Community Financial System (CBU) Investor Day 2024 summary

Strategic direction and business model

• Operates four complementary business lines: banking, employee benefit services, insurance, and wealth management, with non-banking/noninterest revenues now nearly 40% of total, providing diversification and stability.

• Transitioned to a diversified financial services model, doubling banking business size and expanding footprint, supported by a corporate name change to reflect strategic focus.

• Focuses on organic growth, M&A, branch expansion, digital transformation, and cost rationalization, leveraging technology and AI for efficiency.

• Maintains a decentralized regional structure for local decision-making and tailored solutions, emphasizing a culture of integrity, excellence, teamwork, and humility.

• Cross-serving clients through initiatives like Community Connect and leveraging cross-referral opportunities to deepen relationships and drive double-digit internal referral growth.

Financial performance and guidance

• Achieved over $700 million in aggregate revenues, with $500 million from banking and $200 million from non-banking segments; 7.3% total operating revenue CAGR over the past decade.

• Net interest income has grown every year since 2016, with a stable, low-cost deposit base and consistent loan growth.

• Non-interest income now represents 39-40% of total revenues, supporting consistent year-over-year performance.

• Maintains a 32-year streak of increasing cash dividends, with a target payout ratio around 50% and strong capital (CET1 ratio 14.03%).

• Long-term targets include mid-single-digit loan and NII growth, upper single to double-digit noninterest revenue growth in benefits, insurance, and wealth management, and credit losses below 0.15%.

Growth opportunities and market expansion

• Plans to open 18 new branches in key markets through 2025, targeting significant market share expansion in Buffalo, Syracuse, Rochester, Albany, Lehigh Valley, Springfield, and New Hampshire.

• Employee benefit services (BPAS) has 12.1% 10-year revenue CAGR, 880,000+ plan participants, and vast national growth potential with only 0.5% market penetration.

• Insurance business (OneGroup) has doubled in size since 2015, with 9.8% 7-year revenue CAGR, 13 acquisitions since 2021, and is ranked 66th among U.S. agencies.

• Wealth management manages over $12.5 billion in assets, with a 2.8% penetration rate among retail clients and a goal to reach 5-7% in 2-3 years, plus 8.3% 10-year revenue CAGR.

• M&A remains a key strategy across all business lines, with a focus on strategic, culture-aligned acquisitions and disciplined pricing.