Community Bank System, Inc. Q2 FY2025 earnings call

Banking: Net interest income expanding, consumer lending strong, commercial banking pipeline good, fee income strong, credit results with resolution of large nonperforming assets, net charge offs minimal otherwise. Employee Benefit Services: Record keeping growing, fiduciary trust repositioning with early positive results. Insurance Services: Revenue up YTD, margin and pretax earnings expanded due to pull forward of payments. Wealth Management: Muted revenue but improved pretax earnings and margin, exited nonproductive arrangements. Branch Acquisition: Announced acquisition of Santander branches in Pennsylvania, expected to close Q4, provides strong market presence, high quality liquidity, no asset issues

Banking Business: Net interest income expanding with increasing asset yields; consumer lending strong; commercial banking impacted by repayments but pipeline good; fee income strong; credit results affected by resolution of large nonperforming assets, net charge offs minimal otherwise. Employee Benefit Services: Flat Y/Y/Q/Q; record keeping growing high single digits; fiduciary trust facing headwinds but initiatives showing early promise. Insurance Services: Revenue up 13% YTD, operating margin up to 23%, operating pretax earnings up 70% due to pull forward of contingency payments. Wealth Management Services: Muted revenue growth Y/Y but operating pretax earnings and margin expanded, exited nonproductive revenue arrangements

Expect strong third quarter to get back on track to growth targets. Confident in achieving historical growth rates in insurance services. Anticipate deploying cash proceeds from branch acquisition into earning assets over next few years

Competition in lending with pressure on rates and credits. Seasonal factors impacting non-banking financial services noninterest revenues. Headwinds in fiduciary trust business during repositioning

Q: Steve Moss on loans, competitive landscape, loan pricing A: Dimitar Karaivanov mentioned competition is tough, yields impacted by rate cuts and competition, originations in certain range Q: Steve Moss on NIM expansion, liquidity from acquired deposits A: Mariah Loss said NIM in 3-5 range, acquired deposits to be deployed for loan growth over years Q: Manuel Navas on OpEx trends, restructuring A: Mariah Loss stated restructuring charge for branch consolidation, OpEx flat moving forward, focus on expense control Q: Manuel Navas on branch acquisition progress, tie to de novo A: Dimitar Karaivanov said on track, complements organic strategy, de novo branches opening, net neutral on branches Q: Matthew Breese on pipeline, branch acquisition deposits, de novo branches, loan yields, CHIPS Act A: Dimitar Karaivanov mentioned pipeline supports growth, acquired deposits high quality, de novo branches on track, loan yields steady, CHIPS Act on track Q: David Conrad on fee income, seasonality, year over year expectations A: Dimitar Karaivanov said insurance fee income impacted by pull forward, target high single to low double digit growth, on track for historical rates