Community Bank System Inc. (NYSE:CBU) Q3 2020 Earnings Conference Call - Final Transcript

Oct 26, 2020 • 11:00 am ET

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Community Bank System Inc. (NYSE:CBU) Q3 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Welcome to the Community Bank System Third Quarter 2020 Earnings Conference Call.

Please note that this presentation contains forward-looking statements within the provisions of the Private Securities 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 Annual Report and Form 10-K filed with the Securities and Exchange Commission.

Today's call presenters are Mark Tryniski, President and Chief Executive Officer; and Joseph Sutaris, Executive Vice President and Chief Financial Officer. They will be joined by Joseph Serbun, Executive Vice President and Chief Banking Officer, for the question-and-answer session.

Gentlemen, you may begin.

Executive
Mark E. Tryniski

Thank you, Jason. Good morning, everyone. Thank you as well, for joining our Q3 conference call, and we hope you and your families are well. This quarter was certainly different than the last, less -- day-to-day and sometimes minute-to-minute -- focused on COVID, PPP, loan deferrals and the Steuben acquisition, and we seem to have settled into a reasonably effective operating cadence.

Operating earnings for the quarter were a bit better than we might have expected, given the yield curve and the muted product demand. But our nonbanking businesses had a strong quarter. In fact, year-to-date are up 4% on the topline and over 6% on the bottom line, so a very solid performance for those businesses. The quarter was also very good for mortgage banking, credit, deposit growth, consumer deposit fees and the Steuben acquisition was also very additive to our performance.

The only real negative in the quarter, notwithstanding the litigation accrual that Joe will discuss further, was credit demand, excluding mortgage lending. The total loan book was off about 1%, with slight declines in every business.

The mortgage business was quite strong, we sold over $100 million of lower rate, conforming production in the secondary market, where premiums are -- at the present moment -- very generous. So, overall, we're satisfied with the quarter and with current operating trends, given the environment.

As we head into the last quarter of the year and into 2021, we will continue to be mindful and focused on the potential headwinds, including credit, the economic environment and interest rates. Despite the forward headwinds, we think we're in pretty good shape to capitalize on opportunities that, we expect, lie ahead.

Joe?

Executive
Joseph E. Sutaris

Thank you, Mark, and good morning, everyone. As Mark noted, the earnings results for the third quarter of 2020 were very solid, especially in light of the economic challenges and industry headwinds we faced throughout the year.

The company recorded $0.79 in fully diluted GAAP earnings per share for the third quarter, excluding $0.04 per share for litigation reserve expense, net of tax effect and $0.02 per share for acquisition-related expenses, net of tax effect. Fully diluted operating earnings per share were $0.85 for the quarter.