Community Bank System
Annual Report 2014

Plain-text annual report

Fit for the Future Fit for the Future 2 O 1 4 A N N U A L R E P O R T 2 O 1 4 A N N U A L R E P O R T TA B L E O F C O N T E N T S Shareholder Letter Peer Comparison Operations Review 2 6 8 Leadership and Governance 16 Administration 18 Selected Financial Highlights 24 Shareholder Information 25 The Company operates more than 190 customer facilities across Upstate New York and Northeastern Pennsylvania through its banking subsidiary, Community Bank, N.A. With assets of approximately $7.5 billion, the DeWitt, N.Y. headquartered company is among the country’s 150 largest financial institutions.We have built a market-leading branch system serving predominantly non-urban markets where we have earned the 1st or 2nd leading deposit market share in 75% of the towns where we operate.Our principal business focus is building additional value into our enterprise through selective and strategic acquisitions, disciplined lending, and a consistent approach to business regardless of economic conditions. Our goal is to generate a 10% average annual total shareholder return over time.Approximately 33% of our revenue comes from noninterest sources with approximately half flowing from our benefits administration and wealth management businesses. For 2014, our financial services businesses generated over $60 million in revenue, a strong foundation to build on. Our disciplined approach to lending has provided an enviable risk profile for the Bank where our asset quality metrics have remained consistently better than industry and peer group averages. The Company’s Tier I leverage ratio, a primary measure of regulatory capital, was 9.96% at the end of 2014, up 67 basis points from year-end 2013 primarily from strong net earnings retention.Community Bank’s healthy approach to business has resulted in it being named one of the nation’s best large banks in each of the last six years, in the annual Forbes.com analysis of America’s 100 largest financial institutions. Reflecting a history of consistent results, the Company has raised its cash dividend for 22 consecutive years, a significant milestone and evidence of our belief that payment of a meaningful and growing dividend is an important component of providing favorable long-term returns to our shareholders. A Healthy ProfileI N V E S T M E N T R AT I O N A L E Relentless focus on creating shareholder value > Through superior performance > Through growing dividends Consistent execution over the past 20+ years Effective and proven business model, built for tomorrow Diversification driving non-interest income expansion Disciplined approach to growth > Through a locally-focused, branch-centric philosophy > Through a record of successful and accretive acquisitions Meaningful dividend and yield Market cap of more than $1.4 billion NYSE listed with significant liquidity Total Average Annual Shareholder Returns Through December 31, 2014, Including Reinvestment of Dividends CBU 2 YEARS 5 YEARS 7 YEARS 15 YEARS 22.0% 18.9% 14.1% 12.4% S&P 600 Commercial Bank 25.2% 16.4% NASDAQ Bank S&P 500 DJIA 21.9% 12.5% 22.7% 15.4% 19.4% 14.2% 2.5% 2.4% 7.3% 7.2% 6.0% 5.6% 4.2% 5.4% C B U 2 0 1 4 A N N U A L R E P O R T 1 The Company’s total cumulative return to shareholders of 152.6% over the last seven years is more than 4 and ½ times the median return among America’s largest 100 banks for the same period.4½ Community Bank System’s consistent approach to business again yielded very strong results in 2014. For the fifth consecutive year, we produced record operating earnings, alongside encouraging regional economic trends. Record bottom-line results were matched in our record revenues, loans and deposits, all attained with controlled costs and with capital levels that exceeded both historic levels and regulatory requirements. Fit for the Future S H A R E H O L D E R L E T T E R “Health is not valued till sickness comes.” Thomas Fuller coined this phrase nearly 400 years ago, and much can be drawn from its relevance to the banking industry in recent years. Since 2007, prior to the start of the economic downturn, through December 31, 2014, the number of FDIC-insured banking institutions in the United States fell by 2,171, or 25%, including more than 500 banks that “failed.” Some liken our industry to a Darwinian “survival of the fittest,” and in many ways this is accurate. Community Bank is certainly among “the fittest.” However, far from simply “surviving,” we aim to thrive. We understand the value of being fit and well – for our customers, our communities, our associates and most importantly, our shareholders. To date, we’ve done well by this aim. From 2007 through the end of 2014, Community Bank delivered a 152.6% cumulative total return to shareholders, ranking 5th among the largest 100 banks in the U.S. by assets and measuring more than four and a half times the median of that group. Further, during this period of banking industry underperformance among the broader universe of stocks, our shareholders received more than twice the rate of return experienced by the S&P 500 and Russell 3000. The same outperformance holds true over the longer term as well. With consistency, we’ve rewarded our shareholders with returns few other companies can match. In 2014 the number of years in which we have raised our dividend without interruption reached 22 – a rarity among our industry. Among more than 1,000 publicly traded banks and thrifts, we are among a group of just eight to claim this achievement. In fact, our growing dividend has contributed to our shareholders receiving a compound annual total return of 13% per year over these last 22 years – during which the company has reported consistent quarterly profits, delivered 12% average annual growth in net income and delivered 11% annual growth in revenue. Perhaps most gratifying: the steady increase in our dividend reflects our Board’s confidence in the future direction of our business. We are fit and nimble for a future in which the banking landscape may look wholly different than the one that exists today. With changing customer preferences, rapidly evolving risk management requirements, and shifting regulatory expectations of what constitutes “health,” excellence is required. Our agility and strength will serve us – and our customers, communities and shareholders – well. R E C O R D 2 0 14 P E R F O R M A N C E A look to the future would be incomplete without acknowledging the 2014 successes upon which our growth strategy builds. We reported record earnings per share of $2.22, up 9% over 2013. We effectively integrated the eight branches we acquired in Northeast Pennsylvania in December 2013, as well as an add-on acquisition by our Benefit Plans business. We grew fee revenues generated by both our banking and financial services businesses, up 16% over 2013. In total, revenues grew 7%, including the benefit of 3% net interest income expansion. With controlled expenses, our efficiency ratio improved to 57.9% from 59.3% in 2013. Total assets and disciplined management of deposit funding costs continue to have positive effects on margin results, but have generally not been able to fully offset declining asset yields. We are pleased with our ability to hold net interest margin steady at 3.91% for the second consecutive year. This was aided in large part by loan 2 F I T F O R T H E F U T U R E Community Bank System has increased its cash dividend for 22 consecutive years, and is one of only eight banks in this very select group of “dividend achievers.”growth across all portfolios of $140 million, along with core deposit growth of over $190 million. As the economy has stabilized, so too have the costs we’ve incurred to manage troubled loans. For example, the ratio of credit losses to average loans on our balance sheet in 2014 fell to just 15 bps – that’s 15 hundredths of one percent – marking the lowest level in seven years. Disciplined risk management has been key to this success. We commit resources to continually improve our credit assessment and risk management capabilities, and we are pleased that our outcomes have validated this approach. In tandem, our profitability grew substantially. Return on average assets – a core measure of how efficiently we use our balance sheet to generate profits – grew to 1.23%, the highest annual rate in 20 years. This high rate of capital generation continued to reinforce our capital position, driving our Tier 1 risk-based capital ratio to 17.61%, more than 480 basis points higher than the median for the largest 100 U.S. banks. Even with our highest-ever capital levels, our return on equity in 2014 grew to 9.65%, our highest level in three years. Our 2014 profitability increased an already strong capital base and positioned Community Bank to continue building additional value into our enterprise. Indeed, 2014 was the most productive year in Community Bank System’s history. S T R E N G T H A N D P O S I T I O N I N G We concluded 2014 with the best balance sheet we’ve ever had in terms of asset mix, funding, credit quality and capital strength. This, in part, reflects significant measures we’ve taken over the last two years to position our balance sheet with a stronger mix of loans and core deposits. For example, in the fourth quarter of 2014, average earning assets were up just 1.6% from the fourth quarter of 2013. However, all of the growth in earning assets was in loans, rather than investment securities – a very positive mix development. Likewise, the multi-year trend away from time deposits and into core checking, savings and money market accounts continued in 2014, resulting in a further decline in overall funding costs. The outcome was a stable 2014 net interest margin, which at 3.91% was a considerable 60 basis points higher than the median among the 100 largest banks, which fell 11 basis points from 2013 to 2014. What’s more, for an institution of our size, our average loan sizes are uniquely granular. Our average commercial loan totals just $301,000, while our average residential mortgage and home equity loans total just $102,000 and $41,000, respectively. With more than 130,000 loan accounts and 566,000 deposit accounts, we are most Dividend Growth Per Share Book Value Per Share 05 06 07 08 09 10 11 12 13 14 05 06 07 08 09 10 11 12 13 14 10-year CAGR = 5.5% 10-year CAGR = 4.6% C B U 2 0 1 4 A N N U A L R E P O R T 3 The Company’s book value per share has grown nearly 60% since the end of 2005.$24.00$18.00$12.00$6.00$1.20$0.90$0.60$0.30pleased that our margins and returns are particularly robust relative to risk taken. Our reserve coverage of non-performing loans further supports our conservative approach: our reserves could adequately absorb more than 7 years of credit losses at our recent loss rate. Outstanding results have made capital accumulation over the past several years considerable, which creates particularly favorable opportunity. With risk-based capital ratios today that are above the industry and above where we’ve typically ranged, we have ample capital, and we are eager to use it. We are tremendously well-positioned in 2015, and will work hard to deploy capital to continue to grow earnings and grow dividends for the benefit of our shareholders. We haven’t been shy about our desire to expand through acquisition, which we believe offers a supplemental opportunity for delivering added shareholder value over time. We continue to focus on building additional value into our enterprise through selective acquisitions, disciplined lending and a consistent approach to business regardless of economic conditions. You can be sure our historic approach to growth will remain at the core of our strategy for the foreseeable future. Namely, we’ll pursue opportunity where others don’t, we’ll put the branch and the communities we serve at the center of our business, and we’ll seek orderly diversification across our banking and financial services targets. Despite considerable industry and economic change, we believe this approach will continue to support our strong performance and solid results. D I V E R S I F I C AT I O N L E A D S T H E W AY The rising significance of fee-driven revenue streams is among the most important shifts in our industry today. The reasons are many. The current low-interest-rate environment has persisted well beyond most economists’ predictions, challenging interest-driven revenues earned from offering loans. Likewise, increasing regulatory capital requirements have reinforced the merits of delivering value-added services for which customers are willing to pay a fee, and which carry minimal capital requirements. Much like the competitive triathlete who trains across a number of sports, diversification is a key component of our success. Today, fee income streams comprise 33% of our revenues, compared to 25% for the largest 100 U.S. banks. Specifically, our Benefit Plans Administration Services (BPAS) and Wealth Management businesses contribute half of Community Bank’s non-interest income and 17% of total revenue. Our national provider of retirement plan administration, actuarial, consulting and fund administration services, BPAS reaches a diverse array of clients spanning the United States and Puerto Rico. In essence, BPAS is a technology business with a scalable platform. From just nine office locations, our 248 BPAS employees serve 350,000 plan participants and 3,600 professional engagements, with trust assets exceeding $18 billion. Momentum is strong. In fact, BPAS’ 2014 revenues of $42.6 million were more than double our 2007 level. Over the past ten years this platform has produced 17% compound annual growth in revenues, and we believe significant growth opportunities remain. Similarly, our Wealth Management Group is a national business seeing strong growth due to referrals and customer-adviser loyalty. We see a clear opportunity to leverage synergies between Wealth Management and the Community Bank branch network, with the bank’s resources, branding and deep market penetration providing an excellent source of referrals. With a portion of the group’s distribution coming through Community Bank’s non-urban branch network, we are able to thrive in markets where the bigger names in the financial services industry have exited or can’t justify operating. With full-service brokerage and insurance offerings, investment advisory and trust services, we offer unmatched capabilities in many of our markets. This strength generated 16% compound annual growth in revenue over the past five years, reaching $17.9 million in 2014. We believe our wealth management group is positioned well for both organic and acquisition growth. CBU has been a component of the S&P 1500 Dividend Aristocrats Index since 2012, when it raised its cash dividend for the 20th consecutive year.Looking ahead, perhaps our strongest asset in building out our financial services offerings is the strength of the Community Bank franchise. Simply put, it makes us an attractive acquirer to potential sellers. Combining the strong reputation and capital position of Community Bank and the capital-light structure of our BPAS and Wealth Management businesses means a strong, available currency and attractive returns. We fully expect to continue executing our growth strategy for these fee-driven businesses. 2 015… A N D B E Y O N D 2015 is off to a terrific start, highlighted by the February announcement of our planned acquisition of Oneida Financial Corp. The merger will combine two institutions with a long history of community-focused service and with a deposit base that will rank fourth largest by market share in the Syracuse, New York area. Equally exciting, Oneida’s impressive insurance, benefits administration, and wealth management businesses will meaningfully strengthen and complement Community Bank’s existing non-banking service capacity. Most importantly, Oneida has an impeccable history of service to its customers and its communities, reflecting a culture that aligns very well with that of Community Bank. We look forward to welcoming the Oneida team when the transaction closes this summer. 2015 also brings the retirement of Brian R. Wright, a member of our Board of Directors since 2011. Our Board is a driving force behind Community Bank’s consistent philosophy and strength, and it is with great appreciation that we recognize Brian for his dedicated service. Brian previously served as a director and Chairman of the Wilber Corporation since 1982, and the wise counsel he brought to our Board affirms our continued preference for welcoming directors through our regional bank acquisitions. We are pleased that Community Bank will continue to benefit from Brian’s insight and experience, as he will remain a member of the company’s Central New York Advisory Board. Community Bank System’s disciplined approach to business, similar to maintaining a healthy lifestyle, has provided sustainable growth and bottom-line results, while positioning the company to be “in shape” to seize new opportunities. We are committed to healthy habits – disciplined business practices and consistent execution – which we believe bodes well for our future. With healthy returns, healthy performance, healthy relationships, healthy communities, and a healthy outlook, we are truly fit for the future. Most importantly, we are pleased that our strength and health contributes to the financial well-being of our customers, businesses, communities and shareholders. This year and always, you can expect us to maintain our relentless focus on creating shareholder value, through superior performance and meaningful dividends. We thank you for your continued support of Community Bank System, Inc. Nicholas A. DiCerbo Chairman of the Board Mark E. Tryniski President and Chief Executive Officer C B U 2 0 1 4 A N N U A L R E P O R T 5 We haven’t been shy about our desire to expand through acquisition, which we believe offers a very productive opportunity for delivering added shareholder value over time.6 F I T F O R T H E F U T U R E In 2014, Forbes.com published its sixth annual analysis of “America’s Best and Worst Banks,” and once again Community Bank System was ranked near the top. The Forbes® analysis ranked CBU 12th best among America’s 100 largest banks and thrifts, based on a comparison of nine different metrics related to asset quality, capital adequacy and profitability. The Company was ranked 11th in 2012, and top 10 for each of the remaining years of this analysis, demonstrating a consistent ability to deliver superior performance across these important industry financial metrics.Performing Consistently Among the Best Large BanksFor the sixth consecutive year CBU was ranked among America’s best large banks by performance.6The nine charts included here display the financial metrics used in the annual Forbes® analysis of the “Best and Worst Large Banks.” Comparing CBU to the median values of the institutions included in the Forbes® analysis illustrates why it has ranked among the country’s best performing banks during the six years this comparison has been published. The metrics include net interest margin; nonperforming loans (NPLs) as a percentage of loans; nonperforming assets as a percentage of assets; reserves as a percentage of NPLs; two capital ratios (Tier 1 and Total risk-based), leverage ratio, return on average equity and revenue growth. Return on Average Equity % Net Interest Margin (FTE) % Revenue Growth % 09 10 11 12 13 14 09 10 11 12 13 14 09 10 11 12 13 14 Nonperforming Loans / Loans Outstanding % Allowance for Loan Losses / Nonperforming Loans % Nonperforming Assets / Total Assets % 09 10 11 12 13 14 09 10 11 12 13 14 09 10 11 12 13 14 Tier 1 Risk Based Capital Ratio % Leverage % Total Risk Based Capital Ratio % 09 10 11 12 13 14 09 10 11 12 13 14 09 10 11 12 13 14 C B U 2 0 1 4 A N N U A L R E P O R T 7 CBUMedian of Top 100 Banks601218408125010151.002.03.010002003001.002.03.0408123.43.03.84.2501015A Disciplined and Differentiated Approach to Growth At Community Bank System, we understand that the journey to long-term success is not a sprint – but rather, it’s achieved through consistent and disciplined execution of a proven growth strategy. Operating primarily in non-metropolitan markets, we’ve continued to find that the branch is still an effective way for us to connect with our current and prospective retail and small business customers. To support this philosophy, we’ve bolstered our branch network significantly in recent years through strategic acquisitions. Since 2006, we’ve added a net of more than 70 branches and $3 billion in assets through seven branch or whole-bank acquisitions that have added density to our Upstate New York and Pennsylvania footprint. The “plug and play” flexibility of our branch-centric model allows us to efficiently allocate resources and serve clients in historically lower-growth areas. This strategy has been highly effective for us. During the fourth quarter of 2014, our year-over-year average loan balances were up 4%, while average deposits were up 5%. We believe that this level of high-quality, sustainable growth allows us the opportunity to create incremental stakeholder value. As we look ahead to 2015 and beyond, we expect to capitalize on the progress we’ve made through growth initiatives in recent years. With a very healthy balance sheet, our team is well-positioned to continue to pursue growth opportunities, both organic and acquired. Utilizing our strong financial position, we recently announced a definitive agreement to merge with Oneida Financial Corp. for approximately $142 million in stock and cash. The Oneida acquisition will add nearly $800 million in total assets, deposits of $690 million, and 12 banking offices across Madison and Oneida Counties in Upstate New York. The transaction also adds benefits administration, wealth management, and insurance businesses which will complement and expand our existing financial services offerings. Loan and Deposit Growth In millions 4.6% 5.3% 5.4% 5.0% 6.2% 5.7% 4.9% 3.8% 8 F I T F O R T H E F U T U R E 1Q 14 2Q 14 3Q 14 4Q 14 Loans Deposits Average Balances and Year Over Year Growth$3,500$2,500$4,500$5,500$6,500CBU holds the 1st or 2nd deposit market share in 75% of the towns where it has a branch location. 75C B U 2 0 1 4 A N N U A L R E P O R T 9 Our emphasis is on building and maintaining profitable customer relationships across all business lines.Financial Services Revenue In millions 10-year CAGR = 13.7% 14 10 F I T F O R T H E F U T U R E 060705080910111213$20$40$60Diversification Drives Non-Interest Income Expansion In 2014, Community Bank System grew non-interest income by more than 9% year-over-year, to $119 million. In the past five years, that figure has grown by 34%. This notable non-interest income expansion is the result of strategic efforts to diversify our revenue streams, aimed at making us less dependent on net interest income, and less susceptible to changes in the interest rate environment. Not only do we have a healthy mix of interest and non-interest income, but we’ve also worked to create similar diversification within our non-interest income sources. In 2014, financial services revenue from wealth management and employee benefit services of more than $60 million made up approximately half of total non-interest income for the year. Our financial services businesses, Community Bank Wealth Management and Benefit Plans Administrative Services, Inc. (BPAS), operate well beyond the footprint of our local banking operations, with offices in New York, Pennsylvania, Florida, Texas and Puerto Rico, and assets under management or administration in 46 states. BPAS is a leading provider of employee benefits administration and trust services, actuarial and consulting services to customers on a national scale, and is complemented by our wealth management group, made of four branded firms providing a suite of insurance, investment, and personal and institutional trust services. Financial Services Coverage Wealth Management BPAS States with AUM/AUA PUERTO RICO C B U 2 0 1 4 A N N U A L R E P O R T 11 33% of our 2014 total revenue came from non-interest income sources.At $60.5 million for 2014, CBU’s Financial Services revenue has more than tripled since 2005. 60.533llnSuperior Execution Builds Value Long-term value creation is built through excellence across the board, and it’s something we strive for throughout all levels and business lines within our Company. Our philosophy of discipline that enables us to achieve this is defined by high-quality credit, strong capital, consistent operational execution and strategic M&A activity. While our primarily non-urban footprint offers a slower level of growth, we are comfortable with the stability found in these markets and excel at capitalizing on it. We’ve maintained our hallmark risk management standards while organically growing our lending portfolio and producing strong asset quality metrics, regardless of the economic conditions facing the industry. At year-end, non-performing loans made up just 0.56% of loans outstanding, compared to 1.95% for all commercial banks in the U.S. Reserves for loan losses represented 1.14% of our legacy loans and 1.07% of total loans outstanding and based on full-year 2014 results, represent over seven years of annualized net charge-offs. We expect Community Bank’s superior asset quality to remain a differentiating feature of our business model into the future. Exceptional Asset Quality At or for the twelve months ended December 31, 2014 Loan loss allowance/NPLs2 NPLs2/loans outstanding Net charge-offs/ average loans3 Provision to net charge-offs Earnings coverage of net charge-offs (x) CBU ACBN 1 ACBN ACBN > $1B $1B-$10B 190% 0.56% 76% 1.95% 73% 2.02% 99% 1.42% ACBN > $10B 71% 2.10% 0.15% 117% 0.49% 72% 0.51% 71% 0.30% 91% 0.54% 70% 14.73 6.28 6.15 8.93 5.94 1 ACBN = All Commercial Banks, National 2 NPLs = Nonperforming loans 3 FDIC Statistics - Net charge-off to loans 12 F I T F O R T H E F U T U R E Average loan balances grew by $202 million during 2014.202 Total Loans In billions 10-year CAGR = 6.0% 14 C B U 2 0 1 4 A N N U A L R E P O R T 13 060705080910111213$4.0$3.0$2.0$1.014 F I T F O R T H E F U T U R E Consistent Long-Term Performance We have delivered successful performance over the long-term for one simple reason – we have a business model that is, and has always been, built for tomorrow. Through economic downturns and periods of prosperity alike, our markets have remained stable and predictable. That, coupled with our conservative risk management, means that our returns are particularly robust relative to risk taken. This strategy has been the key to Community Bank System’s long-term value creation and is what sets us apart from our peers and much of the industry. In July, we raised our quarterly dividend for the 22nd consecutive year to $0.30 per share, an increase of more than 7%. We are proud to be among a select group of banks that have consistently increased their annual dividend over this period. Our executive team and Board believe that a consistent and growing dividend is integral to delivering long-term value to our shareholders. Our Growth Story 10 -Year CAGR Loans Average Deposits (core) Net Interest Income Non-Interest Income (banking) Non-Interest Income (financial services) Total Revenues 5.8% s 11.8% s 4.9% s 7.8% s 13.7% s 6.4% s C B U 2 0 1 4 A N N U A L R E P O R T 15 The steady increase in our dividend reflects our Board’s confidence in the future direction of our business. L E A D E R S H I P E X E C U T I V E M A N A G E M E N T Mark Tryniski President and Chief Executive Officer With CBU since 2003. Formerly served as Chief Financial Officer and Chief Operating Officer. Partner with Pricewaterhouse Coopers prior to joining CBU. Scott Kingsley Chief Financial Officer With CBU since 2004. Served as CFO of Carlisle Engineered Products prior to joining CBU. Brian Donahue Chief Banking Officer With CBU since 1992. Formerly served as Chief Credit Officer and as Senior Loan Officer for the Southern Region. Joe Getman Executive Vice President and General Counsel With CBU since 2008. Provided corporate counsel to CBU as a senior partner at Bond, Schoeneck & King, PLLC prior to joining CBU. Brian R. Wright The Board of Directors recognizes Brian R. Wright for his tremendous service to Community Bank System, Inc. Prior to joining the Board in 2011, he had served as a director and Chairman of the Wilber Corporation since 1982. Mr. Wright, an attorney, special counsel with Hinman, Howard & Kattell, LLP, has provided exceptional guidance as a member of both the Strategic/Executive, Compensation and the Nominating/ Corporate Governance Committees. Community Bank will continue to benefit from his insight and experience, as he will remain an important member of the company’s Central New York Advisory Board. Community Bank, N.A. Regional Advisory Boards 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 Tom Harding Joseph P. Mirabito Benjamin C. Nesbitt James L. Seward Geoffrey A. Smith Alfred S. Whittet David F. Wilber III Brian R. Wright 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 16 F I T F O R T H E F U T U R E B O A R D O F D I R E C T O R S 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; Loan/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 Note: All bank board members participate in the Loan /ALCO Committee C B U 2 0 1 4 A N N U A L R E P O R T 17 Richard M. Heidrick, Senior Vice President, Indirect Lending Director of Special Projects ADMINISTRATION Finance & Treasury Management Daniel P. O’Connell, Director of Internal Audit Executive Joseph J. Lemchak, Senior Vice President, Dorothy A. Quarltere, Chief Compliance Officer Mark E. Tryniski, President and Chief Executive Officer Chief Investment Officer Susan S. Fox, Corporate Controller Timothy Miller, Director of Information Security Lawrence D. Witter, Financial Intelligence Scott A. Kingsley, Executive Vice President, Robert R. Frost, Director of Planning Unit Director Chief Financial Officer & Financial Analysis Brian D. Donahue, Executive Vice President, Sean M. Howard, Senior Treasury Officer Chief Banking Officer George J. (Joe) Getman, Executive Vice President, General Counsel Retail & Business Banking Joseph F. Serbun, Senior Vice President, Chief Credit Officer Hal Wentworth, Senior Vice President, Retail Banking and Marketing George J. Burke, Director of Mortgage Banking Joseph E. Sutaris, Senior Vice President, Regional Banking Executive Robert A. Cirko, Senior Vice President, Regional Retail Banking Manager Scott J. Boser, Retail Lending Manager Judith A. Meyer, Branch Services Administrator Cynthia L. Lefko, Cash Management Product and Sales Manager Michael J. Stacey, Collections Manager Credit Administration Stephen G. Hardy, Senior Vice President, Chief Credit Administrator Nancy Mastrucci, Senior Credit Manager Mark A. Guenthner, Special Assets Manager Denise Rhoads, Commercial Appraisal Manager 18 F I T F O R T H E F U T U R E Randy Pray, Corporate Purchasing Manager Brian Fancher, Benefits Accounting Manager Laura J. Mattice, General Accounting Manager Dennelle T. Michalski, Financial Controls Manager COMMUNIT Y BANK Commercial Banking Officers W E S T E R N R E G I O N David McKinley, Commercial Banking Officer David S. Alm, Senior Commercial Banking Officer Mark P. Saglimben, Senior Commercial Robert E. Pierce, Financial Reporting Manager Banking Officer Administrative Services Scott P. Brechbuehl, Commercial Banking Officer Timothy J. Baker, Senior Vice President, Gretchen Copella, Commercial Banking Officer Bernadette R. Barber, Senior Vice President, Chief Human Resources Officer Danielle M. Cima, Associate General Counsel, Corporate Secretary Michael N. Abdo, Associate General Counsel Brett C. Fisk, Director of Facilities Donna J. Drengel, Board Secretary and Shareholder Relations Technology & Operations J. Michael Wilson, Senior Vice President, Chief Technology Officer Patrick M. Gorman, Commercial Banking Officer Douglas O. Frank, Commercial Banking Officer Michael Boza, Agricultural Banking Officer N O R T H E R N R E G I O N Nicholas S. Russell, Senior Vice President of Commercial Banking Northern Region Kevin J. Kent, Commercial Banking Officer Paul Connelly, Commercial Banking Officer Ronald J. Bacon, Senior Commercial Banking Officer Craig Stevens, Commercial Banking Officer Aaron S. Friot, Director of Information Technology Jeffrey T. Fallon, Commercial Banking Officer Robin E. Dumas, Electronic Banking Manager Amy Downey, Commercial Banking Officer Barbara L. Snyder, Loan Operations Manager Patricia Duffy, Agricultural Banking Officer Christina E. Sullivan, Deposit Operations Manager Matthew J. Rollins, Commercial Banking Officer Risk Management Paul J. Ward, Senior Vice President, Chief Risk Officer Mark J. Houghtaling, Director of Loan Review Andrew Rice, Agricultural Banking Officer D E W I T T / S Y R A C U S E R E G I O N Luke Fagan, Commercial Banking Team Leader  William D. McIncrow, Commercial Paul Baynum, Commercial Banking Officer Thomas LaPage, Trust Officer, Canton Banking Officer Matthew Dougherty, Commercial Patricia A. Crolly, Trust Officer, Scranton, PA Russell E. Sturtz, Commercial Banking Officer Banking Officer Joseph Pedrotti, Commercial Banking Officer Mary Elizabeth D’Andrea, Commercial Banking Officer Patricia A. Lowe, Trust Operations Officer Priscilla R. Welch, Trust Officer, Oneonta S O U T H E R N R E G I O N Stephen H. Rich, Commercial Banking Joseph S. Tomko, Commercial Banking Officer Nottingham Advisors, LLC Team Leader Neil D. King, Commercial Banking Officer Loren C. Herod, Agricultural Banking Walter Sarafinko, Commercial Banking Officer Team Leader Arthur J. Sable, Commercial Banking Officer J. David Clark, Commercial Banking Officer David M. McHale, Commercial Banking Officer A. Edward Nork, Commercial Banking Officer Chief Investment Officer Stacia L. Arnaud, Commercial Banking Officer Karen A. Mohn, Chief Compliance Officer, D. James Vedora, Commercial Banking Officer Client Services Manager John Pekarovsky, Commercial Banking Officer Mark Miller, Commercial Banking Officer Charles Van Hooft, Agricultural Banking Officer Rebecca L. Snyder, Agricultural Banking Officer WEALTH MANAGEMENT GROUP Nicholas Verbanic, Vice President, Portfolio Manager Paul A. Restante, Managing Director Community Investment Services, Inc. Barbara Toczko-Maculloch, Senior Vice President, Paul A. Restante, President C E N T R A L R E G I O N Pennsylvania Market Director Jeffrey C. Lord, Commercial Banking Theresa Kalil-Lennon, Senior Vice President, Team Leader Regional Sales Manager- Central/East Financial Consultants Audrey Pound, Operations Manager Edward P. Michalek, Commercial David B. Coon, Senior Vice President, Peter Albano, Wilkes-Barre, PA Banking Officer Regional Sales Manager- Western NY 100 Corporate Parkway, Suite 338 Amherst, NY 14226 Thomas S. Quealy, Chief Executive Officer Lawrence V. Whistler, President, John M. Connolly, Commercial Banking Officer Daniel P. Drappo, Senior Financial Consultant, Jonathan M. Luce, Commercial Banking Officer Allison M. Mosher, Commercial Banking Officer S M A L L B U S I N E S S U N D E R W R I T I N G Michael G. Austin, Small Business Loan Manager Richard R. Sisson, Underwriter Beth Robbins, Underwriter P E N N S Y LVA N I A R E G I O N Robert P. Matley, Senior Vice President, President Pennsylvania Banking Warren C. Rozelle, Commercial Banking Team Leader Richard Kazmerick, Commercial Banking Team Leader Regional Sales Coordinator, ADK/North 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 Adam C. Niebanck, Trust Investment Officer, Eric E. Brunet, Ogdensburg Michael Bufalini, Watertown Joseph M. Butler, Jr., Watertown Thomas Ciolek, Olean/Avon Shawn Derrick, Wellsville Daniel P. Drappo, Black River James G. Durso, Waterloo Oneonta Timothy Forman, Lake Placid Amy B. Allen, Senior Trust Officer, Oneonta Kevin C. Gildner, Wellsville Vincent L. Mastrucci, Trust Officer, Scranton, PA Jason Grover, Canandaigua Paul J. Snodgrass, Trust Investment Officer, Canton Justin P. Hooper, Plattsburgh Robert P. Jewell, Trust Officer, Elmira Randall J. Hulick, Springville Patricia E. Barie, Trust Officer, Olean C B U 2 0 1 4 A N N U A L R E P O R T 19 Kyle A. Leikam, Dunkirk Linda S. Pritchard, Senior Vice President, Boonville (101 Main Street and Headwaters Plaza) Rick P. Little, Jermyn, PA Andrew Lomanto, Plattsburgh/Malone David Long, Horseheads/Consumer Square Andrew Mangano, Fulton Jude R. McDonough, Scranton, PA Tim McNamara, Scranton, PA Chad J. Murray, Falconer Charles A. Nicosia, Oneonta David H. O’Neil, Jr., Boonville Brent Patry, Oneonta/Norwich Joseph Topichak, Corning Michele Wilck, Newark/Palmyra CBNA Insurance Agency Mark J. Moeller, President/CEO Elaina Bradley 117 Park Street, Tupper Lake, NY John Duprey 173 Margaret Street, Plattsburgh, NY Diane Hazelton 6 Clinton Street, Heuvelton, NY Andrew Ellis Recordkeeping Services Debra Roberts, Manager 3501 Masons Mill Road, Suite 505, Canton Huntingdon Valley, PA David R. Peggs, Manager Mary Anne Geary, Senior Vice President, Champlain DC Plan Services Melissa M. Peryea, Manager Richard Schultz, Senior Vice President, Chateaugay Fiduciary Services Candice Pelkey, Branch Supervisor Harbridge Consulting Group, LLC Clayton One Lincoln Center, Syracuse, NY Vincent F. Spina, President Steven P. Chase, Senior Vice President Sarah E. Dam, Senior Vice President Lori E. Fearnside, Manager Fort Covington Gayle E. Miner, Branch Supervisor Gouverneur Diane Easton, Manager 335 Lexington Ave., 5th Floor, New York, NY Harrisville Sheryl Gabriel, Senior Vice President Karen Pierce, Branch Supervisor Hermon Hand Benefits & Trust Connie J. Green, Manager 820 Gessner, Suite 1250, Houston, TX Heuvelton Richard Tacchino, Branch Supervisor W. David Hand, Chief Executive Officer Stephen Hand, President James Goodwin, Vice President Kathy Harvey, Senior Vice President BPAS Trust Company, Puerto Rico Alfredo Matheu, President, BPAS Puerto Rico Tina M. Paczkowski, District Manager Indian Lake Brenda K. Lanphear, Manager Lake Placid Katie R. Stephenson, Manager Long Lake Viccann Novak, Manager Lowville (7605 State Street) Lowville (7395 Turin Road) Stephen H. Allen, Manager Lyons Falls Nancy Fruin, Manager Madrid Marsha L. Watson, Manager Malone (Elm Street) Byron Tuthill, District Manager Malone (West Main Street) Stacey Brunell, Manager 8242 Route 3, Harrisville, NY 644 Fernandez Juncos Ave, Suite 301, San Juan, PR Yvonne Webb 217 West Main Street, Malone, NY BENEFIT PLAN SERV ICES Barry S. Kublin, President Benefit Plans Administrative Services, LLC 6 Rhoads Drive, Utica, NY Paul M. Neveu, Executive Vice President BRANCH LOCATIONS Community Bank Northern New York Market Adams Christopher M. Castle, Manager Alexandria Bay Matthew Honeywell, Manager Ausable Forks Robert A. Malczyk, Vice President, Valerie A. Daniels, Manager Director of Sales Black River Christina S. Meagher, Manager 20 F I T F O R T H E F U T U R E Massena Waddington Cicero Joy Graves, Manager Adrienne Smith, Branch Manager Denise Cavallo, Manager North Creek Watertown (1125 Arsenal Street) Clifton Springs Lori A. DeMars, Manager Elizabeth A. Brown, Manager (26 East Main Street and Clifton Plaza) Norwood Watertown (216 Washington Street) Adrienne Smith, Manager Rita J. Walldroff, Regional Retail Clymer Theresa P. Dorgan, Manager Ogdensburg (825 State Street) Robert L. Seymour, District Manager Ogdensburg (320 Ford Street) Denise Barse, Manager Old Forge Barbara B. Criss, Manager Plattsburgh (Margaret Street) Kathie Coller, Manager Plattsburgh (Route 3) Banking Manager Catherine Ward, Manager West Carthage Naura L. Christman, Manager Whitehall Holly A. Rabideau, Manager Laurie L. Harvey, Manager Corning (West Market Street) Wendy B. Daines, Manager Corning North Robert Avvampato, Manager Cuba Community Bank Southern New York Market Shavonne Henderson, Manager Addison Dansville Robin K. Knapp, Manager Jody R. Tonkery, District Manager James E. Snook, Vice President, Manager Alfred Plattsburgh (468 Route 3) Beth L. Plaisted, Manager Dunkirk (3909 Vineyard Drive) Jason DeChard, Manager Kent G. Backus, Regional Retail Allegany Dunkirk (345 Central Avenue) Banking Manager James E. Snook, Manager Stephanie L. Kolkowski, Manager Jean M. Coughlin, Manager Avon Elmira Plattsburgh (In-store – Wal-Mart) Deborah K. Fitch, Manager Denise E. Allen, District Manager Arlene Favreau, Branch Supervisor Angelica Erwin/Painted Post Potsdam (64-70 Market Street and May Road) Diana L. Grastorf, Branch Supervisor Angela M. Long, Branch Supervisor Victoria G. Strader, Branch Manager Pulaski Steven P. Gaffney, Manager Saranac Lake (Broadway) Brenda Darrah, Manager Saranac Lake (Lake Flower) Renee L. Darrah, Manager Bath Falconer Joel P. Brazie, Manager Joann W. Anderson, Manager Belfast Fillmore Lisa Perry, Branch Supervisor Julie A. Hall, District Manager Bolivar Franklinville Judy Gilliland, Manager Sandra S. Wolfer, Manager St. Regis Falls Paul E. Lepore, District Manager Tina Stephens, Manager Canandaigua (County Road 10) Fulton Sherri Fleury, Branch Supervisor Star Lake Connie Green, Manager Ticonderoga Maria E. Beuerlein, Manager Tupper Lake (Park Street) John W. Salamy, Manager Canandaigua (South Main Street) Geneva (Canandaigua Road) Christopher Bross, Manager Tina Jackson, Manager Cassadaga Geneva (Seneca Street) Susan C. Sekuterski, Manager John Latanyshyn, Manager Cato Gowanda Tiesha Combes, Manager Ralph Swanson, Manager C B U 2 0 1 4 A N N U A L R E P O R T 21 Hammondsport Olean (201 North Union Street) Silver Creek Kelly L. Bussmann, Manager Eric M. Garvin, Regional Retail Banking Manager Mark J. Catalano, District Manager Hannibal Jody L. Spears, District Manager Skaneateles Debra A. Davis, District Manager Olean (Delaware Park) Desiree R. Murphy, Manager Hornell Melissa M. Ponticello, Manager Orchard Park Kelly Crandall, Manager Horseheads-Consumer Square Glenn Parsons, Manager Houghton College Kristen Woodarek, Manager Oswego Fred Aldrich IV, Manager Julie A. Hall, District Manager Ovid Jacqueline M. Robinson, Manager Interlaken Denise Ector, Manager Owego Ithaca Michael MacDonald, Manager Palmyra Florence Rossi, Manager Jamestown (1281 North Main Street) Kathleen S. Bemus, Manager Jamestown (25 Main Street - Brooklyn Square) Glori A. Taylor, Manager Cheryl A. Ford, Manager Penn Yan (151 Main Street) Thomas R. May, Manager Penn Yan (272 Lake Street) Teresa A. Vivier, Manager Lakewood Lisa R. Allenson, District Manager Phelps Livonia Ronda Howard, Manager Moravia Amy Shaffer, Manager Portville (1471 East State Road) Brenda Blackwell, Manager Tracey Pille, Manager Portville (7 North Main Street) Katrina Savitcheff, Branch Supervisor Mount Morris Susan Neelin, Manager Randolph Diane M. Lecceardone, Manager Naples Joilette M. Pendleton, Manager Ripley Newark (Church Street) Phyllis A. Adriaansen, Manager Rushville Patricia J. Knight, Manager Newark Plaza Ann Young, Manager Nichols Christine M. Copper, Manager Salamanca Robin K. Bowser, Manager Kathleen M. Bowen, Manager Seneca Falls North Collins Robin Hohman, Manager 22 F I T F O R T H E F U T U R E David W. Sloan, Regional Retail Banking Manager Christine Plate, Manager Sherman Shannon R. Stevens, Manager Springville (Cascade Drive) Mary Ann Lutz, Manager Springville (North Buffalo Street) Brooke Baker, Manager Waterloo Larry D. Ledgerwood, Manager Watkins Glen Anthony Fraboni, Manager Wellsville (4196 Bolivar Road) Lori Dzielski, Manager Wellsville (113 Main Street) Virginia L. Elliott, Manager Westfield Carl Swan, Manager Woodhull Ashley Quick, Manager Yorkshire Joseph D. Fore, Manager Community Bank Central New York Market Boiceville Brad Bernard, Manager Cobleskill Arthur C. Lafleur, III, District Manager Cooperstown (Main Street and Otsego, State Highway) Naomi G. Grigoli, Manager Delhi Tina A. Seguare, Manager Downsville Jean M. Lacey, Manager Fleischmanns Marilee A. Asher, Manager Halfmoon Richard A. Griesche, Manager Johnson City Edwardsville Scranton (Minooka - Davis Street) Michelle Carlsson, Manager Denise M. Johnson, Manager David H. Lencicki, Manager Milford Freeland Scranton (North Washington Avenue) Rosemary Aborn, Manager Daniel J. Boote, Manager Suzanne Kennedy, Manager Morris Hazleton (Airport Road) Michael Walling, District Manager Paula Palance, Manager Scranton (Wyoming Avenue) Michelle Cook, Manager Norwich (State Highway) Caryn M. Wake, Manager Norwich (Broad Street) Terri Slater, Manager Hazleton (North Church Street) Towanda Lori A. Roth, Manager Lori A. Smith, Manager Hazleton (West Broad Street) Emmanuel Marte, Manager Tunkhannock Jennifer Chesner, Manager Trucksville/Back Mountain Susanne M. Mullin, Manager Oneonta (Main Street) Jermyn Richard J. Follett, District Manager John Peterson, Manager Oneonta (Chestnut Street) Paula M. Morell, Manager Oneonta (Southside) Sean A. Hall, Manager Jessup Wilkes Barre (Franklin Street) Mary Z. Bieszczad, Manager David P. Dobbs, District Manager Kingston (James Street) Susan Russick, Manager Karen R. Shuster, Manager Wilkes Barre (South Main Street) Sandra A. Wheeler, Manager Oneonta (FoxCare Center) Laceyville Lesley A. Bohacek, Manager Greg Culver, Manager Wyalusing Karen Fuller, District Manager Otego Lansford Beth Braun, Manager John Greybosh, Manager Schenevus Lawton Gerald V. Coombs, Jr., Manager Doug Jackson, Manager Sidney Lehighton Bridget Fisk, District Manager Dana M. Cannariato, Manager Sharon D. Cutting, Manager Walton Donna A. Bundy, Manager Gold Club Nancy Miller, Gold Club Manager Little Meadows Mary A. Sivers, Manager Meshoppen Jennifer Ramey, Manager Montrose Community Bank Pennsylvania Market Steven Stranburg, Manager Carbondale Noxen/Bowman’s Creek Bobbiann Davis, Manager Colleen M. Bullock, Manager Clarks Summit Olyphant David C. Griffin, Manager Theresa A. Collins, District Manager Daleville Pittston Susan M. Pitoniak, Manager Gary Missal, Manager Dickson City Lisa Rochinski, Manager Scranton (Keyser Avenue) Lisa Browning, Manager C B U 2 0 1 4 A N N U A L R E P O R T 23 Income Statement In millions 2014 2006 Net interest income $ 244.4 $ 134.8 Non-interest income 119.0 51.7 Operating expenses 226.6 129.6 Provision for loan loss 7.2 6.6 Net income $ 91.4 $ 38.4 Net interest margin 3.91% 3.91% CAGR (8-year) 7.7% 11.0% 7.2% 1.1% 11.5% 0.0% Per Share Data Diluted Earnings per share $ 2.22 $ 1.26 Cash dividends declared 1.16 0.78 Book value 24.24 15.37 7.3% 5.1% 5.9% Tangible book value $ 15.63 $ 7.17 10.2% Balance Sheet Data End of period, In millions Assets Loans, net Deposits $ 7,489 $ 4,498 4,191 2,665 5,935 3,168 6.6% 5.8% 8.2% Shareholders’ equity $ 988 $ 462 10.0% 24 F I T F O R T H E F U T U R E Selected Financial Highlights Corporate Headquarters Community Bank System, Inc. 5790 Widewaters Parkway DeWitt, NY 13214-1883 Investor Information Keefe, Bruyette & Woods Inc. Investor and shareholder information Collyn Gilbert / 973.549.4092 regarding Community Bank System, Inc., collyn.gilbert@kbw.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 www.communitybankna.com Stock Listing Copies may also be obtained without Common stock of Community Bank charge upon written request to: System, 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 20, 2015 315.445.7300 10:00 a.m. EST josie.rurka@communitybankna.com The Regina A. Quick Center for the Arts St. Bonaventure University 3261 New York 417 St. Bonaventure, New York 14778 Transfer Agent and Registrant of Stock Shareholders requiring a change of 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 Independent Auditors The Board of Directors appointed PricewaterhouseCoopers, LLP as auditor for the company for the year ended December 31, 2014 Analyst Coverage The following analysts published research about Community Bank System in 2014: American Capital Partners Anthony Polini / 908.625.1931 apolini@acpweb.com Boenning & Scattergood Matthew Schultheis / 610.832.5290 mschultheis@boenninginc.com Guggenheim Partners David Darst / 615.208.1224 david.darst@guggenheimpartners.com Raymond James William Wallace / 703.749.1485 william.wallace@raymondjames.com RBC Capital Markets Jake Civiello / 617.725.2152 jake.civiello@rbccm.com Sandler O’Neill Alexander Twerdahl / 212.466.7916 atwerdahl@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 or 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. C B U 2 0 1 4 A N N U A L R E P O R T 25 SHAREHOLDER INFORMATIONSafe Harbor StatementCOMMUNITY BANK SYSTEM, INC. 5790 Widewaters Parkway DeWitt, NY 13214-1883 800.724.2262 315.445.7347 fax communitybankna.com 

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