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What changed in COMMUNITY FINANCIAL SYSTEM, INC.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of COMMUNITY FINANCIAL SYSTEM, INC.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+529 added−689 removedSource: 10-K (2026-02-27) vs 10-K (2025-02-28)

Top changes in COMMUNITY FINANCIAL SYSTEM, INC.'s 2025 10-K

529 paragraphs added · 689 removed · 448 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

97 edited+25 added−40 removed64 unchanged
Biggest changeThe FDIA requires federal bank regulatory agencies to prescribe, by regulation or guideline, operational and managerial standards for all insured depository institutions that relate to, among other things: (i) internal controls, information systems and audit systems; (ii) loan documentation; (iii) credit underwriting; (iv) interest rate exposure; (v) asset growth and quality; and (vi) compensation and benefits.
Biggest changeThe Bank’s FDIC insurance for 2025 was based on assessment rates ranging between six and seven basis points compared to assessment rates ranging between five and seven basis points for 2024 and five and six basis points for 2023. ​ Under the Federal Deposit Insurance Act (“FDIA”), if the FDIC finds that an institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC, the FDIC may determine that such violation or unsafe or unsound practice or condition require the termination of deposit insurance. ​ The FDIA requires federal bank regulatory agencies to prescribe, by regulation or guideline, operational and managerial standards for all insured depository institutions that relate to, among other things: (i) internal controls, information systems and audit systems; (ii) loan documentation; (iii) credit underwriting; (iv) interest rate exposure; (v) asset growth and quality; and (vi) compensation and benefits.
The current requirements and the Company’s actual capital levels are detailed in Note O of “Notes to Consolidated Financial Statements” filed in Part II, Item 8, “Financial Statements and Supplementary Data.” Consumer Protection Laws In connection with its banking activities, the Bank is subject to a number of federal and state laws designed to protect consumers and promote lending to various sectors of the economy.
The current requirements and the Company’s actual capital levels are detailed in Note P of “Notes to Consolidated Financial Statements” filed in Part II, Item 8, “Financial Statements and Supplementary Data.” ​ Consumer Protection Laws ​ In connection with its banking activities, the Bank is subject to a number of federal and state laws designed to protect consumers and promote lending to various sectors of the economy.
If these or other regulations are adopted in a form similar to what has been proposed, they will impose limitations on the manner in which the Company may structure compensation for its employees, which could adversely affect the Company’s ability to hire, retain and motivate key employees. 11 Table of Contents The ongoing effects of the Dodd-Frank Act, as well as the recent and possible future changes to the regulatory framework as a result of the Economic Growth Act and future proposals make it difficult to assess the overall financial impact of the Dodd-Frank Act and related regulatory developments on the Company and the banking industry.
If these or other regulations are adopted in a form similar to what has been proposed, they will impose limitations on the manner in which the Company may structure compensation for its employees, which could adversely affect the Company’s ability to hire, retain and motivate key employees. ​ The ongoing effects of the Dodd-Frank Act, as well as the recent and possible future changes to the regulatory framework as a result of the Economic Growth Act and future proposals make it difficult to assess the overall financial impact of the Dodd-Frank Act and related regulatory developments on the Company and the banking industry.
As of December 31, 2024, BPAS owns five subsidiaries: Benefit Plans Administrative Services, LLC (“BPA”), a provider of defined contribution plan administration services; Northeast Retirement Services, LLC (“NRS”), a provider of institutional transfer agency, master recordkeeping services, fund administration, trust, and retirement plan services; BPAS Actuarial & Pension Services, LLC (“BPAS-APS”), a provider of actuarial and benefit consulting services; BPAS Trust Company of Puerto Rico, a provider of trust and benefit plan administration services; and Hand Benefits & Trust Company (“HB&T”), a provider of collective investment fund administration and institutional trust services.
As of December 31, 2025, BPAS owns five subsidiaries: Benefit Plans Administrative Services, LLC (“BPA”), a provider of defined contribution plan administration services; Northeast Retirement Services, LLC (“NRS”), a provider of institutional transfer agency, master recordkeeping services, fund administration, trust, and retirement plan services; BPAS Actuarial & Pension Services, LLC (“BPAS-APS”), a provider of actuarial and benefit consulting services; BPAS Trust Company of Puerto Rico, a provider of trust and benefit plan administration services; and Hand Benefits & Trust Company (“HB&T”), a provider of collective investment fund administration and institutional trust services.
The specific impact of the Dodd-Frank Act on the Company’s current activities or new financial activities the Company may consider in the future, the Company’s financial performance, and the markets in which the Company operates depends on the manner in which the relevant agencies continue to develop and implement the required rules and regulations and the reaction of market participants to these regulatory developments. 10 Table of Contents Pursuant to FRB regulations mandated by the Dodd-Frank Act, interchange fees on debit card transactions are limited to a maximum of $0.21 per transaction plus 5 basis points of the transaction amount.
The specific impact of the Dodd-Frank Act on the Company’s current activities or new financial activities the Company may consider in the future, the Company’s financial performance, and the markets in which the Company operates depends on the manner in which the relevant agencies continue to develop and implement the required rules and regulations and the reaction of market participants to these regulatory developments. ​ Pursuant to FRB regulations mandated by the Dodd-Frank Act, interchange fees on debit card transactions are limited to a maximum of $0.21 per transaction plus 5 basis points of the transaction amount.
Service providers are required under the rule to notify affected banking organization customers as soon as possible when the provider determines that it has experienced a computer-security incident that has materially affected or is reasonably likely to materially affect the banking organization's customers for four or more hours. ​ Guidance for Third-Party Relationships On June 9, 2023, the Federal Reserve, OCC, and FDIC issued final interagency guidance on risk management of third-party relationships.
Service providers are required under the rule to notify affected banking organization customers as soon as possible when the provider determines that it has experienced a computer-security incident that has materially affected or is reasonably likely to materially affect the banking organization's customers for four or more hours. ​ ​ 15 Table of Contents Guidance for Third-Party Relationships ​ On June 9, 2023, the Federal Reserve, OCC, and FDIC issued final interagency guidance on risk management of third-party relationships.
Karaivanov ​ 43 ​ Director, President and Chief Executive Officer. Mr. Karaivanov assumed his current position on January 1, 2024. He previously served as Executive Vice President and Chief Operating Officer from October 2022 to December 2023 and Executive Vice President of Financial Services and Corporate Development from June 2021 to September 2022.
Karaivanov ​ 44 ​ Director, President and Chief Executive Officer. Mr. Karaivanov assumed his current position on January 1, 2024. He previously served as Executive Vice President and Chief Operating Officer from October 2022 to December 2023 and Executive Vice President of Financial Services and Corporate Development from June 2021 to September 2022.
Under the assessment rate schedule effective for 2024, the initial base assessment rate for large and highly complex insured depository institutions ranges from five to 32 basis points, and the total base assessment rate, after applying the unsecured debt and brokered deposit adjustments, ranges from two and one-half to 42 basis points.
Under the assessment rate schedule effective for 2025, the initial base assessment rate for large and highly complex insured depository institutions ranges from five to 32 basis points, and the total base assessment rate, after applying the unsecured debt and brokered deposit adjustments, ranges from two and one-half to 42 basis points.
The Company has and will continue to review and monitor its anti-money laundering program to ensure it complies with the provisions of the AMLA. 14 Table of Contents In July 2024, the federal banking agencies, including the Federal Reserve and OCC, proposed amendments to update the requirements for supervised institutions to establish, implement and maintain effective, risk-based and reasonably designed AML and countering the financing of terrorism ("CFT") programs.
The Company has and will continue to review and monitor its anti-money laundering program to ensure it complies with the provisions of the AMLA. ​ In July 2024, the federal banking agencies, including the Federal Reserve and OCC, proposed amendments to update the requirements for supervised institutions to establish, implement and maintain effective, risk-based and reasonably designed AML and countering the financing of terrorism ("CFT") programs.
The Bank was in compliance with the rules and requirements of the FHLB at December 31, 2024. Deposit Insurance Deposits of the Bank are insured up to the applicable limits by the Deposit Insurance Fund (“DIF”) and are subject to deposit insurance assessments to maintain the DIF.
The Bank was in compliance with the rules and requirements of the FHLB at December 31, 2025. ​ Deposit Insurance ​ Deposits of the Bank are insured up to the applicable limits by the Deposit Insurance Fund (“DIF”) and are subject to deposit insurance assessments to maintain the DIF.
The Capital Rules do not change the total risk-based PCA capital requirement for any capital category. 12 Table of Contents The Capital Rules prescribe a standardized approach for risk weighted-assets that expands the risk-weight categories from the four Basel I-derived categories (0%, 20%, 50% and 100%) to a larger and more risk-sensitive number of categories, depending on the nature of the asset.
The Capital Rules do not change the total risk-based PCA capital requirement for any capital category. ​ The Capital Rules prescribe a standardized approach for risk weighted-assets that expands the risk-weight categories from the four Basel I-derived categories (0%, 20%, 50% and 100%) to a larger and more risk-sensitive number of categories, depending on the nature of the asset.
The Company conducts workforce planning sessions periodically across all business areas to ensure market competitive pay for employees and actions to support commitment to the professional development of employees. ​ Growth and Development The Company continues to broaden the scope of its talent development initiatives across its widening geographically diverse footprint in order to sustain a value-driven and growth-oriented environment where employees can perform at their peak and the next generation of leaders are prepared to lead.
The Company conducts workforce planning sessions periodically across all business areas to ensure competitive market pay for employees and actions to support commitment to the professional development of employees. ​ ​ 5 Table of Contents Growth and Development ​ The Company continues to broaden the scope of its talent development initiatives across its widening and geographically diverse footprint in order to sustain a value-driven and growth-oriented environment where employees can perform at their peak and the next generation of leaders are prepared.
This includes offering a variety of health and welfare benefits as well as a holistic wellbeing program. Supervision and Regulation General The banking industry is highly regulated with numerous statutory and regulatory requirements that are designed primarily for the protection of depositors and the financial system.
This includes offering a variety of health and welfare benefits as well as a holistic wellbeing program. ​ ​ 6 Table of Contents Supervision and Regulation ​ General ​ The banking industry is highly regulated with numerous statutory and regulatory requirements that are designed primarily for the protection of depositors and the financial system.
Abdo ​ 47 ​ Executive Vice President and General Counsel. Mr. Abdo assumed his current position in July 2022. He served as Associate General Counsel from 2013 to 2020 and as Senior Vice President and Senior Associate General Counsel from January 2020 to July 2022.
Abdo ​ 48 ​ Executive Vice President and General Counsel. Mr. Abdo assumed his current position in July 2022. He served as Associate General Counsel from 2013 to 2020 and as Senior Vice President and Senior Associate General Counsel from January 2020 to July 2022.
While the Company and the Bank strive to model various interest rate changes and adjust its strategies for such changes, the level of earnings can be materially affected by economic circumstances beyond its control. 8 Table of Contents The Office of the Comptroller of the Currency Regulation (“OCC”) The Bank is supervised by the OCC.
While the Company and the Bank strive to model various interest rate changes and adjust its strategies for such changes, the level of earnings can be materially affected by economic circumstances beyond its control. ​ The Office of the Comptroller of the Currency Regulation (“OCC”) ​ The Bank is supervised by the OCC.
The Company has approved policies and procedures that are designed to comply with the Sarbanes-Oxley Act and its regulations. 15 Table of Contents Community Reinvestment Act of 1977 Under the CRA, the Bank is required to help meet the credit needs of its communities, including low- and moderate-income neighborhoods.
The Company has approved policies and procedures that are designed to comply with the Sarbanes-Oxley Act and its regulations. ​ Community Reinvestment Act of 1977 ​ Under the CRA, the Bank is required to help meet the credit needs of its communities, including low- and moderate-income neighborhoods.
The Bank has created policies and procedures to comply with these consumer protection requirements. 13 Table of Contents The CFPB has implemented the ability-to-repay and qualified mortgage (QM) provisions of the Truth in Lending Act (the “QM Rule”) and has taken steps to modify the QM Rule.
The Bank has created policies and procedures to comply with these consumer protection requirements. ​ The CFPB has implemented the ability-to-repay and qualified mortgage (QM) provisions of the Truth in Lending Act (the “QM Rule”) and has taken steps to modify the QM Rule.
Until corrected, the Company could be prohibited from engaging in any new activity or acquiring companies engaged in activities that are not closely related to banking, absent prior FRB approval. Federal Reserve System Regulation As the Company is a financial holding company, it is subject to regulatory capital requirements.
Until corrected, the Company could be prohibited from engaging in any new activity or acquiring companies engaged in activities that are not closely related to banking, absent prior FRB approval. 7 Table of Contents Federal Reserve System Regulation ​ As the Company is a financial holding company, it is subject to regulatory capital requirements.
The Bank is a nationally-chartered bank and is subject to extensive regulation and supervision by the Office of the Comptroller of the Currency (“OCC”) as its primary federal regulator, and as to certain matters, the FRB, the Consumer Financial Protection Bureau (“CFPB”), and the FDIC.
The Bank is a federally chartered national bank and is subject to extensive regulation and supervision by the Office of the Comptroller of the Currency (“OCC”) as its primary federal regulator, and as to certain matters, the FRB, the Consumer Financial Protection Bureau (“CFPB”), and the FDIC.
Enforcement actions against the Company, the Bank and their respective officers and directors may include the issuance of a written directive, the issuance of a cease-and-desist order that can be judicially enforced, the imposition of civil money penalties, the issuance of directives to increase capital, the issuance of formal and informal agreements, the issuance of removal and prohibition orders against officers or other institution-affiliated parties, the imposition of restrictions and sanctions under prompt corrective action regulations, the termination of deposit insurance (in the case of the Bank) and the appointment of a conservator or receiver for the Bank.
Failure to implement such a plan may result in an enforcement action against the bank. ​ Enforcement actions against the Company, the Bank and their respective officers and directors may include the issuance of a written directive, the issuance of a cease-and-desist order that can be judicially enforced, the imposition of civil money penalties, the issuance of directives to increase capital, the issuance of formal and informal agreements, the issuance of removal and prohibition orders against officers or other institution-affiliated parties, the imposition of restrictions and sanctions under prompt corrective action regulations, the termination of deposit insurance (in the case of the Bank) and the appointment of a conservator or receiver for the Bank.
The Company has established the Community Connect program, which is a joint initiative between the four operating business segments to facilitate cross-selling opportunities and connections with commercial clients between the functional areas of the business.
The Company utilizes the Community Connect program, which is a joint initiative between the four operating business segments to facilitate cross-selling opportunities and connections with commercial clients between the functional areas of the business.
Affiliated entities, including BPAS, BPA, NRS, GTC, HB&T, HSI, BPAS Trust Company of Puerto Rico, FBD, Nottingham, CISI, OneGroup, Carta Group, and Wealth Partners are subject to the jurisdiction of certain state and federal regulators and self-regulatory organizations including, but not limited to, the SEC, the Texas Department of Banking, the State of Maine Bureau of Financial Institutions, the Financial Industry Regulatory Authority (“FINRA”), Puerto Rico Office of the Commissioner of Financial Institutions, the U.S.
Affiliated entities, including BPAS, BPA, NRS, GTC, HB&T, HSI, BPAS Trust Company of Puerto Rico, Nottingham Advisors, NISI, OneGroup, and Wealth Partners are subject to the jurisdiction of certain state and federal regulators and self-regulatory organizations including, but not limited to, the SEC, the Texas Department of Banking, the State of Maine Bureau of Financial Institutions, the Financial Industry Regulatory Authority (“FINRA”), Puerto Rico Office of the Commissioner of Financial Institutions, the U.S.
On October 24, 2023, the FRB, FDIC and OCC jointly issued a final rule to strengthen and modernize regulations implementing the CRA to encourage banks to expand access to credit, investment, and banking services in low- and moderate-income communities, adapt to changes in the banking industry, including internet and mobile banking, provide greater clarity and consistency in the application of the CRA regulations and tailor CRA evaluations and data collection to bank size and type.
The Bank’s most recent CRA rating was “Satisfactory”. ​ On October 24, 2023, the FRB, FDIC and OCC jointly issued a final rule intended to strengthen and modernize regulations implementing the CRA to encourage banks to expand access to credit, investment, and banking services in low- and moderate-income communities, adapt to changes in the banking industry, including internet and mobile banking, provide greater clarity and consistency in the application of the CRA regulations and tailor CRA evaluations and data collection to bank size and type.
The Company maintains a website at cbna.com. Annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, are available on the Company’s website free of charge as soon as reasonably practicable after such reports or amendments are electronically filed with or furnished to the Securities and Exchange Commission (“SEC”).
Annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, are available on the Company’s website free of charge as soon as reasonably practicable after such reports or amendments are electronically filed with or furnished to the Securities and Exchange Commission (“SEC”).
The Bank’s branches are generally located in smaller towns and cities within its geographic market areas of Upstate New York, Northeastern Pennsylvania, Vermont and Western Massachusetts.
The Bank’s branches are located in towns and cities within its geographic market areas of Upstate New York, Northeastern Pennsylvania, Vermont, Western Massachusetts and Southern New Hampshire.
The Bank is a member of the Federal Reserve System, the Federal Home Loan Bank of New York and the Federal Home Loan Bank of Boston (as a non-member bank) (collectively, referred to as “FHLB”), and its deposits are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to applicable limits. 4 Table of Contents Employee Benefit Services Through BPAS and its subsidiaries, the Company operates a national practice that provides employee benefit trust, collective investment fund, retirement plan and health savings account administration, fund administration, transfer agency, actuarial, and health and welfare consulting services to a diverse array of clients spanning the United States and the Commonwealth of Puerto Rico.
The Bank is a member of the Federal Reserve System, the Federal Home Loan Bank of New York and the Federal Home Loan Bank of Boston (as a non-member bank) (collectively, referred to as “FHLB”), and its deposits are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to applicable limits. ​ Employee Benefit Services ​ Through BPAS and its subsidiaries, the Company operates a national practice that provides employee benefit trust, collective investment fund, retirement plan and health savings account administration, fund administration, transfer agency, actuarial, and health and welfare consulting services to a diverse array of clients spanning the United States and the Commonwealth of Puerto Rico. ​ Insurance Services ​ Through OneGroup, the Company offers personal and commercial lines of insurance and other risk management products and services.
The Bank’s failure to comply with the Equal Credit Opportunity Act and the Fair Housing Act could result in enforcement actions against it by its regulators as well as other federal regulatory agencies and the Department of Justice. The Bank’s most recent CRA rating was “Satisfactory”.
The Bank’s failure to comply with the Equal Credit Opportunity Act and the Fair Housing Act could result in enforcement actions against it by its regulators as well as other federal regulatory agencies and the Department of Justice.
The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions that do not maintain a capital conservation buffer of 2.5% or more will face constraints on dividends, common share repurchases and incentive compensation based on the amount of the shortfall. The Capital Rules provide for a number of deductions from and adjustments to CET1.
Banking institutions that do not maintain a capital conservation buffer of 2.5% or more will face constraints on dividends, common share repurchases and incentive compensation based on the amount of the shortfall. ​ The Capital Rules provide for a number of deductions from and adjustments to CET1.
The Dodd-Frank Act established the CFPB and empowered it to exercise broad rulemaking, supervision, and enforcement authority for a wide range of consumer protection laws. Because the Bank’s total consolidated assets exceed $10 billion, the Bank is subject to the direct supervision of the CFPB.
The Company continues to monitor the development of these proposed rule revisions. ​ The Dodd-Frank Act established the CFPB and empowered it to exercise broad rulemaking, supervision, and enforcement authority for a wide range of consumer protection laws. Because the Bank’s total consolidated assets exceed $10 billion, the Bank is subject to the direct supervision of the CFPB.
On October 25, 2023, the FRB proposed to lower the maximum interchange fee that a large debit card issuer can receive for a debit card transaction. The proposal would also establish a regular process for updating the maximum amount every other year going forward. The Company continues to monitor the development of these proposed rule revisions.
On October 25, 2023, the FRB proposed to lower the maximum interchange fee that a large debit card issuer can receive for a debit card transaction. The proposal would also establish a regular process for updating the maximum amount every other year going forward.
Compensation and Benefits ​ The success and growth of the Company’s business is largely dependent on its ability to attract, develop, and retain a population of skilled and high-performing employees with varied backgrounds and skill sets at all levels of the organization.
Strong human capital management is viewed as integral to the Company’s business strategy. ​ Compensation and Benefits ​ The success and growth of the Company’s business is largely dependent on its ability to attract, develop, and retain a population of skilled and high-performing employees with varied backgrounds and skill sets at all levels of the organization.
The Company offers a wide range of learning and development programs, both internally and externally, that support a broad scope of the Company’s talent development initiatives making continuous learning a part of each employee’s relationship with the Company in a growth-oriented environment.
The Company offers a wide range of learning and development programs, both internally and externally, that support a broad scope of the Company’s talent development initiatives making continuous learning a part of each employee’s relationship with the Company in a growth-oriented environment. The Company maintains a strong performance culture through its performance management program.
The amendments also require covered entities to notify, within 30 days, individuals affected by an incident involving sensitive customer information and provide them with details about the incident and other information intended to help affected individuals respond appropriately. Compliance with these amendments may begin on December 3, 2025.
The amendments also require covered entities to notify, within 30 days, individuals affected by an incident involving sensitive customer information and provide them with details about the incident and other information intended to help affected individuals respond appropriately.
The Bank is in the process of expanding its branch presence in new, more densely populated markets within its geographic footprint including the Albany, Buffalo, Rochester and Syracuse regions of New York, the Lehigh Valley region of Pennsylvania and Springfield, Massachusetts. The expansion will also include the Bank’s first physical branch in Southern New Hampshire.
The Bank is nearing completion of its process of expanding its branch presence in more densely populated markets within its geographic footprint including the Albany, Buffalo, Rochester and Syracuse regions of New York, the Lehigh Valley region of Pennsylvania, Southern New Hampshire and Springfield, Massachusetts.
The Bank Secrecy Act The Bank Secrecy Act (“BSA”) requires all financial institutions, including banks and securities broker-dealers, to, among other things, establish a risk-based system of internal controls reasonably designed to prevent money laundering and the financing of terrorism.
Compliance with these amendments began on December 3, 2025. ​ The Bank Secrecy Act ​ The Bank Secrecy Act (“BSA”) requires all financial institutions, including banks and securities broker-dealers, to, among other things, establish a risk-based system of internal controls reasonably designed to prevent money laundering and the financing of terrorism.
Blocked assets (e.g., property and bank deposits) cannot be paid out, withdrawn, set off or transferred in any manner without a license from OFAC. Failure to comply with these sanctions could have serious legal, financial, and reputational consequences. The Company has approved policies and procedures that are designed to comply with OFAC and its regulations.
Blocked assets (e.g., property and bank deposits) cannot be paid out, withdrawn, set off or transferred in any manner without a license from OFAC. Failure to comply with these sanctions could have serious legal, financial, and reputational consequences.
The program intends to provide customers with interconnected solutions and enhance customer retention. 5 Table of Contents Human Capital Resources The Company’s employees are asked to embody the core values of integrity, excellence, teamwork and humility. These values are what makes the Company’s culture strong.
The program intends to provide customers with interconnected solutions and enhance customer retention. ​ Human Capital Resources ​ The Company’s employees are asked to embody the core values of integrity, excellence, teamwork and humility. These values are foundational to sustaining the strength of the Company’s culture.
As the Company is a financial holding company, if the Bank were to not maintain a Satisfactory or better rating under the Community Reinvestment Act of 1977, as amended (“CRA”), the Company would be prohibited, until the rating is raised to Satisfactory or better, from engaging in new activities or acquiring companies other than bank holding companies, banks or savings associations, except that the Company could engage in new activities, or acquire companies engaged in activities, that are considered “closely related to banking” under the Bank Holding Company Act of 1956, (the “BHC Act”).
Prior FRB approval is required before the Company may acquire the beneficial ownership or control of more than 5% of the voting shares or substantially all of the assets of a bank holding company, bank or savings association. ​ As the Company is a financial holding company, if the Bank were to not maintain a Satisfactory or better rating under the Community Reinvestment Act of 1977, as amended (“CRA”), the Company would be prohibited, until the rating is raised to Satisfactory or better, from engaging in new activities or acquiring companies other than bank holding companies, banks or savings associations, except that the Company could engage in new activities, or acquire companies engaged in activities, that are considered “closely related to banking” under the Bank Holding Company Act of 1956, (the “BHC Act”).
Prior to joining the Company, he was the Managing Director of Lazard Middle Market’s Financial Institutions Group from June 2018 through June 2021. Prior to Lazard, he was the Managing Director of RBC Capital Markets’ Financial Institutions Group from April 2011 through June 2018. Joseph E. Sutaris ​ 57 ​ Executive Vice President and Chief Financial Officer. Mr.
Prior to joining the Company, he was the Managing Director of Lazard Middle Market’s Financial Institutions Group from June 2018 through June 2021. Prior to Lazard, he was the Managing Director of RBC Capital Markets’ Financial Institutions Group from April 2011 through June 2018. Marya Burgio Wlos ​ 48 ​ Executive Vice President and Chief Financial Officer. Ms.
Prior to joining the Company in 2013, he was an associate with Cadwalader Wickersham & Taft. Jeffrey M. Levy ​ 63 ​ Senior Vice President and Chief Banking Officer. Mr. Levy assumed his current position on January 1, 2024.
Prior to joining the Company in 2013, he was an associate with Cadwalader Wickersham & Taft. Matthew K. Durkee ​ 63 ​ Senior Vice President, Chief Banking Officer and President of Commercial Banking. Mr. Durkee assumed his current position on January 1, 2026.
The final rules issued by the FRB, SEC, OCC, FDIC, and Commodity Futures Trading Commission implementing Section 619 of the Dodd-Frank Act (commonly known as the Volcker Rule) prohibit insured depository institutions and companies affiliated with insured depository institutions from (1) engaging in short-term proprietary trading of certain securities, derivatives, commodity futures and options on these instruments, for their own account and (2) sponsoring certain covered funds, subject to certain limited exceptions.
In these proceedings, the CFPB can obtain cease and desist orders (which can include orders for restitution or rescission of contracts, as well as other kinds of affirmative relief) and monetary penalties. ​ The final rules issued by the FRB, SEC, OCC, FDIC, and Commodity Futures Trading Commission implementing Section 619 of the Dodd-Frank Act (commonly known as the Volcker Rule) prohibit insured depository institutions and companies affiliated with insured depository institutions from (1) engaging in short-term proprietary trading of certain securities, derivatives, commodity futures and options on these instruments, for their own account and (2) sponsoring certain covered funds, subject to certain limited exceptions.
The Bank is also subject to Section 23B of the FRA, which, among other things, prohibits an institution from engaging in transactions with affiliates unless the transactions are on terms substantially the same, or at least as favorable to such institution or its subsidiaries, as those prevailing at the time for comparable transactions with non-affiliates.
The Bank is also subject to Section 23B of the FRA, which, among other things, prohibits an institution from engaging in transactions with affiliates unless the transactions are on terms substantially the same, or at least as favorable to such institution or its subsidiaries, as those prevailing at the time for comparable transactions with non-affiliates. ​ The Company is subject to restrictions on extensions of credit to insiders (namely executive officers, directors, and 10% stockholders) and their related interests.
Under the Capital Rules, the minimum capital ratios are as follows: ● 4.5% CET1 to total risk-weighted assets; ● 6.0% Tier 1 capital (CET1 plus Additional Tier 1 capital) to total risk-weighted assets; ● 8.0% Total capital (Tier 1 Capital plus Tier 2 capital) to total risk-weighted assets; ● 4.0% Tier 1 capital to total adjusted quarterly average assets (known as “leverage ratio”) ​ The Capital Rules require the Company and the Bank to maintain a “capital conservation buffer” composed entirely of CET1.
In addition, the Capital Rules specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting certain specified requirements. ​ Under the Capital Rules, the minimum capital ratios are as follows: ​ ● 4.5% CET1 to total risk-weighted assets; ● 6.0% Tier 1 capital (CET1 plus Additional Tier 1 capital) to total risk-weighted assets; ● 8.0% Total capital (Tier 1 Capital plus Tier 2 capital) to total risk-weighted assets; ● 4.0% Tier 1 capital to total adjusted quarterly average assets (known as “leverage ratio”) ​ ​ 11 Table of Contents The Capital Rules require the Company and the Bank to maintain a “capital conservation buffer” composed entirely of CET1.
Federal Bank Holding Company Regulation As the Company is classified as a financial holding company, the Company can affiliate with securities firms and insurance companies and engage in other activities that are “financial in nature” or “incidental” or “complementary” to activities that are financial in nature, as long as it continues to meet the eligibility requirements for financial holding companies (including requirements that the financial holding company and its depository institution subsidiary maintain their status as “well capitalized” and “well managed”).
Department of Labor, and state securities and insurance regulators. ​ Federal Bank Holding Company Regulation ​ As the Company is classified as a financial holding company, the Company can affiliate with securities firms and insurance companies and engage in other activities that are “financial in nature” or “incidental” or “complementary” to activities that are financial in nature, as long as it continues to meet the eligibility requirements for financial holding companies (including requirements that the financial holding company and its depository institution subsidiary maintain their status as “well capitalized” and “well managed”). ​ Generally, FRB approval is not required for the Company to acquire a company (other than a bank holding company, bank or savings association) engaged in activities that are financial in nature or incidental to activities that are financial in nature, as determined by the FRB.
There is also an aggregate limitation on all loans to insiders and their related interests, which cannot exceed the institution's total unimpaired capital and surplus, unless the FDIC determines that a lesser amount is appropriate. Insiders are subject to enforcement actions for knowingly accepting loans in violation of applicable restrictions.
There is also an aggregate limitation on all loans to insiders and their related interests, which cannot exceed the institution's total unimpaired capital and surplus, unless the FDIC determines that a lesser amount is appropriate.
Among other provisions, the federal banking rule under the Electronic Fund Transfer Act prohibits financial institutions from charging consumers fees for paying overdrafts on automated teller machines and one-time debit card transactions, unless a consumer consents, or opts in, to the overdraft service for those types of transactions.
The Bank has created policies and procedures to comply with these consumer protection requirements and continues to monitor developments relative to future changes to the QM Rule. ​ Among other provisions, the federal banking rule under the Electronic Fund Transfer Act prohibits financial institutions from charging consumers fees for paying overdrafts on automated teller machines and one-time debit card transactions, unless a consumer consents, or opts in, to the overdraft service for those types of transactions.
The Company expects the Trump administration will seek to implement a regulatory reform agenda that is significantly different from that of the Biden administration, impacting the rulemaking, supervision, examination and enforcement priorities of the federal banking agencies. 7 Table of Contents The Company is also subject to the jurisdiction of the SEC and is subject to disclosure and regulatory requirements under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended.
The Company expects the current federal government administration will continue to implement a regulatory reform agenda that impacts the rulemaking, supervision, examination and enforcement priorities of the federal banking agencies. ​ The Company is also subject to the jurisdiction of the SEC and is subject to disclosure and regulatory requirements under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended.
Failure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing, or to comply with all of the relevant laws or regulations, could have serious legal, financial and reputational consequences for the institution. The Company has approved policies and procedures that are designed to comply with the USA Patriot Act and its regulations.
Failure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing, or to comply with all of the relevant laws or regulations, could have serious legal, financial and reputational consequences for the institution.
Fluctuations in interest rates, which may result from government fiscal policies and the monetary policies of the FRB, have a strong impact on the income derived from loans and securities, and interest paid on deposits and borrowings.
These policies have a significant influence on overall growth and distribution of loans, investments and deposits, and affect the interest rates charged on loans or paid for deposits. ​ Fluctuations in interest rates, which may result from government fiscal policies and the monetary policies of the FRB, have a strong impact on the income derived from loans and securities, and interest paid on deposits and borrowings.
The Company’s employee base is concentrated in New York, Pennsylvania and New England where the Bank maintains its retail bank branch presence, with approximately 2,115 employees in New York, 279 in Pennsylvania, and 309 in Vermont, Massachusetts and New Hampshire. Approximately 215 of the Company’s employee base is located outside of its retail banking footprint.
The Company’s employee base is concentrated in New York, Pennsylvania and New England where the Bank maintains its retail bank branch presence, with approximately 2,136 employees in New York, 312 in Pennsylvania and 323 in Vermont, Massachusetts and New Hampshire.
Office of Foreign Assets Control Regulation The United States has imposed economic sanctions that affect transactions with designated foreign countries, nationals and others administrated by the Treasury’s Office of Foreign Assets Control (“OFAC”).
The Company has approved policies and procedures that are designed to comply with the USA Patriot Act and its regulations. ​ Office of Foreign Assets Control Regulation ​ The United States has imposed economic sanctions that affect transactions with designated foreign countries, nationals and others administrated by the Treasury’s Office of Foreign Assets Control (“OFAC”).
Item 1. Business Community Financial System, Inc. (the “Company”) was incorporated on April 15, 1983, under the Delaware General Corporation Law. Its principal office is located at 5790 Widewaters Parkway, DeWitt, New York 13214. The Company was formerly named Community Bank System, Inc. until May 15, 2024.
Item 1. Business ​ Community Financial System, Inc. (the “Company”) was incorporated on April 15, 1983, under the Delaware General Corporation Law. Its principal office is located at 333 Butternut Drive, Syracuse, New York 13214.
As of December 31, 2024, the Company had 2,918 total employees, which included 2,730 full-time employees and 188 part-time and temporary employees.
As of December 31, 2025, the Company had 3,001 total employees, which included 2,853 full-time employees and 148 part-time and temporary employees.
Compliance with these requirements may begin on January 1, 2026. ​ USA Patriot Act The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA Patriot Act”) imposes obligations on U.S. financial institutions, including banks and broker-dealer subsidiaries, to implement policies, procedures and controls which are reasonably designed to detect and report instances of money laundering and the financing of terrorism.
On December 31, 2025, FinCEN issued a final rule to extend the effective date of this rule from January 1, 2026 until January 1, 2028 to provide additional time for FinCEN to review and tailor the rule. ​ USA Patriot Act ​ The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA Patriot Act”) imposes obligations on U.S. financial institutions, including banks and broker-dealer subsidiaries, to implement policies, procedures and controls which are reasonably designed to detect and report instances of money laundering and the financing of terrorism.
Sarbanes-Oxley Act of 2002 The Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”) implemented a broad range of corporate governance, accounting and reporting reforms for companies that have securities registered under the Securities Exchange Act of 1934, as amended.
The Company has approved policies and procedures that are designed to comply with OFAC and its regulations. ​ 14 Table of Contents Sarbanes-Oxley Act of 2002 ​ The Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”) implemented a broad range of corporate governance, accounting and reporting reforms for companies that have securities registered under the Securities Exchange Act of 1934, as amended.
New laws and regulations, more complex regulations, and changes in regulators’ interpretations and application of existing laws and regulations cannot be predicted and may have a material adverse effect on the Company’s businesses and results.
New laws and regulations, more complex regulations, and changes in regulators’ interpretations and application of existing laws and regulations cannot be predicted and may have a material adverse effect on the Company’s businesses and results. ​ The Company and its subsidiaries are subject to the laws and regulations of the federal government and, where applicable, the states and jurisdictions in which they conduct business.
Anti-Money Laundering Act of 2020 The Anti-Money Laundering Act of 2020 (“AMLA”) amends the BSA and was enacted in January 2021. The AMLA was intended to reform and modernize U.S. bank secrecy and anti-money laundering laws.
The AMLA was intended to reform and modernize U.S. bank secrecy and anti-money laundering laws.
The Company continues to conduct a survey annually to maintain a feedback loop with employees. In 2023, the Company selected Engagement Champions whose role is to support leaders and managers in the ongoing engagement efforts and initiatives. In 2024, the CEO instituted a CFSI company-wide employee townhall to enhance communication and transparency relative to the Company’s strategy and priorities.
In 2023, the Company selected Engagement Champions whose role is to support leaders and managers in the ongoing engagement efforts and initiatives. In 2024, the CEO instituted a Company-wide employee townhall to enhance communication and transparency relative to the Company’s strategy and priorities. The townhalls include a Q&A segment where the CEO answers questions on a variety of topics.
BPA owns one subsidiary, Fringe Benefits Design of Minnesota, Inc. (“FBD”), a provider of retirement plan administration and benefit consulting services. NRS owns one subsidiary, Global Trust Company, Inc. (“GTC”), a non-depository trust company which provides fiduciary services for collective investment trusts and other products. HB&T owns one subsidiary, Hand Securities, Inc. (“HSI”), an introducing broker-dealer.
NRS owns one subsidiary, Global Trust Company, Inc. (“GTC”), a non-depository trust company which provides fiduciary services for collective investment trusts and other products. HB&T owns one subsidiary, Hand Securities, Inc.
Under the Capital Rules, the effects of certain accumulated other comprehensive income or loss items are not excluded for the purposes of determining regulatory capital; however, banks not using the advanced approach, including the Company and the Bank, were permitted to, and in the case of the Company and the Bank did, make a one-time permanent election to continue to exclude these items.
Under the Capital Rules, the effects of certain accumulated other comprehensive income or loss items are not excluded for the purposes of determining regulatory capital; however, banks not using the advanced approach, including the Company and the Bank, were permitted to, and in the case of the Company and the Bank did, make a one-time permanent election to continue to exclude these items. ​ With respect to the Bank, the Capital Rules also revised the prompt corrective action (“PCA”) regulations established pursuant to Section 38 of the Federal Deposit Insurance Act, establishing the CET1 ratio at 6.5% for well-capitalized status and the Tier 1 capital ratio at 8.0% for well-capitalized status.
As of December 31, 2024, the Bank operates 185 full-service branches and 11 drive-thru only locations throughout 42 counties of Upstate New York, six counties of Northeastern Pennsylvania, 12 counties of Vermont, and one county of Western Massachusetts, offering a range of commercial and retail banking services. The Bank owns the following operating subsidiaries: The Carta Group, Inc.
(“HSI”), an introducing broker-dealer. ​ As of December 31, 2025, the Bank operates 192 full-service branches and 8 drive-thru only locations throughout 42 counties of Upstate New York, 9 counties of Northeastern Pennsylvania, 12 counties of Vermont, 1 county of Western Massachusetts and 1 county of Southern New Hampshire, offering a range of commercial and retail banking services.
The acquired companies provide insurance, wealth management and benefit plan recordkeeping services and are headquartered in New York, Pennsylvania and Florida. Total aggregate consideration for these acquisitions was $8.2 million, including $6.8 million in cash and $1.4 million in contingent consideration arrangements.
The assets were acquired from companies that provide insurance, employee benefit and wealth management services. Total aggregate consideration for these acquisitions was $11.2 million, including $4.5 million in cash and $6.7 million in contingent consideration arrangements.
To the extent the Bank is in need of regulatory capital, the Company would be expected to provide additional capital, including borrowings from the FRB for such purpose. Both the Company and the Bank are subject to extensive supervision and regulation, which focus on, among other things, the protection of depositors’ funds.
To the extent the Bank is in need of regulatory capital, the Company would be expected to provide additional capital, including borrowings from the FRB for such purpose.
The BSA includes a variety of recordkeeping and reporting requirements (such as currency transaction and suspicious activity reporting), as well as due diligence/know-your-customer documentation requirements. The Company has established a BSA/anti-money laundering program and taken other appropriate measures in order to comply with BSA requirements.
The BSA includes a variety of recordkeeping and reporting requirements (such as currency transaction and suspicious activity reporting), as well as due diligence/know-your-customer documentation requirements.
The Company and its subsidiaries are subject to the laws and regulations of the federal government and, where applicable, the states and jurisdictions in which they conduct business. The Company, as a financial holding company, is subject to extensive regulation and supervision by the Board of Governors of the Federal Reserve System (“FRB”) as its primary federal regulator.
The Company, as a financial holding company, is subject to extensive regulation and supervision by the Board of Governors of the Federal Reserve System (“FRB” or “Federal Reserve”) as its primary federal regulator.
Several of the provisions of the Dodd-Frank Act have the consequence of increasing the Bank’s expenses, decreasing its revenues, and changing the activities in which it chooses to engage.
The federal agencies have either completed or are in the process of completing these rules and regulations and have been given significant discretion in drafting such rules and regulations. Several of the provisions of the Dodd-Frank Act have the consequence of increasing the Bank’s expenses, decreasing its revenues, and changing the activities in which it chooses to engage.
The Company considers its relationship with its employees to be strong. None of the Company’s employees are represented by a labor union or are represented by a collective bargaining agreement. Oversight The Board of Directors (the “Board”) has ultimate responsibility for the strategy of the Company.
None of the Company’s employees are represented by a labor union or are represented by a collective bargaining agreement. ​ Oversight ​ The Board of Directors (the “Board”) has ultimate responsibility for the strategy of the Company. The Board’s Compensation Committee is responsible for the oversight of executive compensation, company culture, diversity, and employee engagement.
Additionally, third party relationship risk management and banking-as-a-service arrangements (including with respect to deposit products and services) have been topics of focus for federal bank regulators in 2024 and further rulemaking activity or guidance may be forthcoming. ​ Future Legislation and Regulation Laws, regulations and policies are continually under review by Congress and state legislatures and federal and state regulatory agencies.
Additionally, third-party relationship risk management and banking-as-a-service arrangements (including with respect to deposit products and services) have continued to be topics of focus for federal bank regulators in 2025 and further rulemaking activity or guidance may be forthcoming. ​ Guiding and Establishing National Innovation for U.S.
The Board’s Compensation Committee is responsible for the oversight of executive compensation, company culture, diversity, and employee engagement. The Company proactively identifies potential human capital related risks, such as succession planning, labor market shortage, increased labor costs, and employee retention strategies to mitigate those risks. Strong human capital management is viewed as integral to the Company’s business strategy.
The Company proactively identifies potential human capital related risks, such as succession planning, labor market shortage, increased labor costs, and employee retention strategies to mitigate those risks.
The Company believes that open and honest communication among employees, managers and executive leadership fosters an open and collaborative work environment where everyone can participate, develop, and thrive. In 2021, the Company launched the first company-wide employee engagement survey called “MyVoice”, in partnership with a global analytics and advisory firm.
The Company believes that open and honest communication among employees, managers and executive leadership fosters an open and collaborative work environment where everyone can participate, develop, and thrive. The Company continues to conduct a survey annually to maintain a feedback loop with employees.
Cyber Security The federal bank regulators have adopted rules providing for new notification requirements for banking organizations and their service providers for significant cybersecurity incidents.
Accordingly, the CRA continues to be administered under the regulatory framework in effect prior to the issuance of the October 2023 final rule. ​ Cyber Security ​ The federal bank regulators have adopted rules providing for new notification requirements for banking organizations and their service providers for significant cybersecurity incidents.
The CFPB is also authorized to prevent any institution under its authority from engaging in an unfair, deceptive, or abusive act or practice in connection with consumer financial products and services.
The CFPB is also authorized to prevent any institution under its authority from engaging in an unfair, deceptive, or abusive act or practice in connection with consumer financial products and services. ​ ​ 12 Table of Contents The GLB Act requires all financial institutions to adopt privacy policies, restrict the sharing of nonpublic customer data with nonaffiliated parties and establish procedures and practices to protect customer data from unauthorized access.
These restrictions include limits on loans to any individual insider and such insider's related interests and certain conditions that must be met before such loans can be made.
These restrictions are contained in the FRA and Federal Reserve Regulation O and apply to all insured depository institutions as well as their subsidiaries and holding companies. These restrictions include limits on loans to any individual insider and such insider's related interests and certain conditions that must be met before such loans can be made.
The rule does not govern overdraft fees on the payment of checks and certain other forms of bill payments. In May 2024, the SEC finalized amendments to require broker-dealers, investment companies and investment advisers registered with the SEC to adopt written policies and procedures for incident response programs to address unauthorized access to or use of customer information.
Certain of these rules are subject to legal challenge or further regulatory action and their ultimate scope, timing and applicability remain uncertain. ​ In May 2024, the SEC finalized amendments to require broker-dealers, investment companies and investment advisers registered with the SEC to adopt written policies and procedures for incident response programs to address unauthorized access to or use of customer information.
The Company aspires to empower its workforce to achieve their full potential and enable the development of job-related skills and personal growth in a culture that prioritizes employees’ wellbeing and fosters inclusivity. Employees feel safe to share ideas, receive support, and take risks without the fear of judgment or retaliation.
The Company empowers its workforce to achieve their full potential by supporting the development of job-related skills and personal growth within a culture that prioritizes employees’ wellbeing and fosters inclusivity.
Culture and Attracting a Talented Workforce The Company is committed to fostering an inclusive environment where there is a sense of purpose, belonging, and work ownership driven by the Company’s core values and service to customers.
The Company has invested in an on-line skills development platform that will expand and enhance the ability to build critical skills for today and in the future. ​ Culture and Attracting a Talented Workforce ​ The Company is committed to fostering an inclusive environment where there is a sense of purpose, belonging, and ownership, guided by the Company’s core values and dedication to serving customers.
Civil money penalties can be over $2 million for each day a violation continues. Transactions with Affiliates and Insiders The Bank is subject to Section 23A of the Federal Reserve Act, as amended (the "FRA") which places limits on, among other covered transactions, the amount of loans or extensions of credit to affiliates that may be made by the Bank.
The ultimate outcome, timing, and scope of any changes remain uncertain and could materially affect deposit flows, competitive dynamics, and regulatory costs. 9 Table of Contents Transactions with Affiliates and Insiders ​ The Bank is subject to Section 23A of the Federal Reserve Act, as amended (the "FRA") which places limits on, among other covered transactions, the amount of loans or extensions of credit to affiliates that may be made by the Bank.
PFC and OPFC II primarily act as investors in residential and commercial real estate activities. TMC provides cash management, investment, and treasury services to the Bank. CISI, Carta Group and Wealth Partners provide broker-dealer and investment advisory services. Nottingham provides asset management services to individuals, corporations, corporate pension and profit sharing plans, and foundations.
OneGroup is a full-service insurance agency offering personal and commercial lines of insurance and other risk management products and services. PFC and OPFC II primarily act as investors in residential and commercial real estate activities. TMC provides cash management, investment, and treasury services to the Bank. NISI and Wealth Partners provide broker-dealer and investment advisory services.
Prior to joining the Bank, he served as the Executive Vice President and President of Commercial Banking at NBT Bank, N.A. from December 2006 to August 2016. ​
He served as President, Commercial Banking from January 2024 through December 2025 and the President of the New England Region from January 2022 through December 2023. Prior to joining the Bank, he served as Executive Vice President and New England President for NBT Bank, N.A. from 2009 to 2020. ​ ​ ​ 17 Table of Contents
Insurance Services Through OneGroup, the Company offers personal and commercial lines of insurance and other risk management products and services. In addition, OneGroup offers employee benefit related services. OneGroup represents many leading and specialty insurance companies.
In addition, OneGroup offers employee benefit related services. OneGroup represents many leading and specialty insurance companies. ​ Wealth Management Services ​ Through the Bank’s Nottingham Trust division, NISI, Nottingham Advisors, and Wealth Partners, the Company provides wealth management, retirement planning, higher educational planning, fiduciary, risk management, trust services and personal financial planning services.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition, governmental proposals to permit student loan obligations to be discharged in bankruptcy proceedings could, if enacted into law, encourage certain of the Company’s customers to declare personal bankruptcy and thereby trigger defaults and charge-offs of consumer loans extended to those customers.
Biggest changeIn addition, unemployment or underemployment, sustained low economic growth, the level of or change in interest rates, tariffs, inflationary pressures or recessionary conditions could reduce deposit balances and diminish customer demand for the products and services offered by the Company’s businesses. 28 Table of Contents In addition, governmental proposals to permit student loan obligations to be discharged in bankruptcy proceedings could, if enacted into law, encourage certain of the Company’s customers to declare personal bankruptcy and thereby trigger defaults and charge-offs of consumer loans extended to those customers. ​ Pandemics, epidemics, disease outbreaks and other public health crises have disrupted the Company’s business and operations in the past, and future outbreaks could materially adversely impact the Company’s business, financial condition, liquidity and results of operations. ​ Pandemics, epidemics or disease outbreaks in the U.S. or globally, have disrupted, and may in the future disrupt, the Company’s business, which could materially affect results of operations, financial condition, liquidity and future expectations.
Reliance on inaccurate or misleading financial statements, credit reports or other information could have a material adverse impact on business and, in turn, the Company’s financial condition and results of operations. The Company may be required to record impairment charges related to goodwill, other intangible assets and the investment portfolio.
Reliance on inaccurate or misleading financial statements, credit reports or other information could have a material adverse impact on business and, in turn, the Company’s financial condition and results of operations. ​ The Company may be required to record impairment charges related to goodwill, other intangible assets and the investment portfolio. ​ The Company may be required to record impairment charges in respect to goodwill, other intangible assets and the investment portfolio.
Changes in regulations could subject the Company, among other things, to additional costs for compliance, reduced revenues and limit the types of financial services and products it can offer and/or increase the ability of non-banks to offer competing financial services and products. 20 Table of Contents Regulatory agencies, including the CPFB, may introduce new regulatory initiatives or pursue more aggressive enforcement policies with respect to a range of regulatory compliance matters.
Changes in regulations could subject the Company, among other things, to additional costs for compliance, reduced revenues and limit the types of financial services and products it can offer and/or increase the ability of non-banks to offer competing financial services and products. ​ ​ 20 Table of Contents Regulatory agencies may introduce new regulatory initiatives or pursue more aggressive enforcement policies with respect to a range of regulatory compliance matters.
Other conditions and factors that could materially adversely affect the Company’s liquidity and funding include a lack of market or customer confidence in, or negative news about, the Company or the financial services industry generally which also may result in a loss of deposits and/or negatively affect the Company’s ability to access the capital markets; the loss of customer deposits due to reductions in customer savings rates, increased spending due to inflation, or other factors including shifting to alternative investments; counterparty availability; interest rate fluctuations; general economic conditions; and the legal, regulatory, accounting and tax environments governing the Company’s funding transactions.
Other conditions and factors that could materially adversely affect the Company’s liquidity and funding include a lack of market or customer confidence in, or negative news about, the Company or the financial services industry generally which also may result in a loss of deposits and/or negatively affect the Company’s ability to access the capital markets; the loss of customer deposits due to reductions in customer savings rates, increased spending due to inflation, or other factors including shifting to alternative investments such as stablecoins; counterparty availability; interest rate fluctuations; general economic conditions; and the legal, regulatory, accounting and tax environments governing the Company’s funding transactions.
In particular, U.S. markets may be affected by the new government administration, including but not limited to government agency staff reductions and related operating issues, uncertainty related to policy changes that directly or indirectly impact consumer spending and business investment, the level and volatility of interest rates, availability and market conditions of financing, economic growth, historically high levels of inflation, supply chain disruptions, consumer spending, employment levels, labor shortages, wage escalation or stagnation, changes in home prices, commercial property values, the growth of global trade and commerce, the availability and cost of capital and credit, and investor sentiment and confidence.
In particular, U.S. markets may be affected by the current government administration and the domestic political environment, including but not limited to government agency staff reductions and related operating issues, uncertainty related to policy changes that directly or indirectly impact consumer spending and business investment, the level and volatility of interest rates, availability and market conditions of financing, economic growth, historically high levels of inflation, supply chain disruptions, consumer spending, employment levels, labor shortages, wage escalation or stagnation, changes in home prices, commercial property values, the growth of global trade and commerce, the availability and cost of capital and credit, and investor sentiment and confidence.
See “Supervision and Regulation” for more information about the regulations to which the Company is subject. Federal banking agencies periodically conduct examinations of the Company’s business, including compliance with laws and regulations; the failure to comply with any supervisory actions to which the Company becomes subject to as a result of such examinations could adversely affect the Company.
See “Supervision and Regulation” for more information about the regulations to which the Company is subject. ​ Federal banking agencies periodically conduct examinations of the Company’s business, including compliance with laws and regulations; the failure to comply with any supervisory actions to which the Company becomes subject to as a result of such examinations could adversely affect the Company. ​ Federal bank regulatory authorities periodically conduct comprehensive examinations of the Company’s business, including compliance with laws and regulations.
Actions taken by the Federal Reserve Board, including changes in its target funds rate, balance sheet management, and lending facilities are beyond the Company’s control and difficult to predict. These actions can affect interest rates and the value of financial instruments and other assets and liabilities and can impact the Company’s borrowers.
Actions taken by the FRB, including changes in its target funds rate, balance sheet management, and lending facilities are beyond the Company’s control and difficult to predict. These actions can affect interest rates and the value of financial instruments and other assets and liabilities and can impact the Company’s borrowers.
The Company’s insurance revenues and profitability may also be adversely affected by new laws and regulatory developments impacting the healthcare and insurance markets as well as the financial stability of insurance carriers. Changes in the equity markets could materially affect the level of assets under management and the demand for other fee-based services and could adversely affect the Company’s earnings.
The Company’s insurance revenues and profitability may also be adversely affected by new laws and regulatory developments impacting the healthcare and insurance markets as well as the financial stability of insurance carriers. ​ Changes in the equity markets could materially affect the level of assets under management and the demand for other fee-based services and could adversely affect the Company’s earnings. ​ Economic downturns could affect the volume of income from and demand for fee-based services.
Increases in mortgage loan sales would have the effect of increasing fee income but could adversely impact the estimated fair value of the Company’s mortgage servicing rights as the rate of loan prepayments increase. In higher interest rate environments, the demand for mortgage loans and refinancing activity will generally be lower.
In lower interest rate environments, the demand for mortgage loans and refinancing activity will tend to increase. Increases in mortgage loan sales would have the effect of increasing fee income but could adversely impact the estimated fair value of the Company’s mortgage servicing rights as the rate of loan prepayments increase.
Failure to successfully keep pace with technological changes affecting the financial services industry could have a material adverse impact on the Company’s financial condition and results of operations. The Company is exposed to fraud in many aspects of the services and products that it provides.
Failure to successfully keep pace with technological changes affecting the financial services industry could have a material adverse impact on the Company’s financial condition and results of operations. ​ The Company is exposed to fraud in many aspects of the services and products that it provides. ​ The Company offers a wide variety of products and services many of which could be vulnerable to fraud.
Accordingly, the local economic conditions in these areas have a significant impact on the demand for the Company’s products and services as well as the ability of the Company’s customers to repay loans, the value of the collateral securing loans and the stability of the Company’s deposit funding sources. An economic downturn in these markets could negatively impact the Company.
Accordingly, the local economic conditions in these areas have a significant impact on the demand for the Company’s products and services as well as the ability of the Company’s customers to repay loans, the value of the collateral securing loans and the stability of the Company’s deposit funding sources.
This could lead to a material adverse effect on the Company’s financial condition and results of operations through resulting increases in the Company’s allowance for credit losses, provision for credit losses and net charge - offs. ​ 19 Table of Contents Legal, Regulatory, and Compliance Risk The Company is or may become involved in lawsuits, legal proceedings, information-gathering requests, investigations, and proceedings by governmental agencies or other parties that may lead to adverse consequences.
This could lead to a material adverse effect on the Company’s financial condition and results of operations through resulting increases in the Company’s allowance for credit losses, provision for credit losses and net charge-offs. ​ ​ 19 Table of Contents Legal, Regulatory, and Compliance Risk ​ The Company is or may become involved in lawsuits, legal proceedings, information-gathering requests, investigations, and proceedings by governmental agencies or other parties that may lead to adverse consequences. ​ As a participant in the financial services industry, many aspects of the Company’s business involve substantial risk of legal liability.
Management’s Discussion and Analysis of Financial Condition and Results of Operations, under Critical Accounting Policies and Estimates. ​ 27 Table of Contents The Company’s business and results of operations may be adversely affected by the U.S. and global financial markets, fiscal, monetary, and regulatory policies, and economic conditions generally.
Management’s Discussion and Analysis of Financial Condition and Results of Operations, under Critical Accounting Policies and Estimates. ​ ​ 27 Table of Contents The Company’s business and results of operations may be adversely affected by the U.S. and global financial markets, fiscal, monetary, and regulatory policies, and economic conditions generally. ​ General political, economic, and social conditions in the U.S. and in countries abroad affect markets in the U.S. and ultimately the Company’s business.
The foregoing and other factors may cause the Company’s operational losses to increase as a result. 23 Table of Contents The Company is subject to a variety of operational risks, including reputational risk, legal and compliance risk, the risk of fraud or theft by employees or outsiders, which may adversely affect the Company’s business and results of operations.
The foregoing and other factors may cause the Company’s operational losses to increase as a result. ​ ​ 23 Table of Contents The Company is subject to a variety of operational risks, including reputational risk, legal and compliance risk, the risk of fraud or theft by employees or outsiders, which may adversely affect the Company’s business and results of operations. ​ The Company is exposed to many types of operational risks, including reputational risk, legal and compliance risk, the risk of fraud or theft by employees or outsiders, unauthorized transactions by employees, operational errors, or a digital or cybersecurity event or breach.
If the Company’s policies, procedures and systems are deemed to be deficient or the policies, procedures and systems of the financial institutions that the Company acquires in the future are deficient, the Company would be subject to liability, including fines and regulatory actions such as restrictions on the Company’s ability to pay dividends and the necessity to obtain regulatory approvals to proceed with certain aspects of the Company’s business plan, including acquisition plans, which would negatively impact the Company’s business, financial condition and results of operations.
Federal and state bank regulators also focus on compliance with the Bank Secrecy Act and anti-money laundering regulations. ​ If the Company’s policies, procedures and systems are deemed to be deficient or the policies, procedures and systems of the financial institutions that the Company acquires in the future are deficient, the Company would be subject to liability, including fines and regulatory actions such as restrictions on the Company’s ability to pay dividends and the necessity to obtain regulatory approvals to proceed with certain aspects of the Company’s business plan, including acquisition plans, which would negatively impact the Company’s business, financial condition and results of operations.
The market price of the Company’s common stock may fluctuate significantly in response to a number of other factors including, but not limited to: ● Changes in securities analysts’ expectations of financial performance; ● Volatility of stock market prices and volumes; ● Incorrect information or speculation; ● Changes in industry valuations; ● Variations in operating results from general expectations; ● Actions taken against the Company by various regulatory agencies; ● Changes in authoritative accounting guidance by the Financial Accounting Standards Board or other regulatory agencies; ● Changes in general domestic economic conditions such as inflation rates, tax rates, unemployment rates, oil prices, labor and healthcare cost trend rates, recessions, and changing government policies, laws and regulations; and ● Severe weather, natural disasters, acts of war or terrorism and other external events.
However, there is a risk that credit losses could be larger than currently anticipated, thus adversely affecting earnings. ​ General Risks ​ Trading activity in the Company’s common stock could result in material price fluctuations. ​ The market price of the Company’s common stock may fluctuate significantly in response to a number of other factors including, but not limited to: ​ ● Changes in securities analysts’ expectations of financial performance; ● Volatility of stock market prices and volumes; ● Incorrect information or speculation; ● Changes in industry valuations; ● Variations in operating results from general expectations; ● Actions taken against the Company by various regulatory agencies; ● Changes in authoritative accounting guidance by the Financial Accounting Standards Board or other regulatory agencies; ● Changes in general domestic economic conditions such as inflation rates, tax rates, unemployment rates, oil prices, labor and healthcare cost trend rates, recessions, and changing government policies, laws and regulations; and ● Severe weather, natural disasters, acts of war or terrorism and other external events. ​
Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences. Basel III capital rules generally require insured depository institutions and their holding companies to hold more capital, which could limit the Company’s ability to pay dividends, engage in share repurchases and pay discretionary bonuses.
Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences. ​ Basel III capital rules generally require insured depository institutions and their holding companies to hold more capital, which could limit the Company’s ability to pay dividends, engage in share repurchases and pay discretionary bonuses. ​ The FRB, the FDIC, and the OCC adopted final rules for the Basel III capital framework which address the regulatory risk-based capital rules applicable to the Company.
The Company is also directly subject to the requirements of entities that set and interpret the accounting standards such as the Financial Accounting Standards Board, and indirectly subject to the actions and interpretations of the Public Company Accounting Oversight Board, which establishes auditing and related professional practice standards for registered public accounting firms and inspects registered firms to assess their compliance with certain laws, rules, and professional standards in public company audits.
The Company’s business, results of operations or competitive position may be adversely affected as a result. ​ The Company is also directly subject to the requirements of entities that set and interpret the accounting standards such as the Financial Accounting Standards Board, and indirectly subject to the actions and interpretations of the Public Company Accounting Oversight Board, which establishes auditing and related professional practice standards for registered public accounting firms and inspects registered firms to assess their compliance with certain laws, rules, and professional standards in public company audits.
If the Company is unable to adequately address corporate responsibility matters that are of importance to stakeholders, it could negatively impact the Company’s reputation and the Company’s business results. Operational Risk The Company continually encounters technological change and the failure to understand and adapt to these changes could have a negative impact on the business.
If the Company is unable to adequately address corporate responsibility matters that are of importance to stakeholders, it could negatively impact the Company’s reputation and the Company’s business results. ​ Operational Risk ​ The Company continually encounters technological change and the failure to understand and adapt to these changes could have a negative impact on the business. ​ The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services.
The Company faces a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations. The federal Bank Secrecy Act, PATRIOT Act and other laws and regulations require financial institutions, among other duties, to institute and maintain effective anti-money laundering programs and file suspicious activity and currency transaction reports as appropriate.
Such actions could have a material adverse effect on the Company’s business, financial condition and results of operations. ​ The Company faces a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations. ​ The federal Bank Secrecy Act, PATRIOT Act and other laws and regulations require financial institutions, among other duties, to institute and maintain effective anti-money laundering programs and file suspicious activity and currency transaction reports as appropriate.
Changes to existing U.S. laws and regulatory policies and evolving priorities, including those related to financial regulation, consumer compliance, taxation, fiscal policy, trade policy such as tariffs, climate change, and healthcare, may adversely impact U.S. or global economic activity and the Company’s customers and its earnings and operations.
Federal government spending, new or higher U.S. imposed tariffs on imports and retaliatory tariffs imposed by foreign governments on U.S. exports. ​ Changes to existing U.S. laws and regulatory policies and evolving priorities, including those related to financial regulation, consumer compliance, taxation, fiscal policy, trade policy such as tariffs, climate change, and healthcare, may adversely impact U.S. or global economic activity and the Company’s customers and its earnings and operations.
The Company offers a wide variety of products and services many of which could be vulnerable to fraud. The sophistication and skills of bad actors are increasing in scope and capabilities. Although the Company has various processes and controls in place to mitigate fraud, the risk cannot be eliminated and certain exposures are outside the Company’s control.
The sophistication and skills of bad actors are increasing in scope and capabilities. Although the Company has various processes and controls in place to mitigate fraud, the risk cannot be eliminated and certain exposures are outside the Company’s control.
Conditions in the commercial real estate market could adversely affect the Company’s business. ​ The deterioration of the commercial real estate market across the nation may negatively affect the economies where the Company operates and may result in customers engaged in the commercial real estate having greater difficulties fulfilling their financial responsibilities to the Company.
Decreases in mortgage loan sales would have the effect of decreasing fee income opportunities. ​ Conditions in the commercial real estate market could adversely affect the Company’s business. ​ The deterioration of the commercial real estate market across the nation may negatively affect the economies where the Company operates and may result in customers engaged in the commercial real estate having greater difficulties fulfilling their financial responsibilities to the Company.
Finally, technological change is influencing how individuals and firms conduct their financial affairs and changing the delivery channels for financial services, with the result that the Company may have to contend with a broader range of competitors including many that are not located within the geographic footprint of the Bank’s branch network.
Finally, technological change is influencing how individuals and firms conduct their financial affairs and changing the delivery channels for financial services, with the result that the Company may have to contend with a broader range of competitors including many that are not located within the geographic footprint of the Bank’s branch network. ​ The Company may be adversely affected by the soundness of other financial institutions. ​ Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships.
The financial services industry is highly competitive and creates competitive pressures that could adversely affect the Company’s revenue and profitability. The financial services industry in which the Company operates is highly competitive.
An economic downturn in these markets could negatively impact the Company. ​ The financial services industry is highly competitive and creates competitive pressures that could adversely affect the Company’s revenue and profitability. ​ The financial services industry in which the Company operates is highly competitive.
If the Company provides inadequate succession planning or is unable to continue to retain and attract qualified employees, the Company’s performance, including its competitive position, could have a materially adverse effect. External and Market-Related Risk Regional economic factors may have an adverse impact on the Company’s business.
If the Company provides inadequate succession planning or is unable to continue to retain and attract qualified employees, the Company’s performance, including its competitive position, could have a materially adverse effect. ​ External and Market-Related Risk ​ Regional economic factors may have an adverse impact on the Company’s business. ​ The Company’s main markets are currently located in the states of New York, Pennsylvania, Vermont, Massachusetts, and New Hampshire.
This regulatory environment is increasingly challenging and may present material obligations and risks to the Company’s business, including significantly expanded compliance burdens, costs and enforcement risks. The Company relies on third-party service providers, which could expose the Company to additional cybersecurity risks.
This regulatory environment is increasingly challenging and may present material obligations and risks to the Company’s business, including significantly expanded compliance burdens, costs and enforcement risks. ​ The Company relies on third-party service providers, which could expose the Company to additional cybersecurity risks. ​ Third-party service providers provide key components of the Company’s business infrastructure, including certain data processing, cloud computing, and information services.
If the Company becomes subject to such regulatory actions, the Company’s business, financial condition, earnings and reputation could be adversely affected. The Company is subject to numerous laws designed to protect consumers, including the Community Reinvestment Act and fair lending laws, and the failure to comply with these laws could lead to a wide variety of sanctions.
If the Company becomes subject to such regulatory actions, the Company’s business, financial condition, earnings and reputation could be adversely affected. ​ The Company is subject to numerous laws designed to protect consumers, including the Community Reinvestment Act and fair lending laws, and the failure to comply with these laws could lead to a wide variety of sanctions. ​ The Community Reinvestment Act ("CRA") requires the OCC to assess the Company’s performance in meeting the credit needs of the communities the Company serves, including low- and moderate-income neighborhoods.
The Risk Committee of the Board of Directors (the "Board") oversees the Company’s efforts to manage risks through actions such as reviewing the Bank’s credit risk, liquidity and interest rate risk, monitoring the quality and risk profile of the Bank’s loan portfolio and credit administration, evaluating the Company’s securities portfolio to ensure that the Company’s objectives related to diversification, asset quality, liquidity, profitability and pledging are met, overseeing the Company’s enterprise risk management functions and overseeing the Company’s information security and cybersecurity functions. 17 Table of Contents Risks Related to the Company’s Business Interest Rate Risk Changes in interest rates affect the Company’s profitability, assets and liabilities.
The Risk Committee of the Board of Directors (the “Board”) oversees the Company’s efforts to manage risks through actions such as reviewing the Bank’s credit risk, liquidity and interest rate risk, monitoring the quality and risk profile of the Bank’s loan portfolio and credit administration, evaluating the Company’s securities portfolio to ensure that the Company’s objectives related to diversification, asset quality, liquidity, profitability and pledging are met, overseeing the Company’s enterprise risk management functions and overseeing the Company’s information security and cybersecurity functions. ​ Risks Related to the Company’s Business ​ Interest Rate Risk ​ Changes in interest rates affect the Company’s profitability, assets and liabilities. ​ The Company’s income and cash flow depends to a great extent on the difference between the interest earned on loans and investment securities, and the interest paid on deposits and borrowings.
Further, the asset quality or other financial characteristics of a company may deteriorate after the acquisition agreement is signed or after the acquisition closes. A portion of the Company’s loan portfolio was acquired primarily through whole-bank acquisitions and was not underwritten by the Company at origination.
Further, the asset quality or other financial characteristics of a company may deteriorate after the acquisition agreement is signed or after the acquisition closes. ​ ​ 29 Table of Contents A portion of the Company’s loan portfolio was acquired primarily through whole-bank acquisitions and was not underwritten by the Company at origination. ​ At December 31, 2025, 7% of the loan portfolio was acquired and was not underwritten by the Company at origination, and therefore is not necessarily reflective of the Company’s historical credit risk experience.
Thus, the Company’s ultimate losses may be higher than the amounts accrued for legal loss contingencies, which could adversely affect the Company’s financial condition and results of operations. The Company operates in a highly regulated environment and may be adversely affected by changes in laws and regulations or the interpretation and examination of existing laws and regulations.
Thus, the Company’s ultimate losses may be higher than the amounts accrued for legal loss contingencies, which could adversely affect the Company’s financial condition and results of operations. ​ The Company operates in a highly regulated environment and may be adversely affected by changes in laws and regulations or the interpretation and examination of existing laws and regulations. ​ The Company and its subsidiaries are subject to extensive state and federal regulation, supervision and legislation that govern nearly every aspect of its operations.
The Company has policies and procedures designed to prevent or limit the effect of the possible failure, interruption or security breach of its information systems; however, any such failure, interruption or security breach could adversely affect the Company’s business and results of operations through loss of assets or by requiring it to expend significant resources to correct the defect, as well as exposing the Company to customer dissatisfaction and civil litigation, regulatory fines or penalties or losses not covered by insurance.
The Company has policies and procedures designed to prevent or limit the effect of the possible failure, interruption or security breach of its information systems; however, any such failure, interruption or security breach could adversely affect the Company’s business and results of operations through loss of assets or by requiring it to expend significant resources to correct the defect, as well as exposing the Company to customer dissatisfaction and civil litigation, regulatory fines or penalties or losses not covered by insurance. ​ Evolving data security and privacy requirements could increase the Company’s costs and expose it to additional operational, compliance, and legal risks. ​ The Company’s business requires the secure processing and storage of sensitive information relating to its customers, employees, business partners, and others.
If personal, nonpublic, confidential, or proprietary information of customers in the Company’s possession were to be mishandled or misused, the Company could suffer significant regulatory consequences, reputational damage, and financial loss.
Actual or alleged conduct by the Company can result in negative public opinion about its business and financial loss. ​ If personal, nonpublic, confidential, or proprietary information of customers in the Company’s possession were to be mishandled or misused, the Company could suffer significant regulatory consequences, reputational damage, and financial loss.
Changes to the regulatory laws governing these businesses, or changes in regulatory policy or a regulator's interpretation of a law or regulation, could affect the Company’s ability to deliver or expand its services and adversely impact its operating and financial condition.
Changes to the regulatory laws governing these businesses, or changes in regulatory policy or a regulator's interpretation of a law or regulation, could affect the Company’s ability to deliver or expand its services and adversely impact its operating and financial condition. ​ The Dodd-Frank Act, as amended by the Economic Growth Act, instituted major changes to the banking and financial institutions regulatory regimes in the financial services sector.
The Company may face increased costs to address these matters, which could have an adverse impact on the Company’s business and financial condition.
These changes may include more compliance requirements or changes in expectations by stakeholders. The Company may face increased costs to address these matters, which could have an adverse impact on the Company’s business and financial condition.
These regulations, along with the currently existing tax, accounting, securities, insurance, and monetary laws, regulations, rules, standards, policies and interpretations, control the methods by which financial institutions and their holding companies conduct business, engage in strategic and tax planning, implement strategic initiatives, and govern financial reporting.
These regulations, along with the currently existing tax, accounting, securities, insurance, and monetary laws, regulations, rules, standards, policies and interpretations, control the methods by which financial institutions and their holding companies conduct business, engage in strategic and tax planning, implement strategic initiatives, and govern financial reporting. ​ While the Company has developed policies and procedures designed to assist in compliance with these laws and regulations, no assurance is given that compliance policies and procedures will be effective.
Any increase in the allowance for credit losses or in loan charge-offs as required by such regulatory authorities could have a material adverse effect on the Company’s financial condition and results of operations. Mortgage banking income may experience significant volatility.
Any increase in the allowance for credit losses or in loan charge-offs as required by such regulatory authorities could have a material adverse effect on the Company’s financial condition and results of operations. ​ Mortgage banking income may experience significant volatility. ​ Mortgage banking income is highly influenced by the level and direction of mortgage interest rates, real estate and refinancing activity and elections made by the Company to sell or retain mortgage production.
Market volatility and the potential to lead customers to liquidate investments, as well as lower asset values, can reduce the level of assets under management and administration and thereby decrease the Company’s investment management and employee benefit trust revenues. Financial services companies depend on the accuracy and completeness of information about customers and counterparties.
Market volatility and the potential to lead customers to liquidate investments, as well as lower asset values, can reduce the level of assets under management and administration and thereby decrease the Company’s investment management and employee benefit trust revenues. ​ Financial services companies depend on the accuracy and completeness of information about customers and counterparties. ​ In deciding whether to extend credit or enter into other transactions, the Company may rely on information furnished by or on behalf of customers and counterparties, including financial statements, credit reports and other financial information.
Recent negative developments affecting the banking industry have eroded customer confidence in the banking system and may have adverse impacts on the Company’s business. ​ The high-profile collapse of certain U.S. banks has generated significant market volatility among publicly traded bank holding companies and, in particular, community and regional banks.
Any new pandemic or other public health crisis could have a material impact on the Company’s business, financial condition and results of operations going forward. ​ Certain negative developments affecting the banking industry have eroded customer confidence in the banking system and may have adverse impacts on the Company’s business. ​ The high-profile collapse of certain U.S. banks has generated significant market volatility among publicly traded bank holding companies and, in particular, community and regional banks.
As a participant in the financial services industry, many aspects of the Company’s business involve substantial risk of legal liability. The Company and its subsidiaries have been named or threatened to be named as defendants in various lawsuits arising from its or its subsidiaries’ business activities (and in some cases from the activities of acquired companies).
The Company and its subsidiaries have been named or threatened to be named as defendants in various lawsuits arising from its or its subsidiaries’ business activities (and in some cases from the activities of acquired companies).
The Dodd-Frank Act, as amended by the Economic Growth Act, instituted major changes to the banking and financial institutions regulatory regimes in the financial services sector. The ongoing effects of the Dodd-Frank Act, as well as continued rule-making and possible future changes to the regulatory requirements, may substantially impact the Company’s and the Bank’s operations.
The ongoing effects of the Dodd-Frank Act, as well as continued rule-making and possible future changes to the regulatory requirements, may substantially impact the Company’s and the Bank’s operations.
Failures of certain third-party service providers to provide contracted services could adversely affect the Company’s ability to deliver products and services to customers and cause the Company to incur significant expense. 25 Table of Contents The Company’s ability to attract and retain qualified employees is critical to the success of its business, and failure to do so may have a materially adverse effect on the Company’s performance.
Failures of certain third-party service providers to provide contracted services could adversely affect the Company’s ability to deliver products and services to customers and cause the Company to incur significant expense. ​ ​ 25 Table of Contents The Company’s ability to attract and retain qualified employees is critical to the success of its business, and failure to do so may have a materially adverse effect on the Company’s performance. ​ The Company’s employees are its most important resource, and in many areas of the financial services industry, competition for qualified personnel is intense and certain of the Company’s competitors have directly targeted its employees, including competitors who are outside of the Company’s geographic footprint offering work from home opportunities.
The Company performed extensive credit due diligence prior to each acquisition and marked the loans to fair value upon acquisition, with such fair valuation considering expected credit losses that existed at the time of acquisition. However, there is a risk that credit losses could be larger than currently anticipated, thus adversely affecting earnings.
The Company performed extensive credit due diligence prior to each acquisition and marked the loans to fair value upon acquisition, with such fair valuation considering expected credit losses that existed at the time of acquisition.
Economic downturns could affect the volume of income from and demand for fee-based services. Revenue from the wealth management and employee benefit trust businesses depends in large part on the level of assets under management and administration.
Revenue from the wealth management and employee benefit trust businesses depends in large part on the level of assets under management and administration.
Failure to comply with such laws or to maintain sufficient governance and control structures could result in potentially significant regulatory and/or governmental investigations and/or actions, litigation, fines, sanctions, ongoing regulatory monitoring, customer attrition, decreases in the use of the Company’s products and services, and damage to the Company’s reputation and brand.
Failure to comply with such laws or to maintain sufficient governance and control structures could result in potentially significant regulatory and/or governmental investigations and/or actions, litigation, fines, sanctions, ongoing regulatory monitoring, customer attrition, decreases in the use of the Company’s products and services, and damage to the Company’s reputation and brand. ​ Changes in stakeholder expectations related to corporate responsibility matters could negatively affect the Company’s operating results. ​ There are changes in public awareness and concern by various stakeholders on a variety of corporate responsibility matters.
Many of these transactions expose the Company to credit risk in the event a counterparty or client fails to perform its contractual obligations.
The Company has exposure to many different industries and counterparties, and routinely executes transactions with counterparties in the financial services industry. Many of these transactions expose the Company to credit risk in the event a counterparty or client fails to perform its contractual obligations.
The business strategy of the Company includes growth through acquisition and the opening of de novo branches to expand its business footprint. Recently completed and future acquisitions and de novo branches will be accompanied by the risks commonly encountered in acquisitions and expansion into near geographic areas.
Recently completed and future acquisitions and de novo branches will be accompanied by the risks commonly encountered in acquisitions and expansion into near geographic areas.
Such mishandling or misuse could include, for example, if such information were erroneously provided to parties who are not permitted to have the information, either by fault of its systems, employees, or counterparties, or where such information is intercepted or otherwise inappropriately taken by third parties.
Such mishandling or misuse could include, for example, if such information were erroneously provided to parties who are not permitted to have the information, either by fault of its systems, employees, or counterparties, or where such information is intercepted or otherwise inappropriately taken by third parties. ​ Because the nature of the financial services business involves a high volume of transactions, certain errors may be repeated or compounded before they are discovered and successfully rectified.
Negative public opinion can adversely affect the Company’s ability to attract and keep customers and can expose the Company to litigation and regulatory action. Actual or alleged conduct by the Company can result in negative public opinion about its business and financial loss.
Negative public opinion can adversely affect the Company’s ability to attract and keep customers and can expose the Company to litigation and regulatory action.
The Company’s main markets are located in the states of New York, Pennsylvania, Vermont, Massachusetts, and New Hampshire. Most of the Company’s customers are individuals and small and medium-sized businesses which are dependent upon the regional economy.
Most of the Company’s customers are individuals and small and medium-sized businesses which are dependent upon the regional economy.
The Company’s financial statements are based, in part, on assumptions and estimates, which, if incorrect or conditions change, could cause unexpected losses in the future. ​ Pursuant to accounting principles generally accepted in the United States, the Company is required to use certain assumptions and estimates in preparing its financial statements, including the allowance for credit losses, pension, post-retirement and other employee benefit plans, goodwill and other intangible assets, reserves related to litigation and other items.
Numerous factors, including lack of liquidity for resale of certain investment securities, absence of reliable pricing information for investment securities, the economic condition of state and local governments, adverse changes in the business climate, adverse actions by regulators, unanticipated changes in the competitive environment or a decision to change the operations or dispose of an operating unit could have a negative effect on the investment portfolio, goodwill or other intangible assets in future periods. ​ The Company’s financial statements are based, in part, on assumptions and estimates, which, if incorrect or conditions change, could cause unexpected losses in the future. ​ Pursuant to accounting principles generally accepted in the United States, the Company is required to use certain assumptions and estimates in preparing its financial statements, including the allowance for credit losses, pension, post-retirement and other employee benefit plans, goodwill and other intangible assets, reserves related to litigation and other items.
The Company may also be required to add additional compliance personnel or incur other significant compliance-related expenses. The Company’s business, results of operations or competitive position may be adversely affected as a result.
The Company may also be required to add additional compliance personnel or incur other significant compliance-related expenses.
The Company’s liquidity and ability to fund and run its business could be materially adversely affected by a variety of conditions and factors, including financial and credit market disruptions and volatility, a lack of market or customer confidence in financial markets in general, or deposit competition based on interest rates, which may result in a loss of customer deposits or outflows of cash or collateral and/or adversely affect the Company’s ability to access capital markets on favorable terms.
Although management believes it has implemented asset and liability management strategies to reduce the potential effects of changes in interest rates on the results of operations, any substantial, unexpected, prolonged change in market interest rates could have a material adverse effect on the financial condition and results of operations. ​ Liquidity Risk ​ The Company must maintain adequate sources of funding and liquidity to meet regulatory expectations, support its operations and fund outstanding liabilities. ​ The Company’s liquidity and ability to fund and run its business could be materially adversely affected by a variety of conditions and factors, including financial and credit market disruptions and volatility, a lack of market or customer confidence in financial markets in general, or deposit competition based on interest rates, which may result in a loss of customer deposits or outflows of cash or collateral and/or adversely affect the Company’s ability to access capital markets on favorable terms.
The Company’s future success depends, in part, upon its ability to address the needs of its customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in the Company’s operations. The Company or its third-party vendors may incorporate artificial intelligence technology into certain business processes, services, or products.
The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs. The Company’s future success depends, in part, upon its ability to address the needs of its customers by using technology to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in the Company’s operations.
The occurrence of any of these risks could result in a diminished ability to operate the Company’s business, potential liability to clients, reputational damage, and regulatory intervention, which could adversely affect the Company’s business, financial condition, and results of operations, perhaps materially.
The occurrence of any of these risks could result in a diminished ability to operate the Company’s business, potential liability to clients, reputational damage, and regulatory intervention, which could adversely affect the Company’s business, financial condition, and results of operations, perhaps materially. ​ The Company’s information systems may experience an interruption or security breach and expose the Company to additional operational, compliance, cybersecurity and legal risks. ​ The Company relies heavily on existing and emerging communications and information systems to conduct its business.
Although the Company establishes accruals for legal proceedings when information related to the loss contingencies represented by those matters indicates both that a loss is probable and that the amount of loss can be reasonably estimated, the Company does not have accruals for all legal or regulatory proceedings where it faces a risk of loss.
The results of such proceedings could lead to delays in or prohibition to acquire other companies, significant penalties, including monetary penalties, dividend and/or asset growth restrictions, damages, adverse judgments, settlements, fines, injunctions, restrictions on the way in which the Company conducts its business, or reputational harm. ​ Although the Company establishes accruals for legal proceedings when information related to the loss contingencies represented by those matters indicates both that a loss is probable and that the amount of loss can be reasonably estimated, the Company does not have accruals for all legal or regulatory proceedings where it faces a risk of loss.
Private parties may also have the ability to challenge an institution’s performance under fair lending laws in private class action litigation. Such actions could have a material adverse effect on the Company’s business, financial condition and results of operations.
Private parties may also have the ability to challenge an institution’s performance under fair lending laws in private class action litigation.
Any of these developments could adversely affect the Company’s consumer and commercial businesses, its customers, its securities portfolios, including the risk of lower re-investment rates within those portfolios, its level of loan net charge-offs and provision for credit losses, the carrying value of its deferred tax assets, its capital levels, its liquidity and its results of operations. 28 Table of Contents The Company’s consumer businesses can be negatively affected by adverse economic conditions and governmental policies.
Significant fiscal policy changes and/or initiatives may also raise the federal debt, affect businesses and household after-tax incomes and increase uncertainty surrounding the formulation and direction of U.S. monetary policy and volatility of interest rates. ​ Any of these developments could adversely affect the Company’s consumer and commercial businesses, its customers, its securities portfolios, including the risk of lower re-investment rates within those portfolios, its level of loan net charge-offs and provision for credit losses, the carrying value of its deferred tax assets, its capital levels, its liquidity and its results of operations. ​ The Company’s consumer businesses can be negatively affected by adverse economic conditions and governmental policies. ​ The Company’s consumer businesses are particularly affected by U.S. economic conditions, including changes in personal and household incomes, unemployment or underemployment, the level of or change in interest rates, increased housing and automobile prices, the level of inflation and its effect on prices for goods and services, consumer and small business confidence levels, and changes in consumer spending or in the level of consumer debt.
Adverse regulatory findings or new regulatory requirements arising from the recent bank failures could increase the Company’s expenses, reduce the Company’s revenues and affect the Company’s operations. ​ The Company anticipates increased regulatory scrutiny, within the course of routine examinations and new regulations designed to address the recent negative developments in the banking industry, all of which may increase the Company’s costs of doing business and reduce its profitability. ​ 29 Table of Contents Risk Related to Acquisition and De Novo Expansion Activity Acquisition and de novo expansion activity could adversely affect the Company’s financial condition and result of operations.
While the federal regulators have made statements ensuring that depositors of these failed banks would have access to their deposits, including uninsured deposit accounts, there is no guarantee that such actions will be successful in restoring customer confidence in community and regional banks and the banking system more broadly or that any future bank failures will receive the same treatment. ​ Adverse regulatory findings or new regulatory requirements arising from the recent bank failures could increase the Company’s expenses, reduce the Company’s revenues and affect the Company’s operations. ​ The Company anticipates increased regulatory scrutiny, within the course of routine examinations and new regulations designed to address certain negative developments in the banking industry, all of which may increase the Company’s costs of doing business and reduce its profitability. ​ Risk Related to Acquisition and De Novo Expansion Activity ​ Acquisition and de novo expansion activity could adversely affect the Company’s financial condition and result of operations. ​ The business strategy of the Company includes growth through acquisition and the opening of de novo branches to expand its business footprint.
The ability of the Company to satisfy its obligations and pay cash dividends to its shareholders is primarily dependent on the earnings of and dividends from the Bank and BPAS. However, payment of dividends by the Bank is limited by dividend restrictions and capital requirements imposed by bank regulations.
However, payment of dividends by the Bank is limited by dividend restrictions and capital requirements imposed by bank regulations.
The Community Reinvestment Act (“CRA”) requires the OCC to assess the Company’s performance in meeting the credit needs of the communities the Company serves, including low- and moderate-income neighborhoods. If the OCC determines that the Company needs to improve the Company’s performance or are in substantial non-compliance with CRA requirements, various adverse regulatory consequences may ensue.
If the OCC determines that the Company needs to improve the Company’s performance or are in substantial non-compliance with CRA requirements, various adverse regulatory consequences may ensue. In addition, the Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose nondiscriminatory lending requirements on financial institutions.
Regulation in the areas of privacy, data protection, data management, resiliency, data transfer, third party oversight, account access, artificial intelligence and machine learning and information security and cybersecurity could increase the Company’s costs and affect or limit business opportunities and how the Company collects and/or uses personal information.
In addition, these limitations establish a maximum percentage of eligible retained income that could be utilized for such actions and potentially limit the Company’s ability to pay dividends, engage in share repurchases, and pay discretionary bonuses. ​ Regulation in the areas of privacy, data protection, data management, resiliency, data transfer, third-party oversight, account access, artificial intelligence and machine learning and information security and cybersecurity could increase the Company’s costs and affect or limit business opportunities and how the Company collects and/or uses personal information . ​ Legislators and regulators are increasingly adopting or revising privacy, data protection, data management, resiliency, data transfer, third-party oversight, account access, artificial intelligence (“AI”) and machine learning and information security and cybersecurity laws, including data localization, authentication and notification laws.
Failure to satisfy any of these three capital requirements will result in limits on paying dividends, engaging in share repurchases, and paying discretionary bonuses. In addition, these limitations establish a maximum percentage of eligible retained income that could be utilized for such actions and potentially limit the Company’s ability to pay dividends, engage in share repurchases, and pay discretionary bonuses.
Failure to satisfy any of these three capital requirements will result in limits on paying dividends, engaging in share repurchases, and paying discretionary bonuses.
Third party service providers provide key components of the Company’s business infrastructure, including certain data processing, cloud computing, and information services. On behalf of the Company, third parties may transmit confidential, propriety information.
On behalf of the Company, third parties may transmit confidential, propriety information.
Further, the Company’s customers may be adversely impacted by such conditions, which could have a negative impact on the Company’s business, financial condition and results of operations. As a member institution of the FHLB, the Bank is required to maintain a positive tangible equity balance to retain access to the borrowing facilities offered by the FHLB.
Further, the Company’s customers may be adversely impacted by such conditions, which could have a negative impact on the Company’s business, financial condition and results of operations. ​ ​ 18 Table of Contents The Company depends on dividends from the Bank and BPAS for cash revenues to support common dividend payments and other uses, but those dividends are subject to restrictions. ​ The ability of the Company to satisfy its obligations and pay cash dividends to its shareholders is primarily dependent on the earnings of and dividends from the Bank and BPAS.
Mortgage banking income is highly influenced by the level and direction of mortgage interest rates, real estate and refinancing activity and elections made by the Company to sell or retain mortgage production. In lower interest rate environments, the demand for mortgage loans and refinancing activity will tend to increase.
In higher interest rate environments, the demand for mortgage loans and refinancing activity will generally be lower.
Removed
The Company’s income and cash flow depends to a great extent on the difference between the interest earned on loans and investment securities, and the interest paid on deposits and borrowings.
Added
Department of Labor, state attorneys general, state insurance regulators and law enforcement authorities.
Removed
Although management believes it has implemented asset and liability management strategies to reduce the potential effects of changes in interest rates on the results of operations, any substantial, unexpected, prolonged change in market interest rates could have a material adverse effect on the financial condition and results of operations.
Added
The Company or its third-party vendors may incorporate artificial intelligence technology into certain business processes, services, or products.
Removed
Liquidity Risk The Company must maintain adequate sources of funding and liquidity to meet regulatory expectations, support its operations and fund outstanding liabilities.
Added
Cyberattacks can originate from a variety of sources, including foreign governments and third-parties affiliated with them, organized crime or terrorist organizations, and malicious individuals both outside and inside a targeted company, including through use of relatively new AI tools or methods that can be used to create deepfakes for impersonation or to enable attack campaigns more quickly and effectively.
Removed
Management has implemented certain asset and liability management strategies, assessed the Bank’s future earnings capacity and evaluated its capital resources, including its parent Company resources, and believes the likelihood the Bank will be unable to maintain a positive tangible equity balance is low.
Removed
In the event it became unlikely that the Bank would be able to maintain a positive tangible equity balance, it would either seek an approval from its primary federal regulator to maintain access to its FHLB borrowing facilities or transfer its eligible collateral to the FRB to avoid disruption in its wholesale borrowing capacity. 18 Table of Contents The Company depends on dividends from the Bank and BPAS for cash revenues to support common dividend payments and other uses, but those dividends are subject to restrictions.
Removed
Decreases in mortgage loan sales would have the effect of decreasing fee income opportunities.
Removed
Department of Labor, state attorneys general, state insurance regulators and law enforcement authorities. The results of such proceedings could lead to delays in or prohibition to acquire other companies, significant penalties, including monetary penalties, dividend and/or asset growth restrictions, damages, adverse judgments, settlements, fines, injunctions, restrictions on the way in which the Company conducts its business, or reputational harm.
Removed
The Company and its subsidiaries are subject to extensive state and federal regulation, supervision and legislation that govern nearly every aspect of its operations.
Removed
While the Company has developed policies and procedures designed to assist in compliance with these laws and regulations, no assurance is given that compliance policies and procedures will be effective.
Removed
Federal bank regulatory authorities periodically conduct comprehensive examinations of the Company’s business, including compliance with laws and regulations.
Removed
In addition, the Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose nondiscriminatory lending requirements on financial institutions.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeIn addition, on at least a quarterly basis, the CISO presents an Information Security report to the Risk Committee, which includes the Company’s cybersecurity alert level, controls rating, current and emerging cybersecurity risks, threats and trends, mitigation efforts and projects and audit and regulatory updates.
Biggest changeWithin the risk management process, cybersecurity risks are specifically reviewed and addressed, including risks related to current or proposed products and services to be offered by the Company, as well as the efforts taken or to be taken to mitigate such risks. ​ In addition, on at least a quarterly basis, the CISO presents an Information Security report to the Risk Committee, which includes the Company’s cybersecurity alert level, controls rating, current and emerging cybersecurity risks, threats and trends, mitigation efforts and projects and audit and regulatory updates. ​ On an annual basis, the Board’s Audit Committee also receives reports from outside consultants who perform various IT related audits, and the Company’s independent registered public accounting firm regarding the effectiveness of the Company’s cybersecurity program in connection with its review of the Company’s financial statements. ​
The primary executives responsible for the oversight of risk and cybersecurity are the Company’s Chief Risk Officer, who has over 37 years of experience in the banking industry, including 25 years as a national bank examiner for the Office of the Comptroller of the Currency, and the Company’s Chief Information Security Officer (“CISO”), who has an educational and experiential background in information technology and information security for public companies (bachelor’s degree in computer science and service as the Company’s CISO for the past 10 years, with 10 prior years of information technology and information security experience).
The primary executives responsible for the oversight of risk and cybersecurity are the Company’s Chief Risk Officer, who has over 38 years of experience in the banking industry, including 25 years as a national bank examiner for the Office of the Comptroller of the Currency, and the Company’s Chief Information Security Officer (“CISO”) , who has an educational and experiential background in information technology and information security for public companies (bachelor’s degree in computer science and service as the Company’s CISO for the past 11 years, with 10 prior years of information technology and information security experience).
MacPherson have received the Cyber-Risk Oversight Certification issued by the National Association of Corporate Directors (“NACD”), and utilize their business experience and cyber-risk expertise to assist the Risk Committee in its evaluation of management’s cybersecurity systems.
MacPherson, has received the Cyber-Risk Oversight Certification issued by the National Association of Corporate Directors (“NACD”), and utilize their business experience and cyber-risk expertise to assist the Risk Committee in its evaluation of management’s cybersecurity systems.
Less severe incidents will be reported by management at the next Board or Risk Committee meeting. 32 Table of Contents Board of Directors’ Role in Cybersecurity An integral part of Company’s risk management oversight, which includes information security, is the role of the Board.
Less severe incidents will be reported by management at the next Board or Risk Committee meeting. ​ Board of Directors’ Role in Cybersecurity ​ An integral part of Company’s risk management oversight, which includes information security, is the role of the Board.
When the Company becomes aware of such events, the CISO engages with the impacted third-party service providers to understand the incident, assess the risk that the Company’s information was released, and determine methods by which the Company can mitigate the damage, if any, and fulfill its notification obligations to impacted parties.
When the Company becomes aware of such events, the CISO engages with the impacted third-party service providers to understand the incident, assess the risk that the Company’s information was exposed, and determine methods by which the Company can mitigate any damage and fulfill applicable notification obligations.
Item 1C. Cybersecurity As a heavily regulated financial services company, the Company has developed a comprehensive cybersecurity process that is designed to protect the security of confidential information.
Item 1C. Cybersecurity ​ As a heavily regulated financial services company, the Company has developed comprehensive cybersecurity processes that are designed to protect the security of confidential information.
Management stays informed on cybersecurity risks through open communication with the Risk Management team, including through various reports and weekly reporting by the Chief Risk Officer to the Senior Management Committee about cybersecurity matters, as necessary.
Management stays informed on cybersecurity risks through quarterly reports provided by the CRO and CISO to the Company’s Management Risk Committee, comprised of executives and senior leadership, as well as open communication with the Risk Management team, including through various reports and weekly reporting by the Chief Risk Officer to the Senior Management Committee about cybersecurity matters, as necessary.
The CISO is also responsible for monitoring data security incidents at third parties who have access to the Company’s information which may impact the Company or its customers if it was compromised.
Ongoing diligence is also conducted to confirm that vendors are meeting contractual and data security obligations. ​ The CISO is also responsible for monitoring data security incidents at third parties who have access to the Company’s information which may impact the Company or its customers if it was compromised.
The IT Subcommittee typically meets quarterly and consists of members of the information technology and information security teams, the Director of Internal Audit, and senior management members of various business units. This committee is responsible for reviewing information technology and information security projects and the threat landscape.
The IT Subcommittee typically meets quarterly and consists of members of the information technology and information security teams, the Director of Internal Audit, and senior management members of various business units.
Given the importance of maintaining the security of the Company’s systems and information, cybersecurity risks are also reviewed and addressed relative to assessing new products and services and any third-party services providers that may be engaged to provide systems and services to the Company.
This committee is responsible for reviewing information technology and information security projects and the threat landscape. ​ Given the importance of maintaining the security of the Company’s systems and information, cybersecurity risks are also reviewed and addressed when assessing new products and services and any third-party service providers that may be engaged to provide systems and services to the Company.
Set forth below is an overview of the Company’s risks associated with cybersecurity, its cybersecurity process, the role of management and the Board, and whether any risks from cybersecurity threats have materially affected or are reasonably likely to materially affect the Company.
Set forth below is an overview of the Company’s risks associated with cybersecurity, its cybersecurity process, the role of management and the Board, and whether any risks from cybersecurity threats have materially affected or are reasonably likely to materially affect the Company. ​ Risks Associated with Cybersecurity ​ The Company is a frequent target of unauthorized attempts to access financial records, destroy data, degrade services, or sabotage systems.
For cybersecurity incidents, including, but not limited to, incidents that are deemed material pursuant to SEC cybersecurity disclosure rules or that significantly impact vital services provided by the Company, notification to the Board will occur at or about the time the incident is discovered.
For certain cybersecurity incidents, including, but not limited to, incidents that are deemed material pursuant to SEC cybersecurity disclosure rules or that significantly impact vital services provided by the Company, notification is also provided to the Chair of the Board Risk Committee and/or the Chair of the Board.
The CISO uses a variety of threat intelligence resources, including law enforcement and industry groups such as the Financial Services Information Sharing and Analysis Center (FS-ISAC), to help stay informed about current and emerging risks to the Company.
The CISO uses a variety of threat intelligence resources, including law enforcement and industry groups such as the Financial Services Information Sharing and Analysis Center (FS-ISAC), to help stay informed about current and emerging risks to the Company. ​ CFSI maintains enterprise-wide AI and Data Governance frameworks designed to promote the accuracy, privacy, security, and responsible use of data and AI across our operations.
Both of these executives, along with the other professionals in the Information Security and Information Technology Departments, have the appropriate knowledge and expertise to effectively assess and manage the Company’s cybersecurity risk and establish a system of internal controls in an effort to safeguard the Company’s network and comply with regulatory requirements.
Both of these executives, along with the other professionals in the Information Security and Information Technology Departments, have the appropriate knowledge and expertise to effectively assess and manage the Company’s cybersecurity risk and establish a system of internal controls in an effort to safeguard the Company’s network and comply with regulatory requirements. ​ The Company’s cybersecurity framework includes an assessment of the Company’s hardware, software, and data platforms across its lines of business; the risks associated with the Company’s business; areas inside and outside of the Company that expose it to cybersecurity threats.
As part of this oversight, the Company’s Risk Management, Legal and/or Information Security Departments review higher risk and material contracts with third party service providers, which includes an evaluation of the cybersecurity risks presented, any safeguards, and service organization controls reports provided by the third parties.
As part of this oversight, the Company’s Risk Management, Legal and/or Information Security Departments review higher risk and material contracts with third-party service providers.
In addition, cybersecurity risk is a fundamental risk of the Company which is overseen by the Risk Committee of the Board, including Directors with experience in risk management, internal audit, cybersecurity and/or the operations of financial service companies. In particular, the Chair of the Board, Eric E.
This is reinforced by the independence and reporting structure of the Chief Risk Officer, who oversees the CISO and reports to the Board Risk Committee and administratively to the President and Chief Executive Officer. ​ In addition, cybersecurity risk is a fundamental risk of the Company which is overseen by the Risk Committee of the Board , including Directors with experience in risk management, internal audit, cybersecurity and/or the operations of financial service companies.
In an effort to remain vigilant against cybersecurity attacks, the Company further provides annual and ongoing training to all of its employees so that they have an understanding and appreciation of the cybersecurity environment and risks and the Company’s policies to combat such risks.
The Incident Response Core Team, which includes representatives from IT, Risk, and Legal, coordinates the Company’s response to such incidents in accordance with existing policies and supports notification, remediation, and any required regulatory reporting. ​ In an effort to remain vigilant against cybersecurity attacks, the Company further provides annual and ongoing training to all of its employees so that they have an understanding and appreciation of the cybersecurity environment and risks and the Company’s policies to combat such risks.
Stickels, has experience with the risks associated with operating a financial institution based upon his prior service as the President of Oneida Financial Corp. In addition, Lead Director Susan E. Skerritt, the former Chief Executive Officer and President of Deutsche Bank Trust Company Americas, as well as director Kerrie D.
In particular, the Chair of the Board, Eric E. Stickels, has experience with the risks associated with operating a financial institution based upon his prior service as the President of Oneida Financial Corp. In addition, the Chair of the Risk Committee, Director Kerrie D.
The CISO is also responsible for supervising and monitoring certain outside professionals or third-party service providers that assist in enhancing the Company’s current cybersecurity safeguards. The Company has invested meaningful resources to address cybersecurity threats and partners with leading technology companies to implement solutions to address the fast-evolving threat landscape.
The Company has invested meaningful resources to address cybersecurity threats and partners with leading technology companies to implement solutions to address the fast-evolving threat landscape.
The CISO also conducts and participates in annual table top exercises with management, and periodically with Directors, in order to be prepared in the event of a material cybersecurity event. The Company’s cybersecurity process and its ability to assess, manage, and remediate cybersecurity risks further centers around good communication among management.
The CISO also conducts and participates in annual table top exercises with management, and periodically with Directors, in order to be prepared in the event of a material cybersecurity event. ​ The Company’s customers are also sources of cybersecurity risk, particularly when their activities and systems are beyond the Company’s own security and control systems.
The Company’s cybersecurity framework includes an assessment of the Company’s hardware, software, and data platforms across its lines of business; the risks associated with the Company’s business; areas inside and outside of the Company that expose it to cybersecurity threats. As part of this framework, the Company employs policies, systems and safeguards to manage cybersecurity risks.
As part of this framework, the Company employs policies, systems and safeguards to manage cybersecurity risks.
The Risk Committee meets five times a year during which management provides updates to the committee regarding the material risks facing the Company.
Directors Knauss and Singh also serve as Board representatives on the Company’s IT Steering Committee and provide valuable oversight and insight to the committee based on their knowledge and business experience across the digital, technology and/or artificial intelligence sectors. ​ The Risk Committee meets five times a year during which management provides updates to the committee regarding the material risks facing the Company.
For more information on risks to the Company from cybersecurity threats, see “Risk Factors – Operational Risks”. Cybersecurity Process and Management’s Role Management is responsible for designing and implementing policies, processes and procedures and deploying physical and virtual technology and safeguards to measure, monitor and control cybersecurity risk.
In addition, the Company’s increasing use of analytics, machine-learning and generative AI introduces additional data and model risks, including threats to data privacy and integrity, biased or incorrect model outputs, exploitation of third-party models or vendors, and automation-enabled escalation of attacks. ​ To date, these risks have not resulted in a material cybersecurity incident, but a successful compromise, whether internal or originating with a third-party vendor, could result in financial losses, remediation costs, regulatory penalties, customer attrition, and reputational harm. ​ For more information on risks to the Company from cybersecurity threats, see “Risk Factors – Operational Risks”. ​ Cybersecurity Process and Management’s Role ​ Management is responsible for designing and implementing policies, processes and physical and virtual safeguards to measure, monitor, and control cybersecurity risk.
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Risks Associated with Cybersecurity The Company is often targeted in an effort to obtain unauthorized access to its financial records and confidential information, destroy data, disable or degrade service, or sabotage systems.
Added
The sophistication and diversity of these threats is increasing. Against a backdrop of geopolitical tensions, the increasing use of AI by threat actors, and the growing involvement of organized cyber criminal groups, including state-sponsored groups, the Company expects greater frequency and sophistication of attacks in the future (malware, ransomware, phishing, supply chain compromise, and insider-assisted intrusions).
Removed
Such attacks may take various forms, including the introduction of computer viruses or malware, ransomware, phishing attacks, cyberattacks, or breaches due to errors or malfeasance by employees, contractors and others who have access to or obtain unauthorized access to the Company’s systems and networks. To date, these threats and attacks have not resulted in a material cybersecurity incident.
Added
Organized criminal actors include financially motivated ransomware gangs, criminal networks that monetize stolen data, and transnational fraud rings.
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However, a material failure, interruption or security breach could adversely affect the Company’s business and operations through financial losses, remediation expenses, reputational damage, as well as exposing the Company to customer dissatisfaction and civil litigation, regulatory fines or penalties or losses not covered by insurance.
Added
These groups often operate at scale, use professionalized tools and affiliate ecosystems, and in some instances collaborate with nation state actors or exploit third-party vendors to gain access. ​ 30 Table of Contents The exploitation of third-party vendors and contractors increases the risk that a vendor compromise, outage, or failure to meet contractual security obligations could lead to unauthorized access or operational disruption.
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As an essential element of the Company’s cybersecurity program, the Company maintains a third-party service provider management program that assesses and addresses the risks associated with third parties providing systems, software and programs that access the Company’s information.
Added
Executive oversight is provided by the Management Risk Committee and IT Steering Committee, with operational accountability assigned to business and system data stewards and data asset owners. The CISO jointly oversees data and AI governance, supports validation and control requirements, and enforces security, privacy, and incident-response protocols.
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Initial and continuing due diligence is also conducted on third party service providers to ensure that they are fulfilling their contractual obligations and satisfying the Company’s data security requirements.
Added
The Company has deployed machine learning and generative AI capabilities to enhance monitoring, automated classification of events and data, and threat- detection and prioritization. These tools support faster triage, playbook-driven remediation and realistic simulation for control validation. AI solutions are subject to formal approval, validation, and periodic re-validation proportional to their inherent risk; higher-risk applications retain a human-in-the-loop approach.
Removed
This is reinforced by the independence and reporting structure of the Chief Risk Officer, who oversees the CISO and reports to the Board Risk Committee and administratively to the President and Chief Executive Officer.
Added
Controls include encryption, role- based access, audit logging, vendor due diligence, and employee training. These programs are periodically reviewed to reflect evolving regulatory requirements and technological advances. ​ The CISO is also responsible for supervising and monitoring certain outside professionals or third-party service providers that assist in enhancing the Company’s current cybersecurity safeguards.
Removed
Directors Knauss and Singh also serve as Board representatives on the Company’s IT Steering Committee and provide valuable oversight and insight to the committee based on their respective roles as (i) the former CEO of a digital marketing firm and (ii) current CEO of PAR Technology Corporation (“PAR”), a global food service technology company providing leading omnichannel cloud-based software and hardware solutions to the restaurant and retail industries.
Added
As an essential element of the Company’s cybersecurity program, the Company maintains a third-party risk management program that performs initial and ongoing due diligence, evaluates SOC reports and contract safeguards, and monitors incidents at vendors that could impact Company or customer data.
Removed
Within the risk management process, cybersecurity risks are specifically reviewed and addressed, including risks related to current or proposed products and services to be offered by the Company, as well as the efforts taken or to be taken to mitigate such risks.
Added
The Company engages in periodic outreach with its clients, customers and other external parties concerning cybersecurity risks including opportunities to improve cybersecurity and avoid scams. ​ ​ 32 Table of Contents The Company’s cybersecurity process and its ability to assess, manage, and remediate cybersecurity risks further centers around good communication among management.
Removed
On an annual basis, the Board’s Audit Committee also receives reports from outside consultants who perform various IT related audits, and the Company’s independent registered public accounting firm regarding the effectiveness of the Company’s cybersecurity program in connection with its review of the Company’s financial statements. ​ ​ ​ 33 Table of Contents

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties The Company’s primary headquarters are located at 5790 Widewaters Parkway, Dewitt, New York, which is leased. During 2023, the Company entered into a lease arrangement for a new primary headquarters located at 333 Butternut Drive, Dewitt, New York, which is expected to begin utilization in 2025.
Biggest changeItem 2. Properties ​ The Company’s primary headquarters are located at 333 Butternut Drive, Syracuse, New York, which is leased.
The majority of the Company’s properties are used by the Banking and Corporate segment which operates 185 full-service bank branches, 11 drive-thru only bank facilities and 21 facilities for back office banking and corporate operations. The Employee Benefit Services segment uses 16 properties including 15 customer service facilities and one facility for back office operations, all of which are leased.
The majority of the Company’s properties are used by the Banking and Corporate segment which operates 192 full-service bank branches, 8 drive-thru only bank facilities and 18 facilities for back office banking and corporate operations. The Employee Benefit Services segment uses 17 properties including 16 customer service facilities and 1 facility for back office operations, all of which are leased.
The Insurance Services segment uses 22 customer service facilities, all of which are leased. Certain properties are shared for operations of multiple segments, including most of the properties in use by the Wealth Management Services segment. Certain properties also contain tenant leases or subleases.
The Insurance Services segment uses 23 customer service facilities, 20 of which are leased. Certain properties are shared for operations of multiple segments, including most of the properties in use by the Wealth Management Services segment. Certain properties also contain tenant leases or subleases. None of the properties were subject to any material encumbrances.
The Company has 257 properties, of which 152 are owned and 105 are under lease arrangements, excluding 18 properties that are in process of being opened for business in connection with the Bank’s de novo branch expansions, of which three are owned and 15 are under lease arrangements.
The Company has 261 properties, of which 140 are owned and 121 are under lease arrangements, excluding 4 properties that are in process of being opened for business in connection with the Bank’s de novo branch expansions, all of which are under lease arrangements.
Removed
Real property and related banking facilities owned by the Company at December 31, 2024 had a net book value of $106.1 million, of which $1.4 million was held for sale, and none of the properties were subject to any material encumbrances.
Added
The Company believes that its facilities are suitable and adequate for the Company’s current operations. 33 Table of Contents Additional information regarding the Company’s properties is set forth in Note E and Note O to the consolidated financial statements included under Part II, Item 8. ​
Removed
For the year ended December 31, 2024, the Company paid $11.2 million of rental fees for facilities leased for its operations. The Company believes that its facilities are suitable and adequate for the Company’s current operations. ​

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeInformation on current legal proceedings and other matters is set forth in Note M to the consolidated financial statements included under Part II, Item 8. ​
Biggest changeInformation on current legal proceedings and other matters is set forth in Note N to the consolidated financial statements included under Part II, Item 8. ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThere were 1,000,000 shares of treasury stock purchases made under this authorization in 2024. 37 Table of Contents The following table presents stock purchases made during the fourth quarter of 2024: ​ Issuer Purchases of Equity Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ ​ ​ Total Number of Shares ​ ​ ​ ​ Number of ​ Average ​ Purchased as Part of ​ Maximum Number of Shares ​ ​ Shares ​ Price Paid ​ Publicly Announced ​ That May Yet be Purchased Period ​ Purchased ​ Per Share ​ Plans or Programs ​ Under the Plans or Programs October 1-31, 2024 (1) 826 ​ $ 57.28 0 1,697,000 November 1-30, 2024 0 ​ 0.00 0 1,697,000 December 1-31, 2024 0 ​ 0.00 0 1,697,000 Total (1) 826 ​ $ 57.28 0 (1) Included in the common shares repurchased were 826 shares acquired by the Company in connection with the administration of a deferred compensation plan.
Biggest changeThere were 206,054 shares of treasury stock purchases made under this authorization in 2025. ​ The following table presents stock purchases made during the fourth quarter of 2025: ​ Issuer Purchases of Equity Securities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total ​ ​ ​ ​ Total Number of Shares ​ Maximum Number of ​ ​ Number of ​ Average ​ Purchased as Part of ​ Shares That May Yet Be ​ ​ Shares ​ Price Paid ​ Publicly Announced ​ Purchased Under the Plans Period ​ Purchased ​ Per Share ​ Plans or Programs ​ or Programs October 1-31, 2025 998 ​ $ 56.87 0 2,421,946 November 1-30, 2025 0 ​ 0.00 0 2,421,946 December 1-31, 2025 239 ​ 60.70 0 2,421,946 Total (1) 1,237 ​ $ 57.61 0 ​ (1) Included in the common shares repurchased were 781 shares acquired by the Company in connection with the administration of a deferred compensation plan and 456 shares acquired by the Company in connection with the vesting of restricted stock awards in satisfaction of applicable tax withholding obligations.
However, because the substantial majority of the funds available for the payment of dividends by the Company are derived from the subsidiary Bank, future dividends will depend largely upon the earnings of the Bank, its financial condition, its need for funds and applicable governmental policies and regulations. 35 Table of Contents The following graph compares cumulative total shareholders returns on the Company’s common stock over the last five fiscal years to the S&P 600 Commercial Banks Index, the NASDAQ Bank Index, the S&P 500 Index, and the KBW Regional Banking Index.
However, because the substantial majority of the funds available for the payment of dividends by the Company are derived from the subsidiary Bank, future dividends will depend largely upon the earnings of the Bank, its financial condition, its need for funds and applicable governmental policies and regulations. ​ ​ 34 Table of Contents The following graph compares cumulative total shareholders returns on the Company’s common stock over the last five fiscal years to the S&P 600 Commercial Banks Index, the NASDAQ Bank Index, the S&P 500 Index, and the KBW Regional Banking Index.
At its December 2023 meeting, the Board approved a stock repurchase program authorizing the repurchase, at the discretion of senior management, of up to 2,697,000 shares of the Company’s common stock, in accordance with securities and banking laws and regulations, during the twelve - month period starting January 1, 2024.
At its December 2024 meeting, the Board approved a stock repurchase program authorizing the repurchase, at the discretion of senior management, of up to 2,628,000 shares of the Company’s common stock, in accordance with securities and banking laws and regulations, during the twelve-month period starting January 1, 2025.
There were 52,712,324 shares of common stock outstanding on January 31, 2025, held by approximately 3,317 registered shareholders of record. The Company has historically paid regular quarterly cash dividends on its common stock and declared a cash dividend of $0.46 per share for the first quarter of 2025.
There were 52,723,931 shares of common stock outstanding on January 31, 2026, held by approximately 3,136 registered shareholders of record. ​ The Company has historically paid regular quarterly cash dividends on its common stock and declared a cash dividend of $0.47 per share for the first quarter of 2026.
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The Company’s common stock has been trading on the New York Stock Exchange under the symbol “CBU” since December 31, 1997. Prior to that, the common stock traded over-the-counter on the NASDAQ National Market under the symbol “CBSI” beginning on September 16, 1986.
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ​ The Company’s common stock has been trading on the New York Stock Exchange under the symbol “CBU” since December 31, 1997.
Total return values were calculated as of December 31 of each indicated year assuming a $100 investment on December 31, 2019 and reinvestment of dividends. ​ 36 Table of Contents Equity Compensation Plan Information The following table provides information as of December 31, 2024 with respect to shares of common stock that may be issued under the Company’s existing equity compensation plans. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of Securities ​ ​ Number of ​ ​ ​ ​ Remaining Available ​ ​ Securities to be ​ ​ ​ ​ for Future Issuance ​ ​ Issued upon ​ Weighted-average ​ Under Equity ​ ​ Exercise of ​ Exercise Price ​ Compensation Plans ​ ​ Outstanding ​ of Outstanding ​ (excluding securities ​ ​ Options, Warrants ​ Options, Warrants ​ reflected in the first Plan Category ​ and Rights (1) ​ and Rights (2) ​ column) Equity compensation plans approved by security holders: ​ 2004 Long-term Incentive Plan 30,002 ​ $ 23.04 0 2014 Long-term Incentive Plan 1,129,405 ​ 55.87 0 2022 Long-term Incentive Plan ​ 739,150 ​ ​ 34.49 ​ 1,235,610 Equity compensation plans not approved by security holders 0 ​ 0 0 Total 1,898,557 ​ $ 47.03 1,235,610 (1) The number of securities includes 254,630 shares of unvested restricted stock, including performance award restricted stock, comprised of 41,649 shares associated with the 2014 Long - term Incentive Plan and 212,981 shares associated with the 2022 Long - term Incentive Plan.
Total return values were calculated as of December 31 of each indicated year assuming a $100 investment on December 31, 2020 and reinvestment of dividends. ​ ​ ​ 35 Table of Contents Equity Compensation Plan Information ​ The following table provides information as of December 31, 2025 with respect to shares of common stock that may be issued under the Company’s existing equity compensation plans. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of Securities ​ ​ Number of ​ ​ ​ ​ Remaining Available ​ ​ Securities to be ​ ​ ​ ​ for Future Issuance ​ ​ Issued upon ​ Weighted-average ​ Under Equity ​ ​ Exercise of ​ Exercise Price ​ Compensation Plans ​ ​ Outstanding ​ of Outstanding ​ (excluding securities ​ ​ Options, Warrants ​ Options, Warrants ​ reflected in the first Plan Category ​ and Rights (1) ​ and Rights (2) ​ column) Equity compensation plans approved by security holders: ​ ​ ​ ​ 2004 Long-term Incentive Plan 20,001 ​ $ 23.04 0 2014 Long-term Incentive Plan 967,793 ​ 59.96 0 2022 Long-term Incentive Plan ​ 1,043,313 ​ ​ 38.51 ​ 850,227 Equity compensation plans not approved by security holders 0 ​ 0 0 Total 2,031,107 ​ $ 48.58 850,227 (1) The number of securities includes 272,813 shares of unvested restricted stock, including performance award restricted stock, comprised of 4,342 shares associated with the 2014 Long-term Incentive Plan and 268,471 shares associated with the 2022 Long-term Incentive Plan.
Stock Repurchase Program At its December 2024 meeting, the Board approved a new stock repurchase program authorizing the repurchase, at the discretion of senior management, of up to 2,628,000 shares, or 5.0% of the Company’s common stock outstanding, in accordance with securities and banking laws and regulations, during the twelve - month period starting January 1, 2025.
(2) Excluding the impact of unvested restricted stock, including performance award restricted stock, the total weighted-average exercise price is $56.12, the weighted-average exercise price associated with the 2014 Long-term Incentive Plan is $60.23 and the weighted-average exercise price associated with the 2022 Long-term Incentive Plan is $51.86. ​ ​ 36 Table of Contents Stock Repurchase Program ​ At its December 2025 meeting, the Board approved a new stock repurchase program authorizing the repurchase, at the discretion of senior management, of up to 2,633,000 shares, or 5.0% of the Company’s common stock outstanding, in accordance with securities and banking laws and regulations, during the twelve-month period starting January 1, 2026.
Removed
(2) Excluding the impact of unvested restricted stock, including performance award restricted stock, the total weighted - average exercise price is $54.31, the weighted - average exercise price associated with the 2014 Long - term Incentive Plan is $58.01 and the weighted - average exercise price associated with the 2022 Long - term Incentive Plan is $48.45.
Added
Prior to that, the common stock traded over-the-counter on the NASDAQ National Market under the symbol “CBSI” beginning on September 16, 1986.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeIf the Company does update or correct one or more forward-looking statements, investors and others should not conclude that the Company will make additional updates or corrections with respect thereto or with respect to other forward-looking statements. ​ 76 Table of Contents Reconciliation of GAAP to Non-GAAP Measures Table 20: GAAP to Non-GAAP Reconciliations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (000’s omitted) 2024 2023 2022 Operating pre-tax, pre-provision net revenue (non-GAAP) ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (GAAP) ​ $ 182,481 ​ $ 131,924 ​ $ 188,081 Income taxes ​ 54,223 ​ 36,307 ​ 52,233 Income before income taxes ​ 236,704 ​ 168,231 ​ 240,314 Provision for credit losses ​ 22,773 ​ 11,203 ​ 14,773 Pre-tax, pre-provision net revenue (non-GAAP) ​ 259,477 ​ 179,434 ​ 255,087 Acquisition expenses ​ 213 ​ 63 ​ 5,021 Acquisition-related contingent consideration adjustments ​ ​ 244 ​ ​ 3,280 ​ ​ (300) Restructuring expenses ​ ​ 0 ​ ​ 1,163 ​ ​ 0 Litigation accrual ​ ​ 138 ​ ​ 5,800 ​ ​ 0 Loss on sales of investment securities ​ ​ 487 ​ ​ 52,329 ​ ​ 0 Gain on debt extinguishment ​ 0 ​ (242) ​ 0 Unrealized (gain) loss on equity securities ​ (1,231) ​ 47 ​ 44 Amortization of intangible assets ​ ​ 14,259 ​ ​ 14,511 ​ ​ 15,214 Operating pre-tax, pre-provision net revenue (non-GAAP) ​ $ 273,587 ​ $ 256,385 ​ $ 275,066 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating pre-tax, pre-provision net revenue per share (non-GAAP) ​ ​ ​ Diluted earnings per share (GAAP) ​ $ 3.44 ​ $ 2.45 ​ $ 3.46 Income taxes ​ 1.02 ​ 0.67 ​ 0.96 Income before income taxes ​ 4.46 ​ 3.12 ​ 4.42 Provision for credit losses ​ 0.43 ​ 0.21 ​ 0.27 Pre-tax, pre-provision net revenue per share (non-GAAP) ​ 4.89 ​ 3.33 ​ 4.69 Acquisition expenses ​ 0.00 ​ 0.00 ​ 0.09 Acquisition-related contingent consideration adjustments ​ ​ 0.00 ​ ​ 0.06 ​ ​ 0.00 Restructuring expenses ​ ​ 0.00 ​ ​ 0.02 ​ ​ 0.00 Litigation accrual ​ ​ 0.00 ​ ​ 0.11 ​ ​ 0.00 Loss on sales of investment securities ​ 0.01 ​ 0.97 ​ 0.00 Gain on debt extinguishment ​ ​ 0.00 ​ ​ 0.00 ​ ​ 0.00 Unrealized (gain) loss on equity securities ​ (0.02) ​ 0.00 ​ 0.00 Amortization of intangible assets ​ ​ 0.27 ​ ​ 0.27 ​ ​ 0.28 Operating pre-tax, pre-provision net revenue per share (non-GAAP) ​ $ 5.15 ​ $ 4.76 ​ $ 5.06 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating net income (non-GAAP) ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (GAAP) ​ $ 182,481 ​ $ 131,924 ​ $ 188,081 Acquisition expenses ​ ​ 213 ​ ​ 63 ​ ​ 5,021 Tax effect of acquisition expenses ​ ​ (40) ​ ​ (13) ​ ​ (1,091) Subtotal (non-GAAP) ​ ​ 182,654 ​ ​ 131,974 ​ ​ 192,011 Acquisition-related contingent consideration adjustments ​ ​ 244 ​ ​ 3,280 ​ ​ (300) Tax effect of acquisition-related contingent consideration adjustments ​ ​ (46) ​ ​ (689) ​ ​ 65 Subtotal (non-GAAP) ​ ​ 182,852 ​ ​ 134,565 ​ ​ 191,776 Acquisition-related provision for credit losses ​ ​ 0 ​ ​ 0 ​ ​ 3,927 Tax effect of acquisition-related provision for credit losses ​ ​ 0 ​ ​ 0 ​ ​ (853) Subtotal (non-GAAP) ​ ​ 182,852 ​ ​ 134,565 ​ ​ 194,850 Litigation accrual ​ ​ 138 ​ ​ 5,800 ​ ​ 0 Tax effect of litigation accrual ​ ​ (26) ​ ​ (1,218) ​ ​ 0 Subtotal (non-GAAP) ​ ​ 182,964 ​ ​ 139,147 ​ ​ 194,850 Restructuring expenses ​ ​ 0 ​ ​ 1,163 ​ ​ 0 Tax effect of restructuring expenses ​ ​ 0 ​ ​ (244) ​ ​ 0 Subtotal (non-GAAP) ​ ​ 182,964 ​ ​ 140,066 ​ ​ 194,850 Loss on sales of investment securities ​ ​ 487 ​ ​ 52,329 ​ ​ 0 Tax effect of loss on sales of investment securities ​ ​ (93) ​ ​ (10,989) ​ ​ 0 Subtotal (non-GAAP) ​ ​ 183,358 ​ ​ 181,406 ​ ​ 194,850 Gain on debt extinguishment ​ ​ 0 ​ ​ (242) ​ ​ 0 Tax effect of gain on debt extinguishment ​ ​ 0 ​ ​ 51 ​ ​ 0 Subtotal (non-GAAP) ​ ​ 183,358 ​ ​ 181,215 ​ ​ 194,850 Unrealized (gain) loss on equity securities ​ ​ (1,231) ​ ​ 47 ​ ​ 44 Tax effect of unrealized (gain) loss on equity securities ​ ​ 234 ​ ​ (10) ​ ​ (10) Subtotal (non-GAAP) ​ ​ 182,361 ​ ​ 181,252 ​ ​ 194,884 Amortization of intangible assets ​ ​ 14,259 ​ ​ 14,511 ​ ​ 15,214 Tax effect of amortization of intangible assets ​ ​ (2,709) ​ ​ (3,047) ​ ​ (3,307) Operating net income (non-GAAP) ​ $ 193,911 ​ $ 192,716 ​ $ 206,791 ​ 77 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (000's omitted) 2024 2023 2022 Operating diluted earnings per share (non-GAAP) ​ ​ ​ Diluted earnings per share (GAAP) ​ $ 3.44 ​ $ 2.45 ​ $ 3.46 ​ Acquisition expenses ​ 0.00 ​ 0.00 ​ 0.09 ​ Tax effect of acquisition expenses ​ ​ 0.00 ​ ​ 0.00 ​ ​ (0.02) ​ Subtotal (non-GAAP) ​ ​ 3.44 ​ ​ 2.45 ​ ​ 3.53 ​ Acquisition-related contingent consideration adjustments ​ ​ 0.00 ​ ​ 0.06 ​ ​ 0.00 ​ Tax effect of acquisition-related contingent consideration adjustments ​ ​ 0.00 ​ ​ (0.01) ​ ​ 0.00 ​ Subtotal (non-GAAP) ​ 3.44 ​ 2.50 ​ 3.53 ​ Acquisition-related provision for credit losses ​ 0.00 ​ 0.00 ​ 0.07 ​ Tax effect of acquisition-related provision for credit losses ​ 0.00 ​ 0.00 ​ (0.02) ​ Subtotal (non-GAAP) ​ 3.44 ​ 2.50 ​ 3.58 ​ Litigation accrual ​ 0.00 ​ 0.11 ​ 0.00 ​ Tax effect of litigation accrual ​ ​ 0.00 ​ ​ (0.03) ​ ​ 0.00 ​ Subtotal (non-GAAP) ​ ​ 3.44 ​ ​ 2.58 ​ ​ 3.58 ​ Restructuring expenses ​ ​ 0.00 ​ ​ 0.02 ​ ​ 0.00 ​ Tax effect of restructuring expenses ​ ​ 0.00 ​ ​ 0.00 ​ ​ 0.00 ​ Subtotal (non-GAAP) ​ ​ 3.44 ​ ​ 2.60 ​ ​ 3.58 ​ Loss on sales of investment securities ​ ​ 0.01 ​ ​ 0.97 ​ ​ 0.00 ​ Tax effect of loss on sales of investment securities ​ 0.00 ​ (0.21) ​ 0.00 ​ Subtotal (non-GAAP) ​ 3.45 ​ 3.36 ​ 3.58 ​ Gain on debt extinguishment ​ 0.00 ​ 0.00 ​ 0.00 ​ Tax effect of gain on debt extinguishment ​ ​ 0.00 ​ ​ 0.00 ​ ​ 0.00 ​ Subtotal (non-GAAP) ​ ​ 3.45 ​ ​ 3.36 ​ ​ 3.58 ​ Unrealized (gain) loss on equity securities ​ ​ (0.02) ​ ​ 0.00 ​ ​ 0.00 ​ Tax effect of unrealized (gain) loss on equity securities ​ ​ 0.00 ​ ​ 0.00 ​ ​ 0.00 ​ Subtotal (non-GAAP) ​ 3.43 ​ 3.36 ​ 3.58 ​ Amortization of intangible assets ​ ​ 0.27 ​ ​ 0.27 ​ ​ 0.28 ​ Tax effect of amortization of intangible assets ​ (0.05) ​ (0.06) ​ (0.06) ​ Operating diluted earnings per share (non-GAAP) ​ $ 3.65 ​ $ 3.57 ​ $ 3.80 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on assets ​ ​ ​ ​ ​ Net income (GAAP) ​ $ 182,481 ​ $ 131,924 ​ $ 188,081 ​ Average total assets ​ 15,990,697 ​ 15,242,884 ​ 15,567,139 ​ Return on assets (GAAP) ​ 1.14 % 0.87 % 1.21 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating return on assets (non-GAAP) ​ ​ ​ ​ ​ Operating net income (non-GAAP) ​ $ 193,911 ​ $ 192,716 ​ $ 206,791 ​ Average total assets ​ 15,990,697 ​ 15,242,884 ​ 15,567,139 ​ Operating return on assets (non-GAAP) ​ 1.21 % 1.26 % 1.33 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on equity ​ ​ ​ ​ ​ Net income (GAAP) ​ $ 182,481 ​ $ 131,924 ​ $ 188,081 ​ Average total equity ​ 1,695,794 ​ 1,595,724 ​ 1,733,521 ​ Return on equity (GAAP) ​ 10.76 % 8.27 % 10.85 % ​ 78 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (000’s omitted) 2024 2023 2022 Operating return on equity (non-GAAP) ​ ​ ​ Operating net income (non-GAAP) ​ $ 193,911 ​ $ 192,716 ​ $ 206,791 ​ Average total equity ​ ​ 1,695,794 ​ ​ 1,595,724 ​ ​ 1,733,521 ​ Operating return on equity (non-GAAP) ​ ​ 11.43 % ​ 12.08 % ​ 11.93 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest margin ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest income ​ $ 449,117 ​ $ 437,285 ​ $ 420,630 ​ Total average interest-earning assets ​ ​ 14,754,880 ​ ​ 14,078,061 ​ ​ 14,548,665 ​ Net interest margin ​ ​ 3.04 % ​ 3.11 % ​ 2.89 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest margin (FTE) (non-GAAP) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest income ​ $ 449,117 ​ $ 437,285 ​ $ 420,630 ​ Fully tax-equivalent adjustment (non-GAAP) ​ ​ 3,721 ​ ​ 4,242 ​ ​ 4,074 ​ Fully tax-equivalent net interest income (non-GAAP) ​ ​ 452,838 ​ ​ 441,527 ​ ​ 424,704 ​ Total average interest-earning assets ​ 14,754,880 ​ ​ 14,078,061 ​ ​ 14,548,665 ​ Net interest margin (FTE) (non-GAAP) ​ ​ 3.07 % ​ 3.14 % ​ 2.92 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating noninterest revenues (non-GAAP) ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest revenues (GAAP) ​ $ 297,186 ​ $ 214,834 ​ $ 258,725 ​ Loss on sales of investment securities ​ ​ 487 ​ ​ 52,329 ​ ​ 0 ​ Gain on debt extinguishment ​ ​ 0 ​ ​ (242) ​ ​ 0 ​ Unrealized (gain) loss on equity securities ​ ​ (1,231) ​ ​ 47 ​ ​ 44 ​ Total operating noninterest revenues (non-GAAP) ​ $ 296,442 ​ $ 266,968 ​ $ 258,769 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating noninterest expenses (non-GAAP) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest expenses (GAAP) ​ $ 486,825 ​ $ 472,685 ​ $ 424,268 ​ Acquisition expenses ​ ​ (213) ​ ​ (63) ​ ​ (5,021) ​ Acquisition-related contingent consideration adjustments ​ ​ (244) ​ ​ (3,280) ​ ​ 300 ​ Restructuring expenses ​ ​ 0 ​ ​ (1,163) ​ ​ 0 ​ Litigation accrual ​ ​ (138) ​ ​ (5,800) ​ ​ 0 ​ Amortization of intangible assets ​ ​ (14,259) ​ ​ (14,511) ​ ​ (15,214) ​ Total operating noninterest expenses (non-GAAP) ​ $ 471,971 ​ $ 447,868 ​ $ 404,333 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating revenues (non-GAAP) ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest income (GAAP) ​ $ 449,117 ​ $ 437,285 ​ $ 420,630 ​ Noninterest revenues (GAAP) ​ 297,186 ​ 214,834 ​ 258,725 ​ Total revenues (GAAP) ​ 746,303 ​ 652,119 ​ 679,355 ​ Loss on sales of investment securities ​ ​ 487 ​ ​ 52,329 ​ ​ 0 ​ Gain on debt extinguishment ​ ​ 0 ​ ​ (242) ​ ​ 0 ​ Unrealized (gain) loss on equity securities ​ ​ (1,231) ​ ​ 47 ​ ​ 44 ​ Total operating revenues (non-GAAP) ​ $ 745,559 ​ $ 704,253 ​ $ 679,399 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest revenues/total revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total noninterest revenues (GAAP) – numerator ​ $ 297,186 ​ $ 214,834 ​ $ 258,725 ​ Total revenues (GAAP) – denominator ​ 746,303 ​ 652,119 ​ 679,355 ​ Noninterest revenues/total revenues (GAAP) ​ ​ 39.8 % ​ 32.9 % ​ 38.1 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating noninterest revenues/operating revenues (FTE) (non-GAAP) ​ ​ ​ ​ ​ ​ ​ ​ ​ Total operating noninterest revenues (non-GAAP) – numerator ​ $ 296,442 ​ $ 266,968 ​ $ 258,769 ​ Total operating revenues (non-GAAP) ​ ​ 745,559 ​ ​ 704,253 ​ ​ 679,399 ​ Fully tax-equivalent adjustment (non-GAAP) ​ ​ 3,721 ​ ​ 4,242 ​ ​ 4,074 ​ Total operating revenues (FTE) (non-GAAP) – denominator ​ ​ 749,280 ​ ​ 708,495 ​ ​ 683,473 ​ Operating noninterest revenues/operating revenues (FTE) (non-GAAP) ​ ​ 39.6 % ​ 37.7 % ​ 37.9 % ​ 79 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (000’s omitted) 2024 2023 2022 ​ Efficiency ratio (GAAP) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total noninterest expenses (GAAP) – numerator ​ $ 486,825 ​ $ 472,685 ​ $ 424,268 ​ Total revenues (GAAP) – denominator ​ 746,303 ​ 652,119 ​ 679,355 ​ Efficiency ratio (GAAP) ​ ​ 65.2 % ​ 72.5 % ​ 62.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating efficiency ratio (non-GAAP) ​ ​ ​ ​ Total operating noninterest expenses (non-GAAP) – numerator ​ $ 471,971 ​ $ 447,868 ​ $ 404,333 ​ Total operating revenues (FTE) (non-GAAP) – denominator ​ 749,280 ​ 708,495 ​ 683,473 ​ Operating efficiency ratio (non-GAAP) ​ ​ 63.0 % ​ 63.2 % ​ 59.2 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on tangible equity (non-GAAP) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (GAAP) ​ $ 182,481 ​ $ 131,924 ​ $ 188,081 ​ Average shareholders’ equity ​ ​ 1,695,794 ​ ​ 1,595,724 ​ ​ 1,733,521 ​ Average goodwill and intangible assets, net ​ ​ (902,681) ​ ​ (900,058) ​ ​ (891,647) ​ Average deferred taxes on goodwill and intangible assets, net ​ ​ 44,908 ​ ​ 45,664 ​ ​ 45,145 ​ Average tangible common equity (non-GAAP) ​ ​ 838,021 ​ ​ 741,330 ​ ​ 887,019 ​ Return on tangible equity (non-GAAP) ​ ​ 21.78 % ​ 17.80 % ​ 21.20 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating return on tangible equity (non-GAAP) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating net income (non-GAAP) ​ $ 193,911 ​ $ 192,716 ​ $ 206,791 ​ Average tangible common equity (non-GAAP) ​ 838,021 ​ 741,330 ​ 887,019 ​ Operating return on tangible equity (non-GAAP) ​ ​ 23.14 % ​ 26.00 % ​ 23.31 % ​ 80 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (000’s omitted) 2024 2023 2022 Total tangible assets (non-GAAP) ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets (GAAP) ​ $ 16,386,044 ​ $ 15,555,753 ​ $ 15,835,651 ​ Goodwill and intangible assets, net ​ (901,471) ​ (897,987) ​ (902,837) ​ Deferred taxes on goodwill and intangible assets, net ​ 44,618 ​ 45,198 ​ 46,130 ​ Total tangible assets (non-GAAP) ​ $ 15,529,191 ​ $ 14,702,964 ​ $ 14,978,944 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total tangible common equity (non-GAAP) ​ ​ ​ ​ ​ ​ ​ Shareholders’ equity (GAAP) ​ $ 1,762,835 ​ $ 1,697,937 ​ $ 1,551,705 ​ Goodwill and intangible assets, net ​ (901,471) ​ (897,987) ​ (902,837) ​ Deferred taxes on goodwill and intangible assets, net ​ 44,618 ​ 45,198 ​ 46,130 ​ Total tangible common equity (non-GAAP) ​ $ 905,982 ​ $ 845,148 ​ $ 694,998 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shareholders’ equity-to-assets ratio at year end ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total shareholders' equity (GAAP) - numerator ​ $ 1,762,835 ​ $ 1,697,937 ​ $ 1,551,705 ​ Total assets (GAAP) - denominator ​ ​ 16,386,044 ​ ​ 15,555,753 ​ ​ 15,835,651 ​ Shareholders’ equity-to-assets ratio at year end (GAAP) ​ ​ 10.76 % ​ 10.92 % ​ 9.80 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tangible equity-to-tangible assets ratio at year end (non-GAAP) ​ ​ ​ ​ ​ ​ ​ Total tangible common equity (non-GAAP) - numerator ​ $ 905,982 ​ $ 845,148 ​ $ 694,998 ​ Total tangible assets (non-GAAP) - denominator ​ ​ 15,529,191 ​ ​ 14,702,964 ​ ​ 14,978,944 ​ Tangible equity-to-tangible assets ratio at year end (non-GAAP) ​ 5.83 % 5.75 % 4.64 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Book value (GAAP) ​ ​ ​ ​ ​ ​ ​ Total shareholders’ equity (GAAP) – numerator ​ $ 1,762,835 ​ $ 1,697,937 ​ $ 1,551,705 ​ Period end common shares outstanding – denominator ​ ​ 52,668 ​ ​ 53,327 ​ ​ 53,737 ​ Book value (GAAP) ​ $ 33.47 ​ $ 31.84 ​ $ 28.88 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tangible book value (non-GAAP) ​ ​ ​ ​ ​ ​ ​ Total tangible common equity (non-GAAP) – numerator ​ $ 905,982 ​ $ 845,148 ​ $ 694,998 ​ Period end common shares outstanding – denominator ​ ​ 52,668 ​ ​ 53,327 ​ ​ 53,737 ​ Tangible book value (non-GAAP) ​ $ 17.20 ​ $ 15.85 ​ $ 12.93 ​ ​ ​
Biggest changeIf the Company does update or correct one or more forward-looking statements, investors and others should not conclude that the Company will make additional updates or corrections with respect thereto or with respect to other forward-looking statements. ​ ​ 71 Table of Contents Reconciliation of GAAP to Non-GAAP Measures ​ Table 20: GAAP to Non-GAAP Reconciliations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (000’s omitted) ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Operating pre-tax, pre-provision net revenue (non-GAAP) ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (GAAP) ​ $ 210,455 ​ $ 182,481 ​ $ 131,924 Income taxes ​ 64,939 ​ 54,224 ​ 36,307 Income before income taxes ​ 275,394 ​ 236,705 ​ 168,231 Provision for credit losses ​ 21,350 ​ 22,773 ​ 11,203 Pre-tax, pre-provision net revenue (non-GAAP) ​ 296,744 ​ 259,478 ​ 179,434 Acquisition expenses ​ 3,663 ​ 213 ​ 63 Acquisition-related contingent consideration adjustments ​ ​ 0 ​ ​ 244 ​ ​ 3,280 Litigation accrual ​ ​ (50) ​ ​ 138 ​ ​ 5,800 Restructuring expenses ​ ​ 1,499 ​ ​ 0 ​ ​ 1,163 Loss on sales of investment securities ​ ​ 0 ​ ​ 487 ​ ​ 52,329 Gain on debt extinguishment ​ ​ 0 ​ ​ 0 ​ ​ (242) Unrealized (gain) loss on equity securities ​ (375) ​ (1,231) ​ 47 Amortization of intangible assets ​ ​ 13,846 ​ ​ 14,259 ​ ​ 14,511 Operating pre-tax, pre-provision net revenue (non-GAAP) ​ $ 315,327 ​ $ 273,588 ​ $ 256,385 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating pre-tax, pre-provision net revenue per share (non-GAAP) ​ ​ ​ ​ ​ ​ Diluted earnings per share (GAAP) ​ $ 3.97 ​ $ 3.44 ​ $ 2.45 Income taxes ​ 1.22 ​ 1.02 ​ 0.67 Income before income taxes ​ 5.19 ​ 4.46 ​ 3.12 Provision for credit losses ​ 0.40 ​ 0.43 ​ 0.21 Pre-tax, pre-provision net revenue per share (non-GAAP) ​ 5.59 ​ 4.89 ​ 3.33 Acquisition expenses ​ 0.07 ​ 0.00 ​ 0.00 Acquisition-related contingent consideration adjustments ​ ​ 0.00 ​ ​ 0.00 ​ ​ 0.06 Litigation accrual ​ ​ 0.00 ​ ​ 0.00 ​ ​ 0.11 Restructuring expenses ​ ​ 0.03 ​ ​ 0.00 ​ ​ 0.02 Loss on sales of investment securities ​ 0.00 ​ 0.01 ​ 0.97 Gain on debt extinguishment ​ ​ 0.00 ​ ​ 0.00 ​ ​ 0.00 Unrealized (gain) loss on equity securities ​ (0.01) ​ (0.02) ​ 0.00 Amortization of intangible assets ​ ​ 0.26 ​ ​ 0.27 ​ ​ 0.27 Operating pre-tax, pre-provision net revenue per share (non-GAAP) ​ $ 5.94 ​ $ 5.15 ​ $ 4.76 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating net income (non-GAAP) ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (GAAP) ​ $ 210,455 ​ $ 182,481 ​ $ 131,924 Acquisition expenses ​ ​ 3,663 ​ ​ 213 ​ ​ 63 Tax effect of acquisition expenses ​ ​ (778) ​ ​ (40) ​ ​ (13) Subtotal (non-GAAP) ​ ​ 213,340 ​ ​ 182,654 ​ ​ 131,974 Acquisition-related contingent consideration adjustments ​ ​ 0 ​ ​ 244 ​ ​ 3,280 Tax effect of acquisition-related contingent consideration adjustments ​ ​ 0 ​ ​ (46) ​ ​ (689) Subtotal (non-GAAP) ​ ​ 213,340 ​ ​ 182,852 ​ ​ 134,565 Litigation accrual ​ ​ (50) ​ ​ 138 ​ ​ 5,800 Tax effect of litigation accrual ​ ​ 11 ​ ​ (26) ​ ​ (1,218) Subtotal (non-GAAP) ​ ​ 213,301 ​ ​ 182,964 ​ ​ 139,147 Restructuring expenses ​ ​ 1,499 ​ ​ 0 ​ ​ 1,163 Tax effect of restructuring expenses ​ ​ (318) ​ ​ 0 ​ ​ (244) Subtotal (non-GAAP) ​ ​ 214,482 ​ ​ 182,964 ​ ​ 140,066 Loss on sales of investment securities ​ ​ 0 ​ ​ 487 ​ ​ 52,329 Tax effect of loss on sales of investment securities ​ ​ 0 ​ ​ (93) ​ ​ (10,989) Subtotal (non-GAAP) ​ ​ 214,482 ​ ​ 183,358 ​ ​ 181,406 Gain on debt extinguishment ​ ​ 0 ​ ​ 0 ​ ​ (242) Tax effect of gain on debt extinguishment ​ ​ 0 ​ ​ 0 ​ ​ 51 Subtotal (non-GAAP) ​ ​ 214,482 ​ ​ 183,358 ​ ​ 181,215 Unrealized (gain) loss on equity securities ​ ​ (375) ​ ​ (1,231) ​ ​ 47 Tax effect of unrealized (gain) loss on equity securities ​ ​ 80 ​ ​ 234 ​ ​ (10) Subtotal (non-GAAP) ​ ​ 214,187 ​ ​ 182,361 ​ ​ 181,252 Amortization of intangible assets ​ ​ 13,846 ​ ​ 14,259 ​ ​ 14,511 Tax effect of amortization of intangible assets ​ ​ (2,942) ​ ​ (2,709) ​ ​ (3,047) Operating net income (non-GAAP) ​ $ 225,091 ​ $ 193,911 ​ $ 192,716 ​ 72 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (000's omitted) ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Operating diluted earnings per share (non-GAAP) ​ ​ ​ ​ ​ ​ ​ Diluted earnings per share (GAAP) ​ $ 3.97 ​ $ 3.44 ​ $ 2.45 ​ Acquisition expenses ​ 0.07 ​ 0.00 ​ 0.00 ​ Tax effect of acquisition expenses ​ ​ (0.01) ​ ​ 0.00 ​ ​ 0.00 ​ Subtotal (non-GAAP) ​ ​ 4.03 ​ ​ 3.44 ​ ​ 2.45 ​ Acquisition-related contingent consideration adjustments ​ ​ 0.00 ​ ​ 0.00 ​ ​ 0.06 ​ Tax effect of acquisition-related contingent consideration adjustments ​ ​ 0.00 ​ ​ 0.00 ​ ​ (0.01) ​ Subtotal (non-GAAP) ​ 4.03 ​ 3.44 ​ 2.50 ​ Litigation accrual ​ 0.00 ​ 0.00 ​ 0.11 ​ Tax effect of litigation accrual ​ ​ 0.00 ​ ​ 0.00 ​ ​ (0.03) ​ Subtotal (non-GAAP) ​ ​ 4.03 ​ ​ 3.44 ​ ​ 2.58 ​ Restructuring expenses ​ ​ 0.03 ​ ​ 0.00 ​ ​ 0.02 ​ Tax effect of restructuring expenses ​ ​ (0.01) ​ ​ 0.00 ​ ​ 0.00 ​ Subtotal (non-GAAP) ​ ​ 4.05 ​ ​ 3.44 ​ ​ 2.60 ​ Loss on sales of investment securities ​ ​ 0.00 ​ ​ 0.01 ​ ​ 0.97 ​ Tax effect of loss on sales of investment securities ​ 0.00 ​ 0.00 ​ (0.21) ​ Subtotal (non-GAAP) ​ 4.05 ​ 3.45 ​ 3.36 ​ Gain on debt extinguishment ​ ​ 0.00 ​ ​ 0.00 ​ ​ 0.00 ​ Tax effect of gain on debt extinguishment ​ ​ 0.00 ​ ​ 0.00 ​ ​ 0.00 ​ Subtotal (non-GAAP) ​ ​ 4.05 ​ ​ 3.45 ​ ​ 3.36 ​ Unrealized (gain) loss on equity securities ​ ​ (0.01) ​ ​ (0.02) ​ ​ 0.00 ​ Tax effect of unrealized (gain) loss on equity securities ​ ​ 0.00 ​ ​ 0.00 ​ ​ 0.00 ​ Subtotal (non-GAAP) ​ 4.04 ​ 3.43 ​ 3.36 ​ Amortization of intangible assets ​ ​ 0.26 ​ ​ 0.27 ​ ​ 0.27 ​ Tax effect of amortization of intangible assets ​ (0.06) ​ (0.05) ​ ​ (0.06) ​ Operating diluted earnings per share (non-GAAP) ​ $ 4.24 ​ $ 3.65 ​ $ 3.57 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on assets ​ ​ ​ ​ ​ ​ ​ Net income (GAAP) ​ $ 210,455 ​ $ 182,481 ​ $ 131,924 ​ Average total assets ​ 16,743,361 ​ 15,990,697 ​ 15,242,884 ​ Return on assets (GAAP) ​ 1.26 % 1.14 % 0.87 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating return on assets (non-GAAP) ​ ​ ​ ​ ​ ​ ​ Operating net income (non-GAAP) ​ $ 225,091 ​ $ 193,911 ​ $ 192,716 ​ Average total assets ​ 16,743,361 ​ 15,990,697 ​ 15,242,884 ​ Operating return on assets (non-GAAP) ​ 1.34 % 1.21 % 1.26 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on equity ​ ​ ​ ​ ​ ​ ​ Net income (GAAP) ​ $ 210,455 ​ $ 182,481 ​ $ 131,924 ​ Average total equity ​ 1,864,775 ​ 1,695,794 ​ 1,595,724 ​ Return on equity (GAAP) ​ 11.29 % 10.76 % 8.27 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating return on equity (non-GAAP) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating net income (non-GAAP) ​ $ 225,091 ​ $ 193,911 ​ $ 192,716 ​ Average total equity ​ ​ 1,864,775 ​ ​ 1,695,794 ​ ​ 1,595,724 ​ Operating return on equity (non-GAAP) ​ 12.07 % ​ 11.43 % ​ 12.08 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest margin ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest income ​ $ 506,550 ​ $ 449,117 ​ $ 437,285 ​ Total average interest-earning assets ​ ​ 15,393,824 ​ ​ 14,754,880 ​ ​ 14,078,061 ​ Net interest margin ​ ​ 3.29 % ​ 3.04 % ​ 3.11 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest margin (FTE) (non-GAAP) ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest income ​ $ 506,550 ​ $ 449,117 ​ $ 437,285 ​ Fully tax-equivalent adjustment (non-GAAP) ​ 3,533 ​ ​ 3,721 ​ ​ 4,242 ​ Fully tax-equivalent net interest income (non-GAAP) ​ ​ 510,083 ​ ​ 452,838 ​ ​ 441,527 ​ Total average interest-earning assets ​ 15,393,824 ​ ​ 14,754,880 ​ ​ 14,078,061 ​ Net interest margin (FTE) (non-GAAP) ​ 3.31 % ​ 3.07 % ​ 3.14 % ​ 73 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (000’s omitted) ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 ​ Operating noninterest revenues (non-GAAP) ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest revenues (GAAP) ​ $ 311,457 ​ $ 297,186 ​ $ 214,834 ​ Loss on sales of investment securities ​ ​ 0 ​ ​ 487 ​ ​ 52,329 ​ Gain on debt extinguishment ​ ​ 0 ​ ​ 0 ​ ​ (242) ​ Unrealized (gain) loss on equity securities ​ ​ (375) ​ ​ (1,231) ​ ​ 47 ​ Total operating noninterest revenues (non-GAAP) ​ $ 311,082 ​ $ 296,442 ​ $ 266,968 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating noninterest expenses (non-GAAP) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest expenses (GAAP) ​ $ 521,263 ​ $ 486,825 ​ $ 472,685 ​ Acquisition expenses ​ ​ (3,663) ​ ​ (213) ​ ​ (63) ​ Acquisition-related contingent consideration adjustments ​ ​ 0 ​ ​ (244) ​ ​ (3,280) ​ Litigation accrual ​ ​ 50 ​ ​ (138) ​ ​ (5,800) ​ Restructuring expenses ​ ​ (1,499) ​ ​ 0 ​ ​ (1,163) ​ Amortization of intangible assets ​ ​ (13,846) ​ ​ (14,259) ​ ​ (14,511) ​ Total operating noninterest expenses (non-GAAP) ​ $ 502,305 ​ $ 471,971 ​ $ 447,868 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating revenues (non-GAAP) ​ ​ ​ ​ ​ ​ ​ ​ ​ Net interest income (GAAP) ​ $ 506,550 ​ $ 449,117 ​ $ 437,285 ​ Noninterest revenues (GAAP) ​ 311,457 ​ 297,186 ​ 214,834 ​ Total revenues (GAAP) ​ 818,007 ​ 746,303 ​ 652,119 ​ Loss on sales of investment securities ​ ​ 0 ​ ​ 487 ​ ​ 52,329 ​ Gain on debt extinguishment ​ ​ 0 ​ ​ 0 ​ ​ (242) ​ Unrealized (gain) loss on equity securities ​ ​ (375) ​ ​ (1,231) ​ ​ 47 ​ Total operating revenues (non-GAAP) ​ $ 817,632 ​ $ 745,559 ​ $ 704,253 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest revenues/total revenues ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total noninterest revenues (GAAP) – numerator ​ $ 311,457 ​ $ 297,186 ​ $ 214,834 ​ Total revenues (GAAP) – denominator ​ 818,007 ​ ​ 746,303 ​ ​ 652,119 ​ Noninterest revenues/total revenues (GAAP) ​ ​ 38.1 % ​ 39.8 % ​ 32.9 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating noninterest revenues/operating revenues (FTE) (non-GAAP) ​ ​ ​ ​ ​ ​ ​ ​ ​ Total operating noninterest revenues (non-GAAP) – numerator ​ $ 311,082 ​ $ 296,442 ​ $ 266,968 ​ Total operating revenues (non-GAAP) ​ ​ 817,632 ​ ​ 745,559 ​ ​ 704,253 ​ Fully tax-equivalent adjustment (non-GAAP) ​ ​ 3,533 ​ ​ 3,721 ​ ​ 4,242 ​ Total operating revenues (FTE) (non-GAAP) – denominator ​ ​ 821,165 ​ ​ 749,280 ​ ​ 708,495 ​ Operating noninterest revenues/operating revenues (FTE) (non-GAAP) ​ ​ 37.9 % ​ 39.6 % ​ 37.7 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Efficiency ratio (GAAP) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total noninterest expenses (GAAP) – numerator ​ $ 521,263 ​ $ 486,825 ​ $ 472,685 ​ Total revenues (GAAP) – denominator ​ 818,007 ​ 746,303 ​ 652,119 ​ Efficiency ratio (GAAP) ​ ​ 63.7 % ​ 65.2 % ​ 72.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating efficiency ratio (non-GAAP) ​ ​ ​ ​ ​ ​ ​ Total operating noninterest expenses (non-GAAP) – numerator ​ $ 502,305 ​ $ 471,971 ​ $ 447,868 ​ Total operating revenues (FTE) (non-GAAP) – denominator ​ 821,165 ​ 749,280 ​ 708,495 ​ Operating efficiency ratio (non-GAAP) ​ ​ 61.2 % ​ 63.0 % ​ 63.2 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on tangible equity (non-GAAP) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (GAAP) ​ $ 210,455 ​ $ 182,481 ​ $ 131,924 ​ Average shareholders’ equity ​ ​ 1,864,775 ​ ​ 1,695,794 ​ ​ 1,595,724 ​ Average goodwill and intangible assets, net ​ ​ (902,145) ​ ​ (902,681) ​ ​ (900,058) ​ Average deferred taxes on goodwill and intangible assets, net ​ ​ 44,261 ​ ​ 44,908 ​ ​ 45,664 ​ Average tangible common equity (non-GAAP) ​ ​ 1,006,891 ​ ​ 838,021 ​ ​ 741,330 ​ Return on tangible equity (non-GAAP) ​ ​ 20.90 % ​ 21.78 % ​ 17.80 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating return on tangible equity (non-GAAP) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating net income (non-GAAP) ​ $ 225,091 ​ $ 193,911 ​ $ 192,716 ​ Average tangible common equity (non-GAAP) ​ 1,006,891 ​ 838,021 ​ 741,330 ​ Operating return on tangible equity (non-GAAP) ​ ​ 22.36 % ​ 23.14 % ​ 26.00 % ​ 74 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (000’s omitted) ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 Total tangible assets (non-GAAP) ​ ​ ​ ​ ​ ​ ​ ​ ​ Total assets (GAAP) ​ $ 17,303,296 ​ $ 16,386,044 ​ $ 15,555,753 ​ Goodwill and intangible assets, net ​ (942,716) ​ (901,471) ​ (897,987) ​ Deferred taxes on goodwill and intangible assets, net ​ 43,905 ​ 44,618 ​ 45,198 ​ Total tangible assets (non-GAAP) ​ $ 16,404,485 ​ $ 15,529,191 ​ $ 14,702,964 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total tangible common equity (non-GAAP) ​ ​ ​ ​ ​ ​ ​ Shareholders’ equity (GAAP) ​ $ 2,006,034 ​ $ 1,762,835 ​ $ 1,697,937 ​ Goodwill and intangible assets, net ​ (942,716) ​ (901,471) ​ (897,987) ​ Deferred taxes on goodwill and intangible assets, net ​ 43,905 ​ 44,618 ​ 45,198 ​ Total tangible common equity (non-GAAP) ​ $ 1,107,223 ​ $ 905,982 ​ $ 845,148 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Shareholders’ equity-to-assets ratio at quarter end ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total shareholders' equity (GAAP) - numerator ​ $ 2,006,034 ​ $ 1,762,835 ​ $ 1,697,937 ​ Total assets (GAAP) - denominator ​ ​ 17,303,296 ​ ​ 16,386,044 ​ ​ 15,555,753 ​ Shareholders’ equity-to-assets ratio at quarter (GAAP) ​ ​ 11.59 % ​ 10.76 % ​ 10.92 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tangible equity-to-tangible assets ratio at quarter end (non-GAAP) ​ ​ ​ ​ ​ ​ ​ Total tangible common equity (non-GAAP) - numerator ​ $ 1,107,223 ​ $ 905,982 ​ $ 845,148 ​ Total tangible assets (non-GAAP) - denominator ​ ​ 16,404,485 ​ ​ 15,529,191 ​ ​ 14,702,964 ​ Tangible equity-to-tangible assets ratio at quarter end (non-GAAP) ​ 6.75 % 5.83 % 5.75 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Book value (GAAP) ​ ​ ​ ​ ​ ​ ​ Total shareholders’ equity (GAAP) – numerator ​ $ 2,006,034 ​ $ 1,762,835 ​ $ 1,697,937 ​ Period end common shares outstanding – denominator ​ ​ 52,682 ​ ​ 52,668 ​ ​ 53,327 ​ Book value (GAAP) ​ $ 38.08 ​ $ 33.47 ​ $ 31.84 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tangible book value (non-GAAP) ​ ​ ​ ​ ​ ​ ​ Total tangible common equity (non-GAAP) – numerator ​ $ 1,107,223 ​ $ 905,982 ​ $ 845,148 ​ Period end common shares outstanding – denominator ​ ​ 52,682 ​ ​ 52,668 ​ ​ 53,327 ​ Tangible book value (non-GAAP) ​ $ 21.02 ​ $ 17.20 ​ $ 15.85 ​ ​ ​
In addition to these risk characteristics, the Company considers the portion of acquired loans to the overall segment balance, the change in the volume and terms of originations, differences between the losses incurred in the period used for quantitative modeling and a longer timeframe that includes the Great Recession of 2008 (the “Great Recession”), as well as recent delinquency, charge-off and risk rating trends compared to historical time periods.
In addition to these risk characteristics, the Company considers the portion of acquired loans to the overall segment balance, the change in the volume and terms of originations, differences between the losses incurred in the period used for quantitative modeling and a longer timeframe that includes the Great Recession of 2008 and 2009 (the “Great Recession”), as well as recent delinquency, charge-off and risk rating trends compared to historical time periods.
Results on a “tangible” basis exclude goodwill and intangible asset balances, net of accumulated amortization and applicable deferred tax amounts. Although these items are non-GAAP measures, the Company’s management believes this information helps investors and analysts measure underlying core performance and improves comparability to other organizations that have not engaged in acquisitions or restructuring activities.
Results on a “tangible” basis exclude goodwill and intangible asset balances, net of accumulated amortization and applicable deferred tax amounts. Although these items are non-GAAP measures, the Company’s management believes this information helps investors and analysts measure underlying core performance and improves comparability to other organizations that have not engaged in acquisition or restructuring activities.
Historical credit loss experience provides the basis for the estimation of expected future credit losses in all three methodologies. Qualitative adjustments are made for differences in loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, acquisition status, current levels of delinquencies, net charge-offs and risk ratings, as well as actual and forecasted macroeconomic variables.
Historical credit loss experience provides the basis for the estimation of expected future credit losses in all three methodologies. Qualitative adjustments are made for differences in portfolio risk characteristics such as differences in underwriting standards, portfolio mix, acquisition status, current levels of delinquencies, net charge-offs, and risk ratings, as well as actual and forecasted macroeconomic variables.
These collateral and industry statistics combined with no metropolitan statistical area (“MSA”) accounting for more than 14% of the CRE portfolio and a very low level of commercial real estate lending being conducted in major metropolitan areas, demonstrate the Company’s diversity in the business lending portfolio, as there are no significant property type, industry or geographic concentrations.
These collateral and industry statistics combined with no metropolitan statistical area (“MSA”) accounting for more than 14% of the CRE portfolio and a very low level of commercial real estate lending being conducted in major metropolitan areas, demonstrate the diversity of the Company’s business lending portfolio, as there are no significant industry or geographic concentrations.
(2) The MSAs within these captions include certain counties in adjacent states with a high degree of economic and social integration to the respective city based in New York or Pennsylvania. 64 Table of Contents The consumer mortgage portfolio is comprised of fixed (95%) and adjustable rate (5%) residential lending.
(2) The MSAs within these captions include certain counties in adjacent states with a high degree of economic and social integration to the respective city based in New York or Pennsylvania. 58 Table of Contents The consumer mortgage portfolio is comprised of fixed (95%) and adjustable rate (5%) residential lending.
As of December 31, 2024, there is sufficient liquidity available during the next year to cover projected cash outflows. In addition, stress tests on the cash flows are performed for various scenarios ranging from high probability events with a low impact on the liquidity position to low probability events with a high impact on the liquidity position.
As of December 31, 2025, there is sufficient liquidity available during the next year to cover projected cash outflows. In addition, stress tests on the cash flows are performed for various scenarios ranging from high probability events with a low impact on the liquidity position to low probability events with a high impact on the liquidity position.
The Company considers qualifying loans to require an individually assessment when, based on current information and events, it is probable that the Company will be unable to collect all principal and interest according to the contractual terms of the loan agreement or the loan is delinquent 90 days or more.
The Company considers qualifying loans to require an individual assessment when, based on current information and events, it is probable that the Company will be unable to collect all principal and interest according to the contractual terms of the loan agreement or the loan is delinquent 90 days or more.
Based on this analysis, a relationship may be assigned a special assets officer or other senior lending officer to review the loan, meet with the borrowers, assess the collateral and recommend an action plan. This plan could include foreclosure, restructuring loans, issuing demand letters or other actions.
Based on this analysis, a relationship may be assigned a special assets officer or other senior lending officer to meet with the borrowers, assess the collateral, and recommend an action plan. This plan could include foreclosure, restructuring loans, issuing demand letters or other actions.
Factors that could cause actual results to differ from those discussed in the forward - looking statements include: (1) adverse developments in the banking industry related to bank failures and the potential impact of such developments on customer confidence and regulatory responses to these developments; (2) current and future economic and market conditions, including the effects of changes in housing or vehicle prices, higher unemployment rates, disruptions in the commercial real estate market, labor shortages, supply chain disruption, inability to obtain raw materials and supplies, U.S. fiscal debt, budget and tax matters, geopolitical matters and conflicts, and any changes in global economic growth; (3) the effect of, and changes in, monetary and fiscal policies and laws, including future changes in Federal and state statutory income tax rates and interest rate and other policy actions of the Board of Governors of the Federal Reserve System; (4) the effect of changes in the level of checking or savings account deposits on the Company's funding costs and net interest margin including the possibility of a sudden withdrawal of the Company's deposits due to rapid spread of information or disinformation regarding the Company's well - being; (5) future provisions for credit losses on loans and debt securities; (6) changes in nonperforming assets; (7) the effect of a fall in stock market or bond prices on the Company's fee income businesses, including its employee benefit services, wealth management, and insurance businesses; (8) risks related to credit quality; (9) inflation, interest rate, liquidity, market and monetary fluctuations; (10) the strength of the U.S. economy in general and the strength of the local economies where the Company conducts its business; (11) the timely development of new products and services and customer perception of the overall value thereof (including features, pricing and quality) compared to competing products and services; (12) changes in consumer spending, borrowing and savings habits; (13) technological changes and implementation and financial risks associated with transitioning to new technology - based systems involving large multi - year contracts; (14) the ability of the Company to maintain the security, including cybersecurity, of its financial, accounting, technology, data processing and other operating systems, facilities and data, including customer data; (15) effectiveness of the Company's risk management processes and procedures, reliance on models which may be inaccurate or misinterpreted, the Company's ability to manage its credit or interest rate risk, the sufficiency of its allowance for credit losses and the accuracy of the assumptions or estimates used in preparing the Company's financial statements and disclosures; (16) failure of third parties to provide various services that are important to the Company's operations; (17) any acquisitions or mergers that might be considered or consummated by the Company and the costs and factors associated therewith, including differences in the actual financial results of the acquisition or merger compared to expectations and the realization of anticipated cost savings and revenue enhancements; (18) the ability to maintain and increase market share and control expenses; (19) the nature, timing and effect of changes in banking regulations or other regulatory or legislative requirements affecting the respective businesses of the Company and its subsidiaries, including changes in laws and regulations concerning taxes, accounting, banking, service fees, risk management, securities, capital requirements and other aspects of the financial services industry; (20) changes in the Company's organization, compensation and benefit plans and in the availability of, and compensation levels for, employees in its geographic markets; (21) the outcome of pending or future litigation and government proceedings; (22) the effect of opening new branches to expand the Company's geographic footprint, including the cost associated with opening and operating the branches and the uncertainty surrounding their success including the ability to meet expectations for future deposit and loan levels and commensurate revenues; (23) the effects of natural disasters could create economic and financial disruption; (24) the effects from changes in governmental leadership which expose the Company and its customers to a variety of political, economic, and regulatory risks, including the risk of changes in laws (including labor, trade, tax and other laws) and the potential for disruption in governmental agencies, services provided by the government, and funding of government sponsored projects; (25) other risk factors outlined in the Company's filings with the SEC from time to time; and (26) the success of the Company at managing the risks of the foregoing. ​ The foregoing list of important factors is not all-inclusive.
Factors that could cause actual results to differ from those discussed in the forward-looking statements include: (1) adverse developments in the banking industry related to bank failures and the potential impact of such developments on customer confidence and regulatory responses to these developments; (2) current and future economic and market conditions, including the effects of changes in housing or vehicle prices, higher unemployment rates, disruptions in the commercial real estate market, labor shortages, supply chain disruption, inability to obtain raw materials and supplies, U.S. fiscal debt, budget and tax matters, geopolitical matters and conflicts, the effects of announced or future tariff increases, changes in global trade policies, and any changes in global economic growth; (3) the effect of, and changes in, monetary and fiscal policies and laws, including future changes in Federal and state statutory income tax rates and interest rate and other policy actions of the Board of Governors of the Federal Reserve System; (4) the effect of changes in the level of checking or savings account deposits on the Company’s funding costs and net interest margin including the possibility of a sudden withdrawal of the Company’s deposits due to rapid spread of information or disinformation regarding the Company’s well-being; (5) future provisions for credit losses on loans and debt securities; (6) changes in nonperforming assets; (7) the effect of a fall in stock market or bond prices on the Company’s fee income businesses, including its employee benefit services, wealth management, and insurance businesses; (8) risks related to credit quality; (9) inflation, interest rate, liquidity, market and monetary fluctuations; (10) the strength of the U.S. economy in general and the strength of the local economies where the Company conducts its business; (11) the timely development of new products and services and customer perception of the overall value thereof (including features, pricing and quality) compared to competing products and services; (12) changes in consumer spending, borrowing and savings habits; (13) technological changes and implementation and financial risks associated with transitioning to new technology-based systems involving large multi-year contracts; (14) the ability of the Company to maintain the security, including cybersecurity, of its financial, accounting, technology, data processing and other operating systems, facilities and data, including customer data; (15) effectiveness of the Company’s risk management processes and procedures, reliance on models which may be inaccurate or misinterpreted, the Company’s ability to manage its credit or interest rate risk, the sufficiency of its allowance for credit losses and the accuracy of the assumptions or estimates used in preparing the Company’s financial statements and disclosures; (16) failure of third parties to provide various services that are important to the Company’s operations; (17) any acquisitions or mergers that might be considered or consummated by the Company and the costs and factors associated therewith, including differences in the actual financial results of the acquisition or merger compared to expectations and the realization of anticipated cost savings and revenue enhancements; (18) the ability to maintain and increase market share and control expenses; (19) the nature, timing and effect of changes in banking regulations or other regulatory or legislative requirements affecting the respective businesses of the Company and its subsidiaries, including changes in laws and regulations concerning taxes, accounting, banking, service fees, risk management, securities, capital requirements and other aspects of the financial services industry; (20) changes in the Company’s organization, compensation and benefit plans and in the availability of, and compensation levels for, employees in its geographic markets; (21) the outcome of pending or future litigation and government proceedings; (22) the effect of opening new branches to expand the Company’s geographic footprint, including the cost associated with opening and operating the branches and the uncertainty surrounding their success including the ability to meet expectations for future deposit and loan levels and commensurate revenues; (23) the effects of natural disasters could create economic and financial disruption; (24) the effects from changes in governmental leadership which expose the Company and its customers to a variety of political, economic, and regulatory risks, including the risk of changes in laws (including labor, trade, tax and other laws) and the potential for disruption in governmental agencies, services provided by the government, funding of government sponsored projects, and changes in the domestic political environment; (25) the effect of total or partial governmental shutdowns; (26) material differences in the actual financial results of investment activities compared with the Company's initial expectations, including the growth of the Insurtech market; (27) other risk factors outlined in the Company’s filings with the SEC from time to time; and (28) the success of the Company at managing the risks of the foregoing. ​ ​ 70 Table of Contents The foregoing list of important factors is not all-inclusive.
Adjustments are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, size and credit quality of acquired loans, delinquency level, risk ratings or term of loans as well as actual and forecasted macroeconomic trends, including unemployment rates and changes in property values such as home prices, commercial real estate prices, including office-specific property prices, automobile prices, office-specific property vacancy rates, gross domestic product, median household income net of inflation and other relevant factors in comparison to longer-term performance.
Adjustments are made for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, size and credit quality of acquired loans, delinquency levels, risk ratings or term of loans as well as actual and forecasted US macroeconomic trends, including unemployment rates, growth of gross domestic product and median household income net of inflation and changes in property values such as home prices, commercial real estate prices (including office-specific property prices), automobile prices, office-specific property vacancy rates, and other relevant factors in comparison to longer-term performance.
Management judgment and estimates are involved in determining the initial and ongoing carrying value of goodwill and other intangible assets. Initial and ongoing carrying values require the assessment of fair value based on discounted cash flow modeling techniques and inputs such as discount rates, required equity market premiums, peer volatility indicators and company-specific risk indicators.
Management judgment and estimates are involved in determining the initial and ongoing carrying value of goodwill and other intangible assets. Initial and ongoing carrying values require the assessment of fair value based on discounted cash flow modeling techniques and inputs such as discount rates, required equity market premiums, peer stock price volatility metrics and company-specific risk indicators.
The qualitative assessment requires significant management judgment, and if the qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit is not less than its carrying value, no quantitative analysis is necessary.
The qualitative assessment requires significant management judgment, and if the qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit is greater than its carrying value, no quantitative analysis is necessary.
This allocation is based on management’s assessment, as of a given point in time, of the risk characteristics of each of the component parts of the total loan portfolio and is subject to change when the risk factors of each component part change.
This allocation is based on management’s assessment, at a given point in time, of the risk characteristics of each of the component parts of the total loan portfolio and is subject to change when the risk factors of each component part change.
To illustrate the sensitivity of the ACL calculation to these economic forecasts, management performed a hypothetical sensitivity analysis using a weighting of 100% to the downside forecast, rather than the existing weighting of baseline, upside, and downside of 40%, 30%, and 30%, respectively.
To illustrate the sensitivity of the ACL calculation to these economic forecasts, management performed a hypothetical sensitivity analysis using a weighting of 100% to the downside forecast, rather than the existing weighting of baseline, upside, and downside of 40%, 20%, and 40%, respectively.
A decrease in the expected long-term rate of return on plan assets of 100 basis points would reduce the net periodic pension income by $2.6 million, while an increase of 100 basis points would increase net periodic pension income by $2.6 million.
A decrease in the expected long-term rate of return on plan assets of 100 basis points would reduce the net periodic pension income by $2.7 million, while an increase of 100 basis points would increase net periodic pension income by $2.7 million.
The Company’s and the Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. The Company and the Bank are required to maintain a “capital conservation buffer,” composed entirely of common equity Tier 1 capital, in addition to minimum risk-based capital ratios.
The Company’s and the Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. 52 Table of Contents The Company and the Bank are required to maintain a “capital conservation buffer,” composed entirely of common equity Tier 1 capital, in addition to minimum risk-based capital ratios.
The inputs for the qualitative analysis that require management judgment include macroeconomic conditions, industry and market conditions, financial performance of the reporting unit and other relevant events that affect the fair value of a reporting unit. During 2024, the Company performed qualitative goodwill analyses for all of the Company’s operating segments.
The inputs for the qualitative analysis that require management judgment include macroeconomic conditions, industry and market conditions, financial performance of the reporting unit and other relevant events that affect the fair value of a reporting unit. ​ During 2025, the Company performed quantitative goodwill analyses for all of the Company’s operating segments.
The remaining 6% of nonperforming loan balances relate to consumer installment and home equity loans, with home equity nonperforming loan levels being driven by the same factors identified for consumer mortgages.
The remaining 8% of nonperforming loan balances relate to consumer installment and home equity loans, with home equity nonperforming loan levels being driven by the same factors identified for consumer mortgages.
In addition, the Company offers comprehensive financial planning, trust administration and wealth management services through its Wealth Management Group operating unit and insurance services through its OneGroup NY, Inc. (“OneGroup”) operating unit.
In addition, the Company offers comprehensive financial planning, trust administration and wealth management services through its Nottingham Financial Group operating unit and insurance services through its OneGroup NY, Inc.
The decrease in this ratio from one year ago was primarily driven by the increase in nonperforming business loans previously mentioned. ​ Total delinquencies, defined as loans 30 days or more past due or in nonaccrual status, ended 2024 at 1.24% of total loans outstanding, compared to 1.06% at the end of 2023.
The increase in this ratio from one year ago was primarily driven by the decrease in nonperforming business loans previously mentioned. ​ Total delinquencies, defined as loans 30 days or more past due or in nonaccrual status, ended 2025 at 1.10% of total loans outstanding, compared to 1.24% at the end of 2024.
Approximately 57% of loans outstanding at the end of 2024 were made to consumers borrowing on an installment, line of credit or residential mortgage loan basis while 43% of loans outstanding at the end of 2024 were associated with business lending. 61 Table of Contents Mortgages on commercial property combined with general-purpose business lending to commercial, industrial, non-profit and governmental customers and vehicle dealer floor plan financing is characterized as the Company’s business lending activity.
Approximately 57% of loans outstanding at the end of 2025 were made to consumers borrowing on an installment, line of credit or residential mortgage loan basis while 43% of loans outstanding at the end of 2025 were associated with business lending. ​ Mortgages on commercial property combined with general-purpose business lending to commercial, industrial, non-profit, and governmental customers and vehicle dealer floor plan financing is characterized as the Company’s business lending activity.
If the final resolution of taxes payable differs from its estimates due to regulatory determination or legislative or judicial actions, adjustments to tax expense may be required. The effective income tax rate for 2024 was 22.9%, compared to 21.6% in 2023 and 21.7% in 2022.
If the final resolution of taxes payable differs from its estimates due to regulatory determination or legislative or judicial actions, adjustments to tax expense may be required. ​ The effective income tax rate for 2025 was 23.6%, compared to 22.9% in 2024 and 21.6% in 2023.
For the year ended December 31, 2024, a decrease in the discount rate of 100 basis points would reduce the net periodic pension income by $1.2 million, while an increase in the discount rate of 100 basis points would increase the net periodic pension income by $0.7 million.
For the year ended December 31, 2025, a decrease in the discount rate of 100 basis points would reduce the net periodic pension income by $0.7 million, while an increase in the discount rate of 100 basis points would decrease the net periodic pension income by $0.2 million.
The results of the stress tests as of December 31, 2024 indicate the Company has sufficient sources of liquidity for the next year in all simulated stressed scenarios. To measure longer-term liquidity, a baseline projection of growth in interest-earning assets and interest-bearing liabilities for five years is made to reflect how liquidity levels could change over time.
The results of the stress tests as of December 31, 2025 indicate the Company has sufficient sources of liquidity for the next year in all simulated stressed scenarios. ​ 54 Table of Contents To measure longer-term liquidity, a baseline projection of growth in interest-earning assets and interest-bearing liabilities for five years is made to reflect how liquidity levels could change over time.
The average quarter-end delinquency ratio for total loans in 2024 was 1.05%, as compared to an average of 0.88% in 2023, and 0.80% in 2022. ​ 67 Table of Contents The Company’s senior management, special asset officers and business lending management review all delinquent and nonaccrual loans and OREO regularly in order to identify deteriorating situations, monitor known problem credits and discuss any needed changes to collection efforts, if warranted.
The average quarter-end delinquency ratio for total loans in 2025 was 1.10%, as compared to an average of 1.05% in 2024, and 0.88% in 2023. ​ 61 Table of Contents The Company’s senior management, special asset officers and business lending management review all delinquent and nonaccrual loans and OREO regularly in order to identify deteriorating situations, monitor known problem credits and discuss any needed changes to collection efforts, if warranted.
This five-year measure reflects ample liquidity for loan and other asset growth over the next five years. 59 Table of Contents The possibility of a funding crisis exists at all financial institutions.
This five-year measure reflects ample liquidity for loan and other asset growth over the next five years. ​ The possibility of a funding crisis exists at all financial institutions.
The Insurance Services segment includes the operating subsidiary OneGroup, a full-service insurance agency offering personal and commercial lines of insurance and other risk management products and services. The Insurance Services segment includes 267 employees and 22 customer service facilities in New York, Pennsylvania, Massachusetts, South Carolina and Florida.
The Insurance Services segment includes the operating subsidiary OneGroup, a full-service insurance agency offering personal and commercial lines of insurance and other risk management products and services. The Insurance Services segment includes 256 employees and 23 customer service facilities in New York, Pennsylvania, Massachusetts, South Carolina, and Florida.
In addition, BPAS employs 459 professionals serving clients in every U.S. state plus the Commonwealth of Puerto Rico, and occupies 16 offices located in New York, Pennsylvania, Massachusetts, New Jersey, Texas, Minnesota, South Dakota, Washington, Florida and Puerto Rico.
In addition, BPAS employs 479 professionals serving clients in every U.S. state plus the Commonwealth of Puerto Rico, and occupies 17 offices located in New York, Pennsylvania, Massachusetts, New Jersey, Texas, Minnesota, South Dakota, Washington, Florida, and Puerto Rico.
The resulting difference is not intended to represent an expected increase in allowance levels, as future conditions are uncertain and there are several other quantitative and qualitative factors that will also fluctuate concurrent with changing economic conditions, which would affect the results of the ACL calculation.
The resulting difference is not intended to represent an expected increase in allowance levels, as future conditions are uncertain and there are several other quantitative and qualitative factors that will also fluctuate at the same time that economic conditions are changing, which would affect the results of the ACL calculation.
The required capital conservation buffer is 2.5% as of December 31, 2024, 2023 and 2022.
The required capital conservation buffer is 2.5% as of December 31, 2025, 2024 and 2023.
Further details regarding the methodologies applied to estimate the various components of the ACL are provided in Note A, “Summary of Significant Accounting Policies”, starting on page 89. 39 Table of Contents Pension, Post-Retirement and Other Employee Benefit Plans The Company provides a qualified defined benefit pension to eligible employees and retirees, other post-retirement health and life insurance benefits to certain retirees, an unfunded supplemental pension plan for certain key executives and an unfunded stock balance plan for certain of its nonemployee directors.
Further details regarding the methodologies applied to estimate the various components of the ACL are provided in Note A, “Summary of Significant Accounting Policies,” starting on page 83. ​ Pension, Post-Retirement and Other Employee Benefit Plans ​ The Company provides a qualified defined benefit pension to eligible employees and retirees, other post-retirement health and life insurance benefits to certain retirees, an unfunded supplemental pension plan for certain key executives and an unfunded stock balance plan for certain of its nonemployee directors.
The decrease in the tier 1 leverage ratio as compared to 2023 was the result of an increase in average assets, excluding intangibles and the market value adjustment on available-for-sale investment securities, of 5.4%, primarily due to organic loan growth, while shareholders’ equity, excluding intangibles and other comprehensive income or loss items, increased 3.7%, as the impact of net earnings retention outweighed share repurchases during the year.
The increase in the tier 1 leverage ratio as compared to 2024 was the result of an increase in shareholders’ equity, excluding intangibles and other comprehensive income or loss items of 5.0%, as the impact of net earnings retention outweighed share repurchases during the year, while average assets, excluding intangibles and the market value adjustment on available-for-sale investment securities, increased 4.7%, primarily due to the Santander branch acquisition and organic loan growth.
The allowance for credit losses to nonperforming loans ratio, a general measure of coverage adequacy, was 108% at the end of 2024 compared to 122% at year-end 2023 and 183% at December 31, 2022.
The allowance for credit losses to nonperforming loans ratio, a general measure of coverage adequacy, was 156% at the end of 2025 compared to 108% at year-end 2024 and 122% at December 31, 2023.
The Company’s geographic distribution of loans primarily outside of major metropolitan areas, combined with low statistical correlation between its historical losses and national economic indicators, results in changes to the allowance that are less significant as compared to economic metric-based modeling that is more directly correlated, and therefore sensitive to fluctuations in historical and projected national economic activity.
The Company’s geographic distribution of loans being primarily outside of major metropolitan areas, combined with low statistical correlation between its historical losses and national economic indicators, is reflected in the current methodology that would produce changes to the allowance that are less significant as compared to economic metric-based modeling that is more directly correlated, and therefore sensitive, to fluctuations in historical and projected national economic activity.
The hypothetical downside forecast includes assumptions of a weakening economy represented by a cumulative decline in real GDP of 2.6%, enhanced geopolitical tensions, elevated inflation, a peak unemployment rate of 8.3% and an average unemployment rate of 6.9%.
The hypothetical downside forecast includes assumptions of a weakening economy represented by a cumulative decline in real GDP of 2.6%, enhanced geopolitical tensions, elevated inflation, a peak unemployment rate of 8.4% and an average unemployment rate of 7.1%.
Interest income and yields are on a fully tax-equivalent (“FTE”) basis using a marginal income tax rate of 25.0% for 2024, 24.4% in 2023 and 24.3% in 2022. Average balances are computed by totaling the daily ending balances in a period and dividing by the number of days in that period.
Interest income and yields are on a FTE basis using a marginal income tax rate of 25.3% for 2025, 25.0% for 2024 and 24.4% for 2023. Average balances are computed by totaling the daily ending balances in a period and dividing by the number of days in that period.
The Company calculated that this hypothetical scenario would increase the ACL and provision for credit losses as of and for the year ended December 31, 2024 by approximately $4.7 million, and decrease net income by $3.5 million (net of tax). This change is reflective of the sensitivity of the various economic factors used in the ACL model.
The Company calculated that this hypothetical scenario would increase the ACL and provision for credit losses as of and for the year ended December 31, 2025 by approximately $3.8 million, and decrease net income by $2.8 million (net of tax). This change is reflective of the sensitivity of the various economic factors used in the ACL model.
At the end of 2024, 65% of the Company’s total deposits were in no and low rate checking and savings accounts. The total estimated amount of deposits that exceeded the $250,000 insured limit provided by the FDIC, net of collateralized and intercompany deposits, was approximately $2.35 billion at December 31, 2024.
At the end of 2025, 64% of the Company’s total deposits were in no and generally low rate checking and savings accounts. The total estimated amount of deposits that exceeded the $250,000 insured limit provided by the FDIC, net of collateralized and intercompany deposits, was approximately $2.74 billion at December 31, 2025.
The Company manages organic and acquired growth in a manner that enables it to continue to maintain and grow its capital base over time and maintain its ability to take advantage of future strategic growth opportunities. Cash dividends declared on common stock in 2024 of $96.0 million represented an increase of 0.5% over the prior year.
The Company manages organic and acquired growth in a manner that enables it to continue to maintain and grow its capital base over time and maintain its ability to take advantage of future strategic growth opportunities. ​ Cash dividends declared on common stock in 2025 of $98.1 million represented an increase of 2.2% over the prior year.
The Company’s larger criticized credits are also reviewed on a quarterly basis by senior management, senior credit administration management, special assets officers and business lending management to monitor their status and discuss relationship management plans.
The Company’s larger criticized credits (greater than $2.0 million exposure) are also reviewed on a quarterly basis by senior management, senior credit administration management, special assets officers and business lending management to monitor their status and discuss relationship management plans.
An allowance for credit losses is determined using the same methodology as other loans. The initial allowance for credit losses determined on a collective basis is allocated to individual loans. The sum of the loan’s purchase price and allowance for credit losses becomes its initial amortized cost basis.
PCD loans are initially recorded at the amount paid. An allowance for credit losses is determined using the same methodology as other loans. The initial allowance for credit losses determined on a collective basis is allocated to individual loans. The sum of the loan’s purchase price and allowance for credit losses becomes its initial amortized cost basis.
Although operating pre-tax, pre-provision net revenue is a non-GAAP measure, the Company’s management believes this information helps investors and analysts measure and compare the Company’s performance through a credit cycle by excluding the volatility in the provision for credit losses associated with the impact of CECL, helps investors and analysts measure underlying core performance and improves comparability to other organizations that have not engaged in acquisitions or restructuring activities.
Although operating pre-tax, pre-provision net revenue is a non-GAAP measure, the Company’s management believes this information helps investors and analysts measure and compare the Company’s performance through a credit cycle by excluding the volatility in the provision for credit losses associated with Current Expected Credit Loss (“CECL”) allowance methods, helps investors and analysts measure underlying core performance and improves comparability to other organizations that have not engaged in acquisition or restructuring activities.
The Bank Call Report estimated uninsured deposit balances at December 31, 2024 are reported gross at $4.38 billion, which includes intercompany account balances of $279.4 million, and collateralized deposits of $1.75 billion. Estimated insured deposits, net of collateralized and intercompany deposits, represent greater than 80% of ending total deposits at December 31, 2024.
The Bank Call Report estimated uninsured deposit balances at December 31, 2025 are reported gross at $4.54 billion, which includes intercompany account balances of $299.4 million, and collateralized deposits of $1.50 billion. Estimated insured deposits, net of collateralized and intercompany deposits, represent greater than 80% of ending total deposits at December 31, 2025.
For more information regarding the risk factor associated with the possibility of a funding crisis, refer to the discussion under the heading “Item 1A. Risk Factors” beginning on page 17 .
For more information regarding the risk factor associated with the possibility of a funding crisis, refer to the discussion under the heading “Item 1A.
Dividends per share for 2024 of $1.82 represents a 2.2% increase from $1.78 in 2023, a result of quarterly dividends per share increasing from $0.44 to $0.45 in the third quarter of 2023 and from $0.45 to $0.46 in the third quarter of 2024.
Dividends per share for 2025 of $1.86 represents a 2.2% increase from $1.82 in 2024, a result of quarterly dividends per share increasing from $0.45 to $0.46 in the third quarter of 2024 and from $0.46 to $0.47 in the third quarter of 2025.
The primary sources of funds are deposits, which totaled $13.44 billion at December 31, 2024. The primary sources of non-deposit funds are customer repurchase agreements and FHLB and FRB overnight advances and term borrowings.
The primary sources of funds are deposits, which totaled $14.39 billion at December 31, 2025. The primary sources of non-deposit funds are customer repurchase agreements and FHLB and FRB term borrowings and overnight advances.
The Company’s Benefit Plans Administrative Services, Inc. (“BPAS”) subsidiary is a leading provider of employee benefits administration, trust services, collective investment fund administration and actuarial consulting services to customers on a national scale.
The Company’s banking subsidiary is Community Bank, N.A. (the “Bank” or “CBNA”). The Company’s Benefit Plans Administrative Services, Inc. (“BPAS”) subsidiary is a leading provider of employee benefits administration, trust services, collective investment fund administration, and actuarial consulting services to customers on a national scale.
For additional financial information on the Company’s regulatory capital, refer to Note O – Regulatory Matters in the Notes to Consolidated Financial Statements. The shareholders’ equity-to-assets ratio was 10.76% at the end of 2024 compared to 10.92% at the end of 2023.
For additional financial information on the Company’s regulatory capital, refer to Note P – Regulatory Matters in the Notes to Consolidated Financial Statements. The shareholders’ equity-to-assets ratio was 11.59% at the end of 2025 compared to 10.76% at the end of 2024.
At December 31, 2024, a decrease in the discount rate of 100 basis points would increase the pension benefit obligation by $11.6 million, while an increase in the discount rate of 100 basis points would decrease the pension benefit obligation by $9.8 million.
At December 31, 2025, a decrease in the discount rate of 100 basis points would increase the pension benefit obligation by $11.3 million, while an increase in the discount rate of 100 basis points would decrease the pension benefit obligation by $9.5 million.
The recognition of customer relationship intangibles was determined based on a methodology that calculates the present value of the projected future net income derived from the acquired customer base. These customer relationship intangibles are being amortized on an accelerated basis over periods ranging from eight to twelve years.
Core deposit intangibles are amortized on an accelerated basis over eight years. The recognition of customer relationship intangibles was determined based on a methodology that calculates the present value of the projected future net income derived from the acquired customer base.
The Company continues to focus on expanding its core deposit relationship base through its competitive product offerings and high quality customer service. Full-year average governmental deposits increased $384.2 million, or 25.9%, during 2024 to $1.87 billion, reflective of competitive offerings and expansion of the Company’s governmental deposit relationship base due in part to additional business development efforts.
The Company continues to focus on expanding its deposit relationship base through its competitive product offerings, high-quality customer service, and market expansion initiatives. ​ Full-year average governmental deposits increased $175.1 million, or 9.4%, during 2025 to $2.04 billion, reflective of competitive offerings and expansion of the Company’s governmental deposit relationship base due in part to additional business development efforts.
The percentage of average funding derived from deposits was 93.5% in 2024 as compared to 95.3% in 2023 and 96.4% in 2022.
The percentage of average funding derived from deposits was 94.3% in 2025 as compared to 93.5% in 2024 and 95.3% in 2023.
(2) Changes due to volume and rate are computed from the respective changes in average balances and rates of the totals; they are not a summation of the changes of the components. 51 Table of Contents Noninterest Revenues The Company’s sources of noninterest revenues are of four primary types: 1) general banking services related to loans, including mortgage banking, deposits, customer interest rate swap fees, commercial real estate transaction advisory and placement services, and other core customer activities typically provided through the branch network and digital banking channels (performed by CBNA); 2) employee benefit trust, collective investment fund, transfer agency, actuarial, benefit plan administration and recordkeeping services (performed by BPAS and its subsidiaries); 3) wealth management services, comprised of trust services (performed by the Nottingham Trust division within CBNA), broker-dealer and investment advisory products and services (performed by Community Investment Services Inc.
(2) Changes due to volume and rate are computed from the respective changes in average balances and rates of the totals; they are not a summation of the changes of the components. 48 Table of Contents Noninterest Revenues ​ The Company’s sources of noninterest revenues are of four primary types: 1) general banking services related to loans, including mortgage banking, deposits, customer interest rate swap fees, CRE financing and structuring fees, and other core customer activities typically provided through the branch network, commercial banking offices, and digital banking channels (performed by CBNA); 2) employee benefit trust, collective investment fund, transfer agency, actuarial, benefit plan administration and recordkeeping services (performed by BPAS and its subsidiaries); 3) wealth management services, comprised of trust services (performed by the Nottingham Trust division within CBNA), broker-dealer and investment advisory products and services (performed by NISI) and Nottingham Wealth Partners, Inc.) and asset management services (performed by Nottingham), collectively referred to as Nottingham Financial Group; and 4) insurance and risk management products and services (performed by OneGroup).
This increase reflects net income of $131.9 million, stock-based compensation of $9.3 million, the issuance of shares through employee stock plans of $1.0 million and a decrease in accumulated other comprehensive loss of $129.5 million, partially offset by common stock dividends declared of $95.5 million and common stock repurchased of $30.0 million.
This increase reflects net income of $210.5 million, a decrease in accumulated other comprehensive loss of $129.1 million, stock-based compensation of $10.9 million, the issuance of shares through employee stock plans of $2.1 million, partially offset by common stock dividends declared of $98.2 million and common stock repurchased of $11.2 million.
Year-end nonperforming loans as a percentage of total loans and nonperforming assets as a percentage of loans and other real estate owned increased 14 and 16 basis points, respectively, as compared to December 31, 2023 levels, primarily attributable to an increase in nonperforming business lending loan balances.
Year-end nonperforming loans as a percentage of total loans and nonperforming assets as a percentage of loans and other real estate owned decreased 18 and 14 basis points, respectively, as compared to December 31, 2024 levels, primarily attributable to a decrease in nonperforming business lending loan balances.
The Company and the Bank are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s dividend paying ability and financial statements.
Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s dividend paying ability and financial statements.
Home equity had net charge-offs of $0.2 million, or 0.03%, in 2024 compared to net charge-offs of $0.1 million, or 0.02%, in 2023. 68 Table of Contents Management continually evaluates the credit quality of the Company’s loan portfolio and conducts a formal review of the adequacy of the allowance for credit losses on a quarterly basis.
Home equity had net charge-offs of $0.2 million, or 0.03%, in 2025, consistent with the levels in 2024. 62 Table of Contents Management continually evaluates the credit quality of the Company’s loan portfolio and conducts a formal review of the adequacy of the allowance for credit losses on a quarterly basis.
Average loans increased $849.0 million, or 9.2%, in 2024. This increase was driven by organic growth in all of the Company’s five main portfolios - business lending, consumer mortgage, consumer indirect, home equity and consumer direct.
Average loans increased $524.7 million, or 5.2%, in 2025. This increase was driven primarily by organic growth in all of the Company’s five main portfolios - business lending, consumer mortgage, consumer indirect, home equity and consumer direct.
Goodwill at December 31, 2024 totaled $853.2 million, comprised of $732.6 million related to banking acquisitions and $120.6 million arising from the acquisition of financial services businesses. Goodwill is subject to periodic impairment analysis to determine whether the carrying value of the identified businesses exceeds their fair value, which would necessitate a write-down of goodwill.
Goodwill at December 31, 2025 totaled $888.0 million, comprised of $764.6 million related to banking acquisitions and $123.4 million arising from the acquisition of non-banking financial services businesses. Goodwill is subject to periodic impairment analysis to determine whether the carrying value of the identified businesses exceeds their fair value, which would necessitate a write-down of goodwill.
A summary of the accounting policies used by management is disclosed in Note A, “Summary of Significant Accounting Policies”, starting on page 89. 38 Table of Contents Allowance for Credit Losses The allowance for credit losses (“ACL”) represents management’s judgment of an estimated amount of lifetime losses expected to be incurred on outstanding loans at the balance sheet date.
A summary of the significant accounting policies used by management is disclosed in Note A, “Summary of Significant Accounting Policies,” starting on page 83. ​ Allowance for Credit Losses ​ The allowance for credit losses (“ACL”) represents management’s judgment of an estimated amount of lifetime losses on outstanding loans at the balance sheet date.
At December 31, 2024, there were $261.6 million of customer repurchase agreements, $118.0 million of overnight borrowings, and $610.6 million of FHLB term borrowings outstanding. 58 Table of Contents The Company’s primary sources of available liquidity include unrestricted cash and cash equivalents, borrowing capacity at the FHLB and FRB, as well as net unpledged investment securities that could be sold, subject to market conditions, or used to collateralize additional funding.
At December 31, 2025, there were $231.2 million of customer repurchase agreements, $450.4 million of FHLB term borrowings outstanding, and no overnight borrowings. ​ The Company’s primary sources of available liquidity include unrestricted cash and cash equivalents, borrowing capacity at the FHLB and FRB, as well as net unpledged investment securities that could be sold, subject to market conditions, or used to collateralize additional funding.
The 2024 increase in quarterly dividends marked the 32 nd consecutive year of dividend increases for the Company. The dividend payout ratio for 2024 was 52.6% compared to 72.4% in 2023, and 49.9% in 2022.
The 2025 increase in quarterly dividends marked the 33rd consecutive year of dividend increases for the Company. The dividend payout ratio for 2025 was 46.6% compared to 52.6% in 2024, and 72.4% in 2023.
As disclosed in Table 3, fully tax-equivalent net interest income, a non-GAAP measure, totaled $452.8 million in 2024, an increase of $11.3 million, or 2.6%, from the prior year.
As disclosed in Table 3, fully tax-equivalent net interest income, a non-GAAP measure, totaled $510.1 million in 2025, an increase of $57.2 million, or 12.6%, from the prior year.
Treasury and agency securities ​ 0.00 % 0.00 % 3.37 % 3.71 % ​ 1,138,743 Government agency mortgage-backed securities ​ 0.00 % 0.00 % 0.00 % 5.59 % ​ 206,412 (1) Weighted-average yields are an arithmetic computation of income (not fully tax-equivalent adjusted) divided by book balance; they may differ from the yield to maturity, which considers the time value of money.
Treasury and agency securities ​ 0.00 % 3.28 % 3.34 % 3.66 % ​ 1,168,487 Government agency mortgage-backed securities ​ 0.00 % 0.00 % 0.00 % 5.36 % ​ 285,679 (1) Weighted-average yields are an arithmetic computation of income (not fully tax-equivalent adjusted) divided by book balance; they may differ from the yield to maturity, which considers the time value of money.
Loan interest income and yields include amortization of deferred loan income and costs, loan prepayment, late and other fees and the accretion of acquired loan purchase discounts and premiums. Average loan balances include acquired loan purchase discounts and premiums, nonaccrual loans and loans held for sale.
Loan interest income and yields include amortization of deferred loan income and costs, loan prepayment, late and other fees and the accretion of acquired loan purchase discounts and premiums.
During 2024, average deposits increased 2.5%, while average borrowings increased 45.3%. 72 Table of Contents The following table summarizes the outstanding balance of the Company’s borrowings as of December 31: Table 17: Borrowings ​ ​ ​ ​ ​ ​ ​ ​ (000’s omitted) 2024 2023 Overnight borrowings ​ $ 118,000 ​ $ 53,000 Securities sold under agreement to repurchase, short term ​ ​ 261,553 ​ ​ 304,595 Federal Home Loan Bank borrowings ​ 610,645 ​ 407,603 Finance lease liabilities ​ 8,667 ​ 0 Balance at end of period ​ $ 998,865 ​ $ 765,198 ​ Financial Instruments with Off-Balance Sheet Risk The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.
During 2025, average deposits increased 4.9%, while average borrowings decreased 8.8%. ​ 66 Table of Contents The following table summarizes the outstanding balance of the Company’s borrowings as of December 31: ​ Table 17: Borrowings ​ ​ ​ ​ ​ ​ ​ ​ (000’s omitted) ​ ​ ​ 2025 ​ ​ ​ 2024 Overnight borrowings ​ $ 0 ​ $ 118,000 Securities sold under agreement to repurchase, short term ​ ​ 231,163 ​ ​ 261,553 Federal Home Loan Bank borrowings ​ 450,439 ​ 610,645 Finance lease liabilities ​ 8,331 ​ 8,667 Balance at end of period ​ $ 689,933 ​ $ 998,865 ​ Financial Instruments with Off-Balance Sheet Risk ​ The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.
The provision for credit losses is calculated by subtracting the previous period allowance for credit losses, net of the interim period net charge-offs, from the current required allowance level. This provision is then recorded in the income statement for that period. Members of senior management and the Board’s Audit Committee review the adequacy of the allowance for credit losses quarterly.
The provision for credit losses is calculated by subtracting the previous period allowance for credit losses, net of the interim period net charge-offs, from the current required allowance level. This provision is then recorded in the income statement for that period.
This must be accomplished within the following constraints: (a) implementing certain interest rate risk management strategies which achieve a relatively stable level of net interest income; (b) providing both the regulatory and operational liquidity necessary to conduct day-to-day business activities; (c) considering investment risk-weights as determined by the regulatory risk-based capital guidelines; and (d) generating a favorable return without undue compromise of the other requirements.
This must be accomplished within the following constraints: (a) implementing certain interest rate risk management strategies which achieve a relatively stable level of net interest income; (b) providing both the regulatory and operational liquidity necessary to conduct day-to-day business activities; (c) considering investment risk-weights as determined by the regulatory risk-based capital guidelines; and (d) generating a favorable return without undue compromise of the other requirements. ​ The carrying value of the Company’s investment portfolio ended 2025 at $4.41 billion, an increase of $188.3 million, or 4.5%, from the end of 2024.
The scenario-weighted average unemployment rate and GDP growth forecasts used in the ACL model at December 31, 2024 were 4.8% and 1.8%, respectively, compared to 4.5% and 1.7% at December 31, 2023, respectively.
The scenario-weighted average unemployment rate and gross domestic product (“GDP”) growth forecasts used in the ACL model at December 31, 2025 were 5.5% and 1.3%, respectively, compared to 4.8% and 1.8% at December 31, 2024, respectively.
See Table 20 beginning on page 77 for Reconciliation of GAAP to Non-GAAP Measures. The dividend payout ratio for 2024 of 52.6% decreased from 72.4% in 2023 driven by a 38.3% increase in net income and a 0.5% increase in dividends declared.
See Table 20 beginning on page 72 for Reconciliation of GAAP to Non-GAAP Measures. ​ The dividend payout ratio for 2025 of 46.6% decreased from 52.6% in 2024 driven by a 15.3% increase in net income outpacing the 2.2% increase in dividends declared.
A 100 basis point increase in the discount rates used in each operating segment model would reduce estimated entity level fair value in total by approximately $275.1 million at the October 1, 2023 valuation date and was determined it would more likely than not result in no impairment of goodwill, as each reporting unit’s fair value would still exceed its carrying value. 40 Table of Contents Supplemental Reporting of Non-GAAP Results of Operations The Company also provides supplemental reporting of its results on an “operating” or “tangible” basis.
As of October 1, 2025, a 100 basis point increase in the discount rates used in each operating segment model would reduce estimated entity level fair value by approximately $361.2 million and would not result in impairment of goodwill, as each reporting unit’s fair value would still exceed its carrying value. ​ Supplemental Reporting of Non-GAAP Results of Operations ​ The Company also provides supplemental reporting of its results on an “operating” or “tangible” basis.
The change in accumulated other comprehensive loss was primarily driven by a positive $9.6 million adjustment in the overfunded status of the Company’s employee retirement plans, offset by $0.8 million of additional other comprehensive loss related to the Company’s available-for-sale investment portfolio.
The change in accumulated other comprehensive loss was primarily driven by a $118.0 million decrease in other comprehensive loss related to the Company’s available-for-sale investment portfolio, as well as a positive $11.1 million adjustment in the overfunded status of the Company’s employee retirement plans.
Non-governmental, non-time deposits are frequently considered to be an attractive source of funding because they are generally stable, do not need to be collateralized, carry a relatively low interest rate, generate fee income and provide a strong customer base for which a variety of loan, deposit and other financial service-related products can be cross-sold.
The increase in average deposits was due to organic growth and the acquisition of $543.7 million of deposits from the Santander branch acquisition in the fourth quarter of 2025. ​ Non-governmental, non-time deposits are frequently considered to be an attractive source of funding because they are generally stable, do not need to be collateralized, carry a relatively low interest rate, generate fee income and provide a strong customer base for which a variety of loan, deposit and other financial service-related products can be cross-sold.
Consumer installment loan net charge-offs increased to $6.9 million this year from $4.8 million in 2023, with a net charge-off ratio of 0.36% in 2024 and 0.26% in 2023. Consumer mortgage net charge-offs decreased to $0.3 million in 2024 compared to $0.6 million in 2023 with a net charge-off ratio of 0.01% and 0.02% in 2024 and 2023, respectively.
Consumer installment loan net charge-offs decreased to $6.7 million this year from $6.9 million in 2024, with a net charge-off ratio of 0.34% in 2025 and 0.36% in 2024. Consumer mortgage net charge-offs decreased to $0.1 million in 2025 compared to $0.3 million in 2024 with a net charge-off ratio of 0.00% and 0.01% in 2025 and 2024, respectively.
This resulted in an annual net charge-off ratio (net charge-offs / total average loans) of 0.10%, which was four basis points higher than the prior year, but one basis point below the 10-year historical average of 0.11%.
This resulted in an annual net charge-off ratio (net charge-offs / total average loans) of 0.12%, which was 2 basis points higher than both the prior year and the 10-year historical average of 0.10%.
The business loan balance increases are reflective of continued high demand for multi-family housing, expansion of internal resources and proactive business development and pricing in the Company’s market areas, as well as the Company’s strong liquidity profile relative to competitors that creates opportunities to gain market share.
See Table 10 below for concentrations of CRE lending by borrower type and Table 11 below for concentrations of CRE by property location. 56 Table of Contents The business loan balance increases are reflective of continued high demand for multi-family housing, expansion of internal resources and proactive business development and pricing in the Company’s market areas, as well as the Company’s strong liquidity profile relative to competitors that creates opportunities to gain market share.
See Table 20 for Reconciliation of GAAP to Non-GAAP Measures. ​ 54 Table of Contents Table 6: Noninterest Expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ (000’s omitted) 2024 2023 2022 ​ Salaries and employee benefits ​ $ 300,779 ​ $ 281,803 ​ $ 257,339 Data processing and communications ​ 61,843 ​ 57,585 ​ ​ 54,099 ​ Occupancy and equipment ​ 43,658 ​ 42,550 ​ ​ 42,413 ​ Business development and marketing ​ 16,059 ​ 15,731 ​ ​ 13,095 ​ Legal and professional fees ​ 15,323 ​ 15,921 ​ ​ 14,018 ​ Amortization of intangible assets ​ 14,259 ​ 14,511 ​ ​ 15,214 ​ Acquisition-related contingent consideration adjustments ​ ​ 244 ​ ​ 3,280 ​ ​ (300) ​ Acquisition expenses ​ 213 ​ 63 ​ ​ 5,021 ​ Restructuring expenses ​ ​ 0 ​ ​ 1,163 ​ ​ 0 ​ Litigation accrual ​ ​ 138 ​ ​ 5,800 ​ ​ 0 ​ Other ​ 34,309 ​ 34,278 ​ ​ 23,369 ​ Total noninterest expenses ​ $ 486,825 ​ $ 472,685 ​ $ 424,268 ​ Noninterest expenses/average assets ​ ​ 3.04 % ​ 3.10 % ​ 2.73 % Operating noninterest expenses (1) /average assets (non-GAAP) ​ 2.95 % 2.95 % ​ 2.60 % Efficiency ratio (GAAP) ​ ​ 65.2 % ​ 72.5 % ​ 62.5 % Operating efficiency ratio (non-GAAP) (2) ​ 63.0 % 63.2 % ​ 59.2 % (1) Operating noninterest expenses, a non-GAAP measure, is calculated as total noninterest expenses less acquisition expenses, acquisition-related contingent consideration adjustment, litigation accrual, restructuring expenses and amortization of intangible assets.
See Table 20 for Reconciliation of GAAP to Non-GAAP Measures. ​ Table 6: Noninterest Expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ (000's omitted) ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 ​ ​ ​ Salaries and employee benefits ​ $ 313,915 ​ $ 300,779 ​ $ 281,803 ​ Data processing and communications ​ 70,161 ​ 61,843 ​ ​ 57,585 ​ Occupancy and equipment ​ 48,249 ​ 43,658 ​ ​ 42,550 ​ Business development and marketing ​ 15,135 ​ 16,059 ​ ​ 15,731 ​ Legal and professional fees ​ 17,898 ​ 15,323 ​ ​ 15,921 ​ Amortization of intangible assets ​ 13,846 ​ 14,259 ​ ​ 14,511 ​ Litigation accrual ​ ​ (50) ​ ​ 138 ​ ​ 5,800 ​ Acquisition expenses ​ 3,663 ​ 213 ​ ​ 63 ​ Acquisition-related contingent consideration adjustments ​ ​ 0 ​ ​ 244 ​ ​ 3,280 ​ Restructuring expenses ​ ​ 1,499 ​ ​ 0 ​ ​ 1,163 ​ Other ​ 36,947 ​ 34,309 ​ ​ 34,278 ​ Total noninterest expenses ​ $ 521,263 ​ $ 486,825 ​ $ 472,685 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest expenses/average assets ​ 3.11 % ​ 3.04 % ​ 3.10 % Operating noninterest expenses (1) /average assets (non-GAAP) ​ ​ 3.00 % 2.95 % ​ 2.95 % Efficiency ratio ​ 63.7 % ​ 65.2 % ​ 72.5 % Operating efficiency ratio (non-GAAP) (2) ​ ​ 61.2 % 63.0 % ​ 63.2 % (1) Operating noninterest expenses, a non-GAAP measure, is calculated as total noninterest expenses less litigation accrual, acquisition expenses, acquisition-related contingent consideration adjustments, restructuring expenses and amortization of intangible assets.
Although fully tax-equivalent interest income, net interest income and net interest margin are non-GAAP measures, the Company’s management believes this information helps enhance comparability of the performance of assets that have different tax liabilities. Reconciliations of GAAP amounts with corresponding non-GAAP amounts are presented in Table 20.
Although fully tax-equivalent interest income, net interest income and net interest margin are non-GAAP measures, the Company’s management believes this information helps enhance comparability of the performance of earning assets that have different tax profiles.
Management considers the year-end 2024 and 2023 allowance for credit losses to be adequate. The provision for credit losses as a percentage of average loans was 0.23% in 2024 as compared to 0.12% in 2023 and 0.18% in 2022. The provision for credit losses was 225% of net charge-offs in 2024 versus 193% in 2023 and 443% in 2022.
Management considers the year-end 2025 and 2024 allowance for credit losses to be adequate. The provision for credit losses as a percentage of average loans was 0.20% in 2025 as compared to 0.23% in 2024 and 0.12% in 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeDeposit balance and mix changes and the resultant deposit and funding betas are assumed to move in a manner that reflects the Company’s (i) long-term historical relationship between the Company’s deposit rate movement and changes in the federal funds rate, (ii) recent interest rate cycle experience, (iii) significant management judgment and (iv) other factors, including recent market behaviors of customers and competitors.
Biggest changeDeposit balance and mix changes and the resultant deposit and funding betas are assumed to move in a manner that reflects the Company’s (i) long-term historical relationship between the Company’s deposit rate movement and changes in the federal funds rate, (ii) recent interest rate cycle experience, (iii) significant management judgment and (iv) other factors, including recent market behaviors of customers and competitors. ​ Net Interest Income Sensitivity Model ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Calculated annualized increase Calculated annualized increase ​ ​ ​ (decrease) in projected net interest (decrease) in projected net interest ​ ​ ​ income at December 31, 2025 income at December 31, 2025 ​ Interest rate scenario ​ ​ ​ (000’s omitted) (%) ​ +200 basis points ​ $ 2,989 ​ 0.5 % +100 basis points ​ $ 3,129 ​ 0.6 % -100 basis points ​ $ 2,066 ​ 0.4 % -200 basis points ​ $ (2,183) ​ (0.4) % ​ 76 Table of Contents Projected NII over the 12-month forecast period increases in the up 100 and up 200 interest rate environments largely due to higher income on cash balances, investments, and loans all partially offset by higher funding costs. ​ Projected NII increases in the down 100 interest rate environment largely due to lower funding costs which are partially offset by lower income on loans.
Management believes that the tax risk of the Company’s municipal investments associated with potential future changes in statutory, judicial and regulatory actions is minimal. Treasury, agency, mortgage-backed and collateralized mortgage obligation securities issued by government agencies comprise 90.4% of the total portfolio and are currently rated AAA by Moody’s Investor Services and AA+ by Standard & Poor’s.
Management believes that the tax risk of the Company’s municipal investments associated with potential future changes in statutory, judicial and regulatory actions is minimal. Treasury, agency, mortgage-backed and collateralized mortgage obligation securities issued by government agencies comprise 90.8% of the total portfolio and are currently rated AAA by Moody’s Investor Services and AA+ by Standard & Poor’s.
Therefore, almost all the market risk in the investment portfolio is related to interest rates. 81 Table of Contents The ongoing monitoring and management of both interest rate risk and liquidity over the short - and long - term time horizons is an important component of the Company’s asset/liability management process, which is governed by guidelines established in the policies reviewed and approved annually by the Company’s Board.
Therefore, almost all the market risk in the investment portfolio is related to interest rates. ​ ​ 75 Table of Contents The ongoing monitoring and management of both interest rate risk and liquidity over the short- and long-term time horizons is an important component of the Company's asset/liability management process, which is governed by guidelines established in the policies reviewed and approved annually by the Company’s Board.
Obligations of state and political subdivisions account for 9.4% of the total portfolio, of which 95.7% carry a minimum rating of A-. The remaining 0.2% of the portfolio is comprised of other investment grade securities. The Company does not have material foreign currency exchange rate risk exposure.
Obligations of state and political subdivisions account for 9.1% of the total portfolio, of which 95.7% carry a minimum rating of A-. The remaining 0.1% of the portfolio is comprised of other investment grade securities. The Company does not have material foreign currency exchange rate risk exposure.
These hypothetical estimates are based upon numerous assumptions: the nature and timing of interest rate levels (including yield curve shape), prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits, reinvestment/replacement of asset and liability cash flows, and other factors.
These hypothetical estimates are based upon numerous assumptions: the nature and timing of interest rate levels (including yield curve shape), prepayments on loans and securities, pricing decisions on loans and deposits, reinvestment/replacement of asset and liability cash flows, and other factors.
Investment cash inflows will be used to pay down overnight borrowings and fund loan growth. ● In the rising/falling rates scenarios, the prime rate, federal funds, and treasury curve rates are assumed to move up/down in a parallel manner by the amounts listed below over a 12-month period.
Investment cash inflows will be used to fund these purchases with any excess inflows being used to pay down overnight borrowings and fund loan growth. ​ ● In the rising/falling rates scenarios, the prime rate, the federal funds rate, and the 3-month treasury rate are assumed to move up/down in a straight-line manner by the amounts listed below over a 12-month period.
Projected NII in the down 200 rate environment is fairly neutral due to lower income on investments and loans being almost fully offset by lower funding costs. 82 Table of Contents The analysis does not represent a Company forecast and should not be relied upon as being indicative of expected operating results.
Projected NII decreases in the down 200 interest rate environment largely due to lower income on cash balances, investments, and loans all mostly offset by lower funding costs. ​ The analysis does not represent a Company forecast and should not be relied upon as being indicative of expected operating results.
The following reflects the Company’s estimated NII sensitivity as compared to the base case scenario over the subsequent twelve months based on: ● Balance sheet levels using December 31, 2024 as a starting point. ● The model assumes the Company’s average deposit balances will increase approximately 1.6% over the next twelve months. ● The model assumes the Company’s average earning asset balances will increase approximately 2.3% over the next twelve months, largely due to forecasted loan growth. ● Cash flows on earning assets are based on contractual maturity, optionality, and amortization schedules along with applicable prepayments derived from internal historical data and external sources. ● The model assumes no additional investment security purchases over the next twelve months.
The direction of interest rates, the slope of the yield curve, the modeled changes in deposit balances and the cost of funds, including the Company’s deposit and funding betas, are not easily predicted in the current market environment, and therefore a wide variety of strategic balance sheet and treasury yield curve scenarios are modeled on an ongoing basis. ​ The following reflects the Company's estimated NII sensitivity as compared to the base case scenario over the subsequent twelve months based on: ​ ● Balance sheet levels using December 31, 2025 as a starting point. ​ ● The model assumes the Company’s average deposit balances will increase approximately 2.6% over the next twelve months. ​ ● The model assumes the Company’s average earning asset balances will increase approximately 3.1% over the next twelve months, largely due to forecasted loan growth. ​ ● Cash flows on earning assets are based on contractual maturity, optionality, and amortization schedules along with applicable prepayments derived from internal historical data and external sources. ​ ● The model assumes approximately $60.0 million of additional mortgage-backed security purchases over the next twelve months.
Removed
The direction of interest rates, the slope of the yield curve, the modeled changes in deposit balances and the cost of funds, including the Company’s deposit and funding betas, are not easily predicted in the current market environment, and therefore a wide variety of strategic balance sheet and treasury yield curve scenarios are modeled on an ongoing basis.
Added
The remainder of the treasury curve normalizes to a historical shape based off a historical spread between the 3-month treasury and each point on the treasury curve, which also occurs over a 12-month period.
Removed
Net Interest Income Sensitivity Model ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Calculated annualized increase Calculated annualized increase ​ ​ ​ (decrease) in projected net interest (decrease) in projected net interest ​ ​ ​ income at December 31, 2024 income at December 31, 2024 ​ Interest rate scenario (000’s omitted) (%) ​ +200 basis points ​ $ (8,578) ​ (1.7) % +100 basis points ​ $ (4,416) ​ (0.9) % -100 basis points ​ $ 1,736 ​ 0.3 % -200 basis points ​ $ (16) ​ (0.0) % ​ Projected NII over the 12-month forecast period decreases in the up 100 and up 200 interest rate environments largely due to deposits and overnight borrowings repricing higher in year 1, which are only partially offset by loans repricing higher.
Removed
Projected NII increases in the down 100 interest rate environment due to lower funding costs which are partially offset by lower income on loans.

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