Community Bank System, Inc. (NYSE:CBU) reported fourth quarter 2016 net income of $26.4 million, an increase of 31.5% compared with $20.1 million earned for the fourth quarter of 2015. Diluted earnings per share totaled $0.59 for the fourth quarter of 2016, compared to $0.47 per share in the fourth quarter of 2015. Fourth quarter 2016 results included approximately $1.4 million, or two cents per share of acquisition expenses, while the fourth quarter of 2015 included $5.7 million of acquisition expenses, or nine cents per share. Record full year 2016 net income of $103.8 million, or $2.32 per share, was 13.8% above 2015’s earnings of $91.2 million, or $2.19 per share.

“Our solid fourth quarter and full year 2016 operating results were again driven by productive loan growth, particularly in our consumer lending portfolios, a continuation of exceptional credit quality, disciplined expense management and continued improvement in our non-interest income generation,” said President and Chief Executive Officer Mark E. Tryniski. “We successfully completed the integration of Oneida Financial in 2016 and are eager to continue to expand in the markets and product lines acquired.” Mr. Tryniski also commented, “As we celebrated our 150th year anniversary in 2016, the strength of our company continues to be driven by the commitment of our employees. Through their hard work and dedication, we continue to consistently deliver above-peer financial results. We remain well positioned to provide the right products and services to our customers so that they may achieve their financial objectives as we continue to create value for our shareholders.”

Mr. Tryniski continued, “We were also extremely pleased to announce two strategically important transactions during the quarter. In October, we announced plans to merge with Merchants Bancshares, Inc. (“Merchants”), a high-quality, $2.0 billion-asset company providing banking and other financial services across the State of Vermont and in Western Massachusetts. In early December, we reached an agreement to acquire Northeast Retirement Services, Inc. (“NRS”), a leading provider of benefit plan accounting, transfer agency, fund administration, trust and retirement plan services. Subject to certain shareholder and regulatory approvals, we look forward to both transactions closing in the first half of 2017.”

Total revenue for the fourth quarter of 2016 was $109.2 million, an increase of $11.1 million, or 11.3%, over the prior year quarter, and included the impact of the Oneida Financial transaction completed in December of last year. The higher revenue was generated as a result of a 5.3% increase in average earning assets and continued acquired and organic growth in noninterest income, as well as a six basis-point increase in net interest margin from the prior year quarter. A combination of acquired and organic growth resulted in a $4.1 million, or 22.0% increase in wealth management, insurance, and employee benefit services revenues. Deposit service fees increased 10.0% year-over-year, the result of increased card-related revenues offset by modestly lower fees from account overdraft protection programs, and included the additional revenue-producing activities from the Oneida transaction. The quarterly provision for loan losses of $2.6 million was $0.7 million lower than the fourth quarter of 2015, reflective of comparably better credit trends and modest portfolio growth. Non-performing asset and delinquent loan ratios were generally stable. Excluding acquisition expenses from both periods, total operating expenses of $65.6 million for the quarter were $6.3 million, or 10.6% above the fourth quarter of 2015, and included a full quarter of operating expenses from Oneida Financial. Certain statutory changes to state tax rates and structures along with a lower proportion of tax-exempt income resulted in a quarterly effective tax rate of 33.4% in the fourth quarter of 2016, compared to 32.7% in the fourth quarter of 2015.

Fourth quarter 2016 net interest income was $70.2 million, an increase of $5.3 million, or 8.1%, compared to the fourth quarter of 2015. Slightly lower funding costs and a four basis-point improvement in earning asset yields, which included a $1.2 million dividend from a limited partnership investment, resulted in a six basis point increase in net interest margin year-over-year. While average loan balances grew $474.5 million, or 10.6%, average loan yields declined ten basis points year-over-year, resulting in a $4.3 million increase in quarterly loan interest income. Investment interest income was $0.7 million higher than the fourth quarter of 2015 as average investment securities (including cash equivalents) decreased by $90.0 million, but were more than offset by a 16-basis point increase in yield, including the previously mentioned limited partnership dividend. Interest expense was $0.3 million lower than the previous year’s quarter, driven by a two basis points decline in cost of funds, and a $393.8 million decline in average borrowings, partially offset by a $727.5 million increase in average deposits, including the Oneida acquisition. Wealth management, insurance and employee benefit services revenues increased $4.1 million, or 22.0%, compared to the fourth quarter of 2015, to $22.5 million, principally from the acquired activities of Oneida Financial. Revenues from mortgage banking and other services increased $0.4 million from the fourth quarter of 2015.

Fourth quarter of 2016 operating expenses, excluding acquisition expenses, of $65.6 million increased $6.3 million over the fourth quarter of 2015, including the operating activities of Oneida Financial. Salaries and employee benefits increased $4.2 million, or 12.8%, and included a full quarter of personnel added from the Oneida transaction as well as planned merit increases. All other expenses increased 7.9%, and reflected the occupancy, equipment and other operating costs of Oneida, including higher intangible amortization, compared to the fourth quarter of 2015. The fourth quarter and year-to-date 2016 effective income tax rates of 33.4% and 32.9%, respectively, were higher than the 32.7% and 31.0% in last year’s comparable periods. Excluding acquisition expenses, fourth quarter 2016 operating expenses were $0.7 million lower than the third quarter of this year, principally from one less day of payroll.

Financial Position

Average earning assets of $7.69 billion for the fourth quarter of 2016 were up $384.4 million from the fourth quarter of 2015, and were consistent with the third quarter of 2016. Compared to the prior year, total average earning asset balances included acquired and organic loan growth of $474.5 million, while average investment securities and interest-earning cash balances declined by $90.0 million. Average deposit balances grew $727.5 million compared to the fourth quarter of 2015, and were $101.0 million higher than the third quarter of 2016. Average borrowings in the fourth quarter of 2016 of $213.9 million, were $113.6 million, or 34.7%, lower than the third quarter of this year.

Ending loans at December 31, 2016 increased $147.2 million, or 3.1%, year-over-year, reflecting productive organic growth in the Company’s consumer lending portfolios. Investment securities totaled $2.78 billion at December 31, 2016, in line with the previous four quarter-ends, and reflective of limited reinvestment of securities cash flows in 2016.

Shareholders’ equity of $1.20 billion at December 31, 2016 was $57.5 million, or 5.0%, higher than the prior year period, a result of strong earnings generation and capital retention over the last four quarters. The Company’s net tangible equity to net tangible assets ratio was 9.24% at December 31, 2016, up from 8.59% at the end of 2015. The Company’s Tier 1 leverage ratio reached an all-time high of 10.55% at the end of the fourth quarter.

As previously announced, in December 2016 the Company’s Board of Directors approved a stock repurchase program authorizing the repurchase of up to 2.2 million shares of the Company’s common stock during a twelve-month period starting January 1, 2017. Such repurchases may be made at the discretion of the Company’s senior management based on market conditions and other relevant factors and will be acquired through open market or privately negotiated transactions as permitted under Rule 10b-18 of the Securities Exchange Act of 1934 and other applicable legal requirements.

Asset Quality

The Company’s asset quality metrics continue to be favorable relative to comparative peer and industry averages and illustrate the long-term effectiveness of the Company’s disciplined risk management and underwriting standards. Net charge-offs were $2.2 million for the fourth quarter, compared to $3.5 million for the fourth quarter of 2015 and $1.5 million for the third quarter of 2016. Net charge-offs as an annualized percentage of average loans measured 0.18% in the fourth quarter of 2016, compared to 0.31% in the prior year fourth quarter and 0.12% in the third quarter of 2016. Full year 2016 net charge-offs of $5.6 million, or 0.13% of average loans, were down $0.6 million, or two basis points of average loans from full year 2015’s levels. Nonperforming loans as a percentage of total loans at December 31, 2016 were 0.48%, improved from 0.50% at December 31, 2015. The total loan delinquency ratio of 1.19% at the end of the fourth quarter was three basis points higher than the level at December 31, 2015. The fourth quarter provision for loan losses of $2.6 million was $0.7 million lower than the fourth quarter of 2015 due primarily to comparably better credit trends and net organic loan growth. The allowance for loan losses to nonperforming loans was 199% at December 31, 2016, compared with the 190% and 201% levels at the end of the fourth quarter of 2015 and the third quarter of 2016, respectively.

Dividend Increase

In August, the Company declared a quarterly cash dividend of $0.32 per share on its common stock, marking the 24th consecutive year of dividend increases. President and Chief Executive Officer, Mark E. Tryniski, commented, “The payment of a meaningful and growing dividend is an important component of our commitment to provide consistent and favorable long-term returns to our shareholders. The increase reflected the continued strength of both our current operating performance and capital position.” The one cent increase, or 3.2%, in the Company’s quarterly cash dividend over the same quarter of the prior year, represents an annualized yield of 2.2% based upon its’ closing price of $57.91 on January 20, 2017.

Merchants Bancshares

On October 24, 2016, the Company announced that it had entered into a definitive agreement to acquire Merchants Bancshares, Inc. ("Merchants"), parent company of Merchants Bank headquartered in South Burlington, Vermont, for approximately $352 million in Company stock and cash. The acquisition will extend the Company's footprint into the Vermont and Western Massachusetts markets. Upon the completion of the merger, Community Bank will add 31 branch locations in Vermont and one location in Massachusetts with approximately $2.0 billion of assets, and deposits of $1.5 billion. The acquisition is expected to close during the second quarter of 2017, pending both regulatory and Merchants shareholder approval.

Northeast Retirement Services

On December 5, 2016, the Company announced that it had entered into a definitive agreement to acquire Northeast Retirement Services, Inc. (“NRS”), a leading provider of plan accounting, transfer agency, fund administration, trust and retirement plan services for approximately $147 million in Company stock and cash. The acquisition is expected to close during the first quarter of 2017, pending both regulatory and NRS shareholder approval.

Conference Call Scheduled

Company management will conduct an investor call at 11:00 a.m. (ET) today to discuss fourth quarter and full year results. The conference call can be accessed at 888-312-9865 (1-719-457-2655 if outside United States and Canada) using the conference ID code 9693195. Investors may also listen live via the Internet at: http://www.webcaster4.com/Webcast/Page/995/19174.

This earnings release, including supporting financial tables, is available within the press releases section of the Company's investor relations website at: http://ir.communitybanksystem.com. An archived webcast of the earnings call will be available on this site for one full year.

Community Bank System, Inc. operates more than 200 customer facilities across Upstate New York and Northeastern Pennsylvania through its banking subsidiary, Community Bank, N.A. With assets of approximately $8.7 billion, the DeWitt, N.Y. headquartered company is among the country's 150 largest financial institutions. In addition to a full range of retail, business, and governmental banking services, the Company offers comprehensive financial planning, insurance and wealth management services through its’ Community Bank Wealth Management Group and OneGroup NY, Inc. operating subsidiaries. The Company's Benefit Plans Administrative Services, Inc. subsidiary is a leading provider of employee benefits administration, trust services, and actuarial consulting services to customers on a national scale. Community Bank System, Inc. is listed on the New York Stock Exchange and the Company's stock trades under the symbol CBU. For more information about Community Bank visit www.communitybankna.com or http://ir.communitybanksystem.com.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The following factors, among others, could cause the actual results of CBU’s operations to differ materially from CBU’s expectations: the successful integration of operations of its acquisitions; competition; changes in economic conditions, interest rates and financial markets; and changes in legislation or regulatory requirements. These statements are based on the current beliefs and expectations of CBU’s management and CBU does not assume any duty to update forward-looking statements.

           

Summary of Financial Data

(Dollars in thousands, except per share data)                
Quarter Ended     Year Ended
     

December 31,
2016

  

December 31,
2015

    

December 31,
2016

  

December 31,
2015

Earnings                    
Loan income $ 53,602 $ 49,321 $ 211,467 $ 187,743
Investment income 19,397 18,683 73,720 71,879
Total interest income 72,999 68,004 285,187 259,622
Interest expense 2,753 3,015 11,291 11,202
Net interest income 70,246 64,989 273,896 248,420
Provision for loan losses 2,640 3,327

8,076

6,447
Net interest income after provision for loan losses 67,606 61,662 265,820 241,973
Deposit service fees 14,959 13,605 58,595 52,747
Revenues from mortgage banking and other banking services 1,438 1,061 7,477 4,960
Wealth management and insurance services 10,870 6,825 43,251 20,208
Employee benefit services 11,679 11,661 46,628 45,388
Loss on sale of investments 0 (4) 0 (4)
Total noninterest income 38,946 33,148 155,951 123,299
Salaries and employee benefits 37,385 33,138 152,773 126,356
Occupancy and equipment 7,633 6,702 30,078 27,593
Amortization of intangible assets 1,275 1,021 5,479 3,663
Acquisition expenses 1,364 5,719 1,706 7,037
Other 19,266 18,400 77,138 68,406
Total operating expenses 66,923 64,980 267,174 233,055
Income before income taxes 39,629 29,830 154,597 132,217
Income taxes 13,237 9,759 50,785 40,987
Net income 26,392 20,071 103,812 91,230
Basic earnings per share $ 0.59 $ 0.48 $ 2.34 $ 2.21
Diluted earnings per share     $ 0.59   $ 0.47     $ 2.32   $ 2.19
 
           

Summary of Financial Data

(Dollars in thousands, except per share data)                  
2016   2015
      4th Qtr   3rd Qtr   2nd Qtr   1st Qtr   4th Qtr
Earnings                      
Loan income $ 53,602 $ 53,706 $ 52,509 $ 51,650 $ 49,321
Investment income 19,397 17,616 18,601 18,106 18,683
Total interest income 72,999 71,322 71,110 69,756 68,004
Interest expense 2,753 2,859 2,804 2,875 3,015
Net interest income 70,246 68,463 68,306 66,881 64,989
Provision for loan losses 2,640 1,790 2,305 1,341 3,327
Net interest income after provision for loan losses 67,606 66,673 66,001 65,540 61,662
Deposit service fees 14,959 14,894 15,008 13,734 13,605
Revenues from mortgage banking and other banking services 1,438 2,863 1,597 1,579 1,061
Wealth management and insurance services 10,870 10,928 10,496 10,957 6,825
Employee benefit services 11,679 11,267 11,671 12,011 11,661
Loss on sale of investments 0 0 0 0 (4)
Total noninterest income 38,946 39,952 38,772 38,281 33,148
Salaries and employee benefits 37,385 38,300 37,950 39,138 33,138
Occupancy and equipment 7,633 7,373 7,409 7,663 6,702
Amortization of intangible assets 1,275 1,359 1,403 1,442 1,021
Acquisition expenses 1,364 2 263 77 5,719
Other 19,266 19,192 19,331 19,349 18,400
Total operating expenses 66,923 66,226 66,356 67,669 64,980
Income before income taxes 39,629 40,399 38,417 36,152 29,830
Income taxes 13,237 13,239 12,560 11,749 9,759
Net income 26,392 27,160 25,857 24,403 20,071
Basic earnings per share $ 0.59 $ 0.61 $ 0.58 $ 0.55 $ 0.48
Diluted earnings per share     $ 0.59   $ 0.61   $ 0.58   $ 0.55   $ 0.47
Profitability                      
Return on assets 1.21% 1.24% 1.20% 1.14% 0.98%
Return on equity 8.59% 8.71% 8.62% 8.34% 7.41%
Return on tangible equity(2) 13.40% 13.52% 13.63% 13.38% 10.98%
Noninterest income/operating income (FTE) (1) 34.9% 36.0% 35.3% 35.5% 32.8%
Efficiency ratio       57.6%     59.0%     59.0%     61.4%     57.6%
Components of Net Interest Margin (FTE)                      
Loan yield 4.33% 4.36% 4.35% 4.33% 4.43%
Cash equivalents yield 0.48% 0.46% 0.46% 0.47% 0.25%
Investment yield 3.14% 2.88% 3.06% 2.97% 2.98%
Earning asset yield 3.90% 3.82% 3.87% 3.82% 3.86%
Interest-bearing deposit rate 0.13% 0.13% 0.14% 0.14% 0.14%
Borrowing rate 1.80% 1.31% 1.50% 1.33% 0.83%
Cost of all interest-bearing funds 0.19% 0.20% 0.20% 0.20% 0.22%
Cost of funds (includes DDA) 0.15% 0.16% 0.15% 0.16% 0.17%
Net interest margin (FTE) 3.76% 3.67% 3.73% 3.67% 3.70%
Fully tax-equivalent adjustment     $ 2,382   $ 2,450   $ 2,605   $ 2,524   $ 3,041
 
           

Summary of Financial Data

(Dollars in thousands, except per share data)                  
2016   2015
      4th Qtr   3rd Qtr   2nd Qtr   1st Qtr   4th Qtr
Average Balances                      
Loans $ 4,934,034 $ 4,913,517 $ 4,866,574 $ 4,812,575 $ 4,459,575
Cash equivalents 15,367 19,110 19,456 22,355 12,448
Taxable investment securities 2,179,840 2,179,044 2,178,448 2,172,983 2,214,690
Nontaxable investment securities 556,774 571,327 588,897 603,297 614,891
Total interest-earning assets 7,686,015 7,682,998 7,653,375 7,611,210 7,301,604
Total assets 8,665,973 8,712,758 8,656,653 8,604,264 8,161,843
Interest-bearing deposits 5,472,420 5,405,180 5,517,287 5,458,273 4,943,210
Borrowings 213,930 327,578 249,263 296,964 607,771
Total interest-bearing liabilities 5,686,350 5,732,758 5,766,550 5,755,237 5,550,981
Noninterest-bearing deposits 1,603,703 1,569,960 1,532,322 1,527,585 1,405,416
Shareholders' equity       1,222,136     1,239,927     1,206,353     1,177,246     1,074,243
Balance Sheet Data                      
Cash and cash equivalents $ 173,857 $ 161,542 $ 161,634 $ 138,513 $ 153,210
Investment securities 2,784,392 2,877,644 2,931,301 2,902,878 2,847,940
Loans:
Consumer mortgage 1,819,701 1,798,748 1,779,295 1,777,792 1,769,754
Business lending 1,490,076 1,506,878 1,536,546 1,509,421 1,497,271
Consumer indirect 1,044,972 1,037,077 993,132 941,151 935,760
Home equity 401,998 401,784 399,870 403,273 403,514
Consumer direct 191,815 196,134 195,959 189,535 195,076
Total loans 4,948,562 4,940,621 4,904,802 4,821,172 4,801,375
Allowance for loan losses 47,233 46,789 46,526 45,596 45,401
Intangible assets, net 480,844 482,119 483,478 484,881 484,146
Other assets 327,142 312,609 307,422 314,053 311,399
Total assets 8,667,564 8,727,746 8,742,111 8,615,901 8,552,669
Deposits:
Noninterest-bearing 1,646,039 1,577,194 1,546,253 1,533,085 1,499,616
Non-maturity interest-bearing 4,726,787 4,771,436 4,664,635 4,808,650 4,569,310
Time 703,128 728,789 746,966 777,327 804,548
Total deposits 7,075,954 7,077,419 6,957,854 7,119,062 6,873,474
Borrowings 146,200 133,900 267,600 33,700 301,300
Subordinated debt held by unconsolidated subsidiary trusts 102,170 102,164 102,158 102,152 102,146
Accrued interest and other liabilities 145,140 173,681 177,570 160,322 135,102
Total liabilities 7,469,464 7,487,164 7,505,182 7,415,236 7,412,022
Shareholders' equity 1,198,100 1,240,582 1,236,929 1,200,665 1,140,647
Total liabilities and shareholders' equity       8,667,564     8,727,746     8,742,111     8,615,901     8,552,669
Capital                      
Tier 1 leverage ratio 10.55% 10.35% 10.14% 9.95% 10.32%
Tangible equity/net tangible assets (2) 9.24% 9.66% 9.58% 9.25% 8.59%
Diluted weighted average common shares O/S 45,025 44,835 44,636 44,356 42,373
Period end common shares outstanding 44,437 44,357 44,179 44,070 43,775
Cash dividends declared per common share $ 0.32 $ 0.32 $ 0.31 $ 0.31 $ 0.31
Book value per share $ 26.96 $ 27.97 $ 28.00 $ 27.24 $ 26.06
Tangible book value per share(2) $ 17.12 $ 18.06 $ 17.99 $ 17.16 $ 15.90
Common stock price (end of period)     $ 61.79   $ 48.11   $ 41.09   $ 38.21   $ 39.94
 
           
Summary of Financial Data
(Dollars in thousands, except per share data)                  
2016   2015
      4th Qtr   3rd Qtr   2nd Qtr   1st Qtr   4th Qtr
Asset Quality                      
Nonaccrual loans $ 20,619 $ 21,301 $ 22,150 $ 23,765 $ 21,728
Accruing loans 90+ days delinquent 3,076 2,015 1,909 2,327 2,195
Total nonperforming loans 23,695 23,316 24,059 26,092 23,923
Other real estate owned (OREO) 1,966 2,060 1,726 2,031 2,088
Total nonperforming assets 25,661 25,376 25,785 28,123 26,011
Net charge-offs 2,196 1,527 1,375 1,146 3,514
Allowance for loan losses/loans outstanding 0.95% 0.95% 0.95% 0.95% 0.95%
Nonperforming loans/loans outstanding 0.48% 0.47% 0.49% 0.54% 0.50%
Allowance for loan losses/nonperforming loans 199% 201% 193% 175% 190%
Net charge-offs/average loans 0.18% 0.12% 0.11% 0.10% 0.31%
Delinquent loans/ending loans 1.19% 1.06% 1.10% 1.00% 1.16%
Loan loss provision/net charge-offs 120% 117% 168% 117% 95%
Nonperforming assets/total assets       0.30%     0.29%     0.29%     0.33%     0.30%
Asset Quality (excluding loans acquired since 1/1/09)                      
Nonaccrual loans 16,600 $ 16,966 $ 18,259 $ 20,045 $ 18,804
Accruing loans 90+ days delinquent 1,963 1,869 1,573 1,837 1,802
Total nonperforming loans 18,563 18,835 19,832 21,882 20,606
Other real estate owned (OREO) 1,658 1,594 1,258 1,497 1,546
Total nonperforming assets 20,221 20,429 21,090 23,379 22,152
Net charge-offs 1,846 1,432 1,404 898 3,420
Allowance for loan losses/loans outstanding 1.02% 1.02% 1.02% 1.04% 1.05%
Nonperforming loans/loans outstanding 0.42% 0.43% 0.46% 0.52% 0.49%
Allowance for loan losses/nonperforming loans 245% 238% 224% 200% 212%
Net charge-offs/average loans 0.17% 0.13% 0.13% 0.09% 0.34%
Delinquent loans/ending loans 1.14% 1.01% 1.08% 1.00% 1.19%
Loan loss provision/net charge-offs 133% 124% 144% 112% 62%
Nonperforming assets/total assets       0.25%     0.25%     0.26%     0.29%     0.28%
 
           
Summary of Financial Data
(Dollars in thousands, except per share data)                  
2016   2015
      4th Qtr   3rd Qtr   2nd Qtr   1st Qtr   4th Qtr
Quarterly GAAP to Non-GAAP Reconciliations                      
Income statement data
Core operating expenses, revenues & Efficiency Ratio
Noninterest expenses (GAAP) $ 66,923 $ 66,226 $ 66,356 $ 67,669 $ 64,980
Acquisition expenses (1,364) (2) (263) (77) (5,719)
Amortization of intangibles   (1,275)     (1,359)     (1,403)     (1,442)     (1,021)
Core operating expenses (non-GAAP) - numerator   64,284     64,865     64,690     66,150     58,240
Tax-equivalent net interest income 72,628 70,913 70,911 69,405 68,030
Noninterest revenues 38,946 39,952 38,772 38,281 33,148
Insurance-related recovery 0 (950) 0 0 0
Loss on sale of investments   0     0     0     0     4
Core operating revenues (non-GAAP) - denominator   111,574     109,915     109,683     107,686     101,182
Efficiency ratio (non-GAAP)   57.6%     59.0%     59.0%     61.4%     57.6%
 
Balance sheet data
Net tangible equity-to-assets ratio at period end
Common stock, APIC, Retained earnings, and Treasury stock $ 1,190,258 $ 1,174,491 $ 1,155,894 $ 1,139,378 $ 1,121,412
Accumulated other comprehensive income   7,842     66,091     81,035     61,287     19,235
Shareholders’ equity (GAAP) 1,198,100 1,240,582 1,236,929 1,200,665 1,140,647
Intangible assets (480,844) (482,119) (483,478) (484,881) (484,146)
Deferred taxes on intangible assets   43,504     42,523     41,528     40,483     39,724
Tangible common equity (non-GAAP) - numerator   760,760     800,986     794,979     756,267     696,225
Total assets (GAAP) 8,667,564 8,727,746 8,742,111 8,615,901 8,552,669
Intangible assets (480,844) (482,119) (483,478) (484,881) (484,146)
Deferred taxes on intangible assets   43,504     42,523     41,528     40,483     39,724
Tangible assets (non-GAAP) - denominator   8,230,224     8,288,150     8,300,161     8,171,503     8,108,247
Net tangible equity-to-assets ratio at period end (non-GAAP)   9.24%     9.66%     9.58%     9.25%     8.59%
                       

(1) Excludes gains and losses on sales of investment securities and debt prepayments.

(2) Includes deferred tax liabilities (of approximately $43.5 million at 12/31/16) related to certain intangible assets.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The following factors, among others, could cause the actual results of CBU’s operations to differ materially from CBU’s expectations: the successful integration of operations of its acquisitions; competition; changes in economic conditions, interest rates and financial markets; and changes in legislation or regulatory requirements. CBU does not assume any duty to update forward-looking statements.