Community Bank System, Inc.

Second-quarter GAAP EPS was $1.16, up $0.19 or 19.6% from the prior year and up $0.08 or 7.4% sequentially. Operating EPS was $1.16 versus $1.04 a year ago, and operating pretax pre-provision net revenue per share was $1.62, up $0.21 year over year. Net interest income was $139.1 million, up $4.4 million or 3.3% from Q1 and $14.4 million or 11.5% from last year; NIM expanded to 3.49% from 3.45% in Q1, and cost of funds fell to 1.18%. Operating noninterest revenue rose $4.8 million or 6.4% year over year, while operating noninterest expenses were $137.7 million, up $8.6 million or 6.7% year over year. Provision for credit losses was $4.6 million. Loans increased $763.7 million or 7.3% year over year, and total deposits increased $1.01 billion or 7.4% year over year. For full-year 2026, management expects 5% to 6% loan growth, 3% to 4% deposit growth, 10% to 11% net interest income growth, 6% to 7% noninterest revenue growth, provision expense of $20 million to $25 million, core noninterest expenses of $550 million to $555 million, and an effective tax rate of 23% to 24%. They also expect NIM to exit 2026 in the low to mid-3.5% range, with modest third-quarter pressure of up 1 basis point to down 2 basis points.

Dimitar Karaivanov framed the quarter as another record performance and emphasized diversification across banking, employee benefits, wealth, and insurance. He highlighted strong client and talent acquisition, new product launches, the ClearPoint addition, and what he called a very strong M&A pipeline in insurance. His tone was confident and constructive, with repeated emphasis on market-share gains, strong pipelines, and the expectation for acceleration in the second half.

Marya Burgio Wlos focused on the drivers of the quarter: record net interest income, a 4-basis-point sequential NIM expansion to 3.49%, and a lower cost of funds at 1.18%. She also pointed to expense growth tied to acquisitions, ClearPoint, one-time items, and branch expansion, while noting that credit quality remained solid with a $91.7 million allowance for credit losses, or 81 basis points of loans. Her guidance was specific: low- to mid-3.5% exit NIM for 2026, $550 million to $555 million of core noninterest expense, and a 23% to 24% tax rate.

Analysts pressed on loan competition, deposit pricing, insurance contingencies, repurchases, long-term NIM dynamics, potential benefits from industrial/chip-related activity, and AI investments. Management said competition is active across the footprint and pricing has become more aggressive, but it still expects to hit 5% to 6% loan growth and sees a solid pipeline. On deposits, the company stressed seasonal muni outflows, a 76% loan-to-deposit ratio, and more than $1 billion of expected securities cash flows over the next 18 months; on AI, it said more than a dozen people are involved, with tangible benefits still early and mostly visible in app development and faster product delivery.