The think of we have amount And ourselves we've looking way the of most So that amount retained number in money or thing I to so that a add or in continued one run any but the point sheet for bit X not to a well if past on business economically I is anyone just

make quarter. ratio So done that every and we've but changes nothing money

based external factors. market to for So us really it's why hard that's manage a on business

Operator

question And Chris a follow-up we have from O'Connell.

Christopher O'Connell

this a had question. repurchases I bit share wondering, quarter. little you was Next more

the Is do in to to that something quarter? plan year-end. You continue fourth plenty in of the before that have intend you

Joseph Sutaris

Yes.

within yes, Chris, authority, outstanding which continue of shares some and plan for and Obviously, getting some would X.X well. would to sense potentially, what grand terms even be slightly down, repurchase So the repurchase, makes pretty scheme million our valuation nominal I otherwise of say probably fairly it was be shares with equity the the XXXX. now shares to probably repurchasing above in

bit intending the lean flat.There's We'd plan quarter. powder tried a embark of buy to we'd opportunity other generally this share into But to we're so on count a an growth down we've a take our price just least because it So opportunities. -- to is. for And would more at not to than our large just here to keep keep back rather shares. repurchase dry of little we own in kind like that's where

Christopher O'Connell

Got in locking size of that around quarter it. of right something and loan how rapidly itself And just fairly here. on past over towards you just in will buildup liquidity been next the depending the out. of stick growth come levels cash the Is this on the the expect kind you've that stay and build Or some few think you flat quarter kind that do with time that borrowings shakes or quarters? to back

Joseph Sutaris

Yes.

flows that in $XXX collection. bit cash bit. a a couple and keep cash our finished I'll is some those lever we're 'XX start to We So that in and so, My bridged of a little some pace to drift could funding up expect with but that QX, million see we to going QX.But we to years, into if we'll kind on does next loans basis Chris, we reassess of then have we deposit over that But not the longer-term the of into is down typically, growth think until 'XX. continue our and equivalents. get expectation continue QX we of expectation in I grow QX, loans right growth QX, have carry seasonal in a on over into tax as into of and quarter probably a that loan pattern QX some to say, securities lean do less we in cash term the now, and equivalents to --

Christopher O'Connell

as Great. believe just one just for into seasonality remind us touch And fourth where just there's some the bit. -- us of business it you a then quarter me. typical magnitude in the down you to last the there. up I Can insurance remind comes Can

Joseph Sutaris

It Yes. and does are X periods a January vary the typically, Chris. renewal But July bit, X.

So that a usually period. results rate QX little in QX. higher run in insurance just renewal and typical That's

right translates indicated in higher the And -- which million rate, run about levels. think for are subsequent $XX QX quarter. in it we sure million little back I a then could exact typically, million in And up $X not and down I a QX. but down be peg about insurance Dimitar $X But markets hard the number, longer-term So and is can it's commission now. into and quarter the or drift premiums, I'm an bit that

of a kind is into have sort acquisitions outlook absent that around solid any expectations -- -- our that just So the organic on we commissions the of pretty on growth is XXXX. rate

Operator

for well And attending this our this you much session question-and-answer as very today's presentation. as conference. concludes Thank

disconnect. You may now

Community Bank System (CBU) 24 Oct 232023 Q3 Earnings call transcript