Community Bank System Annual Report 2013

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FY2013 Annual Report · Community Bank System

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2013

Cbu

Annual Report

Eleme nts of Succ e ss

In science, elements are the simplest

form of matter; they cannot be broken

down. By understanding the properties

of chemical elements, we can predict

the way they’ll react. And, we can better

understand why materials behave the

way they do.

So it is with successful companies.

The elements that make up strong

companies are consistent and

unwavering. Like neighboring blocks in

the periodic table, these elements share

certain basic qualities. Stakeholders can

better understand how a company will

act in any environment by becoming

familiar with these properties.

Value. Growth. Discipline. Consistency.

These simple fundamentals are the

elements of Community Bank’s historic

success. For more than 20 years they

have been the foundation of our

business model, and we believe they’ll

continue to drive value creation for

years to come.

TA B L E O F C O N T E N T S

Peer Comparison

Shareholder Letter

Operations Review

Leadership and Governance

Administration

Selected Financial Highlights

Shareholder Information

Inside
Back Cover

INVESTMENT RATIONALEDisciplined approach to revenue and profitability growthSuccessful and effective operating strategy in place for over 20 yearsBest-in-class asset quality metricsDominant market share – 1st or 2nd in more than 75% of the towns where we operateSubstantial non-interest income– more than 30% of operating revenuesDiversified financial services businesses with more than $54 million in 2013 revenuesRecord of successful and accretive acquisitionsMeaningful dividend and yieldMarket cap of more than $1.5 billionNYSE listed with significant liquidity
CBU was named the fourth best bank in
the country in Forbes® annual analysis of
the 100 largest publicly traded banks,
reflective of our continued high level of
financial strength and performance.

CBU

Median of Top 100 Banks

These charts display the nine
financial metrics used in the
annual Forbes® analysis of
the “Best and Worst Banks.”
Comparing CBU to the median
values of the institutions
included in the Forbes® analysis
illustrates why we’ve ranked
among the country’s best
performing banks during the
five years this comparison has
been published.

Return on
Average Equity %

Net Interest
Margin (FTE) %

Revenue Growth %

4.2

3.8

3.4

3.0

Nonperforming Loans /
Loans Outstanding %

Allowance for Loan Losses /
Nonperforming Loans %

Nonperforming Assets /
Total Assets %

3.0

2.0

1.0

300

200

100

3.0

2.0

1.0

Tier 1 Risk Based
Capital Ratio %

Leverage Ratio %

Total Risk Based
Capital Ratio %

C B U 2 0 1 3 A N N U A L R E P O R T 1

FOURTHBEST BANK 4

The Elements of Our Success

S H A R E H O L D E R L E T T E R

Value, growth, discipline and consistency – these simple fundamentals are the elements
of Community Bank’s historic success. In 2013 we were purposeful in executing our
solid business strategy to further our track record of success. As in years past, we
delivered consistent shareholder returns. Dividend growth. Leading market share.
Revenue diversity. Steady loan growth. Superior asset quality.

Above all, we have been steadily successful because we have a singular focus on creating
value. Value for our shareholders, customers, employees and communities. In 2013 we
delivered on that focus, providing a 50.1% return to our shareholders while growing
our dividend for the 21st consecutive year, closing two small but valuable acquisitions and
extending millions in credit to support economic growth in our markets.

D E L I V E R I N G S U P E R I O R S H A R E H O L D E R V A L U E

Since the end of the 2007 credit crisis and recession, Community Bank has delivered
the third strongest return to shareholders of 2013’s largest 100 banks, averaging 17%
per year. This outperformance compares favorably against our long-term target of
achieving greater than 10% average annual shareholder returns. It is particularly strong
given the unusually challenging operating environment of the last six years, over which
nearly one third of the industry’s largest banks – those that survived the crisis – posted
negative returns.

We are gratified by our ability to provide consistent, above-average returns to our
shareholders, and a growing dividend has been an essential element of that success.
2013 marks our 21st year of increased dividends, and over that period both our
dividend and our stock price have grown at a 9% average annual rate. This is
particularly rewarding considering that only 20% of the 1,332 publicly traded banks
that existed 21 years ago remain and trade publicly today. Most were impacted by the
industry trends of consolidation and, unfortunately, failures. Among those that remain,
Community Bank joins just nine others to have the distinction of increasing its
dividend in each of the past 21 years.

Our success has not gone unnoticed. In October 2013, we were nationally recognized
with our inclusion in the Barron’s 400 Index, a collection of the most fundamentally
sound and attractively priced stocks from across the market. In January 2014,
Forbes.com once again recognized our success by naming Community Bank System
“Fourth Best Bank in America” in its annual ranking of America’s 100 largest banks
and thrifts. Forbes’ analysis measures the ability of the country’s largest banks to
deliver superior performance against nine important financial health metrics.
While by asset size we ranked 87th out of the largest 100 banks, by financial
performance we outperformed 96% of the country’s largest banks.

A M O D E L B U I LT F O R S U C C E S S

Community Bank’s deliberate and consistent approach to doing business in the
low-growth markets we serve has helped us achieve first or second rankings in deposit
market share in 75% of the towns where we operate. As a major player in these
non-urban markets, we enjoy enviable customer loyalty with longstanding deposit
relationships. We’ve also benefited considerably from the stability of these markets,
which have not incurred the level of volatility experienced in many areas of the country.

Community Bank System was selected
to be part of the Barron’s 400 Index
in 2013. The index “collects the most
fundamentally sound and attractively
priced stocks from all corners of the
market, using a proven and disciplined
stock-selection process. Given that
only about 6% of all North American
publicly listed companies are selected
to the Barron’s 400 on the basis
of their fundamental soundness
underscores the overall strength of
your company’s financial results and its
bright prospects as an investment for
public shareholders.” Obviously the
Company is always pleased to be
recognized as a financially sound and
disciplined company.

2 C B U 2 0 13 A N N U A L R E P O R T

We constantly evaluate our branch network to ensure it operates as conveniently and as
efficiently as possible. Over the course of 2013 we enhanced our network by acquiring
eight branches in Northeastern Pennsylvania and consolidating four branches to
improve our average branch size and reduce operating costs. We also rebranded our
Northeastern Pennsylvania market from First Liberty Bank and Trust to Community
Bank, enhancing brand clarity and consolidating our marketing structure.

Perhaps most importantly, our choice to be a major player in smaller Upstate New York
and Northeastern Pennsylvania markets has challenged us to diversify our revenue
streams and operate with a disciplined focus on efficiency and capital allocation.
We know how to operate profitably in these service areas that are often of little interest
to larger regional banks. We have a business plan that is appropriate and highly
effective for our market, and it is essentially unchanged over the past 20 years.

S T R AT E G I C E X E C U T I O N F O R G R O W T H

Operating successfully in slower-growth markets necessitates a disciplined and flexible
approach to growth. While organic growth is essential, M&A provides an important
springboard for returns. Over the past 13 years we have completed 14 bank and branch
deals and seven financial services firm acquisitions. We continue to have a reasonable
appetite for high-value acquisition opportunities, be they branch, whole-bank or
financial services transactions. We are pleased that our strong capital positions us
well to engage in M&A without the need to excessively dilute shareholders by raising
significant capital.

When pursuing acquisitions we focus on loan and fee income growth. Our lending
model effectively allows for having a local credit authority resident in each of our
branches – a significant advantage compared to the model typically operated by
other banks. This advantage provides considerable opportunity for us to attract and
retain new customers and loans. Further, even small branch deals provide the capacity to
generate fee income as a percentage of the deposit base that larger banks cannot replicate.

In our model, a relatively small branch deal can enhance our presence and market
density in a region. This was precisely the case in December 2013 when we closed on
the purchase of eight branches from Bank of America in Northeastern Pennsylvania.
The transaction increased our service capacity with a greater number of branches,
while also helping cover some of the fixed costs of operating in the Pennsylvania
marketplace. The value of such small deals becomes even greater in tomorrow’s rising
rate environment, where the economic value of those core deposits will grow.

Likewise, we continue to pursue growth in our financial services business. Revenues
across these businesses have grown over 15% per year, on average, over the past 10
years. In 2013, revenues grew 11% over 2012, while pretax earnings expanded by 44%.
These non-capital-intensive businesses generate impressive revenue streams and the
return on equity is substantial. Importantly, they also diversify our sources of income
and are highly scalable, with a national client base. At the start of 2014, we were pleased
to close on a small benefits deal in the Western New York market. Our Benefit Plans
Administrative Services Inc. group acquired a Rochester, New York-based professional
services practice that provides actuarial valuation and consulting services to clients who
sponsor pension and post-retirement medical and welfare plans.

Tsr

Total Shareholder Return

Total Average Shareholder Returns
Through January 31, 2014, including reinvestment of dividends

1 YEAR

5 YEARS

7 YEARS

12 YEARS

CBU

S&P 600
Comm Bank

29.7%

19.5%

11.1%

12.0%

33.0%

14.2%

(3.2%)

2.2%

NASDAQ Bank

28.8 %

12.0%

(1.8 %)

3.6 %

S&P 500

DJIA

21.5 %

19.2%

5.4%

6.0 %

16.1 %

17.6 %

6.0 %

6.5%

Source: Bloomberg

C B U 2 0 1 3 A N N U A L R E P O R T 3

17CBU provided an average annual total return to shareholders of 17% over the six years since the economic downturn began in 2007 – third highest among America’s largest 100 banks.AVERAGE ANNUAL TOTAL RETURN PERCENTAGE

This growth strategy continues to differentiate us from the industry. Our diverse
revenue streams have contributed to better-than-peer revenue growth for the past five
years, consistently among the top performers of the largest 100 banks. We will continue
to focus our efforts on growing the benefit administration and wealth management
businesses through both organic and acquired means as a core element of our
operating strategy.

2 01 3 R E S U LT S

The whole of 2013 was a very productive year, and earnings of $78.8 million remained
strong and consistent with 2012. Organic loan, checking and savings account growth
each exceeded 6%. Substantial capital generation and careful execution of balance
sheet repositioning activities helped grow our Tier 1 leverage ratio, a core measure of
our capital adequacy, from 8.40% in 2012 to 9.29%. As in prior years, our strong asset
quality metrics continued to improve.

2013 revenue growth of 3% benefited from careful execution of our strategic
priorities. In 2013 we improved the composition of our core deposit portfolio,
lowering the percentage of higher-cost time deposits and increasing the percentage
of lower-cost core checking, savings and money market accounts in our deposit
portfolio. We also deleveraged our investment securities portfolio and wholesale
borrowings, further contributing to overall growth of 3% in net interest income.
Higher net interest income, 9% growth in banking fee income, 11% revenue growth
in our benefits administration and wealth management businesses and responsible
expense management all combined to maintain our efficiency ratio below 60%.
Positive momentum in all sources of non-interest revenue leaves us favorably
positioned in 2014.

A critical element of Community Bank’s success is disciplined and efficient
management of our balance sheet. In 2013 we proactively undertook certain balance
sheet restructuring activities which served to enhance our liquidity profile, capital
position, and profitability. In the first half of 2013 we sold selected investment securities
and prepaid a portion of our Federal Home Bank advances. In December 2013, we
sold our portfolio of bank and insurance trust preferred collateralized debt obligations
to eliminate uncertainty related to potential regulatory changes, and we redeemed our
remaining Federal Home Loan Bank term borrowings. We reinvested the net liquidity
created from these transactions in order to mitigate the net interest income impact of
the security sales and debt extinguishments. This series of deleveraging transactions
was done for both qualitative and economic reasons that improved the quality of our
balance sheet, provided a modest benefit to net interest margin and created regulatory
capital for use in creating future earnings and shareholder value.

A strong net interest margin is an additional outcome of our disciplined balance sheet
management. Our net interest margin is consistently above industry levels across
economic and interest rate cycles. It was a key driver of our outperformance compared
to the 100 largest banks in 2013 when, against industry tides, we expanded our net
interest margin to 3.91%, measuring nearly 50 basis points higher than the median,
which saw a decline of 18 basis points from 2012. Community Bank’s net interest margin
has exceeded the median for the 100 largest banks by a range of 28 to 49 basis points
over the last five years.

Profitable management of our balance sheet reflects a disciplined approach to funding
coupled with quality, plain vanilla asset production. We’ve been successful in proactively
managing deposit funding costs, benefiting our margin, but declining asset yields
remain a challenge. Nevertheless, our approach remains simple: extend basic loans to

Dividend Growth

4 C B U 2 0 13 A N N U A L R E P O R T

2121 consecutive years of increased dividends by Community Bank System puts the Company in a very select group of dividend achievers.CONSECUTIVE YEARS OF INCREASED DIVIDENDScredit-worthy borrowers seeking financing for every day needs, such as mortgages and
business lines of credit, and fund them primarily with customer deposits.

Dividend Growth

$ 0.68

$ 0.74

$0.78

$ 0.82

$ 0.86

$ 0.88

$ 0.94

$ 1.00

$ 1.06

$ 1.10

10-year CAGR = 6.1%

Disciplined balance sheet management is reflected in our superior asset quality.
We continued to report very favorable net charge-off results with 2013 losses measuring
just 0.17% of average loans. Indeed, our annual net charge-offs have measured under
0.25% of average loans over each the last eight years. We consider this exceptional.

Finally, through balance sheet actions and significant earnings power, our risk-based
capital ratios at the close of 2013 were well above the industry and above where we’ve
typically ranged. Today we have record levels of capital, and we are eager to use it in a
manner that is effective in creating growing and sustainable value for our shareholders.

E L E M E N T S F O R S U C C E S S I N 2 014 A N D B E Y O N D

For more than 20 years we have steadily grown our dividend, delivered consistent
profitability and executed a sound approach to franchise growth by carefully evaluating
the economics of every decision we make. Looking ahead, we see strong operating
momentum from progress and initiatives over the last two years. Today we have the best
balance sheet we have ever had in terms of asset mix, funding, asset quality and capital
– key components for value creation. These elements of our success are unchanged,
and we will work hard to keep them that way in 2014 and beyond.

We have many elements that have been pivotal to our success, including our talented
and experienced Board of Directors. After more than two decades of service as the
President and as a director of Wilber National Bank, and then as a valued member of
the Community Bank System Board, Alfred Whittet retired in 2013. With extensive
experience in managing a financial institution, his considerable knowledge and
perspective on all aspects of bank operations will be missed. The Board thanks him for
his important contributions.

Today and always, Community Bank System views your investment as the highest honor,
and we strive to reward your loyalty with steady, superior returns. Thank you for your
continued support of Community Bank System, Inc.

Nicholas A. DiCerbo (left)
Chairman of the Board

Mark E. Tryniski (right)
President and Chief Executive Officer

C B U 2 0 1 3 A N N U A L R E P O R T 5

Rms

Retail Market Share

Community Bank supports small
businesses with business lending making
up over 30% of our total loans.

6 C B U 2 0 13 A N N U A L R E P O R T

Community Bank has built a market-leading branch system serving predominantly
non-urban markets in the Northeast where leadership positions can be earned.
With more than 180 customer facilities spanning 41 counties in New York and
Pennsylvania, we still operate like a $1 billion bank. Our business approach emphasizes
responsive local decision-making, customer service and support, and authority at the
branch level, with a focus on generating and retaining core deposit accounts.

This approach has earned Community Bank a dominant market share in much of
Upstate New York, where there is modest competition and modest growth, but where
we have achieved solid performance over time. Our Northeastern Pennsylvania market
presence is located in a more urban area, which is more competitive and where we
currently have a smaller deposit market share but generally more business lending
opportunities than our other markets. During 2013 we rebranded our First Liberty
Bank and Trust branches in this market to Community Bank, N.A., to bring enhanced
unity and brand awareness to our retail banking network.

In December 2013, we expanded and further strengthened our presence in
Northeastern Pennsylvania with our acquisition of eight branches from Bank of
America, N.A., which included over $303 million in customer deposit accounts and
approximately $0.9 million of net performing loans. The acquired branches add
enhanced density and elevate our market presence across the northeast corner of
the Keystone State.

$ 5.9

C B U 2 0 1 3 A N N U A L R E P O R T 7

LEADING DEPOSIT SHARECBU has assembled a strong retail banking franchise where it enjoys leading deposit share in more than 75% of towns where we operate.75Total Deposits In billions $ 5.6$ 4.8$ 3.9$ 3.9$ 3.7$ 3.2$ 3.2$ 3.0$ 2.910-year CAGR = 8.0%7

Acquisition Strategy

As an architect designs models,
so we have carefully designed our
franchise with an eye
toward growth.

8 C B U 2 0 13 A N N U A L R E P O R T

As a community bank committed to the philosophy of serving the financial needs of
customers in local communities, our branches are generally located in smaller towns and
cities across Upstate New York and Northeastern Pennsylvania. A core operating strategy
of the Company is to grow the branch network, primarily through a disciplined acquisition
strategy. Since 2008, we have completed four transactions in which we acquired 59 branch
locations, approximately $731 million in loans, and $2.1 billion in deposits.

We always keep our lines of communication to potential merger partners open and
continue to look for opportunities in contiguous markets, including eastern Ohio,
Upper New England, and New Jersey, as well as our established markets in Upstate
New York and northern Pennsylvania. Our primary merger targets are smaller whole
banks, or larger institutions seeking to shed portions of their branch networks.

To Community Bank, the right cultural fit is an essential ingredient for any potential
transaction. That fit is exemplified by the local character of the business, knowledge of
the customers and their needs, as well as comprehensive retail and business products and
offerings. We combine this with responsive decision-making at the branch and regional
levels, enabling our branch locations to compete effectively within their individual
geographic market. We take into consideration key financial elements when evaluating
an acquisition target, including expected earnings generation of the new branches as
part of our franchise, as well as the expected return on the capital deployed.

Our Expanding Footprint

Community Bank System serves predominantly non-urban markets in
the Northeast where leadership positions can be earned. We continue to
look for opportunities to grow in contiguous markets, including eastern
Ohio, Upper New England, and New Jersey, as well as
our established markets in Upstate New York
and northern Pennsylvania.

C B U 2 0 1 3 A N N U A L R E P O R T 9

ACQUISITIONSSince 2006, Community Bank has completed seven separate branch or whole-bank acquisitions, adding nearly 80 retail banking locations and over $3 billion in assets.7NYPANJOHCTVTNHMA31

Revenue Diversity

With comprehensive financial planning, benefits
administration and trust services offerings, we add value
for our customers beyond basic banking.

10 C B U 2 0 13 A N N U A L R E P O R T

Community Bank continues to diversify its revenue streams, which is a key component
of its plan for long-term value creation for its stockholders. Over the years we have
developed a healthy mix of non-interest income, complementing our strong deposit
service fee income with specialized financial services, including our employee benefit
trust, administration, actuarial and consulting services, as well as an SEC registered
investment advisory firm, investment and trust services, and a full service independent
property and casualty insurance agency.

The same operating strategy that drives our retail bank growth is behind our
approach to financial services - disciplined growth through organic and acquired
opportunities and a keen focus on profitable relationships. We look for acquisitions
which will be accretive to earnings and low risk. Since 2007 we have completed five
professional services acquisitions under these guiding principles, including our
most recent transaction with EBS-RMSCO, Inc. to acquire its actuarial valuation and
consulting practice. Together, these strategic acquisitions have helped us nearly double
revenue generated from financial services in the past seven years, up $26.1 million,
or 93.2%, to $54.1 million in 2013. This growth has directly contributed to our ability
to grow our total non-interest income at a compound annual growth rate of 11.2%
over that same time period. Non-interest income now makes up more than 30% of
our operating revenues, providing stable earnings power to help mitigate factors like
interest rate risk in today’s environment.

We will continue to grow these business lines through organic and acquisitive means,
as we look to expand our national footprint, diversify our service offerings, and
accomplish our number one priority of delivering exceptional returns to
our shareholders.

C B U 2 0 1 3 A N N U A L R E P O R T 11

$ 54.1

31Financial Services Revenue In millions 10-year CAGR =15.4% $48.8$42.3$39.4$36.4$34.4$28.0$20.6$18.5$ 16.7PERCENTAGE OF NON-INTEREST INCOME 31% of our total revenue comes from non-interest income sources.6

Loan Growth

Providing loans to help customers realize
their dreams – like homeownership –
has been a central factor in Community
Bank’s success.

1 2 C B U 2 0 13 A N N U A L R E P O R T

Community Bank is committed to a consistent and disciplined approach to loan
growth, with a focus on the smaller customers within our service footprint that our
large competitors tend to overlook. Our branch managers function as local bank
presidents, leveraging their deep knowledge of our markets in pursuit of profitable
lending opportunities.

We have neither originated nor held subprime, Alternative-A paper or other higher
risk mortgage lending, nor do we have any shared national credits. Our commercial
lending is well diversified and we don’t hesitate to exit from unprofitable lending
relationships. Although Community Bank is firmly committed to maintaining superior
asset quality and profitable margins, we have never retreated from our markets or from
our customers during economic downturns, including the recessionary period that
began in 2007.

When you adhere to a business strategy that is disciplined and effective there is simply
never a need to change your approach. And, we believe that our emphasis on profitable
customer relationships across all business lines and our conservative risk management
makes our returns particularly robust relative to risk assumed.

Following this approach, the Bank’s net loans have grown by more than $1 billion,
to $4.1 billion, a compound annual growth rate of 10.7% since the end of 2010.
This increase is reflective of strong organic loan growth within our service footprint,
as well as the recent branch and whole-bank acquisitions we’ve undertaken.
During 2013, average loans grew $326.5 million due to strong organic growth in our
consumer mortgage, consumer indirect, direct and business lending portfolios, as well
as loans acquired in the HSBC and First Niagara branch transactions.

Our loan portfolio has historically been, and remains, well diversified with residential
mortgage loans – all originated within our service area – accounting for 39%, business
and commercial loans making up 30%, and consumer installment lending representing
the remaining 31% of total loans.

$ 4.1

C B U 2 0 1 3 A N N U A L R E P O R T 13

PERCENTAGE OF ORGANIC GROWTHOur experienced in-market lenders originated $243 million of new net loans in 2013, driving organic loan growth of more than 6% over 2012.6Total Loans In billions $ 3.9$ 3.5$ 3.0$ 3.1$ 3.1$ 2.8$ 2.7$ 2.4$ 2.410-year CAGR = 6.9%25

Saq

Superior Asset
Quality

We are proud to partner with healthy and
growing customers, who are the backbone of
our communities and of Community Bank’s
superior asset quality.

14 C B U 2 0 13 A N N U A L R E P O R T

Community Bank maintains its commitment to generating growth in its loan portfolio
in a manner that adheres to its twin goals of maintaining strong asset quality and
producing profitable margins. Our approach remains simple: extend fairly-priced,
straightforward loans to credit-worthy borrowers seeking financing for everyday needs,
from car loans to mortgages to business lines of credit.

In 2013 our asset quality remained exceptional compared to the industry. We attribute
this success to strong underwriting, a stable economy in our footprint and solid
customer relationships. Our net loan charge-off ratio, non-performing loan ratios and
loan delinquency ratios were all favorable to 2012 and to our peers.

Due to our success in achieving significant acquisition and organic loan growth, net
charge-offs as a percent of average loans (“net charge-off ratio”) offers a meaningful
representation of asset quality trends. Our net charge-off ratio remains best in class,
with 2013 losses measuring just 0.17% of average loans compared to 0.69% for the
banking industry. While the industry has seen volatile swings in assets quality, our loan
losses have consistently measured under 0.25% for the past eight years.

Asset quality results continue to be very favorable across our primary portfolios, with
total annual net charge-offs measuring less than 0.25% of average loans in each of our
residential mortgage, home equity, business loan and consumer installment businesses.

Our reserve coverage of nonperforming loans is also particularly strong.
At 201%, our ratio of reserves to nonperforming loans also far exceeds the 66%
average for the industry.

Consistent Strong Asset Quality

Exceptional Asset Quality
At or for the twelve months ended December 31, 2013

0.9%

0.8%

0.7%

0.6%

0.5%

0.4%

0.3%

0.2%

0.1%

0.0%

CBU ACBN 1 ACBN 1
Assets
> $1 B

Loan loss allowance/ NPLs2

201%

66%

64%

NPLs2/ loans outstanding

0.54% 2.64% 2.74%

Net charge- offs/ average loans3 0.17% 0.69% 0.73%

1 ACBN = All Commercial Banks, National
2 NPLs = Nonperforming loans
3 FDIC Statistics - Net charge-off to loans

Nonperforming Loans/Total Loans

Net Charge-offs/Average Loans

C B U 2 0 1 3 A N N U A L R E P O R T 15

CONSISTENT LOW NET CHARGE-OFFS Our net charge-offs have consistently measured under 0.25% for the past eight years.25

Leadership and Governance

Community Bank, N.A.
Regional Advisory Boards

Executive Management

An eleven year Community Bank System veteran, Mark Tryniski1 has led the

Company as President and Chief Executive Officer since 2006, previously serving

in the roles of Chief Financial Officer and Chief Operating Officer. Prior to

joining CBU, Mark was a partner with PricewaterhouseCoopers.

Scott Kingsley 2 provides sound leadership as Chief Financial Officer of

Community Bank System, a role he has held since 2004. Previously, Scott served as

CFO of Carlisle Engineered Products, Inc. in Ohio.

For more than 20 years, CBU has benefited from the talent and experience of

Brian Donahue.3 Now the company’s Chief Banking Officer, Brian has also served

as Chief Credit Officer and Senior Loan Officer for the Southern Region.

Joe Getman,4 Executive Vice President and General Counsel, joined Community

Bank System in 2008. Joe joined CBU from Bond, Schoeneck & King, PLLC,

where he provided corporate counsel to CBU as a senior partner of the firm.

Pennsylvania

Edward A. Coach

Michael J. Coleman

John H. Graham

Scott E. Henry

Edward I. Johnson, Jr.

Thomas A. McCullough

William K. Nasser, Jr.

Russell G. Newell

Frank J. Niemiec

James M. O’Brien

Adirondack

Paul M. Cantwell, Jr.

William M. Dempsey

Alexander C. Edwards

Joseph Vernon Lamb III

James R. Langley, Jr.

Carl J. Madonna

Kim A. Murray

Central

Mary C. Albrecht

Olon T. Archer

Joseph P. Mirabito

Benjamin C. Nesbitt

James L. Seward

Geoffrey A. Smith

Alfred S. Whittet

David F. Wilber III

16 C B U 2 0 13 A N N U A L R E P O R T

49The Community Bank executive leadership team has served the Company for a combined 49 years, bringing extensive financial services experience to its sound strategy and performance.1

Board of Directors

Nicholas A. DiCerbo
Chairman of the Board;
DiCerbo & Palumbo, Partner;
Director since 1984

James A. Wilson
Lead Director of the Board;
Retired, Parente Randolph, LLC, Principal Partner;
Nominating/ Corporate Governance Committee;
Audit/ Compliance/ Risk Management Committee, Chair;
Director since 2009

Brian R. Ace
Laceyville Hardware, Owner;
Compensation Committee, Vice Chair;
Nominating/ Corporate Governance Committee
Director since 2003

Mark J. Bolus
Bolus Motor Lines, Inc., President and CEO;
Compensation Committee, Chair;
Strategic/ Executive Committee;
Director since 2010

Neil E. Fesette
Fesette Realty, LLC and Fesette Property Management,
Owner, President and CEO;
Nominating/ Corporate Governance Committee, Chair;
Trust Committee;
Director since 2010

James A. Gabriel
Franklin & Gabriel, Owner;
Trust Committee, Chair;
Loans/ ALCO Committee, Vice Chair;
Strategic/ Executive Committee;
Director since 1984

James W. Gibson
Retired, KPMG, LLP, Partner;
Audit/ Compliance/ Risk Management Committee;
Compensation Committee;
Director since 2009

Edward S. Mucenski
Pinto, Mucenski, Hooper, Van House & Company, P.C.,
Partner and Managing Director;
Compensation Committee;
Audit/ Compliance/ Risk Management Committee, Vice Chair;
Director since 2010

John Parente
CP Media, LLC, CEO;
Loan/ ALCO Committee, Chair;
Strategic/ Executive Committee;
Audit/ Compliance/ Risk Management Committee;
Director since 2010

Sally A. Steele
Attorney at Law;
Strategic/ Executive Committee, Chair;
Trust Committee;
Director since 2003

Mark E. Tryniski
Community Bank System, Inc., President and CEO;
Director since 2006

John F. Whipple
Buffamante Whipple Buttafaro, P.C., CEO;
Nominating/ Corporate Governance Committee;
Audit/ Compliance/ Risk Management Committee;
Director since 2010

Brian R. Wright
Hinman, Howard & Kattell, LLP, Attorney, Special Counsel;
Strategic/ Executive Compensation Committee;
Nominating/ Corporate Governance Committee;
Director since 2011

Note: All bank board members participate
in the Loan/ ALCO Committee

C B U 2 0 1 3 A N N U A L R E P O R T 17

The Board of Directors
extends its gratitude
to Alfred S. Whittet for
his outstanding service
to Community Bank
System, Inc. Mr. Whittet,
the former CEO of
The Wilber Corporation,
joined the Board in 2011.
As a member of our
Board, including chair
of our trust committee,
he provided valuable
guidance over the past
several years, and he
remains a key member
of our Central Region
Advisory Board.

ADMINISTRATION

Executive

Mark E. Tryniski, President and

Chief Executive Officer

Barry J. Westington, Vice President,

Tracie M. Clayson, Loan Operations

Special Assets Officer

Unit Manager

Stephen B. Dupree, Reports Analyst

Deanna L. Foster, Loan Operations

Finance & Treasury Management

Unit Manager

Scott A. Kingsley, Executive Vice President,

Joseph J. Lemchak, Senior Vice President,

Chief Financial Officer

Chief Investment Officer

Allyson B. Krieger, Project Administrator

Tami L. Ozogar, Loan Operations Unit Manager

Brian D. Donahue, Executive Vice President,

Susan S. Fox, Vice President, Corporate Controller

Frank A. Palmisano, Manager Network

Chief Banking Officer

Robert R. Frost, Vice President,

Administration

George J. (Joe) Getman, Executive Vice President,

Director of Planning & Financial Analysis

Risk Management

General Counsel

Retail & Business Banking

Sean M. Howard, Vice President,

Paul J. Ward, Senior Vice President,

Senior Treasury Officer

Chief Risk Officer

Richard M. Heidrick, Senior Vice President,

Randy Pray, Vice President,

Mark S. Ackerly, Vice President,

Consumer Banking

Corporate Purchasing Manager

Director of Information Security

Joseph F. Serbun, Senior Vice President,

Brian Fancher, Benefits Accounting Manager

Melissa R. Cloce, Vice President,

Chief Credit Officer

Laura J. Mattice, General Accounting Manager

Compliance Manager

Joseph E. Sutaris, Senior Vice President,

Dennelle T. Michalski, Financial Controls Manager

Mark J. Houghtaling, Vice President,

Regional Banking Executive

Hal Wentworth, Senior Vice President,

Retail Banking and Marketing

Scott J. Boser, Vice President,

Retail Lending Manager

George J. Burke, Vice President,

Director of Mortgage Banking

Cynthia L. Lefko, Vice President,

Cash Management Product and Sales Manager

Judith A. Meyer, Vice President,

Branch Services Administrator

Tammy R. Neumann, Vice President,

Regional Branch Coordinator

J. Randall Palko, Vice President,

Regional Branch Administrator

Michael J. Stacey, Vice President,

Collections Manager

Pamela S. Dent, Recovery Specialist

Jennifer Hernandez, Mortgage Processing Manager

Sherry Stone, Branch Services

Regional Administrator

Credit Administration

Stephen G. Hardy, Senior Vice President,

Chief Credit Administrator

Nancy Mastrucci, Vice President,

Senior Credit Manager

Mark A. Guenthner, Vice President,

Special Assets Manager

Denise Rhoads, Vice President,

Commercial Appraisal Manager

Michael J. Brassard, Vice President,

Special Assets Officer

Noel I. Donnelly, Vice President,

Special Assets Officer

18 C B U 2 0 13 A N N U A L R E P O R T

Robert E. Pierce, Financial Reporting Manager

Administrative Services

Timothy J. Baker, Senior Vice President,

Director of Special Projects

Bernadette R. Barber, Senior Vice President,

Chief Human Resources Officer

Michael N. Abdo, Associate General Counsel

Kristine M. Besaw, Vice President,

Senior Regional Human Resources Manager

Danielle M. Cima, Associate General Counsel,

Corporate Secretary

Brett C. Fisk, Vice President, Director of Facilities

Robert D. Harder, Vice President,

Senior Regional Human Resources Manager

Michael F. Joyce, Vice President,

Director of Real Estate

Lorie M. Semmel, Vice President,

HR Operations Manager

Donna Skechus, Vice President,

Special Projects Manager

Rhoda Awinyo, Associate Marketing Manager

Donna J. Drengel, Board Secretary and

Shareholder Relations

John A. Puchir, Sales Manager

Technology & Operations

Credit Risk Manager

Daniel P. O’Connell, Vice President,

Director of Internal Audit

Dorothy A. Quarltere, Vice President,

Compliance Manager

Lynne M. Wadsworth, Vice President,

Asst. Director of Internal Audit

Anthony A. Antonello, Assistant Vice President,

Asst Corporate Security Officer

Teresa Bower, Loan Review Team Leader

Lawrence D. Witter, Financial Intelligence

Unit Director

COMMUNITY BANK

Business Banking

Buffalo

David McKinley, Vice President,

Commercial Banking

Canton

Nicholas S. Russell, Senior Vice President of

Commercial Banking Northern Region

Clifton Springs

Tina Bounds, Assistant Vice President,

Mortgage Specialist

DeWitt/Syracuse

Luke Fagan, Vice President,

J. Michael Wilson, Senior Vice President,

Commercial Banking Team Leader

Chief Technology Officer

Aaron S. Friot, Vice President,

Director of Information Technology

Robin E. Dumas, Vice President,

Electronic Banking Manager

William D. McIncrow, Vice President,

Commercial Banking Officer

Russell E. Sturtz, Assistant Vice President,

Commercial Banking Officer

James R. Ferguson, Senior Indirect

Barbara L. Snyder, Vice President,

Loan/Business Development Officer

Loan Operations Manager

Christina E. Sullivan, Vice President,

Deposit Operations Manager

Elmira

Arthur J. Sable, Vice President,

Commercial Banking Officer

Erwin/Painted Post

Orchard Park

Tunkhannock

Michael G. Austin, Vice President,

Patrick M. Gorman, Vice President,

Walter Sarafinko, Vice President,

Small Business Loan Manager

Commercial Banking Officer

John D. Clark, Vice President,

Plattsburgh

Wilkes-Barre

Commercial Banking Officer

Paul Connelly, Vice President,

David M. McHale, Senior Vice President,

Richard R. Sisson, Vice President,

Commercial Banking Officer

Potsdam

Geneva

Ronald J. Bacon, Vice President,

A. Edward Nork, Senior Vice President,

Commercial Banking Officer

Loren C. Herod, Vice President,

Senior Commercial Banking Officer

Stacia L. Arnaud, Assistant Vice President,

Agricultural Banking Team Leader

Matthew J. Rollins, Assistant Vice President,

Commercial Banking Officer

Charles Van Hooft, Vice President,

Agricultural Banking Officer

John Pekarovsky, Commercial Banking Officer

Agricultural Banking Officer

Saranac Lake

Stephen H. Rich, Vice President,

Commercial Banking Team Leader

D. James Vedora, Vice President,

Commercial Banking Officer

Mark Miller, Assistant Vice President,

Commercial Banking Officer

Rebecca L. Snyder, Agricultural Banking Officer

Johnson City

Edward P. Michalek, Vice President,

Commercial Banking Team Leader

Lakewood

David S. Alm, Vice President,

Senior Commercial Banking Officer

Lowville

Kevin J. Kent, Vice President,

Commercial Banking Officer

Malone

Craig Stevens, Vice President,

Commercial Banking Officer

Springville

Michael Boza, Agricultural Banking Officer

Watertown

Duane M. Pelkey, Vice President,

Senior Commercial Banking Officer

Jeffrey T. Fallon Vice President,

Commercial Banking Officer

Andrew Rice, Assistant Vice President,

Agricultural Banking Officer

Wellsville

Douglas O. Frank, Vice President,

Commercial Banking Officer

James M. Knapp, Vice President,

Business Development Officer

Lawrence P. Fleury, Assistant Vice President,

PENNSYLVANIA

Senior Indirect Loan/Business Development

Robert P. Matley, Executive Vice President,

Officer

North Creek

President Pennsylvania Banking

Robert A. Cirko, Senior Vice President,

Eugene M. Arsenault, Vice President,

Regional Retail Banking Manager

Business Banking

Hazelton

Paul Baynum, Vice President,

WEALTH MANAGEMENT GROUP

Paul A. Restante, Managing Director

Barbara Toczko-Maculloch, Senior Vice President,

Regional Sales Manager

John Klobusicky, Senior Vice President,

Market – Investment Manager

Theresa Kalil-Lennon, Vice President,

Regional Sales Manager

Trust and Investment Services

Catherine B. Koebelin, Senior Vice President,

Chief Trust Officer, Olean

Charles J. Perrillo, Senior Vice President,

Chief Trust Investment Officer, Oneonta

Herbert A. Simmerly, Vice President,

Senior Trust Officer, Oneonta

Vincent L. Mastrucci, Vice President,

Trust Officer, Scranton PA

Paul J. Snodgrass, Vice President,

Trust Officer, Canton

Priscilla R. Welch, Vice President,

Senior Trust Officer, Oneonta

Patricia E. Barie, Trust Officer, Olean

Michael Byrne, Trust Officer, Geneva

Lauren Carlson, Trust Officer, Oneonta

Patricia A. Crolly, Trust Officer, Scranton PA

Scott P. Brechbuehl, Vice President,

Scranton

Thomas LaPage, Assistant Vice President,

Commercial Banking Officer

Robert P. Jewell, Trust Officer, Elmira

Warren C. Rozelle, Senior Vice President,

Trust Officer, Canton

Commercial Banking Team Leader

Patricia A. Lowe, Trust Operations Officer

Matthew Dougherty, Senior Vice President,

Adam C. Niebanck, Trust Officer, Oneonta

Commercial Banking Officer

Amy B. Schlee, Trust Officer, Oneonta

Mary Elizabeth D’Andrea, Senior Vice President,

Commercial Banking Officer

Samuel DeStefano, Vice President,

Senior Indirect Market Manager

Nottingham Advisors, LLC

500 Essjay Road, Suite 220,

Williamsville, NY

Thomas S. Quealy, Chief Executive Officer

Lawrence V. Whistler, President,

Chief Investment Officer

Karen A. Mohn, Chief Compliance Officer,

Client Services Manager

Nicholas Verbanic, Vice President, Portfolio Manager

C B U 2 0 1 3 A N N U A L R E P O R T 19

Jonathan M. Luce, Assistant Vice President,

Joseph S. Tomko, Senior Vice President,

Commercial Banking Officer

Allison M. Mosher, Assistant Vice President,

Neil D. King, Assistant Vice President,

Commercial Banking Officer

Olean

Mark P. Saglimben, Vice President,

Senior Commercial Banking

Commercial Banking Officer

Gretchen Copella, Vice President,

Commercial Banking Officer

Oneonta

Jeffrey C. Lord, Vice President,

Commercial Banking Team Leader

John M. Connolly, Vice President,

Commercial Banking Officer

Community Investment Services, Inc.

3501 Masons Mill Road, Suite 505,

Clayton

Paul A. Restante, President

Audrey Pound, Vice President,

Operations Manager CISI Lockport

Financial Consultants

Peter Albano, Wilkes-Barre PA

Jonathan Bartholomew, Cicero

Robert Bittner, Geneva

Eric E. Brunet, Ogdensburg

Lucas A. Burton, Olean

Joseph M. Butler, Jr., Watertown

Thomas Ciolek, Avon

Daniel P. Drappo, Black River

James G. Durso, Waterloo

Timothy Forman, Lake Placid

Kevin C. Gildner, Wellsville

Jason Grover, Canandaigua

Justin P. Hooper, Plattsburgh

Randall J. Hulick, Springville

Kyle A. Leikam, Dunkirk

Rick P. Little, Tunkhannock PA

Huntingdon Valley, PA

Lori E. Fearnside, Manager

Mary Anne Geary, Senior Vice President,

Fort Covington

Plan Administrative Services

Richard Schultz, Senior Vice President,

Fiduciary Services

Harbridge Consulting Group, LLC

One Lincoln Center, Syracuse, NY

Vincent F. Spina, President

Steven P. Chase, Senior Vice President

Sarah E. Dam, Senior Vice President

335 Lexington Ave., 5th Floor, New York, NY

Sheryl Gabriel, Senior Vice President

Hand Benefits & Trust

820 Gessner, Suite 1250, Houston, TX

W. David Hand, Chief Executive Officer

Stephen Hand, President

James Goodwin, Senior Vice President,

VEBA/HRA Services

Kathy Harvey, Senior Vice President,

Trust Operations

Gayle E. Miner, Branch Supervisor

Gouverneur

Diane Easton, Vice President, Manager

Harrisville

Karen Pierce, Branch Supervisor

Hermon

Connie J. Green, Branch Manager

Heuvelton

Carol Peacock, Branch Supervisor

Indian Lake

Brenda K. Lanphear, Manager

Lake Placid

Katie R. Stephenson, Assistant Vice President,

Manager

Long Lake

Viccann Novak, Manager

Lowville (7605 State Street)

Tina M. Paczkowski, Vice President,

Andrew Lomanto, Plattsburgh/Malone

BRANCH LOCATIONS

District Manager

David Long, Horseheads/Consumer Square

Community Bank Northern New York Market

Jude R. McDonough, Scranton PA

Adams

Chad J. Murray, Falconer

Charles A. Nicosia, Oneonta

David H. O’Neil, Jr., Boonville

Joseph Topichak, Corning

Michele Wilck, Newark/Palmyra

Michael Bufalini, Watertown

Andrew Mangano, Fulton

CBNA Insurance Agency

Mark J. Moeller, President

117 Park Street, Tupper Lake, NY

173 Margaret Street, Plattsburgh, NY

6 Clinton Street, Heuvelton, NY

8242 Route 3, Harrisville, NY

217 West Main Street, Malone, NY

BENEFIT PLAN SERVICES

Barry S. Kublin, President

Mary L. Peters, Assistant Vice President,

Retail Service Officer

Joseph Monnat, Assistant Vice President,

Retail Service Officer

Lowville (7395 Turin Road)

Christopher M. Castle, Assistant Vice President,

Manager

Alexandria Bay

Matthew Honeywell, Assistant Vice President,

Stephen H. Allen, Vice President, Manager

Manager

Ausable Forks

Lyons Falls

Nancy Fruin, Assistant Vice President, Manager

Valerie A. Daniels, Assistant Vice President,

Madrid

Manager

Black River

Marsha L. Watson, Manager

Malone (Elm Street)

Christina S. Meagher, Assistant Vice President,

Byron Tuthill, Vice President, District Manager

Manager

Boonville

Malone (West Main Street)

Stacey Brunell, Assistant Vice President,

(101 Main Street and Headwaters Plaza)

Debra Roberts, Assistant Vice President,

Manager

Massena

Manager

Brushton

Joy Graves, Assistant Vice President, Manager

North Creek

Bryon Tuthill, Vice President, District Manager

Lori A. DeMars, Assistant Vice President,

Canton

Benefit Plans Administrative Services, LLC

6 Rhoads Drive, Utica, NY

David R. Peggs, Vice President, Manager

Julie A. Rhodes, Retail Srv Officer II

Paul M. Neveu, Senior Vice President,

Champlain

Sales & Marketing

Melissa M. Peryea, Assistant Vice President,

Linda S. Pritchard, Senior Vice President,

Manager

Recordkeeping Services

Chateaugay

Barbara J. LaVoie, Manager

2 0 C B U 2 0 13 A N N U A L R E P O R T

Manager

Norwood

Adrienne Smith, Manager

Ogdensburg (825 State Street)

Robert L. Seymour, Vice President,

District Manager

Ogdensburg (320 Ford Street)

Denise Barse, Manager

Old Forge

Community Bank Southern New York Market

Dunkirk (345 Central Avenue)

Barbara B. Criss, Vice President, Manager

Addison

Jean M. Coughlin, Assistant Vice President,

Plattsburgh (Margaret Street)

Robin K. Knapp, Assistant Vice President,

Kent G. Backus, Vice President,

Manager

Elmira

Regional Retail Banking Manager

Alfred

Denise E. Allen, Vice President, District Manager

Plattsburgh (Route 3)

Beth L. Plaisted, Manager

Christy Parsons, Retail Service Officer

James E. Snook, Vice President, Manager

Allegany

Courtney Shaw, Retail Service Officer

Plattsburgh (468 Route 3)

Stephanie L. Kolkowski, Assistant Vice President,

Vicki Weller, Retail Service Officer

Kent G. Backus Vice President,

Manager

Regional Retail Banking Manager

Avon

Erwin/Painted Post

Angela M. Long, Branch Supervisor

Plattsburgh (In-store – Wal-Mart)

Deborah K. Fitch, Branch Manager

Falconer

Arlene Favreau, Branch Supervisor

Angelica

Joann W. Anderson, Assistant Vice President,

Potsdam (64-70 Market Street and May Road)

Diana L. Grastorf, Branch Supervisor

Manager

Victoria G. Strader, Vice President,

Bath

Fillmore

Joel P. Brazie, Assistant Vice President,

Julie A. Hall, Assistant Vice President,

Branch Manager

Pulaski

Manager

Steven P. Gaffney, Vice President, Manager

Belfast

District Manager

Franklinville

Saranac Lake (Broadway)

Lisa Perry, Branch Supervisor

Sandra S. Wolfer, Manager

Brenda Darrah, Assistant Vice President,

Bolivar

Fulton

Manager

Saranac Lake (Lake Flower)

Renee L. Darrah, Manager

St. Regis Falls

Judy Gilliland, Manager

Tina Stephens, Assistant Vice President,

Brocton

Phyllis A. Crockett, Manager

Canandaigua (County Road 10)

Manager

Geneva (Canandaigua Road)

Tina Jackson, Assistant Vice President, Manager

Bryon Tuthill, Vice President, District Manager

Paul E. Lepore, Vice President, District Manager

Geneva (Seneca Street)

Star Lake

Canandaigua (South Main Street)

John Latanyshyn, Manager

Connie Green, Branch Manager

Christopher Bross, Vice President, Manager

Gowanda

Ticonderoga

Cassadaga

Ralph Swanson, Vice President, Manager

Maria E. Beuerlein, Assistant Vice President,

Susan C. Sekuterski, Manager

Hammondsport

Manager

Tupper Lake (Hosely)

Cato

Tiesha Combes, Manager

John W. Salamy, Vice President, Manager

Cicero

Tupper Lake (Park Street)

John W. Salamy, Vice President, Manager

Claire Brown, Retail Service Officer

Waddington

Adrienne Smith, Branch Manager

Watertown (1125 Arsenal Street)

Elizabeth A. Brown, Assistant Vice President,

Manager

Watertown (216 Washington Street)

Rita J. Walldroff, Vice President,

Regional Retail Banking Manager

Catherine Ward, Vice President, Manager

Robert M. Liedka, Jr., Manager

Clifton Springs

(26 East Main Street and Clifton Plaza)

Theresa P. Dorgan, Vice President, Manager

Clymer

Laurie L. Harvey, Manager

Corning (West Market Street)

Wendy B. Daines, Vice President, Manager

Corning North

Robert Avvampato, Assistant Vice President,

Manager

Cuba

West Carthage

Shavonne Henderson, Manager

Naura L. Christman, Assistant Vice President,

Dansville

Kelly L. Bussmann, Assistant Vice President,

Manager

Hannibal

Debra A. Davis, Assistant Vice President,

District Manager

Hornell

Melissa M. Ponticello, Assistant Vice President,

Manager

Horseheads-Consumer Square

Cynthia A. Welliver, Assistant Vice President,

Manager

Houghton College

Julie A. Hall, Assistant Vice President,

District Manager

Interlaken

Denise Ector, Manager

Ithaca

Manager

Whitehall

Holly A. Rabideau, Manager

Jody R. Tonkery, Vice President, District Manager

Jessica Thomas, Retail Service Officer

Dunkirk (3909 Vineyard Drive)

Jason DeChard, Manager

Michael MacDonald, Manager

Jamestown (1281 North Main Street)

Kathleen S. Bemus, Assistant Vice President,

Manager

C B U 2 0 1 3 A N N U A L R E P O R T 21

Jamestown (25 Main Street - Brooklyn Square)

Portville (1471 East State Road)

Community Bank Central New York Market

Glori A. Taylor, Manager

Brenda Blackwell, Manager

Boiceville

Lakewood

Portville (7 North Main Street)

Brad Bernard, Manager

Lisa R. Allenson, Vice President, District Manager

Katrina Savitcheff, Branch Supervisor

Cobleskill

Livonia

Randolph

Arthur C. Lafleur, III, District Manager

Ronda Howard, Manager

Diane M. Lecceardone, Manager

Cooperstown (Main Street)

Moravia

Ripley

Naomi G. Grigoli, Manager

Kathleen M. Longyear, Manager

Patricia J. Knight, Manager

Cooperstown Otsego (State Highway)

Mount Morris

Rushville

Wende E. Ebberts, Manager

Susan Neelin, Manager

Christine M. Copper, Manager

Delhi

Naples

Salamanca

Tina A. Seguare, Manager

Joilette M. Pendleton, Manager

Robin K. Bowser, Manager

Downsville

Newark (Church Street)

Seneca Falls

Jean M. Lacey, Manager

Phyllis A. Adriansen, Vice President, Manager

David W. Sloan, Vice President,

Fleischmanns

Newark Plaza

Brenda K. Westcott, Manager

Nichols

Regional Retail Banking Manager

Marilee A. Asher, Manager

Christine Plate, Manager

Sherman

Halfmoon

Richard A. Griesche, Manager

Kathleen M. Bowen, Assistant Vice President,

Shannon R. Stevens, Manager

Johnson City

Manager

North Collins

Silver Creek

Michelle Carlsson, Manager

Mark J. Catalano, Assistant Vice President,

Milford

Ellen M. Pavlovic, Assistant Vice President,

Manager

District Manager

Skaneateles

Olean (201 North Union Street)

Desiree R. Murphy, Assistant Vice President,

Eric M. Garvin, Vice President,

Manager

Regional Retail Banking Manager

Springville (Cascade Drive)

Jody L. Spears, Vice President, District Manager

Mary Ann Lutz, Assistant Vice President,

Theresa M. Raftis, Assistant Vice President,

Manager

Retail Service Officer

Olean (Delaware Park)

Kelly Crandall, Manager

Orchard Park

Jason Mongillo, Retail Service Officer

Springville (North Buffalo Street)

Brooke Baker, Vice President, Manager

Kristen Woodarek, Retail Service Officer

Cynthia Andrews, Assistant Vice President,

Waterloo

Manager

Oswego

Larry D. Ledgerwood, Vice President,

Manager

Fred Aldrich IV, Vice President, Manager

Watkins Glen

Rosemary Aborn, Manager

Morris

Michael Walling, District Manager

Norwich (State Highway)

Caryn M. Wake, Manager

Norwich (Broad Street)

Jason C. Yager, Manager

Oneonta (Main Street)

Susan M. DelCostello, Manager

Oneonta (Chestnut Street)

Paula M. Morell, Manager

Oneonta (Southside)

Sean A. Hall, Manager

Oneonta (FoxCare Center)

Ovid

Anthony Fraboni, Vice President, Manager

Richard J. Follett, Assistant Vice President,

Jacqueline M. Robinson, Manager

Laurel M. Fox, Retail Service Officer

Owego

Wellsville (4196 Bolivar Road)

Florence Rossi, Assistant Vice President,

Lori Dzielski, Manager

Manager

Palmyra

Wellsville (113 Main Street)

Virginia L. Elliott, Assistant Vice President,

Cheryl A. Ford, Vice President, Manager

Manager

Penn Yan (151 Main Street)

Westfield

Thomas R. May, Vice President, Manager

Carl Swan, Manager

Dana L. Crans, Retail Service Officer

Woodhull

Penn Yan (272 Lake Street)

Teresa A. Vivier, Manager

Phelps

Amy Shaffer, Manager

Lynn S. Vitale, Manager

Yorkshire

Joseph D. Fore, Assistant Vice President,

Manager

District Manager

Lesley A. Bohacek, Manager

Otego

Dorothy J. Kelley, Manager

Schenevus

Gerald V. Coombs, Jr., Manager

Sidney

Bridget Fisk, Assistant Vice President,

District Manager

Sharon D. Cutting, Manager

Walton

Donna A. Bundy, Manager

2 2 C B U 2 0 13 A N N U A L R E P O R T

Gold Club

Noxen/Bowman’s Creek

Nancy Miller, Assistant Vice President

Colleen M. Bullock, Manager

& Gold Club Manager

Olyphant

Community Bank Pennsylvania Market

Theresa A. Collins, Vice President,

Carbondale

District Manager

Bobbiann Davis, Manager

Pittston

Clarks Summit

Nolan Ayres, Assistant Vice President,

David C. Griffin, Vice President, Manager

Manager

Scranton (Keyser Avenue)

John Peterson, Vice President,

District Manager

Scranton (Linden Street)

Suzanne Kennedy, Assistant Vice President,

Manager

Scranton (Minooka - Davis Street)

David H. Lencicki, Vice President, Manager

Scranton (North Washington Avenue)

Karen E. Sweeney, Manager

Scranton (Wyoming Avenue)

Karen E. Sweeney, Manager

Towanda

Lori A. Smith, Manager

Sue McClary, Business Development Officer

Tunkhannock

Karen Fuller, Vice President,

District Manager

Jennifer Chesner, Manager

Brigitte S. Meskers, Retail Service Officer

Trucksville/Back Mountain

Susanne M. Mullin, Vice President, Manager

Wilkes Barre (Franklin Street)

David P. Dobbs, Vice President,

District Manager

Gary J. Missal, Assistant Vice President,

Manager

Sandra A. Wheeler, Retail Service Officer

Wilkes Barre (South Main Street)

Sandra A. Wheeler, Retail Service Officer

Wyalusing

Douglas M. Jackson, Manager

Daleville

Susan M. Pitoniak, Manager

Dickson City

Lisa Rochinski, Manager

Edwardsville

Denise M. Johnson, Manager

Freeland

Daniel J. Boote, Assistant Vice President,

Manager

Hazleton (Airport Road)

Paula Palance, Vice President, Manager

Hazleton (North Church Street)

Lori A. Roth, Vice President, Manager

Hazleton (West Broad Street)

Emmanuel Marte, Manager

Jermyn

Lisa Browning, Assistant Vice President,

Manager

Jessup

Mary Z. Bieszczad, Vice President, Manager

Kingston (Wyoming Avenue)

Susan M. Russick, Assistant Vice President,

Manager

Kingston (James Street)

Karen R. Shuster, Vice President, Manager

Laceyville

Annette Gravelle, Manager

Lansford

Sarah A. White, Manager

Lawton

Greg M. Culver, Manager

Lehighton

Dana M. Cannariato, Assistant Vice President,

Manager

Little Meadows

Mary A. Sivers, Branch Manager

Meshoppen

Jennifer Ramey, Branch Manager

Montrose

Steven Stranburg, Vice President, Manager

C B U 2 0 1 3 A N N U A L R E P O R T 2 3

Income Statement
In millions

2013

2006 CAGR
(7-year)

Net interest income

$ 238.1

$ 134.8

8.5%

Non-interest income

108.7

51.7

11.2%

Operating expenses

221.3

127.2

Provision for loan loss

8.0

6.6

8.2%

2.8%

Net income

$ 78.8

$ 38.4

10.8%

Net interest margin

3.91%

–

Per Share Data
Diluted

Earnings per share

$ 1.94

$ 1.26

Cash dividends declared

1.10

0.78

Book value

21.66

15.37

Tangible book value

$ 12.80

$ 7.17

Balance Sheet Data
End of period, In millions

Assets

Loans, net

Deposits

$ 7,096

$ 4,498

4,109

2,702

5,896

3,168

Shareholders’ equity

$ 876

$ 462

6.4%

5.0%

8.6%

6.7%

6.2%

9.3%

9.6%

$ 21.66

2 4 C B U 2 0 13 A N N U A L R E P O R T

Selected Financial Highlights Book Value per Share$ 22.78$ 20.94$ 18.23$ 17.25$ 16.69$ 16.16$ 15.37$ 15.28$ 15.4910-year CAGR = 4.2%

Corporate Headquarters

Investor Information

Macquarie Securities Group

Community Bank System, Inc.

Investor and shareholder information

John Moran / 212.231.0662

5790 Widewaters Parkway

DeWitt, NY 13214-1883

regarding Community Bank System, Inc.,

john.moran@macquarie.com

including all filings with the Securities

Phone: 315.445.2282 or 800.724.2262

and Exchange Commission, is available

Fax: 315.445.7347

through the company’s website:

www.communitybankna.com

Stock Listing

Copies may also be obtained without

Common stock of Community Bank System,

charge upon written request to:

Inc. is listed on the New York Stock Exchange

(NYSE) under the symbol: CBU.

Newspaper listing for common stock:

CmntyBkSys.

Annual Meeting

Ms. Josephine Anne E. Rurka

Investor Relations Department

Community Bank System, Inc.

5790 Widewaters Parkway

DeWitt, NY 13214-1883

Wednesday, May 14, 2014

315.445.7300

1:00 P.M. EST

josie.rurka@communitybankna.com

DoubleTree by Hilton Hotel Syracuse

6301 State Route 298

East Syracuse, NY 13057

Independent Auditors

The Board of Directors appointed

PricewaterhouseCoopers, LLP as auditor

Transfer Agent and Registrant of Stock

for the company for the year ended

Shareholders requiring a change of

December 31, 2013

name, address or ownership of stock,

or information about shareholder records,

lost or stolen certificates, and dividend

checks, direct deposit and reinvestment

should contact:

American Stock Transfer & Trust Company

Operations Center

6201 15th Avenue

Brooklyn, NY 11219

800.937.5449

www.amstock.com

Analyst Coverage

The following analysts published research

about Community Bank System in the last

twelve months:

Boenning & Scattergood

Matthew Schultheis / 610.832.5290

mschultheis@boenninginc.com

Guggenheim Partners

David Darst / 615.208.1224

david.darst@guggenheimpartners.com

Keefe, Bruyette & Woods Inc.

Collyn Gilbert / 973.549.4092

collyn.gilbert@kbw.com

Raymond James & Associates

Anthony Polini / 212.856.4897

anthony.polini@raymondjames.com

RBC Capital Markets

Jake Civello / 617.725.2152

jake.civello@rbccm.com

Sandler O’Neill & Partners LP

Joseph Fenech / 212.466.7938

jfenech@sandleroneill.com

Sterne Agee

Matthew Breese / 207.699.5800

mbreese@sterneagee.com

Investor’s Choice Program

CBU offers convenient, low-cost options

for investors wishing to steadily buy shares.

For information, contact:

Ms. Donna J. Drengel

Shareholder Relations Department

Community Bank System, Inc.

5790 Widewaters Parkway

DeWitt, NY 13214-1883

Phone: 315.445.7313

donna.drengel@communitybankna.com

American Stock Transfer & Trust Co.

Operations Center

6201 15th Avenue

Brooklyn, NY 11219

800.937.5449

www.amstock.com

The Community Bank System, Inc. Annual Report contains forward-looking statements, within the provisions of the Private Security 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 periodic reports filed with the Securities and Exchange Commission.

Shareholder InformationSafe Harbor StatementCOMMUNITY BANK SYSTEM, INC.
5790 Widewaters Parkway
DeWitt, NY 13214-1883
800.724.2262
315.445.7347 fax

communitybankna.com