Community Bank System Annual Report 2023

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FY2023 Annual Report · Community Bank System

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

About Community Bank System, Inc.

BUSINESSES

B A N K I N G

E M P L OY E E B E N E F I T S E R V I C E S

I N S U R A N C E

W E A LT H M A N A G E M E N T

RESILIENT
PROGRESS

TABLE OF CONTENTS

LETTER TO SHAREHOLDERS

PERFORMANCE HIGHLIGHTS

SELECTED FINANCIAL HIGHLIGHTS

EXCELLENCE RECOGNIZED

RETIREMENT MESSAGE FROM MARK TRYNISKI

BUSINESSES

MESSAGE FROM JEFFREY LEVY
Chief Banking Officer, Community Bank, N.A.

MESSAGE FROM PAUL NEVEU
President and CEO, BPAS

MESSAGE FROM PIERRE MORRISSEAU
President and CEO, OneGroup

MESSAGE FROM MICHAEL CERMINARO
President and CEO, Community Bank Wealth Management

EXECUTIVE MANAGEMENT

BOARD OF DIRECTORS

ADMINISTRATION

BRANCH LOCATIONS

CORPORATE / SHAREHOLDER INFORMATION

Integrity
WE DO THE RIGHT THING

Excellence
WE ALWAYS BRING OUR BEST

O U R C O R E VA L U E S

Teamwork
WE WORK TOGETHER

Humility
WE RESPECT EVERYONE

To Our Shareholders

RESILIENT PROGRESS

In 2023, Community Bank System, Inc. continued to build

upon its foundation of strength, navigating a year full of both

challenges and opportunities. We were faced with high inﬂation

and rapidly rising interest rates, a number of high-proﬁle bank

failures, geopolitical conﬂicts, and numerous market swings.

The resilience of our Company was on full display as we

navigated through the challenges with a steady focus on our

clients, communities, and colleagues.

services to our clients and our explicit investment thesis of

Above Average Returns with Below Average Risk.

Within our Banking business, we achieved record operating

revenues of $507.3 million—a 3.0% increase from the full year

of 2022. Our total assets were $15.56 billion at the close of the

year, marking a slight reduction of 1.8% from the previous year

due to strategic sales in our investment securities portfolio

to reduce borrowings.

Our ability to allocate capital dynamically across our businesses

allowed us to take advantage of both organic and acquisition

Our loan portfolio grew signiﬁcantly, increasing by $895.2

opportunities enabling the Company to achieve record

operating revenues for 2023. However, the bottom line results

were negatively impacted by a higher than anticipated expense

million, or 10.2%, to $9.70 billion, driven by net organic growth

across all loan categories and major regions. We maintained

our foundational focus on credit quality, as evidenced by net

growth driven by both inﬂationary pressures and purposeful

charge-offs of 0.06% for 2023.

investments for future growth. For the full year, our GAAP

Earnings Per Share (EPS) reached $2.45, a decrease from $3.46

in 2022. Our Operating EPS, which reﬂects our core operations,

stood at $3.36 for the year, highlighting our operational

consistency in a volatile environment. We recorded a return on

assets (ROA) of 0.87% and an operating ROA of 1.19% for the

year. Our return on equity (ROE) was 8.27% for the year, which,

when adjusted for non-operating items, increased to 11.89%.

Despite the challenges of 2023, our ﬁnancial results are a

Community Bank N.A.’s deposits ended the year at $12.93

billion, a slight reduction of 0.6% from the previous year. The

average cost of deposits rose to 0.66% and remains one of the

lowest in the country. Our long-tenured strategy of pursuing

checking accounts and core business relationships truly served

us well. In addition, as of year-end 2023 Community Bank,

N.A. had readily available liquidity sources totaling $4.83

billion. This robust liquidity position, representing over 200%

of our estimated uninsured deposits, net of collateralized and

testament to the resilience of our business model and strategy.

intercompany deposits, underpinned our resilience in 2023.

These outcomes reinforce our commitment to delivering

shareholder value and maintaining operational performance

and discipline.

DIVERSIFIED BUSINESS MODEL

Our dedication to diversifying the Company’s revenue streams

took center stage in 2023 with three of our four businesses

having record revenue results. Our business model is fully

aligned with both our objective to provide full relationship

Our Employee Beneﬁt Services business also showcased

positive momentum, with revenues reaching a record $118.0

million for the full year, a 2.2% increase from the same period

last year. This segment continues to demonstrate strong

organic momentum and we now serve over 800,000

participants nationwide. We were also recently named a Top

5 Recordkeeper across all market segments by the National

Association of Plan Advisors (NAPA) Advisors’ Choice Awards.

Signiﬁcant growth was observed in the Insurance business,

We are also actively deploying technology to enhance our

where revenues surged by 18.3% to a record $47.1 million

internal processes and functions. We have dedicated teams

compared to the full year of 2022. This growth is attributable

focused on data, process optimization and improved internal

to a strong premium market, organic expansion, and strategic

efficiencies. All of those initiatives are designed to ultimately

acquisitions. We were ranked #75 amongst the Top 100

beneﬁt how we service our clients and work with each

Property/Casualty Agencies by the Insurance Journal.

other internally.

Our Wealth Management business enjoyed a revenue boost

to $31.9 million, up by 0.9% from the full year of 2022, driven

by improved investment market conditions and an increase in

assets under management, with revenue stability-maintained

quarter-over-quarter.

Reﬂecting on the year, we recognize the importance of

evolving to embrace a more diversiﬁed approach. Our resilience

and progress have been greatly bolstered by our ability to

adapt and grow across various business segments, from

traditional banking services to innovative ﬁnancial solutions

in wealth management, beneﬁts, and insurance. This strategic

diversiﬁcation has not only strengthened our resiliency across

various economic environments but has also supported our role

LOOKING AHEAD

As we look to 2024 and beyond, we will remain rooted in our

values of Integrity, Teamwork, Excellence and Humility and

build upon our sustainable business model. Our duty of care to

our clients, communities and colleagues is the foundation of our

ﬁnancial success and will continue to serve us well.

As President and CEO, I am fully aware of the responsibility

placed upon my shoulders. It’s an honor to continue in the

footsteps of Mark Tryniski, whose leadership has been a source

of inspiration. With a team of exceptionally talented and

committed professionals by my side, I am conﬁdent the future

is bright.

as a responsive ﬁnancial institution in our communities.

Thank you for being an integral part of our journey and for the

ENHANCING CUSTOMER EXPERIENCE

In 2023, we placed an increased emphasis on enhancing

customer experience, a cornerstone of our business model.

Signiﬁcant investments were channeled into our digital

platforms, resulting in the introduction of new features and

capabilities designed to make our services more accessible,

efficient, and secure. This strategic focus on digital innovation is

evident in the increasing adoption of our digital offerings, with

a signiﬁcant percentage of our customers now actively using

these platforms.

trust you have placed in our Company.

Dimitar A. Karaivanov
President and Chief Executive Officer

Performance Highlights

Total Revenue 1

$ IN MILLIONS

Earnings per Share

DILUTED

346.8

363.4

371.7

429.5

518.1

568.8

584.9

596.4

620.6

679.4

704.3

$1.93

$2.22

$2.19

$2.32

$3.03

$3.24

$3.23

$3.08

$3.48

$3.46

$2.45

10 -YEAR CAGR = 7.3%

10 -YEAR CAGR = 2.4%

Net Interest Income

$ IN MILLIONS

Operating Earnings per Share 2

DILUTED

238.1

244.4

248.4

273.9

315.7

345.1

359.2

368.4

374.4

420.6

437.3

1.98

2.27

2.31

2.35

2.64

3.23

3.29

3.24

3.49

3.58

3.36

10 -YEAR CAGR = 6.3%

10-YEAR CAGR = 5.4%

Noninterest Income1

$ IN MILLIONS

Dividend Growth

DECLARED

108.7

119.0

123.3

155.6

202.4

223.7

225.7

228.0

246.2

258.8

267.0

$1.10

$1.16

$1.22

$1.26

$1.32

$1.44

$1.58

$1.66

$1.70

$1.74

$1.78

10 -YEAR CAGR = 9.4%

10 -YEAR CAGR = 4.9%

1 Excluding securities gains/losses and gain/loss on debt extinguishment
2 Operating earnings per share, a non GAAP measure, excludes net of tax the effect of acquisition
related expenses, gains/losses on investment securities and other special charges. A reconciliation of
GAAP to Non-GAAP measures is provided in Item 7, Table 20 of the Form 10-K.

OUR INVESTMENT THESIS:
Above Average Returns with Below Average Risk

Return on Assets 1

Net Charge-off Ratio 1

1.19%

1.06%

1.24%

1.29%

1.12%

1.06%

1.50%

0.50%

0.20%

0.16%

0.06%

0.09%

0.07%

0.05%

0.13%

0.11%

0.00%

2023

3-YR AVG

5-YR AVG

10-YR AVG

2023

3-YR AVG

5-YR AVG

10-YR AVG

CBU

KRX (MEDIAN) 3

CBU

KRX (MEDIAN) 3

CBU - OPERATING 2

Cost of Funds 1

2.00%

1.84%

0.77%

0.78%

0.76%

0.61%

0.35%

0.31%

0.24%

0.00%

Noninterest Revenues
/ Operating Revenues 2

50.0%

30.0%

10.0%

37.9%

38.6%

38.5%

37.3%

16.7%

19.8%

21.7%

23.1%

2023

3-YR AVG

5-YR AVG

10-YR AVG

2023

3-YR AVG

5-YR AVG

10-YR AVG

CBU

KRX (MEDIAN) 3

CBU

KRX (MEDIAN) 3

Sources: S&P Global, Internal ﬁlings
1 Averages represent simple average of annual results through 2023.
2 Operating ROA and Revenues are non-GAAP measures. A reconciliation of GAAP to Non-GAAP measures is provided in Item 7, Table 20 of the Form 10-K.
3 The KBW Regional Banking Index (KRX) is a market index that is designed to track performance of 50 regional banks or thrifts that are publicly traded in the U.S.

Selected Financial Highlights

Income Statement

2023

2013

IN MILLIONS

Net interest income

437.3

238.1

Noninterest income1

Total revenue1

267.0

704.3

Operating expenses2

462.4

Net income

131.9

108.7

346.8

219.1

78.8

Per Share Data (Diluted)

Earnings per share

Operating earnings per share1,2

Cash dividends declared

Book value

2.45

3.36

1.78

31.84

1.94

1.98

1.10

21.66

Tangible book value

15.85

12.80

Balance Sheet Data
END OF PERIOD, IN MILLIONS

Assets

Loans

Deposits

15,556

7,096

9,705

12,928

4,109

5,896

Shareholders’ equity

1,698

876

1 Excluding securities gains/losses and gain/loss on debt extinguishment
2 Excluding acquisition-related expenses, litigation and restructuring charges

CAGR

10-YEAR

6.3%

9.4%

7.3%

7.8%

5.3%

2.4%

5.4%

4.9%

3.9%

2.2%

8.2%

9.0%

8.2%

6.8%

Excellence Recognized

Community Bank System has garnered consistent recognition for its exceptional

performance within the industry, underscoring our unwavering dedication to

shareholders, consumers, and employees. In 2023, our achievements were

acknowledged as follows:

CBU’s 31 years of consecutive annual dividend increases have
allowed it to retain the status as an S&P Dividend Aristocrat

Ranked in top 25 of Forbes America’s Best Large Banks for 12 of
the last 15 years and named to the World’s Best Banks in 2023

Ranked #23 in Newsweek’s, America’s Most Trustworthy
Companies of 2023

Regularly named a “best bank” in our communities, including by
Vermont Business Magazine in 2023

OneGroup: Ranked #75 in Insurance Journals Top 100 P/C
Agencies of 2023

BPAS: NAPA Advisors’ choice award top 5 record keeper 2023

RETIREMENT FEATURE

Mark Tryniski Farewell Message

Given my retirement at the end of December 2023, I would

many years. As our entire organization understands, we all

like to take a ﬁnal opportunity to reﬂect brieﬂy on the past,

work for you.

present and future of Community Bank System.

Having served your Company as Chief Executive Officer

such an incredible Board of Directors. They are talented and

for nearly eighteen years and over 20 in total, we have

committed professionals who are caring, engaged, objective,

experienced signiﬁcant growth, evolution, change, success,

and performance focused. Just as important, they have been

and challenge. I am fond of saying look out the windshield, not

an inspiration to work with and a source of much of my own

the rear-view mirror. But as I think back over my tenure, I can’t

effort, commitment and pride over the past 20 years.

I am most thankful to have had the opportunity to work with

help but marvel at the evolution and transformation of our

operating environment over the past two decades. Economic,

technological, regulatory, societal, political, and global forces

have signiﬁcantly inﬂuenced our Company and our industry.

I am most proud of how Community Bank System has

navigated this transformation effectively for the beneﬁt

of all our stakeholders to grow even better and stronger for

the future.

I would attribute this outcome to four primary operating

principles - discipline, diversiﬁcation, core values, and people.

We endeavor to be disciplined in all we do, from credit, capital,

and risk, to M&A. We operate a diversiﬁed business model,

including our balance sheet and our income statement.

We focus without exception on our core values of Integrity,

Excellence, Teamwork and Humility. And we are not in the

banking, wealth, insurance, or beneﬁts business; we’re in the

people business. Those principles are enduring and timeless

Lastly, the greatest joy of my professional life has been to

work alongside an incredible leadership team and 3,000

of my other friends and colleagues. Thank you for all you

have done and will continue to do to make this such a great

company and for your efforts, pride and passion in serving our

customers, our communities, our shareholders, and each other.

Community Bank System is better positioned now than at

any time in our history. We have four tremendous businesses

and the best leadership and operating teams we have ever

had. We have invested for the future in people, products and

technology. My successor, Dimitar Karaivanov, is one of the

most talented ﬁnancial and strategic professionals I have ever

worked with and fully embodies the core values that guide

our organization. I very much look forward to the future of

Community Bank System under his capable leadership.

and have worked for us to build a sustainable, high performing

With gratitude,

ﬁnancial services business.

Our greatest operating priority has always been to provide our

shareholders with above-average returns and below average

risk. I hope we have been largely successful in achieving this

objective, and would like to thank our shareholders for their

Mark E. Tryniski

Retired President and Chief Executive Officer

trust and conﬁdence in me and our leadership team for so

Member, Board of Directors

Diversiﬁ ed and Complementary
Revenue Streams

BANKING

Community Bank, N.A.

• Commercial Banking

• Treasury Management

• Municipal

• Agricultural

• Business Banking

• Retail & Consumer

EMPLOYEE BENEFIT SERVICES

BPAS

• Retirement Plan & Beneﬁ ts Administration

• Actuarial & Pension Services

• Public-Sector Beneﬁ ts & VEBA

• Health & Welfare Plans

• Collective Investment Fund

INSURANCE

OneGroup

• Risk Management

• Business Insurance

• Personal Insurance

• Employee Beneﬁ ts

• Human Resources Services

& Consulting

WEALTH MANAGEMENT

Community Bank
Wealth Management

• Investment Advising

• Retirement Plan Design

• Asset Management

• Trust Services

• Financial Planning

• Family & Succession Planning

$437.3M
net interest income for 2023

4.0% increase from 2022

$70.0M
non-interest banking

revenues for 2023

2.7% decrease from 2022

$118.0M
non-interest revenues from

employee beneﬁ t services

for 2023

2.2% increase from 2022

$47.1M
non-interest revenues from

insurance services for 2023

18.3% increase from 2022

$31.9M
non-interest revenues from

wealth management services

for 2023

0.9% increase from 2022

EXECUTIVE FEATURE | COMMUNITY BANK, N.A.

Banking

“

In 2023, Community Bank, N.A. navigated

through several macro-economic

challenges, effectively executed our

strategic plans to post solid operating

results and continued to make long-term

investments. Our journey highlights our

strength and commitment, setting a course

for future growth. As we look ahead, united

in our vision and supported by a dedicated

team of bankers and loyal customers, we

are ready to embrace opportunities and

continue our path of success.

– Jeffrey Levy | Chief Banking Offi cer

”

Community Bank, N.A.

MESSAGE FROM CHIEF BANKING OFFICER OF COMMUNITY BANK, N.A.:

As we look back on 2023, a year marked by its unique blend of challenges and achievements, I am ﬁ lled

with a sense of pride and humility over what we accomplished, and more importantly, optimism as we plan

for the future. The steadfast progress within our banking business, amidst economic uncertainties and a

banking sector crisis early in the year has been remarkable. At the core of our values is our deep-rooted and

long standing customer relationships. Our proactive outreach during the banking sector crisis and ongoing

communication eff orts have played a crucial role in upholding trust and maintaining historical deposit

balances, proving the eff ectiveness of our customer-centric approach. Our successful journey through these

turbulent times has underscored the robustness of our organic growth strategies across commercial banking,

retail banking, and consumer lending.

Commercial banking stood out as a pillar of strength, with a notable expansion in our commercial loan

portfolio and steadfast asset quality metrics, demonstrating our capability to maneuver through the rough

seas of the economy of 2023. This success is a tribute to our rigorous risk management framework and the

enduring trust our clients have placed in us. Our in-footprint, relationship based, commercial loan portfolio is

very diverse, with no major concentrations in speciﬁ c property types or industries.

$14.7M

REVENUE
INCREASE

3.0%

growth in
revenue

10.2%

loan
growth

5.3%

3-year revenue
CAGR (2020-2023)

Consumer lending, particularly in residential mortgages and automobile ﬁ nance, reported exceptional growth,

especially in light of the challenging macro-economic conditions, exceeding our expectations. This growth is

a testament to our unwavering commitment to catering to our customers’ ﬁ nancial needs while sustaining a

strong balance sheet.

The dramatic increase in interest rates required a strategic shift in branch banking from focusing on deposit

growth to emphasizing deposit retention. This strategic adjustment underlines our agility and foresight in

responding to evolving market dynamics. Because of our long-standing customer relationships, along with

the proactive outreach and customer engagement by our dedicated team of bankers, deposit retention

during this turbulent period was a great accomplishment.

We continue to leverage our expansive branch network, enhance our digital capabilities, and continue our

expansion into contiguous markets, thus strengthening our foundation for future success.

Looking ahead, our focus remains steadfast on organic growth and leveraging the expertise of our

Employee Beneﬁ t Services, Insurance and Wealth Management business partners to deepen our numerous

customer relationships.

Jeff rey Levy | Chief Banking Offi cer

Community Bank, N.A.

EXECUTIVE FEATURE | BPAS

Employee Beneﬁ t
Services

“Through resilience, innovation and focus,

BPAS is striving towards new milestones

each year. Our strategy is national in nature

-- bringing a full mix of retirement plan,

employee beneﬁ t and institutional trust

services to professional ﬁ duciaries and other

partners to solve speciﬁ c client needs. We’re

proud of our growth and evolution, but we

have so much more to do.

– Paul Neveu | President and CEO

BPAS

”o.

MESSAGE FROM PRESIDENT AND CEO OF BPAS:

As we reﬂ ect on 2023 at BPAS, it was a year of continuous improvement, problem solving and growth at BPAS. We are

now one of the 25 largest deﬁ ned contribution recordkeepers in the U.S., one of the 15 largest pension actuaries and

one of the three largest institutional trust companies focused on collective investment funds. With so many industry

acquisitions over the last three years and considerable staffi ng disruption seen at many competitors, we have seen a

steady rise of industry interest in BPAS. In this environment, there is an enormous premium on delivering a high touch

experience. This is not just an organizational goal, but a foundational belief at BPAS.

Our focus continues on listening to the marketplace, developing our people, improving our effi ciency, and maintaining

the ﬁ duciary trust that clients place in us. In the last year we have seen a sizeable increase in proposal volume and wins,

and more partners calling us for solutions -- including large and complex engagements. This is evidence to us that our

approach is working.

During 2023, BPAS achieved revenues of $118.0 million, an increase of $2.6 million, or 2.2%, compared to the previous

year. We also reached a new milestone of $115 billion of assets in our care at the end of 2023. Including events of early

2024, BPAS is now 450 employees in total, with sixteen offi ces nationally.

On the trust side of our business, we continue working with the largest custodian banks, asset managers and asset

owners, providing trust administration solutions and innovative ﬁ duciary management. We are continuously forming

new collective investment funds for ERISA investment needs and LLC funds for endowments and foundations. As

the investment management industry grows ever more complex and innovative, we position ourselves as the ﬂ exible,

adaptive solution for supporting an ever-changing investment product environment.

Across our retirement and employee beneﬁt services group,

retirement and ﬁnancial planning topics in the app, but a range

we now have 810,000 total participants in our care -- a 6.6%

of life, health, and personal topics as well. We have hundreds

increase year over year. We have experienced growth in several

of thousands of people in our care. Our mission is to help them

areas of our retirement business this year, including deﬁned

become inspired, so they strive towards ﬁnancial independence

contribution plans and the IRA business. Our Retiree Health

and pursue the things that bring meaning, value, and joy to

Savings business is rapidly expanding thanks to an expert

their lives.

team and strategic partnerships with some of the industry’s

largest ﬁrms. We’ve also seen growth in our Deﬁned Beneﬁt

360 (“DB360”) service line, providing an integrated mix of

BPAS EARNS TOP SPOTS IN 2023
NAPA ADVISORS’ CHOICE AWARDS

services for pension plans including actuarial and trustee

In 2023, BPAS was honored to receive top recognition in the

services, our deﬁned beneﬁt portal, as well as custodial and

National Association of Plan Advisors (NAPA) Advisors’ Choice

pay agent services. We also provide creative solutions for

Awards – naming us as a top performer across all ﬁve segments

employers seeking a deﬁned beneﬁt and deﬁned contribution

of the marketplace, from small plans to the $100 million plus

combination plan to achieve key objectives. In 2023, our IRA

end of the marketplace. Although we remain humble, we take

administration, Fiduciary Services and Puerto Rico businesses

great pride in this recognition since it comes from anonymous

continued to grow, with all three businesses reaching new high-

feedback from a wide range of advisors and across plans of

water marks in terms in clients and revenues this year.

all sizes. Our sales and relationship management teams are

STRATEGIC INITIATIVES

out every day work with ﬁnancial intermediaries to build their

business and win plans. It is the strength of these advisor and

In March 2024 we rolled out an upgraded Plan Sponsor

trustee partnerships that continues to build our business

/ Financial Partner portal that greatly enhances the user

each year.

experience in terms of aesthetics, speed, and functionality. Our

Roadside Assistance program is rolling out this year in phases.

A VISION FOR FUTURE GROWTH

This program will allow us to hear from plan participants when

Our goal at BPAS is to stay focused on our clients and business

they have broader ﬁnancial needs, so we can communicate

partners, continue to listen, work on one initiative at a time, and

with ﬁnancial partners to ensure there is a coordinated and

be highly accountable to the people who entrust relationships

helpful response to those needs.

Across our retirement and institutional trust business lines,

the BPAS toolbox of services is extremely broad. One of our

strategic initiatives is to visit key accounts (the largest national

advisory ﬁrms) to tell our story from the top down – making

ﬁrms aware of niche solutions we can offer as their partner.

to us. Maintaining a happy culture with a sense of humor is

absolutely central to the mission of BPAS. That’s something

we spend so much time on, with the deep friendships that

live inside our organization and with clients and partners.

Maintaining this balance is critically important, and a leading

driver in our continued success.

Although some of our largest business partners have incredible

In summary as we look ahead, our growth strategy includes

capabilities, they often ﬁnd it more efficient to partner with

our commitment to responsible expansion, cultivating and

BPAS to solve speciﬁc product needs rather than scope out

supporting our people, leveraging technology while focusing

and staff for such projects internally.

Across all business lines, BPAS is focused on maintaining

the expertise of our teams. This includes ongoing training

and credentialing, as well as active mentoring across our

plan consulting and actuarial teams. Emerging technologies,

including process automation and artiﬁcial intelligence will

on security, and maintaining a broad set of capabilities to meet

the needs of our clients and partners. Our integration within

the Community Bank System ecosystem has brought

signiﬁcant beneﬁts, enhancing our capabilities and service

offerings – helping us to collaborate effectively across the

broader organization.

optimize these roles in the future – allowing our experts to

Thank you for the support, trust, and conﬁdence you place in

spend more time on consulting and less time running tests,

BPAS. We look forward to writing new chapters of this story

reports, or valuations. We see these technologies augmenting

with the plan sponsors, participants, partners, and clients in our

the role, while our people continue to be the epicenter of BPAS

care – as we continue to meaningfully contribute to the success

and our point of strategic differentiation.

of our parent company while helping participants retire

with dignity.

Finally, educating and inspiring the participants in our care

is an important part of our mission. Through our app, BPAS

University (found at u.bpas.com or in both app stores), we

strive to accomplish this with fresh and engaging content

delivered by our marketing and communications team and

professionals across the organization. We cover not only

Paul Neveu | President and CEO

BPAS

EXECUTIVE FEATURE | ONEGROUP

Insurance

“ OneGroup stands as a beacon of

adaptability, strategic foresight, and

unwavering commitment to excellence. Our

journey is marked by a relentless pursuit of

innovation, deepening client relationships,

and expanding our horizons to meet the

evolving needs of those we serve.

– Pierre Morrisseau | President and CEO

OneGroup

”e.

MESSAGE FROM PRESIDENT AND CEO OF ONEGROUP:

Reﬂ ecting on the past two decades, OneGroup has embarked on a transformative journey, evolving from a modest

$3.5 million revenue agency to a top 100 P&C broker in the nation, with revenues of $47.1 million. This exceptional

growth has been marked by consistent organic expansion and strategic acquisitions, resulting in an annual growth rate

ranging between 17% and 18% over the past two years. The 2015 merger with Community Bank System, Inc. was critical

to broadening our reach, deepening our expertise across New York State and beyond.

STRATEGIC FOCUS AND EXPANSION

Our dedication to specialization has been the cornerstone of our success. We not only focus on building scale and

expertise in our core businesses of commercial lines, employee beneﬁ ts, and personal lines insurance, but have

consistently deepened our expertise in various industry segments to off er unparalleled value and service. Our clients

want us to understand and support their businesses.

The 2021 acquisition of Boston insurance ﬁrm, TGA, has been a cornerstone of our success. It is a great

example of adding new deep expertise in the Food and Life Science industries, expanding our geographic

presence into New England, and enriching our culture of collaboration. This merger has been instrumental in

our ability to compete with industry giants and set new benchmarks for success.

LEVERAGING SYNERGIES AND CLIENT ENGAGEMENT

At the heart of our business philosophy is the strategic leverage of Community Bank and its subsidiaries.

Together we offer a full complement of ﬁnancial services and business expertise. Our model is simple, as a

client of any one of our businesses we provide access to all our knowledge. We work together to bring that

knowledge to our clients when needed. This collaboration has been instrumental in enhancing value for our

clients, offering them comprehensive access to our expertise.

INNOVATION AND CLIENT FOCUS

We are excited about the prospects of further integrating cutting edge technology into our operations. We

continue to invest in technical and human resource platforms to streamline processes, improve efficiency, and

enhance the client experience. The exploration of artiﬁcial intelligence and data analytics within a controlled

environment creates the potential to revolutionize our business, through automation of more basic tasks and

freeing our team to further focus efforts on the client experience.

Our vision extends beyond traditional insurance boundaries, with initiatives like our investment in Medicare

Advantage Insurance highlighting our commitment to addressing the complex needs of our clients

throughout their lives. By creating a holistic approach, OneGroup aims to provide coverage that meets all our

clients’ business needs. This strategy not only positions us as a leader in the industry but also as a strategic

advisor capable of safeguarding the diverse interests of our clients through a single, uniﬁed platform.

75th

AMONG THE
TOP 100 U.S.
INSURANCE
AGENCIES

11
acquisitions in
the past 3 years

13.3%
3-year CAGR
(2020-2023)

Oﬃces
in NY, PA, MA,
SC and FL

LOOKING FORWARD

We are dedicated to leveraging advanced technology, enhancing client experiences, and embracing

innovation to set new standards in client service and operational efficiency. Our focus will continue to be on

strategic growth, innovation, and service excellence. Our unique expertise and the partnership between all of

Community Bank System, Inc.’s businesses to bring real value to our clients sets us apart in the market.

Thank you for your continued support as we embark on this exciting journey. Together, we are not just

navigating change; we are shaping the future of insurance.

Pierre Morrisseau | President and CEO

OneGroup

EXECUTIVE FEATURE | COMMUNITY BANK WEALTH MANAGEMENT

Wealth Management

“

In a year of challenges, our Wealth

Management division turned obstacles

into opportunities, leveraging resilience

and synergy to enrich our client

experience. As we advance, our uniﬁ ed

approach promises a future of strategic

growth and comprehensive service.

– Michael Cerminaro | President and CEO

Community Bank Wealth Management

”

COMMUNITY BANK WEALTH MANAGEMENT

INVESTMENT &
INSURANCE SERVICES

RETIREMENT PLAN
CONSULTING

TRUST SERVICES

FINANCIAL PLANNING

ASSET MANAGEMENT

OUTSOURCED
PARTNER SOLUTIONS

MESSAGE FROM PRESIDENT AND CEO OF
COMMUNITY BANK WEALTH MANAGEMENT:

In a year that presented a myriad of challenges and opportunities, our Wealth Management division

demonstrated remarkable resilience and strategic importance. The volatility of 2023, while presenting hurdles,

also reaffirmed the importance of delivering holistic and comprehensive solutions to our clients.

Heading into 2024, our focus encompasses two critical areas: enriching the client experience through

platform expansion and fueling growth by deepening our client relationships across Community Bank

System, Inc. With a broad client base spanning commercial, retail banking, insurance services and beneﬁt

plans, the opportunity to add value is signiﬁcant. Our goal is to provide an unrivaled, holistic experience by

meeting the demands of our client’s most important ﬁnancial objectives.

PERFORMANCE HIGHLIGHTS

Our division has seen encouraging ﬁnancial performance over the past year. Total revenues reached $31.9

million for the full year, marking an increase of $0.3 million, or 0.9%, from the prior year end. This growth is

attributable to more favorable investment market conditions, which have positively impacted our assets

under management and revenue stability.

The development and enhancement of our wealth management capabilities remain central to our

mission. We are committed to building a premier, full-service offering, delivered by highly skilled ﬁnancial

professionals. Our offering includes, investment and insurance services, trust services, asset management,

retirement plan consulting, ﬁnancial planning and outsourced partner services.

While our primary emphasis is on organic growth, we are positioned to pursue strategic moves such as

acquisitions and partnerships in markets that promise growth and align with our cultural and business

priorities. With the highest priority being the integration of our wealth management services for the beneﬁt of

Community Bank System, Inc. family of businesses and clients.

Looking ahead we are clear on our strategic focus and ultimate dedication to our client’s ﬁnancial well-being.

This focus and dedication prepares us to face future challenges and opportunities with purpose

and conﬁdence.

Michael Cerminaro | President and CEO

Community Bank Wealth Management

Investment Proﬁle

Above average returns with below average risk

Committed to successful operating strategy focused on
intelligent low-risk acquisitions, organic growth, and prudent
capital management

Focused on long-term return to shareholders and
long-standing dividend growth

Strong fundamentals with consistent and strong asset quality
and high quality, durable revenues

Long-term responsible growth focus

Ownership Summary

AS OF DECEMBER 31, 2023

53.3M Shares Outstanding

39.7M Shares Held by Institutions

Approximately 75% of Outstanding Shares Held by Institutions

312 Institutional Holders

Approximately 12.9M Retail Shares

Approximately 24% of Outstanding Shares are Retail Shares

Executive Management

From left to right: Michael Abdo, Maureen Gillan-Myer, Dimitar Karaivanov, Jeffrey Levy, and Joseph Sutaris

Dimitar A. Karaivanov
PRESIDENT AND
CHIEF EXECUTIVE OFFICER

Joined CBU in 2021 and has previously
served as COO. 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 the
Company’s acquisition of The Wilber
Corporation, where he held several
roles, including CFO.

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.

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.

Jeffrey M. Levy
SVP, CHIEF BANKING OFFICER

Mr. Levy joined CBU in 2018 as a
Regional Executive. In January 2022, he
was promoted to Senior Vice President
(SVP), President of Commercial
Banking, before advancing to his
current position as Chief Banking
Officer. Prior to CBU, he held positions
at NBT Bank and M&T Bank.

Board of Directors

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
DIRECTOR SINCE 2010

Jeff ery J. Knauss
FORMER CEO and CO-FOUNDER DIGITAL HYVE

COMMITTEES Governance; Audit
DIRECTOR SINCE 2021

John Parente
CEO CP MEDIA, LLC

COMMITTEES Trust, Chair; Strategic/Executive;
Governance
DIRECTOR SINCE 2010

Susan E. Skerritt
RETIRED CHAIRWOMAN, CEO and PRESIDENT
DEUTSCHE BANK TRUST COMPANY AMERICAS

COMMITTEES Audit; Compensation
DIRECTOR SINCE 2020

Michele Sullivan
RETIRED PARTNER CROWE LLP

COMMITTEES Audit
DIRECTOR SINCE 2024

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, Chair; Trust
DIRECTOR SINCE 2019

Raymond C. Pecor, III
PRESIDENT LAKE CHAMPLAIN
TRANSPORTATION COMPANY

COMMITTEES Risk, Chair; Governance
DIRECTOR SINCE 2017

Sally A. Steele
LEAD DIRECTOR
ATTORNEY AT LAW

COMMITTEES Strategic/Executive;
Compensation
DIRECTOR SINCE 2003

Mark E. Tryniski
RETIRED PRESIDENT and CEO
COMMUNITY BANK SYSTEM, INC.

DIRECTOR SINCE 2006

John F. Whipple, Jr.
CEO BUFFAMANTE WHIPPLE BUTTAFARO, P.C.

COMMITTEES Audit; Governance; Chair
DIRECTOR SINCE 2010

Dimitar A. Karaivanov
PRESIDENT and CEO

COMMUNITY BANK SYSTEM, INC.

DIRECTOR SINCE 2024

NOTE All bank board members
participate in the Risk Committee

Administration

EXECUTIVE

Dimitar A. Karaivanov, President and Chief Executive Officer

Joseph E. Sutaris, EVP, Chief Financial Officer

Maureen Gillan-Myer, EVP, Chief Human Resources Officer

Michael N. Abdo, EVP, General Counsel

Jeffrey M. Levy, SVP, Chief Banking Officer

INFORMATION TECHNOLOGY & OPERATIONS

Aaron Friot, SVP, Chief Technology and Operations Officer

RISK MANAGEMENT

Daniel L. Bailey, SVP, Chief Risk Officer

BANKING

Hal Wentworth, SVP, Retail Banking and Marketing

Scott Boser, SVP, Director of Consumer and Mortgage Lending

Barbara Maculloch, Regional President Pennsylvania

Matthew Durkee, Regional President New England & President

of Commercial Banking

EMPLOYEE BENEFIT SERVICES

Paul M. Neveu, Chief Executive Officer

INSURANCE

Pierre Morrisseau, Chief Executive Officer

WEALTH MANAGEMENT

Michael Cerminaro, President & Chief Executive 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

Waterbury
White River Junction
Drive-thru Only
Williston (Cottonwood Dr)
Wilmington
Winooski

PENNSYLVANIA
REGION

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

COMMUNITY BANK N.A.

Branch and Drive-Thru Locations

ALBANY REGION
OF NEW YORK

Albany
Amsterdam
Ausable Forks
Boiceville
Canajoharie
Champlain
Chateaugay
Chatham
Delmar
East Greenbush
Greenport
Indian Lake
Johnstown
Lake Placid
Latham
Long Lake
Malone (Elm St) Drive-thru Only
Malone (West Main St)
North Creek
Plattsburgh (Margaret St)
Plattsburgh (Route 3)
Saranac Lake (Broadway)
Saranac Lake (Lake Flower)

Drive-thru Only
St. Regis Falls
Ticonderoga
Tupper Lake
Valatie
Whitehall

BINGHAMTON REGION
OF NEW YORK

Cobleskill
Cooperstown (Otsego)
Delhi
Ithaca (East Buffalo St)
Ithaca (South Meadow St)
Ithaca (Triphammer)
Ithaca (West State St)
Johnson City
Nichols
Norwich Town
Oneonta (Chestnut St)
Oneonta (Main St)
Oneonta (Southside)
Sidney
Walton

BUFFALO REGION
OF NEW YORK

Alfred
Allegany
Belfast
Belmont
Bolivar
Clymer
Cuba
Dunkirk (Central Ave)
Dunkirk (Vineyard Dr)

Falconer
Fillmore
Franklinville
Gowanda
Jamestown (Brooklyn Square)
Lakewood
North Collins
Olean (Delaware Park) Drive-thru Only
Olean (North Union St)
Orchard Park
Randolph
Salamanca
Sherman
Silver Creek
Springville (South Cascade Dr)
Warsaw
Wellsville (North Highland Ave)
Wellsville (North Main St)
Westfield
Yorkshire

ROCHESTER REGION
OF NEW YORK

Addison
Avon
Bath
Canandaigua
Clifton Springs Plaza
Corning (West Market St)
Dansville
Elmira (Big Flats)
Elmira (East Water St.)
Elmira (Southport)
Elmira (West Water St.)
Geneseo
Geneva
Hammondsport
Henrietta
Hornell (Steuben Square)
Horseheads (Grand Central Ave)
Livonia
Naples
Newark Plaza
Ovid
Palmyra
Penn Yan (Lake St) Drive-thru Only
Penn Yan (Main St)
Phelps
Seneca Falls
Waterloo
Watkins Glen

SYRACUSE REGION
OF NEW YORK

Adams
Alexandria Bay
Black River
Boonville (Headwaters Plaza)

Drive-thru Only
Boonville (Main St.)
Camden

Canastota
Canton (Court St) Drive-thru Only
Canton (Main St)
Cato
Cazenovia
Chittenango
Cicero
Clayton
Dewitt
Fulton
Gouverneur
Hamilton
Hannibal
Lowville (State St)
Lowville (Turin Rd) Drive-thru Only
Lyons Falls
Madrid
Massena
Moravia
Ogdensburg (State St)
Old Forge
Oneida (182 Main St)
Oneida (585 Main St)
Oswego
Potsdam (Market St)
Pulaski
Rome (Griffiss Park)
Skaneateles
Star Lake
Vernon
Watertown (Arsenal St)
Watertown (Washington St)
West Carthage
Westmoreland

NEW ENGLAND REGION

Vermont and Massachusetts

Barre
Bennington
Bradford
Brattleboro
Bristol
Burlington (College St)
Burlington (North Ave) Enosburg
Essex Junction
Fair Haven
Hardwick
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

Growth Proﬁle

Stock Performance

AT 12/31/23

CLOSING
PRICE

PRICE/EARNINGS
(TTM)

AVERAGE 3-MONTH
DAILY VOLUME

52 WEEK HIGH
STOCK PRICE

52 WEEK LOW
STOCK PRICE

(ANNUALIZED)

$52.11
21.3
283,000
$64.86
$35.38

Total Shareholder Returns

1 YEAR 5 YEARS 10 YEARS 15 YEARS

CBU

(14.2%) 0.5% 5.7% 8.6%

S&P 600 Commercial Banks Index

(1.7%) 5.4% 6.2% 6.6%

KBW Regional Bank Index

(0.4%) 7.5% 6.2% 6.8%

Through December 31, 2023 or most recent available, including reinvestment of dividends
Source: Bloomberg

Most Recent Banking Acquisitions

TRANSACTION
TYPE

NET
BRANCHES

ASSETS IN
MILLIONS

2022 - ELMIRA SAVINGS BANK

2020 - STEUBEN TRUST CORPORATION

2019 - KINDERHOOK BANKCORP.

2017 - MERCHANTS BANCSHARES, INC.

2015 - ONEIDA FINANCIALCORP.

2013 - BANK OF AMERICA, N.A.

2012 - HSBC/FIRST NIAGARA

2011 - WILBER CORPORATION

WHOLE

BRANCH

WHOLE

$584

$608

$643

$1,999

$769

$303

$797

$848

Investor Information

Investor and shareholder

information regarding Community

Bank System, Inc., including all

ﬁlings 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

SA FE HA RB OR STAT EMENT

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.

Corporate and Shareholder Information

CORPORATE HEADQUARTERS
Community Bank System, Inc.
5790 Widewaters Parkway
DeWitt, NY 13214-1883
PHONE 315.445.2282 or 800.724.2262
cbna.com

Annual Meeting

Wednesday, May 15, 2024

12:00pm EST

Marriott Syracuse Downtown

Persian Terrace

100 E Onondaga St,

Syracuse, NY 13202

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
certiﬁcates, and dividend checks,
direct deposit and reinvestment
should contact:

Equintiti
Operations Center
6201 15th Avenue
Brooklyn, NY 11219
equiniti.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, 2023.

ANALYST COVERAGE
The following analysts published
research about Community Bank
System in 2023:

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
Nicholas Cucharale / 347.689.7782
ncucharale@hovdegroup.com

Janney Montgomery Scott LLC
Jake Civiello / 207.536.2171
jciviello@janney.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 offers convenient,
low-cost options for investors
wishing to steadily buy shares.
For information, contact:

Equiniti
Operations Center
6201 15th Avenue
Brooklyn, NY 11219
equiniti.com
General questions: 877.253.6847

COMMUNITY BANK SYSTEM, INC.
5790 Widewaters Parkway
DeWitt, NY 13214-1883
800.724.2262

cbna.com