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Filed by Community Bank System, Inc. (Commission File No.: 001-13695)
pursuant to Rule 425 under the Securities Act of 1933.
Subject Company: First Heritage Bank (Commission File No.: None)
News Release
COMMUNITY BANK SYSTEM, INC.
5790 Widewaters Parkway, DeWitt, N.Y. 13214
For further information, please contact:
Mark E. Tryniski,
Chief Financial Officer
Office: (315) 445-7378
Fax: (315) 445-7347
COMMUNITY BANK SYSTEM REPORTS RECORD EARNINGS IN 2003
Full-year Net Interest Margin Increases; Non-interest Income Up 25%
Syracuse, N.Y. – January 26, 2004 – Community Bank System, Inc. (NYSE: CBU), has announced its earnings results for 2003.
Earnings Results-GAAP Basis. Diluted earnings per share measured in accordance with generally accepted accounting principles (“GAAP”) for 2003 were $2.99, up from the prior year’s level of $2.93. Diluted earnings per share for the quarter ended December 31, 2003, including the impact of a debt restructuring, were $0.62, compared to $0.73 for the same quarter of 2002. Increased earnings in 2003 resulted from improved net interest margins, significantly higher levels of non-interest income, and lower loan loss provisioning, offset by higher operating expenses and a debt restructuring charge of $2.6 million (pre-tax).
Earnings Results-Operating Basis. In addition to the earnings results presented above in accordance with GAAP, the company provides earnings results on a non-GAAP, or operating basis. The determination of operating earnings excludes the effects of certain items the company considers to be non-operating, including acquisition expenses, the results of securities transactions, and debt restructuring activities. Diluted operating earnings per share for 2003 were $3.13, up 8.7% from the $2.88 reported in 2002. Fourth quarter 2003 diluted operating earnings per share rose 4.2%, from $0.72 in 2002 to $0.75 in 2003. A reconciliation of GAAP-based earnings results to operating-based earnings results is as follows:
| Three Months Ended | Year Ended | ||||||||||||||||
| December 31, | December 31, | ||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | ||||||||||||||
Diluted earnings per share |
$ | 0.62 | $ | 0.73 | $ | 2.99 | $ | 2.93 | |||||||||
Acquisition expenses |
0.02 | 0.00 | 0.02 | 0.03 | |||||||||||||
Net securities (gains)/losses |
0.00 | (0.06 | ) | 0.00 | (0.12 | ) | |||||||||||
Loss on debt restructuring |
0.11 | 0.05 | 0.12 | 0.04 | |||||||||||||
Diluted earnings per share — operating |
$ | 0.75 | $ | 0.72 | $ | 3.13 | $ | 2.88 | |||||||||
Sanford A. Belden, President and Chief Executive Officer, stated, “2003 was an exceptional year in many respects. We are pleased that we achieved record operating results during 2003, particularly with the strength
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of our net interest margins and the 25% increase in non-interest income. We grew loans by more than 7% (excluding acquisitions), and our vigilant attention to asset quality resulted in improvements to our delinquency, charge-off, and non-performing loan ratios. Consistent with our strategy of enhancing shareholder value through strategic, high-value acquisitions, we acquired three outstanding businesses in 2003, including Peoples Bancorp, Harbridge Consulting Group, and Grange National Bank. More recently, we announced the acquisition of First Heritage Bank in Wilkes-Barre, Pa., which will bring us significant commercial lending relationships and further enhance our presence in the important Northeastern Pennsylvania marketplace. These acquisitions will further strengthen the earnings opportunities for both our banking and financial services businesses as we begin 2004. Lastly, we are delighted with the market performance of CBU shares, which appreciated by 57% in 2003 and, including the impact of the Grange acquisition, raised our total market capitalization to nearly $700 million.”
Net interest income in 2003 of $131.8 million was up 3.1% over 2002’s level of $127.9 million on the strength of higher net interest margins. Average earning assets rose $45 million in 2003 as higher loan levels were offset by planned securities reductions. Net interest margin increased to 4.69% in 2003 from 4.62% in 2002. Reduction of earning asset yields from 7.18% to 6.62% was more than offset by reductions in the total cost of funds from 2.53% to 1.93%. Net interest margins for the fourth quarter of 2003 remained strong at 4.59%, decreasing only 4 basis points from 4.63% in the third quarter of 2003.
Loan loss provision in 2003 was $11.2 million, down from $12.2 million in 2002 on the strength of lower delinquency, charge-off and non-performing loan ratios. For the fourth quarter of 2003, loan loss provision was $3.1 million, compared to $5.0 million in the comparable 2002 quarter.
Non-interest income (excluding security and debt transactions) increased by more than 25% in 2003, from $30.1 million in 2002 to $37.7 million in 2003. This raises the ratio of non-interest income to total income from 17.7% in 2002 to 20.7% in 2003. This increase is due principally to the introduction of a new deposit service introduced late in the fourth quarter of 2002 which accounts for approximately $6.2 million of the increase, and the acquisition in July 2003 of Harbridge Consulting Group, which contributed approximately $1.6 million of the increase. Revenues from financial services were unfavorably impacted by the difficult investment environment experienced in the first half of 2003; however, the last half of 2003 showed improvement of 12% over the first half of 2003 (excluding the Harbridge acquisition). Total financial services income in 2003 of $12.9 million (including Harbridge) compares to $11.8 million in 2002. Declines in investment management, trust, and broker-dealer activities were offset by continued expansion of the benefit plan administration business, which delivered 21% revenue growth in 2003.
Operating expenses (excluding acquisition expenses) increased from $94.3 million in 2002 to $102.0 million in 2003, and from $23.8 million in fourth quarter 2002 to $27.5 million in 2003. The efficiency ratio (excluding intangible amortization, debt restructuring and security gain/loss) increased to 53.3% in 2003 from 52.0% in 2002. The fourth quarter 2003 efficiency ratio of 54.4% compares to 50.3% for 2002. Increases in 2003 operating expenses for both the full-year and quarterly periods are due in large measure to the additional operating expenses associated with the three acquisitions closed during 2003, as well as significant increases in pension, medical, and other benefit costs recognized in the fourth quarter of 2003.
The company’s effective tax rate declined to 24.0% in 2003 from 26.5% in 2002, due principally to higher proportions of tax-exempt income. The fourth quarter effective tax rate was 24.1% in 2003 and 25.0% in 2002.
Financial Position
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End-of-year earning assets of $3.40 billion represent an increase of $371 million over 2002 levels of $3.03 billion. This increase reflects organic loan growth of $134 million, or 7.4%, and acquired earning assets of $250 million. Investment securities of $1.33 billion at December 31, 2003 were up slightly from the $1.29 billion reported at year-end 2002. Outstanding borrowings rose to $668 million from $544 million at December 31, 2002, with the increase used principally to fund strong consumer mortgage demand. Excluding the impact of $249 million of acquired deposits, total deposits decreased approximately 1% from $2.51 billion at year-end 2002 to $2.48 billion in 2003.
Total organic loan growth of $134 million was driven principally by consumer mortgage demand, which accounted for $127 million, an increase of 25% over 2002. This increase excludes approximately $67 million of longer-term loans originated and sold in the secondary market, $52 million of which occurred in the first and second quarters of 2003. The remainder reflects an increase in indirect installment lending of $38 million (+13%), and reductions in business loans of $9 million (-1.4%) and direct installment loans of $22 million (-5.8%).
Asset Quality
Asset quality metrics continued to improve, with year-over-year reductions in
delinquency, charge-off, and non-performing loan ratios. The allowance for
loan losses at year-end of $29.1 million is up from $26.3 million at December
2002, largely as a result of increased loan balances. The ratio of allowance
for loan losses to total loans of 1.37% at year-end 2003 compares to 1.46% at
December 31, 2002. This decrease reflects improved asset quality metrics, as
well as the lower credit risk profile of consumer mortgages which have
increased from 28% of total loans in 2002 to 35% in 2003. Total net
charge-offs for 2003 of $10.3 million are comparable to the $9.8 million
reported for the same 2002 period, and compare favorably against a 7.2%
increase in average loans outstanding.
Non-performing loans of $13.2 million at year-end are up from $11.6 million in 2002; however, represent only .62% of total loans versus .64% at year-end 2002. Total delinquent loans (>30 days plus non-accrual) also experienced an improving trend, declining from 1.88% at December 31, 2002, to 1.76% at year-end 2003.
Stock Split
On January 21, 2004, the company announced a two-for-one stock split, subject
to shareholder approval of an increase in its authorized shares. The split
will be effected in the form of a 100% stock dividend, which the company
expects to be payable on or about April 12, 2004, to shareholders of record on
or about March 17, 2004. The company will seek approval of an amendment to
increase its total authorized shares from 20 million to 50 million shares at a
special Meeting of Shareholders to be held on or about March 26, 2004. The
company expects to mail a proxy statement to shareholders in February 2004,
that further explains the stock split and shareholder vote necessary to
authorize additional shares.
First Heritage Acquisition
On January 6, 2004, the company announced an agreement to acquire First
Heritage Bank in an all-stock transaction valued at approximately $74 million.
Headquartered in Wilkes-Barre, Pa., First Heritage is a closely held $275
million-asset bank with three branches in Luzerne county. The transaction is
expected to be accretive to earnings within the first 12 months based on
anticipated cost reductions, modest revenue enhancements, and opportunities to
restructure the balance sheet. Like all branches within the Pennsylvania
franchise, First Heritage’s three branches will operate as part of First
Liberty Bank & Trust, a division of Community Bank, N.A. Robert P. Matley,
currently President and Chief Operating Officer of First Heritage, will become
Senior Lending Officer and Executive Vice President of Pennsylvania Banking.
The acquisition is
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expected to close during the second quarter of 2004, pending both customary regulatory and First Heritage shareholder approval.
Grange Successfully Merged
On November 24, 2003, the company completed its previously announced
acquisition of Grange National Banc Corp., a $280 million-asset bank holding
company based in Tunkhannock, Pa. Grange’s banking subsidiary, Grange National
Bank, and its 12 branches are now operating as part of First Liberty Bank &
Trust. Thomas A. McCullough has been appointed President of Pennsylvania
Banking and is managing all of the company’s banking business in Northeastern
Pennsylvania and its combined 24 branch locations.
2004 Earnings Guidance
Mark Tryniski, Executive Vice President and Chief Financial Officer, stated,
“Prudent management of our balance sheet has resulted in strong net interest
margins. However, the present interest rate environment continues to exert
downward pressure that we expect will continue into 2004. Overall economic and
business conditions in our markets have been stable, and we expect to be well
challenged in meeting loan generation objectives in 2004. After a difficult
2003 for our asset-based financial services businesses, we are hopeful that
revenue gains in the second half of the year by these units will continue into
2004 on the improving attractiveness of investment markets. The three
acquisitions we closed in 2003 are all expected to provide incremental earnings
opportunities in 2004.”
Mr. Tryniski concluded, “Subject to the effects of actual events and circumstances, our present estimate of diluted earnings per share for 2004 is between $3.20 and $3.30 per share.”
Conference Call Scheduled
A conference call will be held with company management at 1:00 p.m. (ET) on
Monday, January 26, to discuss the above results at 1-866-453-5550 (access code
3435033). An audio recording will be available one hour after the call until
March 31, and may be accessed at 1-866-453-6660 (access code 142983).
Investors may also listen to the call live via the Internet over PR Newswire,
at:
http://www.firstcallevents.com/service/ajwz396796329gf12.html
The call will be archived on this site for 90 days and may be accessed at any time at no cost. This earnings release, including supporting financial tables, is available within the “Press Releases & News” link within the Investor Relations section of the company’s website at www.communitybankna.com.
Community Bank System, Inc. (NYSE: CBU) is a registered bank holding company based in DeWitt, N.Y. Upon completion of the recently announced acquisition of First Heritage Bank in Wilkes-Barre, Pa., CBU’s wholly-owned banking subsidiary, Community Bank, N.A. will have approximately $4.1 billion of assets, 132 customer facilities and 98 ATMs across Upstate New York and Northeastern Pennsylvania, where it operates as First Liberty Bank & Trust, a division of Community Bank N.A. Other subsidiaries within the CBU family are Elias Asset Management, Inc., an investment management firm based in Williamsville, N.Y.; Community Investment Services, Inc., a broker-dealer delivering financial products, including mutual funds, annuities, individual stocks and bonds, and insurance products, from various locations throughout Community Bank System’s branch network; and Benefit Plans Administrative Services, Inc., an employee benefits company which includes BPA, a retirement plan administration firm located in Utica, N.Y., and Harbridge Consulting Group, an actuarial and consulting firm based in Syracuse, N.Y.
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# # #
Shareholders of First Heritage and other investors are urged to read the proxy statement/prospectus that will be included in a registration statement on Form S-4 that CBU will file with the SEC in connection with the merger, and which will be provided directly to all shareholders of First Heritage. It will contain important information about CBU, First Heritage, the merger, the persons soliciting proxies in the merger and their interests in the merger and related matters. After it is filed with the SEC, the proxy statement/prospectus will be available free of charge on the SEC’s web site (www.sec.gov). The proxy statement/prospectus may also be obtained from First Heritage by directing such requests to First Heritage Bank, (Attention: Robert Matley), 64 North Franklin Street, Wilkes-Barre, PA 18701; telephone: (570) 821-8555.
# # #
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The following factors, among others, could cause the actual results of CBU’s operations to differ materially from CBU’s expectations: the successful integration of operations of its acquisitions; competition; changes in economic conditions, interest rates and financial markets; and changes in legislation or regulatory requirements. CBU does not assume any duty to update forward-looking statements.
| Summary of Financial Data | ||||||||
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Summary of Financial Data
(Dollars in thousands, except per share data)
| Quarter Ended | Year to Date | ||||||||||||||||
| Dec. 31, | Dec. 31, | Dec. 30, | Dec. 30, | ||||||||||||||
| Earnings | 2003 | 2002 | 2003 | 2002 | |||||||||||||
Interest income |
$ | 49,163 | $ | 51,411 | $ | 191,129 | $ | 205,093 | |||||||||
Interest expense |
14,460 | 17,562 | 59,301 | 77,243 | |||||||||||||
Net interest income |
34,703 | 33,849 | 131,828 | 127,850 | |||||||||||||
Loan loss provision |
3,093 | 5,042 | 11,195 | 12,222 | |||||||||||||
Net interest income after provision for loan losses |
31,610 | 28,807 | 120,633 | 115,628 | |||||||||||||
Deposit service fees |
6,099 | 4,586 | 23,124 | 16,480 | |||||||||||||
Other banking services |
516 | 425 | 1,653 | 1,805 | |||||||||||||
Trust, investment and asset management fees |
1,728 | 1,477 | 6,682 | 8,003 | |||||||||||||
Benefit plan administration, consulting and actuarial fees |
1,931 | 1,045 | 6,220 | 3,845 | |||||||||||||
Non-interest income before security gains & debt ext. |
10,274 | 7,533 | 37,679 | 30,133 | |||||||||||||
Security gains & debt ext. |
(2,656 | ) | 313 | (2,698 | ) | 1,673 | |||||||||||
Total non-interest income |
7,618 | 7,846 | 34,981 | 31,806 | |||||||||||||
Salaries and employee benefits |
14,921 | 11,675 | 53,164 | 47,864 | |||||||||||||
Occupancy and equipment and furniture |
4,355 | 3,945 | 17,125 | 15,692 | |||||||||||||
Intangible amortization |
1,292 | 1,312 | 5,093 | 5,953 | |||||||||||||
Other |
6,903 | 6,875 | 26,581 | 24,821 | |||||||||||||
Total recurring operating expenses |
27,471 | 23,807 | 101,963 | 94,330 | |||||||||||||
Acquisition expenses |
328 | 0 | 498 | 700 | |||||||||||||
Total operating expenses |
27,799 | 23,807 | 102,461 | 95,030 | |||||||||||||
Income before tax |
11,429 | 12,846 | 53,153 | 52,404 | |||||||||||||
Income tax |
2,759 | 3,206 | 12,773 | 13,887 | |||||||||||||
Net income |
$ | 8,670 | $ | 9,640 | $ | 40,380 | $ | 38,517 | |||||||||
Basic earnings per share |
$ | 0.64 | $ | 0.74 | $ | 3.07 | $ | 2.97 | |||||||||
Diluted earnings per share |
$ | 0.62 | $ | 0.73 | $ | 2.99 | $ | 2.93 | |||||||||
Diluted earnings per share — operating (1) |
$ | 0.75 | $ | 0.72 | $ | 3.13 | $ | 2.88 | |||||||||
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Summary of Financial Data
(Dollars in thousands, except per share data)
| 2003 | 2002 | |||||||||||||||||||||
| 4th Qtr | 3rd Qtr | 2nd Qtr | 1st Qtr | 4th Qtr | ||||||||||||||||||
Earnings |
||||||||||||||||||||||
Interest income |
$ | 49,163 | $ | 46,676 | $ | 47,019 | $ | 48,271 | $ | 51,410 | ||||||||||||
Interest expense |
14,460 | 14,137 | 14,917 | 15,787 | 17,562 | |||||||||||||||||
Net interest income |
34,703 | 32,539 | 32,102 | 32,484 | 33,848 | |||||||||||||||||
Provision for loan losses |
3,093 | 2,029 | 2,673 | 3,400 | 5,042 | |||||||||||||||||
Net interest income after provision for loan losses |
31,610 | 30,510 | 29,429 | 29,084 | 28,806 | |||||||||||||||||
Deposit service fees |
6,099 | 6,080 | 5,740 | 5,204 | 4,586 | |||||||||||||||||
Other banking services |
516 | (92 | ) | 420 | 810 | 425 | ||||||||||||||||
Trust, investment and asset management fees |
1,728 | 1,747 | 1,530 | 1,677 | 1,477 | |||||||||||||||||
Benefit plan administration, consulting and actuarial fees |
1,931 | 1,987 | 1,201 | 1,101 | 1,045 | |||||||||||||||||
Non-interest income before security gains & debt ext. |
10,274 | 9,722 | 8,891 | 8,792 | 7,533 | |||||||||||||||||
Security gains & debt ext. |
(2,656 | ) | 3 | 0 | (45 | ) | 313 | |||||||||||||||
Total non-interest income |
7,618 | 9,725 | 8,891 | 8,747 | 7,846 | |||||||||||||||||
Salaries and employee benefits |
14,921 | 13,226 | 12,317 | 12,700 | 11,675 | |||||||||||||||||
Occupancy and equipment and furniture |
4,355 | 4,140 | 4,305 | 4,325 | 3,945 | |||||||||||||||||
Amortization of intangible assets |
1,292 | 1,269 | 1,251 | 1,281 | 1,312 | |||||||||||||||||
Other |
6,903 | 6,352 | 7,245 | 6,081 | 6,875 | |||||||||||||||||
Total recurring operating expenses |
27,471 | 24,987 | 25,118 | 24,387 | 23,807 | |||||||||||||||||
Acquisition expenses |
328 | 165 | 5 | 0 | 0 | |||||||||||||||||
Total operating expenses |
27,799 | 25,152 | 25,123 | 24,387 | 23,807 | |||||||||||||||||
Income before income taxes |
11,429 | 15,083 | 13,197 | 13,444 | 12,845 | |||||||||||||||||
Income taxes |
2,759 | 3,354 | 3,165 | 3,495 | 3,206 | |||||||||||||||||
Net income |
$ | 8,670 | $ | 11,729 | $ | 10,032 | $ | 9,949 | $ | 9,639 | ||||||||||||
Basic earnings per share |
$ | 0.64 | $ | 0.90 | $ | 0.77 | $ | 0.76 | $ | 0.74 | ||||||||||||
Diluted earnings per share |
$ | 0.62 | $ | 0.87 | $ | 0.75 | $ | 0.75 | $ | 0.73 | ||||||||||||
Diluted earnings per share — operating (1) |
$ | 0.75 | $ | 0.88 | $ | 0.75 | $ | 0.75 | $ | 0.72 | ||||||||||||
Profitability |
||||||||||||||||||||||
Return on assets |
0.93 | % | 1.35 | % | 1.20 | % | 1.19 | % | 1.11 | % | ||||||||||||
Return on equity |
9.51 | % | 13.83 | % | 11.74 | % | 12.25 | % | 11.91 | % | ||||||||||||
Non-interest income/operating income (FTE) (2) |
21.4 | % | 21.5 | % | 20.2 | % | 19.9 | % | 16.8 | % | ||||||||||||
Efficiency ratio (3) |
54.4 | % | 52.4 | % | 54.3 | % | 52.2 | % | 50.3 | % | ||||||||||||
Components of Net Interest Margin (FTE) |
||||||||||||||||||||||
Loan yield |
6.35 | % | 6.55 | % | 6.81 | % | 7.04 | % | 7.33 | % | ||||||||||||
Investment yield |
6.34 | % | 6.34 | % | 6.69 | % | 6.75 | % | 6.79 | % | ||||||||||||
Earning asset yield |
6.35 | % | 6.47 | % | 6.76 | % | 6.93 | % | 7.11 | % | ||||||||||||
Interest bearing deposit rate |
1.63 | % | 1.72 | % | 1.92 | % | 2.07 | % | 2.24 | % | ||||||||||||
Borrowed funds rate — FHLB & other |
3.06 | % | 3.59 | % | 4.12 | % | 3.89 | % | 3.83 | % | ||||||||||||
Borrowed funds rate — subordinated debt |
6.89 | % | 6.91 | % | 7.05 | % | 7.19 | % | 7.32 | % | ||||||||||||
Cost of all interest bearing funds |
1.87 | % | 1.97 | % | 2.17 | % | 2.28 | % | 2.44 | % | ||||||||||||
Cost of funds (includes DDA) |
1.58 | % | 1.66 | % | 1.83 | % | 1.94 | % | 2.08 | % | ||||||||||||
Cost of funds/earning assets |
1.59 | % | 1.66 | % | 1.83 | % | 1.94 | % | 2.09 | % | ||||||||||||
Net interest margin (FTE) |
4.59 | % | 4.63 | % | 4.74 | % | 4.79 | % | 4.83 | % | ||||||||||||
Fully tax-equivalent adjustment |
$ | 3,141 | $ | 3,008 | $ | 2,962 | $ | 2,980 | $ | 3,326 | ||||||||||||
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| 2003 | 2002 | |||||||||||||||||||||
| 4th Qtr | 3rd Qtr | 2nd Qtr | 1st Qtr | 4th Qtr | ||||||||||||||||||
Average Balances |
||||||||||||||||||||||
Loans |
$ | 2,017,817 | $ | 1,879,858 | $ | 1,834,610 | $ | 1,807,889 | $ | 1,797,678 | ||||||||||||
Taxable investment securities |
834,221 | 764,931 | 728,155 | 790,212 | 853,620 | |||||||||||||||||
Non-taxable investment securities |
417,893 | 402,105 | 401,535 | 402,476 | 403,508 | |||||||||||||||||
Total interest-earning assets |
3,269,931 | 3,046,894 | 2,964,300 | 3,000,577 | 3,054,806 | |||||||||||||||||
Total assets |
3,695,221 | 3,437,021 | 3,359,927 | 3,390,648 | 3,448,482 | |||||||||||||||||
Interest-bearing deposits |
2,141,724 | 2,059,840 | 2,073,398 | 2,087,784 | 2,084,807 | |||||||||||||||||
FHLB borrowings & other |
550,596 | 423,066 | 347,954 | 388,783 | 446,535 | |||||||||||||||||
Subordinated debt held by unconsolidated
subsidiary trusts |
80,382 | 80,368 | 80,355 | 80,341 | 80,327 | |||||||||||||||||
Total interest-bearing liabilities |
2,772,702 | 2,563,274 | 2,501,707 | 2,556,908 | 2,611,669 | |||||||||||||||||
Shareholders’ equity |
$ | 361,513 | $ | 336,572 | $ | 342,830 | $ | 329,503 | $ | 320,979 | ||||||||||||
Balance Sheet Data |
||||||||||||||||||||||
Cash and cash equivalents |
$ | 103,923 | $ | 117,190 | $ | 109,898 | $ | 104,325 | $ | 113,531 | ||||||||||||
Investment securities |
1,329,534 | 1,292,685 | 1,170,372 | 1,228,608 | 1,286,583 | |||||||||||||||||
Loans: |
||||||||||||||||||||||
Consumer mortgage |
739,593 | 606,084 | 545,828 | 520,480 | 510,309 | |||||||||||||||||
Business lending |
689,436 | 630,886 | 637,984 | 639,149 | 629,874 | |||||||||||||||||
Consumer indirect |
325,241 | 318,162 | 305,550 | 290,790 | 287,380 | |||||||||||||||||
Consumer direct |
374,239 | 368,871 | 368,653 | 370,267 | 379,342 | |||||||||||||||||
Total loans |
2,128,509 | 1,924,003 | 1,858,015 | 1,820,686 | 1,806,905 | |||||||||||||||||
Allowance for loan losses |
29,095 | 27,117 | 27,417 | 27,350 | 26,331 | |||||||||||||||||
Intangible assets |
195,001 | 140,292 | 132,296 | 133,547 | 134,828 | |||||||||||||||||
Other assets |
126,415 | 121,666 | 116,658 | 118,528 | 121,731 | |||||||||||||||||
Total assets |
3,854,287 | 3,568,719 | 3,359,822 | 3,378,344 | 3,437,247 | |||||||||||||||||
Deposits |
2,725,488 | 2,553,350 | 2,541,974 | 2,535,960 | 2,505,356 | |||||||||||||||||
Borrowings |
587,396 | 533,630 | 319,864 | 365,213 | 463,241 | |||||||||||||||||
Subordinated debt held by unconsolidated
subsidiary trusts |
80,390 | 80,376 | 80,362 | 80,348 | 80,334 | |||||||||||||||||
Other liabilities |
57,295 | 59,601 | 65,803 | 59,839 | 63,278 | |||||||||||||||||
Total liabilities |
3,450,569 | 3,226,957 | 3,008,003 | 3,041,360 | 3,112,209 | |||||||||||||||||
Shareholders’ equity |
403,718 | 341,762 | 351,819 | 336,984 | 325,038 | |||||||||||||||||
Total liabilities and shareholders’ equity |
3,854,287 | 3,568,719 | 3,359,822 | 3,378,344 | 3,437,247 | |||||||||||||||||
Assets under management or administration |
$ | 1,806,941 | $ | 1,600,141 | $ | 1,577,584 | $ | 1,438,869 | $ | 1,363,631 | ||||||||||||
Capital |
||||||||||||||||||||||
Tier 1 leverage ratio |
7.35 | % | 7.50 | % | 7.87 | % | 7.54 | % | 7.14 | % | ||||||||||||
Tangible equity / tangible assets |
5.70 | % | 5.88 | % | 6.80 | % | 6.27 | % | 5.76 | % | ||||||||||||
Accumulated other comprehensive income |
$ | 35,959 | $ | 39,582 | $ | 52,438 | $ | 43,414 | $ | 38,551 | ||||||||||||
Diluted weighted average common shares outstanding |
14,007 | 13,408 | 13,346 | 13,244 | 13,196 | |||||||||||||||||
Period end common shares outstanding |
14,165 | 12,960 | 13,019 | 13,017 | 12,979 | |||||||||||||||||
Cash dividends declared per common share |
$ | 0.32 | $ | 0.32 | $ | 0.29 | $ | 0.29 | $ | 0.29 | ||||||||||||
Book value |
28.50 | 26.37 | 27.02 | 25.89 | 25.04 | |||||||||||||||||
Tangible book value |
14.73 | 15.55 | 16.86 | 15.63 | 14.66 | |||||||||||||||||
Common stock price (end of period) |
49.00 | 43.91 | 38.00 | 31.43 | 31.35 | |||||||||||||||||
Total shareholders return — trailing 12 months |
61.2 | % | 53.2 | % | 22.0 | % | 8.1 | % | 24.1 | % | ||||||||||||
Table of Contents
Community Bank System, Inc.
Page 9
of 8
| 2003 | 2002 | |||||||||||||||||||||
| 4th Qtr | 3rd Qtr | 2nd Qtr | 1st Qtr | 4th Qtr | ||||||||||||||||||
Asset Quality |
||||||||||||||||||||||
Non-accrual loans |
$ | 11,940 | $ | 10,518 | $ | 12,678 | $ | 13,577 | $ | 9,754 | ||||||||||||
Accruing loans 90+ days delinquent |
1,307 | 3,018 | 2,457 | 2,264 | 1,890 | |||||||||||||||||
Total non-performing loans |
13,247 | 13,536 | 15,135 | 15,841 | 11,644 | |||||||||||||||||
Restructured loans |
28 | 29 | 30 | 39 | 43 | |||||||||||||||||
Other real estate owned (OREO) |
1,077 | 812 | 943 | 700 | 704 | |||||||||||||||||
Total non-performing assets |
14,352 | 14,377 | 16,108 | 16,580 | 12,391 | |||||||||||||||||
Net charge-offs |
$ | 2,744 | $ | 2,532 | $ | 2,606 | $ | 2,381 | $ | 2,790 | ||||||||||||
Loan loss allowance/loans outstanding |
1.37 | % | 1.41 | % | 1.48 | % | 1.50 | % | 1.46 | % | ||||||||||||
Non-performing loans/loans outstanding |
0.62 | % | 0.70 | % | 0.81 | % | 0.87 | % | 0.64 | % | ||||||||||||
Loan loss allowance/non-performing loans |
220 | % | 200 | % | 181 | % | 173 | % | 226 | % | ||||||||||||
Net charge-offs/average loans |
0.54 | % | 0.53 | % | 0.57 | % | 0.53 | % | 0.62 | % | ||||||||||||
Loan loss provision/net charge-offs |
113 | % | 80 | % | 103 | % | 143 | % | 181 | % | ||||||||||||
Non-performing assets/loans outstanding plus OREO |
0.67 | % | 0.75 | % | 0.87 | % | 0.91 | % | 0.69 | % | ||||||||||||
| (1) | Excludes after-tax effect of acquisition expenses, securities gain/loss and debt extinguishment. | |
| (2) | Excludes securities gain/loss and debt extinguishment. | |
| (3) | Excludes intangible amortization, acquisition expenses, securities gain/loss, and debt extinguishment. |
Certain prior period balances have been restated to reflect the fourth quarter 2003 adoption of FIN No. 46, “Consolidation of Variable Interest Entities.” This pronouncement requires the deconsolidation of previously consolidated subsidiary trusts, resulting in the restatement of trust preferred securities to subordinated debt.