Community Bank System
Annual Report 2022

Plain-text annual report

Successful and growing financial services company operating one of the largest community banks based in Upstate New York, as well as significant fee-based businesses that contribute meaningfully to revenue Community Bank, N.A. serves retail, commercial and municipal customers in its NY, PA, VT, and MA branches and through its digital banking platform Our employee benefit services business operates nationally, while our wealth management and insurance services businesses serve much of the East Coast Experienced and disciplined acquirer Delivering value to shareholders $15.8B B A N K I N G Community Bank, N.A. $3.4B 20+ E M P L OY E E B E N E F I T S E R V I C E S Benefit Plans Administrative Services (BPAS) W E A LT H & R E T I R E M E N T Community Bank Wealth Management I N S U R A N C E S E R V I C E S OneGroup LETTER TO SHAREHOLDERS 2 PERFORMANCE PROFILE 4 CUSTOMER AND EMPLOYEE SPOTLIGHTS 10 EXECUTIVE MANAGEMENT 22 BOARD OF DIRECTORS 24 ADMINISTRATION 25 BRANCH AND DRIVE-THRU LOCATIONS 27 CORPORATE AND SHAREHOLDER INFORMATION 29 1 Looking at 2022 as a whole, Community Bank System, Inc. had a record year. Not only were we successful fi nancially, but our focus on investing across all lines of business led to tremendous growth. Across the company, we are focused on technology solutions for our customers and to improve our operating effi ciency. We implemented new commercial and cash management platforms and delivered new and improved digital banking tools for our customers. Most importantly, we made key additions to our talent bench to elevate our organization and position us for performance excellence. We now have the products, technology, talent and service capacity in both the banking and fi nancial services businesses to compete very eff ectively with the larger banks across our markets, which has created a signifi cant new organic market opportunity for us that we have not previously possessed. In addition, our organization is dedicated to supporting and giving back to the communities in which we operate and has launched numerous initiatives aimed at improving the lives of those around us. Our focus on serving our customers and communities is the foundation of our business, and I am proud of the positive impact we have made. Our year was signifi cantly impacted by the rapid rate increases by the Federal Reserve Open Market Committee (“FOMC”) throughout 2022 in their eff ort to control infl ation. Net income of $188.1 million, declined 0.9% from the record $189.7 million in 2021. Diluted earnings per share totaled $3.46 for 2022, which decreased $0.02 per share, or 0.6%, from 2021. Operating diluted earnings per share (non-GAAP) measured a record $3.58, up $0.09 per share, or 2.6%, over 2021. These results were achieved despite much lower Paycheck Protection Program (“PPP”) revenues and a directional reversal in the provision for credit losses due to changes in the macroeconomic outlook and unprecedented loan growth. 30TH CONSECUTIVE YEAR OF DIVIDEND INCREASES Total revenues were meaningfully higher than in 2021 due to the continued improvements in net interest income driven by strong loan growth throughout 2022. The combination of strong organic loan growth, the Elmira Savings Bank (“Elmira”) acquisition in the second quarter, relatively stable deposit costs, and higher market interest rates that led to higher yields on new loan originations and existing variable rate loans resulted in a $46.2 million, or 12.3%, increase in net interest income over the prior year. Noninterest revenues of $258.7 million for the full year of 2022 increased from $246.2 for the full year of 2021. Overall noninterest revenues represented 38.1% of total revenue, compared to a median of 19.8% for our peers. Average deposit balances increased $927.9 million, or 7.5%, between 2021 and 2022. Average deposit funding costs for 2022 of 0.11% remained 11 basis points lower than our peer median. Our Tier 1 leverage ratio of 8.79% at December 31, 2022 was well above the regulatory well capitalized standard of 5%. The Company’s capital planning and management activities, coupled with its historically strong earnings performance, diversifi ed streams of revenue and prudent dividend practices, have allowed it to build and maintain strong capital reserves. We increased our cash dividends by 2.3%. The $0.01 increase in the quarterly dividend declared in the third quarter of 2022 marked the 30th consecutive year of dividend increases for the Company. The payment of a meaningful and growing dividend is an important component of our commitment to provide consistent and favorable long term returns to our shareholders, and it refl ects the continued strength of our current operating performance and capital position, and our confi dence in the future of the Company. 1.12 1.27 1.24 1.23 1.38 1.65 1.63 1.40 1.34 1.31 2.0% 1.0% 13 14 15 16 17 18 19 20 21 2222 1 Core ROAA, a non-GAAP measure excludes acquisition expenses, acquisition-related provision for credit losses, acquisition-related contingent consideration adjustments, gains (losses) on securities, litigation accrual expenses, gain/loss on debt extinguishment, amortization of intangibles and acquired non-PCD loan accretion. 2 $188.1M $3.46 $3.58 1 Operating earnings per share is a non-GAAP measure and excludes acquisition expenses, acquisition-related provision for credit losses, acquisition-related contingent consideration adjustments, and gains (losses) on securities, net of tax eff ect. Emerging from the COVID-19 pandemic and the success of the substantial federal government stimulus program to support citizens and businesses led to a notable positive shift in the overall economic outlook. However, during 2022 another signifi cant shift occurred as higher infl ation prompted the FOMC to take swift action, raising short-term interest rates 425 basis points in 2022. Our performance was positively impacted resulting in improved operating results, largely driven by the signifi cant increase in net interest income and an increase in noninterest revenues, off set by increases in operating expenses, the provision for credit losses and income taxes. Year-end deposits totaled $13.0 billion, up 0.8% from 2021, while average total deposits for 2022 grew 7.5% over 2021. Our liquidity position remains strong. The Company’s banking subsidiary, Community Bank, N.A. (the “Bank”), maintains a funding base largely comprised of core noninterest-bearing demand deposit accounts and low cost interest-bearing checking, savings and money market deposit accounts with customers that operate, reside or work within its branch footprint. The Company’s readily available sources of liquidity totaled $4.88 billion at the end of 2022. Asset quality remained consistent and solid, with nonperforming loans of $33.4 million, or 0.38% of total loans outstanding at year-end, improved from $45.5 million, or 0.62% of total loans outstanding at the end of 2021. Net charge off s remained very low, at 4 basis points of average loans outstanding during 2022. Exclusive of $3.9 million in acquisition-related provision for credit losses due to the Elmira acquisition, the Company recorded a provision for credit losses of $10.8 million for full year 2022, compared to an $8.8 million net benefi t in the provision for credit losses during the full year of 2021. The full year 2022 provision for credit losses was refl ective of a $1.52 billion increase in non-PPP loans outstanding, while the full year 2021 net benefi t in the provision for credit losses was refl ective of the release of reserves in the fi rst three quarters of 2021 as the economic outlook and the loan portfolio’s asset quality profi le both steadily improved during that period. Loan growth for 2022 totaled $1.44 billion, or 19.5%, driven by increases in all fi ve of the Company’s loan portfolios due to net organic growth and the Elmira acquisition despite an $83.8 million decrease in PPP loans. Business lending loans increased $569.8 million, or 18.5%, consumer mortgage loans increased $456.4 million, or 17.9%, consumer indirect loans increased $349.9 million, or 29.4%, home equity loans increased $35.9 million, or 9.0%, and consumer direct loans increased $23.8 million, or 15.5%. Commercial loan pipeline remains healthy and there continues to be an ample amount of new business opportunities for our fi nancial services businesses. 3 PERFORMANCE PROFILE CONTINUOUS GROWTH PROFILE Our focus is always on building additional shareholder value into our diversified financial services enterprise. This is accomplished through organic growth in core banking relationships, disciplined lending, selective and strategic acquisitions of bank and financial services businesses, and a consistent approach to business regardless of economic conditions. DILUTED $ IN MILLIONS $1.93 $2.22 $2.19 $2.32 $3.03 $3.24 $3.23 $3.08 $3.48 $3.46 346.8 363.4 371.7 429.5 518.1 568.8 584.9 596.4 620.6 679.4 13 14 15 16 17 18 19 20 21 22 13 14 15 16 17 18 19 20 21 22 10 -YEAR CAGR = 6.0% 10 -YEAR CAGR = 7.5% $ IN MILLIONS $ IN MILLIONS 238.1 244.4 248.4 273.9 315.7 345.1 359.2 368.4 374.4 420.6 108.7 119.0 123.3 155.6 202.4 223.7 225.7 228.0 246.2 258.8 13 14 15 16 17 18 19 20 21 22 13 14 15 16 17 18 19 20 21 22 10 -YEAR CAGR = 6.2% 10 -YEAR CAGR = 10.1% $ IN BILLIONS DECLARED 6.47 6.64 6.99 7.66 8.81 9.37 9.66 11.36 13.39 14.55 $1.10 $1.16 $1.22 $1.26 $1.32 $1.44 $1.58 $1.66 $1.70 $1.74 13 14 15 16 17 18 19 20 21 22 13 14 15 16 17 18 19 20 21 22 10-YEAR CAGR = 8.6% 10 -YEAR CAGR = 5.1% 1 Excluding securities gains/losses and debt extinguishment charges 4 A core operating objective of the Company is to optimize its customer delivery systems. In the bank, we remain focused on enhancing the digital banking delivery systems, optimizing the branch network and pursuing strategic acquisitions. In the second quarter of 2022 we completed the merger with Elmira to expand and enhance our presence in New York’s Southern Tier and Finger Lakes regions. The merger added eight new branch locations in addition to the 212 customer facilities across Upstate New York, Northeastern Pennsylvania, Vermont and Western Massachusetts. With trends in customer behavior progressively shifting since the evolution of electronic banking and our pre-pandemic commitment to expanding Community Bank’s digital offerings, we continue to explore ways in which customers can bank with us digitally. We aim to provide the most convenient and sophisticated resources to our customers, in the most profitable way for our shareholders. Since the rapid adoption of digital banking tools prompted by the COVID-19 pandemic, we continually evaluate our physical branch network and prudently consolidate branch locations in overbanked regions, while continuing to ensure our customers all have access to a local branch. As of the end of 2022, 63% of total customers were digital banking users, while 55% and 26% of core deposit customers were eStatement users and online bill pay users, respectively. We continue to invest in our digital channels to enhance client experience, such as personal budgeting tools, Treasury Management tools and simplified digital account opening and direct deposit setup. We have shifted investments in other areas to improve efficiencies through workflow automation technology and drive digital traffic, including establishing our Digital Banking department. We are also continually investing in information security infrastructure to ensure client and data information security. Last year, we added back-office resources to reduce the mortgage loan pipeline and closing timelines and in 2022 we’ve seen a significant shift toward online applications, with over 30% of the Bank’s residential mortgage applications being submitted digitally. In addition to our traditional banking franchise, our focus on revenue quality and stability is enhanced through investments in diversified and complementary revenue sources. Our diversification efforts focus on building momentum in our noninterest income component of total revenues including employee benefits, wealth management and insurance services businesses. In 2022, there was a $5.3 million or 2.9% increase in non-banking revenues, despite the challenge of lower financial market valuations and prevailing economic uncertainty. While the Company’s wealth management and employee benefit services businesses were negatively affected by the lower financial market valuations, the impact was partially mitigated by an increase in non-interest revenue from the Company’s banking services. BANKING EMPLOYEE BENEFIT SERVICES WEALTH & RETIREMENT Community Bank, N.A. BPAS • Commercial Banking • Retirement Plan & Benefits Community Bank Wealth Management • Investment Advising INSURANCE SERVICES OneGroup • Risk Management • Cash Management Administration • Retirement Plan Design • Business Insurance • Municipal • Agricultural • Business Banking • Retail & Consumer • Actuarial & Pension Services • Asset Management • Public-Sector Benefits & VEBA • Trust Services • Personal Insurance • Employee Benefits • Health & Welfare Plans • Financial Planning • Human Resources Services • Collective Investment Fund • Family & Succession & Consulting Planning $420.6M net interest income for 2022 $115.4M non-interest revenues from $31.7M non-interest revenues from $39.8M non-interest revenues from $71.9M non-interest banking revenues for 2022 employee benefit services wealth management services insurance services for 2022 for 2022 for 2022 5 Banking noninterest revenues increased $7.2 million for 2022, growing 11.2% over 2021, primarily from increases in deposit service and other banking fees that benefitted from the continued post-pandemic recovery of economic activity, as well as incremental revenues from the Elmira acquisition, offset, in part, by decreases in mortgage banking revenues. Community Bank’s total noninterest revenues increased 5.1% to $258.7 million in 2022, accounting for 38.1% of total revenue. In comparison, the median peer’s non-interest revenues comprised just 19.8% of total revenue in 2022. This significant differentiation continues to be an important driver of our favorable long term shareholder returns. Through strategic investment, our non-banking businesses have evolved into sophisticated and complex enterprises with fantastic technology and capabilities that we’re now leveraging into much larger opportunities in the marketplace. During 2022, our Benefit Plans Administrative Services business rolled-out a state of the art web-based, multi-device participant website that completely overhauled the digital experience for over 400,000 defined contribution plan participants we service. In our OneGroup insurance services business, we acquired several smaller practices to expand our customer base, grow revenues and leverage our service capabilities. To further accelerate growth momentum in our Wealth Management business in July of 2022, we entered into a strategic relationship agreement with Jacobi Capital Management to provide investment advisory services to our commercial and high net worth clients in Pennsylvania. We have achieved critical scale in our nonbanking financial services businesses and expect to remain active acquirers in these spaces while continuing to drive organic expansion across our national markets. The success and growth of the Company’s business is largely dependent on its ability to attract, develop, and retain a population of talented and high-performing employees with a diversity of background and skill sets at all levels of our organization. The Company is committed to fostering a workforce in an inclusive environment that enhances the culture of shared identity, civility, dignity, and respect. In 2022 we appointed a Culture and Diversity Officer to advance culture and diversity initiatives and lead key aspects of our ESG strategy. In October of 2022, Dimitar Karaivanov, was promoted to Executive Vice President and Chief Operating Officer of the Company and the Bank. Mr. Karaivanov has served as Executive Vice President of Financial Services and Corporate Development since joining the Company in June 2021. In his role as Chief Operating Officer, Mr. Karaivanov had oversight over all banking, wealth management, employee benefit services, and insurance services and related business activities. After bringing fresh ideas and innovative thinking to his role as the Executive Vice President of Financial Services and Corporate Development, Mr. Karaivanov effectively led the Company’s mergers and acquisition strategy and reshaped the Company’s wealth management, employee benefit services, and insurance business units. Through this appointment, his focus will be on our banking operations in order to optimize our core business with a focus on increased revenue growth. At this year’s Annual Meeting of Shareholders, Jeffrey L. Davis will retire as a director of the Company. Jeff has been a tremendous asset to our Board and our Company since joining in 2017 with the Merchants Bank merger. Jeff has served as a member of the Audit Committee, Risk Committee, Trust & Financial Services Committee, and Chaired the Company’s Governance Committee during his tenure. His guidance, insight and leadership laid the foundation for the Company’s governance to meet the current and future expectations of our shareholders. Jeff’s positive outlook, steady hand and strong support in our New England market will be missed. On behalf of the shareholders, Board and employees, we wish Jeff best wishes for a happy and healthy retirement. We believe we are well-positioned with strong fundamentals coupled with investments in technology and talent to provide superior returns to our shareholders while continuing to support our customers and communities. Our solid capital position allows us to pursue growth opportunities, invest in our infrastructure, and better serve our customers. Our expanding digital presence has enabled us to reach new customers and enhance our services to our existing ones. Our diversified revenue streams provided by our nonbanking businesses help us achieve stable and consistent returns. I would like to extend my sincerest gratitude to our employees for their hard work and dedication, our shareholders for their continued support, and our customers for their loyalty. Eric E. Stickels Chairman of the Board Mark E. Tryniski President and Chief Executive Officer 6 Community Bank System has a well-earned reputation for attaining strong performance that refl ects our consistent approach to business, regardless of the economic environment, and commitment to eff ective execution. Our success does not go unnoticed. CULTURE AND DIVERSITY In 2022, we appointed Monticia Prather as the Culture & Diversity Offi cer. The Culture & Diversity Council was established in 2020 under the leadership of Executive Chair with the goal of unifying our employees across CBSI business lines and improving our culture, diversity, and inclusion eff orts. The Council has made signifi cant progress and identifi ed the need for a dedicated professional in this important role. Monticia joined CBSI in 2017 and has held various roles within the organization. She has been an active member of the community, serving on boards for the Champlain Valley Physician’s Hospital and the United Way of The Adirondack Region, and has been recognized publicly for her leadership and community involvement eff orts. Monticia received her master’s degree in Human Relations & Organizational Development in May 2021 and a Leadership Certifi cate from Champlain College, demonstrating her commitment to continuous education and growth. Her strong leadership skills, work ethic, institutional knowledge, community engagement, and passion to make a diff erence will serve her well in her new role. Our company-wide culture, values, and respect for individual diff erences are the source of our strength and sustainability, and we are confi dent that Monticia will continue to help us support our employees, customers, and communities. 7 2022 ELMIRA SAVINGS BANK ACQUISITION STRENGTHENED SOUTHERN TIER OF NEW YORK Enhanced the Company’s presence in fi ve counties of New York’s Southern Tier and Finger Lakes regions Highly complementary franchise with consistent performance track record Productive use of CBU’s capital Immediately accretive to operating EPS $15.8B Successful in-market strategy focused on high quality banking partners through low-risk, accretive acquisitions MOST RECENT BANKING ACQUISITIONS Elmira Savings Bank TRANSITION TYPE WHOLE NET BRANCHES 8 ASSETS IN MILLIONS $583 Steuben Trust Corporation TRANSITION TYPE WHOLE NET BRANCHES 11 ASSETS IN MILLIONS $608 Kinderhook Bank Corp. TRANSITION TYPE WHOLE NET BRANCHES 11 ASSETS IN MILLIONS $643 Merchants Bancshares , Inc. TRANSITION TYPE WHOLE NET BRANCHES 32 ASSETS IN MILLIONS $1,999 Oneida Financial Corp TRANSITION TYPE WHOLE NET BRANCHES 12 ASSETS IN MILLIONS $769 Bank of America , N.A. TRANSITION TYPE BRANCH NET BRANCHES 8 ASSETS IN MILLIONS $303 (Deposits) HSBC Bank U.S.A., N.A./First Niagara Bank, N.A. TRANSITION TYPE BRANCH NET BRANCHES 19 ASSETS IN MILLIONS $797 (Deposits) Wilber Corporation TRANSITION TYPE WHOLE NET BRANCHES 22 ASSETS IN MILLIONS $848 $ IN BILLIONS 5.9 5.9 6.9 7.1 8.4 8.3 9.0 11.2 12.9 13.0 13 14 15 16 17 18 19 20 21 22 10-YEAR CAGR = 8.7% 8 DIVERSIFIED LENDING PORTFOLIO Our loan portfolio is well balanced with approximately 42% in business lending, 35% residential mortgage loans, and 23% in consumer installment loans. Consumer loans include more than $1.5 billion of indirect lending, refl ecting more than 35 years of experience of originating loans through dealerships within our service footprint. $3.6B business lending portfolio at 12/31/2022 $3.0B of consumer mortgage loans at 12/31/2022 $1.5B consumer indirect portfolio at 12/31/2022 $0.4B of home equity loans at 12/31/2022 $0.2B in consumer direct loans at 12/31/2022 $151,000 average residential mortgage origination amount $69,000 average home equity origination amount $27,000 average indirect loan origination amount $567,000 average commercial loan relationship at 12/31/2022 More than 900 dealerships serviced through indirect dealer retail center $8.8B ASSET QUALITY METRICS AS OF DECEMBER 31, 2022 Our asset quality metrics are consistently very strong, refl ecting disciplined underwriting standards, combined with a deep understanding of our markets and customer base. Net charge-off s to average loans were just 4 basis points in 2022 Nonperforming loans to total loans of 0.38% Delinquent loans to total loans of 0.89% Allowance for credit losses to nonperforming loans ratio of 183% Allowance for credit losses to loans outstanding was 0.69% 0.17% 0.15% 0.15% 0.13% 0.18% 015% 0.12% 0.07% 0.04% 0.04% 0.24% 0.12% 13 14 15 16 17 18 19 20 21 22 10-YEAR CAGR = -16.1% 9 BA NKING From left, Doug Babbitt discusses plans with Dave Fitz-Gerald. DAVE FITZ-GERALD, CHIEF FINANCIAL OFFICER, CARRI S REELS 10 Carris Reels has been a reel manufacturer with a comprehensive product line for over 72 years. Their Employee Stock Ownership Plan (ESOP) structure allows hundreds of employees to share in the success of the growing business. For the last eight years, the strong partnership between Community Bank and Carris Reels has been led by Doug Babbitt, Vice President and Commercial Banking Offi cer. Doug and the Community Bank team provide valuable support, refl ecting values of integrity, excellence, teamwork, and humility, which align with Carris Reels’ values of safety, commitment to customers, and ownership. Carris Reels relies on Community Bank to play a vital role in helping the company secure the funds to continue their growth trajectory and achieve long-term goals, such as modernizing certain manufacturing facilities. The relationship emphasizes the importance of building trust, listening to our customers and understanding their business needs. The growth Carris Reels has achieved has allowed them to better serve their employees and communities through charitable contributions. The Community Bank team has played a signifi cant role in supporting Carris Reels with the guidance and expertise necessary to achieve substantial and sustainable growth, while also meeting the unique requirements of the ESOP ownership structure. DO UG BA BBITT, VICE PRESIDENT AND COMMER CI AL BANKI NG OFFICER 8 YEARS WITH COMM UN ITY BANK 11 38.1% BA NKING COMMUNITY BANK WITH COMMUNITY BANK WITH STRONG MARKET PRESENCE STRONG MARKET PRESENCE Through a series of strategic acquisitions, we have built Community Bank into one of the largest community banks based in Upstate New York with more than $15 billion in total assets. Today, our branch network serves individual and business customers across four states. NORTHERN NEW YORK North Country of New York, including the Adirondacks and east to the Vermont border MARKET AREA ~16,700 Sq. Mi. POPULATION 1,000,000 SOUTHERN NEW YORK New York’s Southern Tier, encompassing much of Western New York and the Finger Lakes MARKET AREA ~12,000 Sq. Mi. POPULATION 2,800,000 CENTRAL NEW YORK From the Eastern Shore of Lake Ontario through Syracuse and reaching the Hudson Valley MARKET AREA ~7,200 Sq. Mi. POPULATION 1,100,000 CAPITAL REGION NEW YORK Serving Albany and the fi ve counties in and around the Capital District MARKET AREA ~2,700 Sq. Mi. POPULATION 600,000 PENNSYLVANIA Serving the Northeastern portion of Pennsylvania MARKET AREA ~4,100 Sq. Mi. POPULATION 700,000 NEW ENGLAND Encompassing Vermont and part of Western Massachusetts MARKET AREA ~8,500 Sq. Mi. POPULATION 1,100,000 EMPLOYEE SPOTLIGHT PENNSYLVANNIA REGIONAL RETAIL BANKING MANAGER Susanne Mullin is a longstanding member of the Community Bank team, having started her career as a Personal Banking Representative in 1994. Over the years, she has held various roles within the organization, including Branch Assistant, Branch Manager, and District Manager. In January of last year, she assumed her current position as PA Regional Retail Banking Manager. Refl ecting on her experience at Community Bank, Susanne emphasizes the company’s commitment to excellence for employees, shareholders, and customers. She values the bank’s unwavering dedication to core values of integrity and honesty, which are never compromised. 12 SUSANNE MULLIN 29 YEARS WITH COMMUNI TY BANK EMPLOYEE BE NE F IT S ERV IC ES BPAS, Inc. is a national provider of retirement plans, benefi t plans, fund administration, and collective investment trusts. It operates eight subsidiaries through 13 offi ces located in the United States and Puerto Rico. These subsidiaries include Benefi t Plans Administrative Services, LLC, BPAS Actuarial & Pension Services, LLC, Hand Benefi ts & Trust, Hand Securities, Inc., Northeast Retirement Services, LLC, Global Trust Company, BPAS Trust Company of Puerto Rico, and Fringe Benefi ts Design of Minnesota. Our benefi ts business is the primary contributor of noninterest revenue which has grown at a 12.4% 10-year CAGR (2012-2022). BPAS is one of the country’s largest benefi ts plans providers, serving more than 620,000 participants. 4,500 retirement plans $107B in trust assets ~400 employees within our BPAS subsidiary 5 employee benefi t services acquisitions since 2015 EMPLOYEE SPOTLIGHT VICE PRESIDENT, CONSULTING, BPAS ACTUARIAL & PENSION SERVICES Kevin has been with BPAS for over 30 years and oversees client relationships, proactively manages those relationships, and ensures client satisfaction of BPAS services. Kevin is actively involved in the coaching and mentoring program, which helps employees develop their skills and career path. Kevin has been encouraged and supported through the years by BPAS management in pursuit of his professional goals and thoroughly enjoys coaching and mentoring young professionals embarking on their actuarial careers. He is known for his exceptional communication skills and dedication to delivering outstanding customer service. Kevin has helped establish BPAS as a leader in the industry and he continues to play an important role in shaping the future of BPAS. EMPLOYEE PLAN BENEFIT ADMINISTRATION AND TRUST SERVICES BPAS Acquired 1998 Hand Benefits & Trust Acquired 2007 BPAS Trust Company of Puerto Rico Founded 2012 Northeast Retirement Services Acquired 2017 Global Trust Company Acquired 2017 Fringe Benefits Design of Minnesota, Inc. Acquired 2021 KEVIN WADE 33 YEARS WITH BPAS 13 EMPLOYEE BE NE F IT S ERV IC ES From left, Amy Kemp goes over options with Eric Campbell. ERIC C AMPBELL, CHIEF FIN ANCIAL OFFICER, OSWE GO HEALTH 14 Oswego Health has been providing acute care to its community for over 140 years. The partnership between Oswego Health and BPAS began in 1998 with annual services to the Retirement Plan such as actuarial valuations, regulatory fi lings, participant notices, benefi t calculations, and other actuarial services. Amy Kemp, Vice President, Consulting at BPAS has managed the relationship with Oswego Health since 1998. Amy and the team at BPAS have provided consulting services to Oswego Health to help with reducing retirement plan expenses and off ering other retirement benefi t alternatives to the hospital system employees. This has allowed Oswego Health to provide consistent and reliable retirement benefi t alternatives to their employees. The partnership between Oswego Health and the BPAS team has evolved over time, to include a broader range of services, including the record-keeping services for the 403(b) plan. BPAS has provided clear, concise, and trustworthy recommendations which have allowed the administrative team at the hospital to work more effi ciently. The partnership has fl ourished through a shared vision of providing excellent service to the community. Oswego Health’s core values of caring for patients and employees, and being the trusted community hospital, are refl ected in the BPAS team’s unwavering commitment to helping the hospital to provide retirement benefi ts and other postretirement benefi t plans to Oswego Health employees. A MY KEMP, VICE PRESIDENT, CONSULTI NG MANAGING THE OSWEGO H EA LTH RE LATION SH IP FO R 25 YE A RS 15 WEALTH & RE TIR EM ENT From left, George Pifer meets with Joe Butler. GEORGE P IFER, WEALTH CUSTOMER FO R OVE R 20 YE ARS 16 George Pifer, a retired resident of Watertown, NY and an avid fi sherman, has been relying on Joe Butler, a fi nancial advisor at Community Bank Wealth Management, for almost 20 years. George chose Community Bank Wealth Management after his previous fi nancial planner failed to meet his expectations, and he values their conservative approach to ensure the growth and protection of his wealth into his retirement years. Joe and George meet regularly to review his portfolio and discuss any minor adjustments. George appreciates the size and nature of Community Bank’s locations and their friendly and cordial employees. Joe speaks fondly of their relationship, noting their mutual care and respect for one. The partnership strengthened signifi cantly over time, with George entrusting Joe with investing his entire retirement portfolio. Their partnership refl ects the Community Bank Wealth Management commitment to integrity, honesty, and relationship building. The team’s open communication, risk management strategies, and common interests enable them to build enduring relationships with their clients. JO E BUTLER, FINANCIAL ADVISOR AIF® OVER 20 YEARS WITH COMM UNIT Y BAN K WE ALT H M A N AGE M E NT 17 WEALTH & RE TIR EM ENT WEALTH MANAGEMENT SERVICES IN NY, PA, VT, MA AND FL Our wealth management subsidiaries including Community Investment Services, Inc., Nottingham Advisors, Inc., Community Bank Trust Services, The Carta Group, Inc. and OneGroup Wealth Partners, Inc. Through these we provide comprehensive asset management, strategic wealth planning and management, and trust administration. $7.3B assets under management or administration $31.7M in 2022 total revenues 6 wealth management services acquisitions since 2017 120+ Financial Professionals 100+ years of serving the needs of our customers EMPLOYEE SPOTLIGHT VP, CFP,® FINANCIAL CONSULTANT, COMMUNITY BANK WEALTH MANAGEMENT Dan Drappo has been a Financial Consultant at Community Bank Wealth Management for nearly 29 years. He started in 1994 and helped build out a program and a team of fi nancial planners and consultants. Dan is a Certifi ed Financial Planner, demonstrating his expertise and commitment to his profession and providing top-notch fi nancial planning services to clients. Dan appreciates the collaborative and team oriented culture at Community, which is focused on open communication, sharing of ideas, perspectives and strategies. Receiving the support to pursue his professional and career goals while working at Community has allowed Dan to achieve professional designations and become actively involved in various community organizations within his close-knit community of Watertown, NY. 18 DAN DRAPPO 29 YEARS WITH COMMUNI TY BANK WEALTH MANAGEMENT INSURANCE SERVICE S ONE GROUP OneGroup has over 200 experts and specialists in a wide range of business and personal services striving to reduce overall cost of risk. With 17 locations across eastern United States, OneGroup is one of the fastest-growing insurance brokers in the United States serving clients nationally and internationally. $39.8M revenue in 2022 100+ years of industry experience OneGroup is a leading risk management and insurance broker providing holistic solutions Business Insurance Personal Insurance Risk Management and Consulting Claims Management Employee Benefi ts 8th largest bank-owned property/casualty agency in Insurance Journal’s 2022 ranking Human Resources Services and Consulting 12 insurance services acquisitions since 2015 Supporting organic growth through opportunistic M&A Recently acquired several personal lines practices in Florida and New York and a Boston-based specialty-lines commercial insurance broker EMPLOYEE SPOTLIGHT VICE PRESIDENT OF INFORMATION SYSTEMS AT ONEGROUP Linda has been an integral member of Community Bank’s OneGroup team for over 30 years, starting as a data processor and working her way up to Vice President of Information Systems. She values the company’s culture, which prioritizes diversity, community, and personal growth. With the Company’s support, Linda has had the opportunity to be involved in various professional organizations and pursue personal and lifestyle goals within the community of Oneida, NY. Linda served on the SAUCI Board, the research and development committee for Vertafore, has been LINDA FIND LAY involved with NETVU and has even worked as a country-wide educator. OneGroup’s family-like culture has remained consistent as it has grown and supports Linda’s deep connection to the community, as well as the growth of the small-town community. 33 YEARS WI TH ONE GROUP AND COMMUNITY BANK 19 INSURANCE SERVICE S From left, Cyndi Borozny and Carole Krytusa review a policy. CY NDI B OROZNY, CHIEF FINANCIAL OFFI CER, TH E ARC NEW YORK 20 The Arc New York is a not-for-profi t organization that provides services to individuals with disabilities throughout New York State. OneGroup Senior Vice President of Business Insurance, Carole Krytusa has managed the relationship with The Arc New York for the last 17 years. OneGroup has supported The Arc New York achieve several signifi cant goals, such as underwriting their workers compensation insurance policy and launching a single retirement program for all chapters across the state to participate in. The partnership has enabled The Arc New York to improve the safety of their employees through a comprehensive policy covering all 36 chapters of the organization, updating policy language to account for new risks in today’s environment, establishing risk management policies and the development of an injury reporting program and claims review processes. Carole and the OneGroup team have taken the time to understand The Arc New York’s values and mission, which has helped to build trust, understanding, and confi dence between the two organizations. OneGroup’s culture, which values innovation, transparency, and community engagement, aligns closely with The Arc New York values and mission and has played a large part in the growth of this partnership over time. The strong partnership between OneGroup and The Arc New York has enabled both organizations to expand their relationship over time, off ering new products and services to The Arc New York, and make a positive impact within their communities. Over the duration of this relationship, OneGroup has gained the expertise to better serve customers in the social services segment. CARO LE KRYTUSA, SENIOR VICE PRESIDENT BUSI NESS I NSURANCE AT ONEGROUP 21 Mark E. Tryniski PRESIDENT and CHIEF EXECUTIVE OFFICER Joined CBU in 2003 and has previously served as CFO and COO. Prior to joining the company, he was a partner with PricewaterhouseCoopers, LLP. Dimitar A. Karaivanov EVP, CHIEF OPERATING OFFICER Joined Community Bank System in June 2021. Prior to then, Mr. Karaivanov served as Managing Director in Lazard’s Financial Institutions Group. Joseph E. Sutaris EVP, CHIEF FINANCIAL OFFICER Joined CBU in 2011 following its acquisition of The Wilber Corporation, where he held several roles, including CFO. Maureen Gillan-Myer EVP, CHIEF HUMAN RESOURCES OFFICER Prior to joining Community Bank System in October 2021, Ms. Gillan-Myer served as Senior Executive Vice President and Chief Human Resources Officer of HSBC, USA. Michael N. Abdo EVP, GENERAL COUNSEL Prior to joining CBU in 2013, he served as an associate with Cadwalader Wickersham & Taft in its New York City Office, with a focus on commercial and financial litigation. Jeffrey M. Levy SVP, PRESIDENT of COMMERCIAL BANKING Joined CBU in 2018 as a regional executive and was promoted in January 2022 to his current role. Mr. Levy previously worked at NBT Bank and M&T Bank. 22 From left to right: Michael Abdo, Dimitar Karaivanov, Mark Tryniski, Jeffrey Levy, Maureen Gillan-Myer and Joseph Sutaris INVESTMENT CONSIDERATIONS: CBU Consistent business model for over 20 years Market-leading branch system serving predominantly non-urban markets Excellent core deposit base Focused on strong customer relationships Committed to successful operating strategy focused on intelligent low-risk acquisitions, organic growth, and prudent capital management Disciplined growth through organic and acquired opportunities Focused on low-risk accretive mergers and acquisitions Goal of 10% average annual shareholder returns over time Cash dividend payment raised every year for the past 30 years, providing a meaningful dividend and yield Focus on revenue diversifi cation Successful and eff ective operating strategy Strong fundamentals with strong asset quality on a consistent basis NYSE-listed company with both signifi cant institutional ownership and signifi cant liquidity 415% OWNERSHIP SUMMARY AS OF DECEMBER 31, 2022 53.7M shares outstanding 39.3M shares held by institutions 73% of shares held by institutions 321 institutional holders Approximately 14.4M retail shares Approximately 27% of outstanding shares are retail shares 23 Eric E. Stickels CHAIRPERSON OF THE BOARD RETIRED PRESIDENT, COO and SECRETARY ONEIDA FINANCIAL CORP. DIRECTOR SINCE 2015 Brian R. Ace RETIRED OWNER LACEYVILLE HARDWARE COMMITTEES Governance; Compensation DIRECTOR SINCE 2003 Mark J. Bolus PRESIDENT and CEO BOLUS MOTOR LINES, INC. COMMITTEES Compensation, Chair; Strategic/Executive; Trust and Financial Services DIRECTOR SINCE 2010 Neil E. Fesette OWNER, PRESIDENT and CEO FESETTE REALTY, LLC and FESETTE PROPERTY MANAGEMENT COMMITTEES Strategic/Executive, Chair; Compensation; Governance DIRECTOR SINCE 2010 Kerrie D. MacPherson RETIRED SENIOR PARTNER ERNST & YOUNG, LLP COMMITTEES Audit; Trust and Financial Services DIRECTOR SINCE 2019 Jeff rey L. Davis PRESIDENT J.L. DAVIS, INC. COMMITTEES Governance, Chair; Audit DIRECTOR SINCE 2017 Jeff ery J. Knauss FORMER CEO and CO-FOUNDER DIGITAL HYVE COMMITTEES Governance DIRECTOR SINCE 2021 John Parente CEO CP MEDIA, LLC COMMITTEES Trust and Financial Services, Chair; Strategic/Executive DIRECTOR SINCE 2010 Raymond C. Pecor, III PRESIDENT LAKE CHAMPLAIN TRANSPORTATION COMPANY COMMITTEES Risk, Chair; Compensation DIRECTOR SINCE 2017 Susan E. Skerritt RETIRED CHAIRWOMAN, CEO and PRESIDENT DEUTSCHE BANK TRUST COMPANY AMERICAS COMMITTEES Audit; Compensation DIRECTOR SINCE 2020 Mark E. Tryniski PRESIDENT and CEO COMMUNITY BANK SYSTEM, INC. DIRECTOR SINCE 2006 Sally A. Steele LEAD DIRECTOR ATTORNEY AT LAW COMMITTEES Governance; Strategic/Executive; Trust and Financial Services DIRECTOR SINCE 2003 John F. Whipple, Jr. CEO BUFFAMANTE WHIPPLE BUTTAFARO, P.C. COMMITTEES Audit, Chair; Governance DIRECTOR SINCE 2010 24 NOTE All bank board members participate in the Risk Committee EXECUTIVE Mark E. Tryniski, President and Chief Executive Officer Dimitar A. Karaivanov, EVP, Chief Operating Officer Joseph E. Sutaris, EVP, Chief Financial Officer Maureen Gillan-Myer, EVP, Chief Human Resources Officer Mike Abdo, EVP, General Counsel Jeffrey M. Levy, SVP, President of Commercial Banking RETAIL BANKING Hal Wentworth, SVP, Retail Banking and Marketing Anita Bourgeois, SVP, Retail and Municipal Banking Manager Lynne Wadsworth, Branch Services Administrator Dara Penny, Director of Marketing Kent Backus, Senior Regional Retail Banking Manager Lisa Allenson, Senior Regional Retail Banking Manager Jody Tonkery, Senior Regional Retail Banking Manager Janet Briggs, Regional Retail Banking Manager Robert Liedka, Regional Retail Banking Manager Susanne Mullin, Regional Retail Banking Manager Victoria Strader, Regional Retail Banking Manager COMMERCIAL/CONSUMER LENDING AND CREDIT ADMINISTRATION Scott Boser, SVP, Director of Consumer and Mortgage Lending John Keshavan, SVP, Regional Credit Officer Susan McCarthy, SVP, Regional Credit Officer James Murphy, SVP, Chief Commercial Credit Officer FINANCE & TREASURY MANAGEMENT Joseph J. Lemchak, SVP, Chief Investment Officer Deresa Durkee, SVP, Corporate Controller Robert Frost, VP, Director of Financial Planning and Analysis Sean Howard, Senior Treasury Officer ADMINISTRATIVE SERVICES Danielle Cima, Senior Associate General Counsel, Corporate Secretary Colin Quillinan, Associate General Counsel Compliance Anna Richards, Associate General Counsel Dorothy Quarltere, Chief Compliance Officer Brett Fisk, Director of Facilities Randy Pray, Corporate Purchasing Manager INFORMATION TECHNOLOGY & OPERATIONS Aaron Friot, SVP, Chief Technology and Operations Officer Paula Demo, Director of Operations Shelley Quinn, Director of Customer Care and Cash Management RISK MANAGEMENT Paul Ward, SVP, Chief Risk Officer Dennelle Michalski, Director of Risk Management Timothy Miller, Chief Information Security Officer John Miller, Bank Secrecy Officer Gail Whipple, Director of Internal Audit COMMUNITY BANK COMMERCIAL BANKING W E S T E R N R E G I O N John Eagleton, SVP, Commercial Banking Group Manager Christopher Humphrey, SVP, Commercial Banking Team Leader N O R T H E R N R E G I O N Allen Racine, Commercial Banking Team Leader Ronald Bacon, Commercial Banking Team Leader S Y R AC U S E / O N E I DA R E G I O N Russell Brewer, SVP, Commercial Banking Group Manager Thomas Breed, Commercial Banking Team Leader S O U T H E R N R E G I O N D. James Vedora, SVP, Commercial Banking Group Manager Ed Michalek, Commercial Banking Team Leader C E N T R A L R E G I O N Jeffrey Lord, SVP, Commercial Banking Sales Manager C A P I TA L R E G I O N Ken Countermine, SVP, Commercial Banking Group Manager P E N N S Y LVA N I A R E G I O N Barbara Maculloch, Regional President Pennsylvania Matthew Dougherty, SVP, Commercial Banking Group Manager N E W E N G L A N D R E G I O N Matthew Durkee, Regional President New England Bruce Bernier, SVP, Commercial Banking Group Manager Patrick Calecas, Commercial Banking Team Leader WEALTH MANAGEMENT GROUP Paul Restante, Managing Director COMMUNITY INVESTMENT SERVICES, INC. Theresa Kalil-Lennon, SVP, Sales and Marketing Director Scott Duggleby, SVP, Regional Sales Manager Chasity Jaynes, SVP, Director of Operations TRUST SERVICES Charles Perrillo, SVP, Chief Trust Investment Officer, South Burlington Catherine Koebelin, SVP, Chief Trust Officer, Olean Karissa McDonough, SVP, Senior Fixed Income Strategist Kristopher Hacker, SVP, Senior Equity Strategist NOTTINGHAM ADVISORS, LLC 100 Corporate Parkway, Suite 338, Amherst, NY Thomas Quealy, Chief Executive Officer Lawrence Whistler, President, Chief Investment Officer ONE GROUP 706 North Clinton Street, Syracuse, NY Pierre Morrisseau, Chief Executive Officer Chris Mason, President BENEFIT PLAN SERVICES B PA S 6 Rhoads Drive, Utica, NY Paul M. Neveu, Chief Executive Officer Linda S. Pritchard, SVP, Recordkeeping Services 3401 Masons Mill Road, Suite 601, Huntingdon Valley, PA Mary Anne Geary, President B PA S AC T U A R I A L A N D P E N S I O N S E R V I C E S 706 North Clinton Street, Syracuse, NY Vincent F. Spina, President Steven P. Chase, SVP Sarah E. Dam, SVP 60 East 42nd Street, Suite 1062, New York, NY Sheryl Gabriel, SVP H A N D B E N E F I T S & T R U S T 820 Gessner, Suite 1250, Houston, TX Stephen Hand, President Kathy A. Harvey, SVP Gregg K. Zimmerman, SVP B PA S T R U S T C O M PA N Y P U E R T O R I C O VIG Tower, 1225 Ponce De Leon Ave, Suite 804, San Juan, PR Alfredo Matheu, BPAS President, Puerto Rico N O R T H E A S T R E T I R E M E N T S E R V I C E S , I N C . ( N R S ) 12 Gill Street, Suite 2600, Woburn, MA Chris Hulse, Chief Executive Officer Freddie Jacobs, Chief Operating Officer Frank Lallos, Chief Business Officer Christopher Ellis, Chief Financial Officer C O M M U N I T Y B A N K , N . A . PENNSYLVANIA REGIONAL ADVISORY BOARD John Basalyga William Ruark Colleen Doyle, Esq. Lissa Bryan-Smith John Graham James Shoemaker, Esq. Gerard O’Donnell Tara Mugford Wilson 25 A HIGHLY COST-EFFECTIVE FUNDING NETWORK We have built an eff ective and highly effi cient funding engine powered by our strong market position in primarily non-metropolitan locations across New York, Pennsylvania, Vermont, and Massachusetts. This strength is refl ected by our fi rst or second market share in approximately two thirds of the towns and cities where we have a branch location. 63% Approximately 93% of deposits come from core checking, money market and savings accounts. DIGITAL TRANSFORMATION $13.0B of total deposits at 12/31/2022 $4.2B in noninterest-bearing deposits at 12/31/2022 $12.1B of core checking & savings deposits at 12/31/2022 Deposit funding costs averaged 0.11% for full year 2022 Interest checking accounts were 24.8% of total deposits Money market accounts were 17.7% of total deposits Savings accounts were 18.7% of total deposits Time deposits were 7.0% of total deposits 35,000 new retail checking accounts opened in 2022 5,000 new business checking accounts opened in 2022 Selected Financial Highlights Income Statement IN MILLIONS Net interest income Noninterest income Total revenue1 Operating expenses2 Net income Net interest margin 2022 2012 $ 420.6 258.7 679.4 419.5 188.1 2.92% $ $ 230.4 99.2 329.4 203.5 77.1 3.88% $ Per Share Data (Diluted) Earnings per share Operating earnings per share3 Cash dividends declared Book value Tangible book value $ $ 3.46 3.58 1.74 28.88 12.93 Balance Sheet Data END OF PERIOD, IN MILLIONS Assets Loans Deposits Shareholders’ equity $ 15,836 78,809 13,012 1,552 $ $ $ $ $ 1.93 2.12 1.06 22.78 13.72 7,497 3,866 5,628 903 CAGR 10-YEAR 6.2% 10.1% 7.5% 7.5% 9.3% (2.8%) 6.0% 5.4% 5.1% 2.4% (0.6%) 7.8% 8.6% 8.7% 5.6% 1 Excluding securities gains/losses and debt extinguishment charges 2 Excluding acquisition-related expenses 3 Operating EPS is a non-GAAP measure and excludes acquisition expenses, acquisition-related provision for credit losses, acquisition-related contingent consideration adjustment and gains(losses) on securities. 26 Investing for the future also means strengthening our digital capabilities. In recent years, we have made signifi cant upgrades to our customer-facing technology, creating robust and easy to use platforms that have earned positive feedback from our customers. These enhancements have included a new mobile banking app launched in 2020, a small business loan application online portal, a treasury management tool for business and municipal customers, and a loan application portal for second-draw PPP loans. Our focus on technology also supports our eff orts to implement environmentally sound practices. For example, our online mortgage banking platform helps to reduce paper usage during the lending process. More than 253,000 active mobile banking users 26% of consumer core deposit customers use online bill pay 55% of core deposit customers are eStatement users 31% of residential mortgage applications submitted online More than 7.1 million monthly debit card transactions on average in 2022 Hinesburg Jericho Johnson Manchester Rutland (Green Mountain Plaza) Rutland (Woodstock Ave) Drive-thru Only South Burlington (Shelburne Rd) South Burlington (Williston Rd) South Hero Springfield, MA Springfield, VT St. Albans St. Johnsbury Vergennes Waterbury White River Junction Drive-thru Only Williston (Cottonwood Dr) Wilmington Winooski PENNSYLVANIA Back Mountain Carbondale Drive-thru Only Clarks Summit Daleville Edwardsville Drive-thru Only Freeland Hazleton (Airport Rd) Hazleton (South Church St) Jermyn Kingston Laceyville Lansford Lehighton Meshoppen Montrose Olyphant Pittston Scranton (Keyser Ave) Scranton (Minooka) Scranton (North Washington Ave) Scranton (Wyoming Ave) Tunkhannock Wilkes Barre (Liberty Plaza) Wilkes Barre (South Main St) Wyalusing NORTHERN NEW YORK Adams Alexandria Bay Ausable Forks Black River Canton (Court St) Drive-thru Only Canton (Main St) Champlain Chateaugay Clayton Fulton Gouverneur Hannibal Harrisville Indian Lake Lake Placid Long Lake Lowville (State St) Lowville (Turin Rd) Drive-thru Only Lyons Falls Madrid Malone (Elm St) Drive-thru Only Malone (West Main St) Massena North Creek Norwood Ogdensburg (State St) Oswego Plattsburgh (Margaret St) Plattsburgh (Route 3) Potsdam (Market St) Potsdam (May Rd) Drive-thru Only Pulaski Saranac Lake (Broadway) Saranac Lake (Lake Flower) Drive-thru Only St. Regis Falls Star Lake Ticonderoga Tupper Lake Watertown (Arsenal St) Watertown (Washington St) West Carthage Whitehall SOUTHERN NEW YORK Addison Alfred Allegany Arkport Avon Bath Belfast Belmont Bolivar Boonville (Headwaters Plaza) Drive-thru Only Boonville (Main St.) Camden Canandaigua Cassadaga Drive-thru Only Cato Cicero Clarence Clifton Springs (Main St) Clifton Springs (Clifton Plaza) Drive-thru Only Clymer Corning (West Market St) Corning (West Pulteney St) Cuba Dansville Dewitt Dunkirk (Central Ave) Dunkirk (Vineyard Dr) Elmira (Big Flats) Elmira (East Water St.) Elmira (Southport) Elmira (West Church St.) Elmira (West Water St.) Falconer Fillmore Franklinville Geneseo Geneva Gowanda Hammondsport Henrietta Hornell (Steuben Square) Horseheads (Consumer Square) Horseheads (Grand Central Ave) Ithaca (East Buffalo St) Ithaca (South Meadow St) Ithaca (Triphammer) Ithaca (West State St) Jamestown (Brooklyn Square) Lakewood Livonia Moravia Mount Morris Naples Newark Plaza North Collins Olean (Delaware Park) Drive-thru Only Olean (North Union St) Orchard Park Ovid Painted Post Palmyra Penn Yan (Lake St) Drive-thru Only Penn Yan (Main St) Phelps Portville Randolph Ripley Rome (Griffiss Park) Rome (Turin Rd) Rushville Salamanca Seneca Falls Sherman Silver Creek Skaneateles Springville (North Buffalo St) Springville (South Cascade Dr) Warsaw Waterloo Watkins Glen Wellsville (North Highland Ave) Wellsville (North Main St) Westfield Westmoreland Woodhull Yorkshire CENTRAL NEW YORK Boiceville Canastota Cazenovia Chittenango Cobleskill Cooperstown (Otsego) Delhi Hamilton Johnson City Milford Morris Nichols Norwich Town Oneida (182 Main St) Oneida (585 Main St) Oneonta (Chestnut St) Oneonta (Main St) Oneonta (Southside) Owego Schenevus Sidney Vernon Walton CAPITAL REGION OF NEW YORK Albany Amsterdam Canajoharie Chatham Delmar East Greenbush Greenport Johnstown Kinderhook Latham Valatie NEW ENGLAND Vermont and Massachusetts Barre Bennington Bradford Brattleboro Bristol Burlington (College St) Burlington (North Ave) Enosburg Essex Junction Fair Haven Hardwick 27  DILUTED $1.93 $2.22 $2.19 $2.32 $3.03 $3.24 $3.23 $3.08 $3.48 $3.46 13 14 15 16 17 18 19 20 21 22 10 -YEAR CAGR = 6.0% Stock Performance AT 12/31/22 CLOSING PRICE PRICE/EARNINGS (TTM) AVERAGE 3-MONTH DAILY VOLUME 52 WEEK HIGH STOCK PRICE 52 WEEK LOW STOCK PRICE $62.95 18.19 215,000 $74.05 $54.63 $ IN MILLIONS 78.8 91.4 91.2 103.8 150.7 168.6 169.1 164.7 189.7 188.1 Total Shareholder Returns (ANNUALIZED) 1 YEAR 5 YEARS 10 YEARS 15 YEARS CBU (13.2%) 5.8% 11.7% 11.5% S&P 600 Commercial Banks Index (7.9%) 3.6% 10.9% 5.2% KBW Regional Bank Index (6.9%) 3.5% 10.4% 5.4% 13 14 15 16 17 18 19 20 21 22 10 -YEAR CAGR = 9.3% Through December 31, 2022 or most recent available, including reinvestment of dividends Source: Bloomberg Integrity WE DO THE RIGHT THING Excellence WE ALWAYS BRING OUR BEST O U R C O R E V A L U E S Teamwork WE WORK TOGETHER Humility WE RESPECT EVERYONE 28 10.85% Investor Information Investor and shareholder information regarding Community Bank System, Inc., including all fi lings with the Securities and Exchange Commission, is available through the company’s website: cbna.com Copies may also be obtained without charge upon written request to: Marguerite Geiss Investor Relations Department Community Bank System, Inc. 5790 Widewaters Parkway DeWitt, NY 13214-1883 315.445.7313 marguerite.geiss@cbna.com CORPORATE HEADQUARTERS Community Bank System, Inc. 5790 Widewaters Parkway DeWitt, NY 13214-1883 PHONE 315.445.2282 or 800.724.2262 FAX 315.445.7347 cbna.com Annual Meeting Wednesday, May 17, 2023 12:00pm EST Turning Stone Resort Casino Onondaga Conference Room 5218 Patrick Road Verona, New York 13478 STOCK LISTING CBU The common stock symbol of Community Bank System, Inc. listing on the New York Stock Exchange (NYSE) CmntyBkSys Newspaper listing for common stock 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 certifi cates, and dividend checks, direct deposit and reinvestment should contact: AST Operations Center 6201 15th Avenue Brooklyn, NY 11219 astfi nancial.com General questions: 877.253.6847 INDEPENDENT AUDITORS The Board of Directors appointed PricewaterhouseCoopers, LLP as auditor for the company for the year ended December 31, 2022. ANALYST COVERAGE The following analysts published research about Community Bank System in 2022: American Capital Partners Anthony Polini / 908.625.1931 apolini@acpweb.com D.A. Davidson & Co. Manuel Navas / 212.223.5405 mnavas@dadco.com Hovde Group LLC Erik E. Zwick / 617.510.1239 ezwick@hovdegroup.com Keefe, Bruyette & Woods, Inc. Christopher O’Connell / 212.887.4725 oconnellch@kbw.com Piper Sandler Alexander Twerdahl / 212.466.7916 alex.twerdahl@psc.com Raymond James Financial Inc. Steve Moss / 202.872.5931 steve.moss@raymondjames.com Stephens, Inc. Matthew M. Breese / 401.658.1114 matt.breese@stephens.com INVESTOR’S CHOICE PROGRAM CBU off ers convenient, low-cost options for investors wishing to steadily buy shares. For information, contact: AST Operations Center 6201 15th Avenue Brooklyn, NY 11219 astfi nancial.com General questions: 877.253.6847 SA FE HARBOR STATEMENT 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 diff er materially from the results discussed in these statements. These risks are detailed in the company’s periodic reports fi led with the Securities and Exchange Commission. 29 COMMUNITY BANK SYSTEM, INC. 5790 Widewaters Parkway DeWitt, NY 13214-1883 800.724.2262 315.445.7347 fax cbna.com 

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