Form 8-K - Current report

 

 

  

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: [phone]

 

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)

 

 

Exhibit 99.1

 

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 • • • • •

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

We Have Grown Net Interest Income Every Year Since 2006

Business Line Summary • • • • • • • • • •

Loan Portfolios & Asset Quality

Our Banking Evolution ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪

De-centralized Regional Structure

Established Growth Capabilities Across All Regions

Retail & Business Banking • • • • • • • • • • • •

Optimizing Delivery Channels for Growth • • • •

• • • • • • • • • Digital Banking Capabilities

Consumer Lending • • • • • • • • • • •

• • • • • • Consumer Lending

Commercial Banking

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%

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

What the Future Brings

Employee Benefit Services

Employee Benefit Services • • • • • • •

One Company, One Call • • • • • • • •

BPAS at a Glance

Our History

Well Positioned For Success in a Growing Industry

Business Line Summary • • • • • •

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

Recordkeeping & TPA • • • • • • • • • • • • • •

How We Win in Recordkeeping • • • • • • • • • • • • •

State of the Art Technology

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

Insurance Services

Insurance Services • • • • • •

Insurance Services • • • • • • • • • • • •

OneGroup at a Glance

• • • • Insurance Brokerage Industry

Favorable Business Mix With Deep Specialties

Lines of Business • • • • • • • • • •

Revenue Performance 7Yr Operating Revenue CAGR1,4: 9.8% 3Yr Avg. Operating Margin3,5: 18.8%

Carrier Depth • •

Future Outlook

Wealth Management Services

Wealth Management Services • • • • •

Wealth Management Services • • • • • • • • • • •

Well Positioned For Success in a Growing Industry

Uniquely Broad and Deep Capabilities • • • • • • • • • • • • • • • • • •

Trended Results

Wealth Management Services: Financial Performance 10Yr Operating Revenue CAGR1,4: 8.3% 3Yr Avg. Operating Margin3,5: 31.2%

Future Outlook

Risk Management

Risk Management • • • • • • •

Risk Management Framework

CBNA’s Lending Philosophy & Credit Risk Management

Debt-to-Income Ratio

Loan Losses

Loan Mix Comparison

Retail Lending

Funding Metrics

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

Financial Performance

Financial Performance • • • • • • • •

Fundamental Elements of Our Enduring Success

• • Focus on Revenue Quality, Diversification and Sustainable Results

Strong Asset Quality

Allowance Industry Comparison

• • • • • Core Deposit Strength 22% cycle to date deposit beta1 24% cycle to date funding beta1 30% cycle to date interest-bearing deposit beta1

Liquidity Position & Sources • • • • •

• • Solid Capital Position

Outperformance During Turbulence

Company Performance 9.3% 4.5% 1.29% 40% $1.29 0.06% $0.95 0.05%

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

Catalysts for Earnings Growth & Shareholder Value Creation

• • Loan Repricing Opportunity 28% of outstanding loan balances are expected to reprice or be repaid in the next 12 months1

• • Securities Redeployment Opportunity

Opportunities and Financial Targets • • • • • • • • • • •

Valuation Considerations

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

P/E Reference Framework

5Yr Avg 10Yr Avg KRX (median): 1.52x 1.71x KRX (top quartile): 1.80x 2.05x Illustrative P/TBV Context

Closing Remarks

Closing Remarks ▪ ▪ ▪ ▪ ▪ ▪

Thank you!

Appendix

Glossary of Terms

Primary Subsidiaries

Board of Directors

KRX Peer Group

Multifamily & NOO CRE by Location

• • • • Reconciliation of GAAP and Non-GAAP

Pre-tax, Pre-provision Components

Operating Net Income

Net Interest Margin & Operating ROA

Operating Revenues

Equity-to-Assets

Book Value

Operating Noninterest Expenses

Core Results

Cover	Sep. 04, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Sep. 04, 2024
Entity File Number	001-13695
Entity Registrant Name	COMMUNITY FINANCIAL SYSTEM, INC.
Entity Central Index Key	0000723188
Entity Tax Identification Number	16-1213679
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	5790 Widewaters Parkway
Entity Address, City or Town	DeWitt
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	13214
City Area Code	315
Local Phone Number	445-2282
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $1.00 par value per share
Trading Symbol	CBU
Security Exchange Name	NYSE
Entity Emerging Growth Company	false
Entity Information, Former Legal or Registered Name	Community Bank System, Inc.

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