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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 2/09/24 Community Bank System, Inc. 8-K/A:2 1/23/24 10:468K Toppan Merrill/FA |
Document/Exhibit Description Pages Size 1: 8-K/A Amendment to Current Report HTML 235K 5: R1 Cover HTML 45K 7: XML IDEA XML File -- Filing Summary XML 12K 10: XML XBRL Instance -- tm245711d1_8ka_htm XML 15K 6: EXCEL IDEA Workbook of Financial Report Info XLSX 8K 3: EX-101.LAB XBRL Labels -- cbu-20240123_lab XML 96K 4: EX-101.PRE XBRL Presentations -- cbu-20240123_pre XML 64K 2: EX-101.SCH XBRL Schema -- cbu-20240123 XSD 12K 8: JSON XBRL Instance as JSON Data -- MetaLinks 25± 34K 9: ZIP XBRL Zipped Folder -- 0001104659-24-013434-xbrl Zip 58K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): i January 23, 2024
(Exact name of registrant as specified in its charter)
| i Delaware | i 001-13695 | i 16-1213679 |
| (State or other jurisdiction of | (Commission File Number) | (IRS Employer Identification |
| incorporation) | No.) |
| i 5790 Widewaters Parkway, i DeWitt, i New York | i 13214 |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: ( i 315) i 445-2282
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| i ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| i ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| i ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| i ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) |
Name of each exchange on which registered |
| i Common Stock, $1.00 par value per share | i CBU | i New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ¨ |
Explanatory Note
Community Bank System, Inc.’s (the “Company”) is filing this amendment to its Current Report on Form 8-K, dated January 23, 2024, filed with the Securities and Exchange Commission (the “Prior Report”), in order to update certain financial information for the fiscal year and fourth quarter ended December 31, 2023 that was included in Exhibit 99.1 to the Prior Report (the “Original Earnings Release”). Certain financial information contained in the Original Earnings Release is accordingly updated as set forth below due to a subsequent event that occurred following the filing of the Prior Report.
| Item 2.02 | Results of Operations and Financial Condition. |
On January 23, 2024, the Company announced financial results for the fiscal year and fourth quarter ended December 31, 2023. Subsequent to issuing the Original Earnings Release and based on new information, the Company recorded a loss contingency related to a threatened collective and class action, asserted against Community Bank, N.A. on behalf of certain nonexempt branch employees, regarding unpaid wages under the Fair Labor Standards Act and applicable state labor laws. On February 5, 2024, following a mediation held on February 1, 2024, the Company agreed to a settlement in the amount of $5.8 million, and the Company anticipates it will execute a settlement agreement in connection with this matter in the first quarter of 2024. The settlement is subject to documentation and Court approval. The Company does not anticipate that additional amounts will be accrued for this matter in future periods.
As the aforementioned event provided additional evidence of conditions that existed at the December 31, 2023 balance sheet date, the Company determined that this event meets the definition of a recognized subsequent event in accordance with FASB ASC 855 Subsequent Events and has therefore recorded a $5.8 million litigation accrual in the Company’s December 31, 2023 consolidated financial statements. This litigation accrual will be reflected in the Company’s consolidated financial statements for inclusion in its Annual Report on Form 10-K for the fiscal year ended December 31, 2023 to be filed with the Securities and Exchange Commission (“SEC”) on or before February 29, 2024.
As a result of the foregoing, net income, as reported in the Original Earnings Release, was reduced $4.6 million to $33.7 million and $131.9 million for the fourth quarter of 2023 and full year 2023, respectively. Diluted earnings per share, as reported in the Original Earnings Release, was reduced $0.08 to $0.63 and $2.45 for the fourth quarter of 2023 and full year 2023, respectively.
An updated version of the line items and reconciliations in the summary of financial data (unaudited) that were impacted by the recognition of this subsequent event and included in the Original Earnings Release are included below:
| Summary of Financial Data (unaudited) | ||||
| (Dollars in thousands, except per share data) | ||||
| Quarter Ended | Year-to-Date | |||
| Original Earnings Release | Updated | Original Earnings Release | Updated | |
| December 31, 2023 | December 31, 2023 | December 31, 2023 | December 31, 2023 | |
| Earnings | ||||
| Litigation accrual | $0 | $5,800 | $0 | $5,800 |
| Total operating expenses | 123,291 | 129,091 | 466,885 | 472,685 |
| Income before income taxes | 49,595 | 43,795 | 174,031 | 168,231 |
| Income taxes | 11,307 | 10,089 | 37,525 | 36,307 |
| Net income | $38,288 | $33,706 | $136,506 | $131,924 |
| Basic earnings per share | $0.71 | $0.63 | $2.54 | $2.45 |
| Diluted earnings per share | $0.71 | $0.63 | $2.53 | $2.45 |
| Profitability | ||||
| Return on assets | 0.99% | 0.87% | ||
| Return on equity | 9.69% | 8.53% | ||
| Return on tangible equity(1) (non-GAAP) | 21.30% | 18.75% | ||
| Efficiency ratio (GAAP) | 69.7% | 72.9% | ||
| Average Balances | ||||
| Total assets | $15,333,118 | $15,333,131 | ||
| Shareholders’ equity | 1,567,430 | 1,567,381 | ||
| Balance Sheet Data | ||||
| Other assets | $662,345 | $663,563 | ||
| Total assets | 15,554,535 | 15,555,753 | ||
| Accrued interest and other liabilities | 158,697 | 164,497 | ||
| Total liabilities | 13,852,016 | 13,857,816 | ||
| Shareholders' equity | 1,702,519 | 1,697,937 | ||
| Total liabilities and shareholders' equity | 15,554,535 | 15,555,753 | ||
| Capital and Other | ||||
| Shareholders’ equity/total assets (GAAP) | 10.95% | 10.92% | ||
| Tangible equity/net tangible assets(1) (non-GAAP) | 5.78% | 5.75% | ||
| Tier 1 leverage ratio | 9.37% | 9.34% | ||
| Book value (GAAP) | $31.93 | $31.84 | ||
| Tangible book value(1) (non-GAAP) | $15.93 | $15.85 | ||
| Asset Quality | ||||
| Non-owner occupied CRE / total bank-level regulatory capital | 197% | 198% | ||
| Quarterly GAAP to Non-GAAP Reconciliations | ||||
| Income statement data | ||||
| Pre-tax, pre-provision net revenue | ||||
| Net income (GAAP) | $38,288 | $33,706 | ||
| Income taxes | 11,307 | 10,089 | ||
| Income before income taxes | 49,595 | 43,795 | ||
| Provision for credit losses | 4,073 | 4,073 | ||
| Pre-tax, pre-provision net revenue (non-GAAP) | 53,668 | 47,868 | ||
| Acquisition expenses | 7 | 7 | ||
| Acquisition-related contingent consideration adjustment | 2,200 | 2,200 | ||
| Restructuring expenses | 1,163 | 1,163 | ||
| Litigation accrual | 0 | 5,800 | ||
| Loss on sales of investment securities | 0 | 0 | ||
| Gain on debt extinguishment | 0 | 0 | ||
| Unrealized (gain) loss on equity securities | (52) | (52) | ||
| Adjusted pre-tax, pre-provision net revenue (non-GAAP) | $56,986 | $56,986 | ||
| Summary of Financial Data (unaudited) | ||||
| (Dollars in thousands, except per share data) | ||||
| Quarter Ended | ||||
| Original Earnings Release | Updated | |||
| December 31, 2023 | December 31, 2023 | |||
| Quarterly GAAP to Non-GAAP Reconciliations | ||||
| Income statement data | ||||
| Pre-tax, pre-provision net revenue per share | ||||
| Diluted earnings per share (GAAP) | $0.71 | $0.63 | ||
| Income taxes | 0.21 | 0.19 | ||
| Income before income taxes | 0.92 | 0.82 | ||
| Provision for credit losses | 0.08 | 0.07 | ||
| Pre-tax, pre-provision net revenue per share (non-GAAP) | 1.00 | 0.89 | ||
| Acquisition expenses | 0.00 | 0.00 | ||
| Acquisition-related contingent consideration adjustment | 0.04 | 0.04 | ||
| Restructuring expenses | 0.02 | 0.02 | ||
| Litigation accrual | 0.00 | 0.11 | ||
| Loss on sales of investment securities | 0.00 | 0.00 | ||
| Gain on debt extinguishment | 0.00 | 0.00 | ||
| Unrealized (gain) loss on equity securities | 0.00 | 0.00 | ||
| Adjusted pre-tax, pre-provision net revenue per share (non-GAAP) | $1.06 | $1.06 | ||
| Net income | ||||
| Net income (GAAP) | $38,288 | $33,706 | ||
| Acquisition expenses | 7 | 7 | ||
| Tax effect of acquisition expenses | (1) | (1) | ||
| Subtotal (non-GAAP) | 38,294 | 33,712 | ||
| Acquisition-related contingent consideration adjustment | 2,200 | 2,200 | ||
| Tax effect of acquisition-related contingent consideration adjustment | (445) | (443) | ||
| Subtotal (non-GAAP) | 40,049 | 35,469 | ||
| Restructuring expenses | 1,163 | 1,163 | ||
| Tax effect of restructuring expenses | (235) | (234) | ||
| Subtotal (non-GAAP) | 40,977 | 36,398 | ||
| Litigation accrual | 0 | 5,800 | ||
| Tax effect of litigation accrual | 0 | (1,168) | ||
| Subtotal (non-GAAP) | 40,977 | 41,030 | ||
| Loss on sales of investment securities | 0 | 0 | ||
| Tax effect of loss on sales of investment securities | 0 | 0 | ||
| Subtotal (non-GAAP) | 40,977 | 41,030 | ||
| Gain on debt extinguishment | 0 | 0 | ||
| Tax effect of gain on debt extinguishment | 0 | 0 | ||
| Subtotal (non-GAAP) | 40,977 | 41,030 | ||
| Unrealized (gain) loss on equity securities | (52) | (52) | ||
| Tax effect of unrealized (gain) loss on equity securities | 11 | 10 | ||
| Operating net income (non-GAAP) | 40,936 | 40,988 | ||
| Amortization of intangible assets | 3,563 | 3,563 | ||
| Tax effect of amortization of intangible assets | (721) | (718) | ||
| Subtotal (non-GAAP) | 43,778 | 43,833 | ||
| Acquired non-PCD loan accretion | (828) | (828) | ||
| Tax effect of acquired non-PCD loan accretion | 168 | 167 | ||
| Adjusted net income (non-GAAP) | $43,118 | $43,172 | ||
| Summary of Financial Data (unaudited) | ||||
| (Dollars in thousands, except per share data) | ||||
| Quarter Ended | ||||
| Original Earnings Release | Updated | |||
| December 31, 2023 | December 31, 2023 | |||
| Quarterly GAAP to Non-GAAP Reconciliations | ||||
| Income statement data | ||||
| Return on average assets | ||||
| Adjusted net income (non-GAAP) | $43,118 | $43,172 | ||
| Average total assets | 15,333,118 | 15,333,131 | ||
| Adjusted return on average assets (non-GAAP) | 1.12% | 1.12% | ||
| Return on average equity | ||||
| Adjusted net income (non-GAAP) | $43,118 | $43,172 | ||
| Average total equity | 1,567,430 | 1,567,381 | ||
| Adjusted return on average equity (non-GAAP) | 10.91% | 10.93% | ||
| Earnings per common share | ||||
| Diluted earnings per share (GAAP) | $0.71 | $0.63 | ||
| Acquisition expenses | 0.00 | 0.00 | ||
| Tax effect of acquisition expenses | 0.00 | 0.00 | ||
| Subtotal (non-GAAP) | 0.71 | 0.63 | ||
| Acquisition-related contingent consideration adjustment | 0.04 | 0.04 | ||
| Tax effect of acquisition-related contingent consideration adjustment | (0.01) | (0.01) | ||
| Subtotal (non-GAAP) | 0.74 | 0.66 | ||
| Restructuring expenses | 0.02 | 0.02 | ||
| Tax effect of restructuring expenses | 0.00 | 0.00 | ||
| Subtotal (non-GAAP) | 0.76 | 0.68 | ||
| Litigation accrual | 0.00 | 0.11 | ||
| Tax effect of litigation accrual | 0.00 | (0.03) | ||
| Subtotal (non-GAAP) | 0.76 | 0.76 | ||
| Loss on sales of investment securities | 0.00 | 0.00 | ||
| Tax effect of loss on sales of investment securities | 0.00 | 0.00 | ||
| Subtotal (non-GAAP) | 0.76 | 0.76 | ||
| Gain on debt extinguishment | 0.00 | 0.00 | ||
| Tax effect of gain on debt extinguishment | 0.00 | 0.00 | ||
| Subtotal (non-GAAP) | 0.76 | 0.76 | ||
| Unrealized (gain) loss on equity securities | 0.00 | 0.00 | ||
| Tax effect of unrealized (gain) loss on equity securities | 0.00 | 0.00 | ||
| Operating diluted earnings per share (non-GAAP) | 0.76 | 0.76 | ||
| Amortization of intangible assets | 0.07 | 0.07 | ||
| Tax effect of amortization of intangible assets | (0.01) | (0.01) | ||
| Subtotal (non-GAAP) | 0.82 | 0.82 | ||
| Acquired non-PCD loan accretion | (0.02) | (0.02) | ||
| Tax effect of acquired non-PCD loan accretion | 0.00 | 0.00 | ||
| Diluted adjusted net earnings per share (non-GAAP) | $0.80 | $0.80 | ||
| Summary of Financial Data (unaudited) | ||||
| (Dollars in thousands, except per share data) | ||||
| Quarter Ended | ||||
| Original Earnings Release | Updated | |||
| December 31, 2023 | December 31, 2023 | |||
| Quarterly GAAP to Non-GAAP Reconciliations | ||||
| Income statement data | ||||
| Efficiency ratio (GAAP) | ||||
| Noninterest expenses (GAAP) – numerator | $123,291 | $129,091 | ||
| Net interest income (GAAP) | 109,190 | 109,190 | ||
| Noninterest revenues (GAAP) | 67,769 | 67,769 | ||
| Total revenues (GAAP) – denominator | 176,959 | 176,959 | ||
| Efficiency ratio (GAAP) | 69.7% | 72.9% | ||
| Noninterest operating expenses | ||||
| Noninterest expenses (GAAP) | $123,291 | $129,091 | ||
| Amortization of intangible assets | (3,563) | (3,563) | ||
| Acquisition expenses | (7) | (7) | ||
| Acquisition-related contingent consideration adjustment | (2,200) | (2,200) | ||
| Restructuring expenses | (1,163) | (1,163) | ||
| Litigation accrual | 0 | (5,800) | ||
| Total adjusted noninterest expenses (non-GAAP) | $116,358 | $116,358 | ||
| Operating efficiency ratio (non-GAAP) | ||||
| Adjusted noninterest expenses (non-GAAP) - numerator | $116,358 | $116,358 | ||
| Fully tax-equivalent net interest income | 110,227 | 110,227 | ||
| Noninterest revenues | 67,769 | 67,769 | ||
| Acquired non-PCD loan accretion | (828) | (828) | ||
| Unrealized (gain) loss on equity securities | (52) | (52) | ||
| Loss on sales of investment securities | 0 | 0 | ||
| Gain on debt extinguishment | 0 | 0 | ||
| Operating revenues (non-GAAP) - denominator | 177,116 | 177,116 | ||
| Operating efficiency ratio (non-GAAP) | 65.7% | 65.7% | ||
| Summary of Financial Data (unaudited) | ||||
| (Dollars in thousands, except per share data) | ||||
| Quarter Ended | ||||
| Original Earnings Release | Updated | |||
| December 31, 2023 | December 31, 2023 | |||
| Quarterly GAAP to Non-GAAP Reconciliations | ||||
| Balance sheet data | ||||
| Total assets | ||||
| Total assets (GAAP) | $15,554,535 | $15,555,753 | ||
| Goodwill and intangible assets, net | (897,987) | (897,987) | ||
| Deferred taxes on goodwill and intangible assets, net | 45,198 | 45,198 | ||
| Total tangible assets (non-GAAP) | $14,701,746 | $14,702,964 | ||
| Total common equity | ||||
| Shareholders' equity (GAAP) | $1,702,519 | $1,697,937 | ||
| Goodwill and intangible assets, net | (897,987) | (897,987) | ||
| Deferred taxes on goodwill and intangible assets, net | 45,198 | 45,198 | ||
| Total tangible common equity (non-GAAP) | $849,730 | $845,148 | ||
| Shareholders’ equity-to-assets ratio at quarter end | ||||
| Total shareholders’ equity (GAAP) - numerator | $1,702,519 | $1,697,937 | ||
| Total assets (GAAP) - denominator | 15,554,535 | 15,555,753 | ||
| Net shareholders’ equity-to-assets ratio at quarter end (GAAP) | 10.95% | 10.92% | ||
| Net tangible equity-to-assets ratio at quarter end | ||||
| Total tangible common equity (non-GAAP) - numerator | $849,730 | $845,148 | ||
| Total tangible assets (non-GAAP) - denominator | 14,701,746 | 14,702,964 | ||
| Net tangible equity-to-assets ratio at quarter end (non-GAAP) | 5.78% | 5.75% | ||
| (1) Includes deferred tax liabilities related to certain intangible assets. | ||||
Non-GAAP Measures
The Company also provides supplemental reporting of its results on an “operating,” “adjusted” and “tangible” basis, from which it excludes the after-tax effect of amortization of core deposit and other intangible assets (and the related goodwill, core deposit intangible and other intangible asset balances, net of applicable deferred tax amounts), accretion on non-purchased credit deteriorated (“PCD”) loans, expenses associated with acquisitions, acquisition-related provision for credit losses, acquisition-related contingent consideration adjustments, restructuring expenses, litigation accrual, gain on debt extinguishment, loss on sales of investment securities and unrealized gain (loss) on equity securities. In addition, the Company provides supplemental reporting for “adjusted pre-tax, pre-provision net revenues,” which subtracts the provision for credit losses, acquisition expenses, acquisition-related contingent consideration adjustments, restructuring expenses, litigation accrual, gain on debt extinguishment, loss on sales of investment securities and unrealized gain (loss) on equity securities from income before income taxes. Although these items are non-GAAP measures, the Company’s management believes this information helps investors and analysts measure underlying core performance and provides better comparability to other organizations that have not engaged in acquisitions or restructuring activities. The Company also provides supplemental reporting of its net interest margin on a “fully tax-equivalent” basis, which includes an adjustment to net interest income that represents taxes that would have been paid had nontaxable investment securities and loans been taxable. Although fully tax-equivalent net interest margin is a non-GAAP measure, the Company’s management believes this information helps enhance comparability of the performance of assets that have different tax liabilities. The amounts for such items are presented in the tables that accompany this release. Diluted adjusted net earnings per share, a non-GAAP measure, were $0.80 in the fourth quarter of 2023, down from $1.00 in the fourth quarter of 2022 and $0.86 in the third quarter of 2023. Adjusted pre-tax, pre-provision net revenue per share, a non-GAAP measure, was $1.06 in the fourth quarter of 2023, down from $1.29 in the fourth quarter of 2022 and $1.10 in the third quarter of 2023.
Forward-Looking Statements
This Form 8-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of CBU’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. The following factors, among others, could cause the actual results of CBU’s operations to differ materially from its expectations: the macroeconomic and other challenges and uncertainties related to or resulting from recent bank failures; current and future economic and market conditions, including the effects on commercial real estate and residential housing or vehicle prices, unemployment rates, high inflation, U.S. fiscal debt, budget and tax matters, geopolitical matters, and global economic growth; fiscal and monetary policies of the Federal Reserve Board; the potential adverse effects of unusual and infrequently occurring events; litigation and actions of regulatory authorities; management’s estimates and projections of interest rates and interest rate policies; the effect of changes in the level of checking, savings, or money market account deposit balances and other factors that affect net interest margin; future provisions for credit losses on loans and debt securities; changes in nonperforming assets; ability to contain costs in inflationary conditions; the effect on financial market valuations on CBU’s fee income businesses, including its employee benefit services, wealth management, and insurance businesses; the successful integration of operations of its acquisitions; competition; changes in legislation or regulatory requirements, including capital requirements; and the timing for receiving regulatory approvals and completing pending merger and acquisition transactions. For more information about factors that could cause actual results to differ materially from CBU’s expectations, refer to its annual, periodic and other reports filed with the Securities and Exchange Commission (“SEC”), including the discussion under the “Risk Factors” section of such reports filed with the SEC and available on CBU’s website at https://ir.communitybanksystem.com and on the SEC’s website at www.sec.gov. Further, any forward-looking statement speaks only as of the date on which it is made, and CBU undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Community Bank System, Inc. | ||
| By: | /s/ Joseph E. Sutaris | |
| Name: Joseph E. Sutaris | ||
| Title: Executive Vice President and Chief Financial Officer | ||
Dated: February 9, 2024
| This ‘8-K/A’ Filing | Date | Other Filings | ||
|---|---|---|---|---|
 | ||||
| 2/29/24 | ||||
| Filed on: | 2/9/24 | |||
| 2/5/24 | ||||
| 2/1/24 | 3 | |||
| For Period end: | 1/23/24 | 8-K, SC 13G/A | ||
| 12/31/23 | 8-K | |||
| List all Filings | ||||