EX-99 2 cbna8k2016q3pressrelease.htm 8K Q3 EARNINGS RELEASE DOCUMENT FOR PRESS RELEASE
Exhibit 99.1

| News Release For further information, please contact:
5790 Widewaters Parkway, DeWitt, N.Y. 13214 | Scott A. Kingsley, EVP & Chief Financial Officer Office: (315) 445-3121

Community Bank System Reports
Third Quarter 2016 Results

| - GAAP earnings of $27.2 million, or $0.61 per share |
| - Increased dividend for the 24th consecutive year |

SYRACUSE, N.Y. — October 24, 2016 — Community Bank System, Inc. (NYSE: CBU) reported third quarter 2016 net income of $27.2 million, an increase of 8.5% compared with $25.0 million earned for the third quarter of 2015. Diluted earnings per share totaled $0.61 for the third quarter of 2016, compared to $0.60 per share reported in the third quarter of last year. Fully diluted shares outstanding increased 3.4 million shares from the third quarter of 2015, principally from shares issued in the fourth quarter of 2015 for the stock portion of consideration for the Oneida Financial acquisition. 2016 year-to-date net income of $77.4 million, or $1.74 per share, was 8.8% above the $71.2 million of earnings for the first nine months of 2015, or $1.72 per share.
"Our solid third quarter operating results were a result of consistent tactical execution on our core strategic objectives, including growing revenues from organic and acquired opportunities while maintaining disciplined operating expense management," said President and Chief Executive Officer, Mark E. Tryniski. "As we celebrate 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."
Total revenue for the third quarter of 2016 was $108.4 million, an increase of $14.7 million, or 15.6%, 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 7.9% increase in average earning assets and continued acquired and organic growth in noninterest income, combined with a two basis-point increase in net interest margin from the prior year quarter. A combination of acquired and organic growth resulted in a $6.3 million, or 39.8% increase in wealth management, insurance, and employee benefit services revenues compared to the third quarter of last year. Deposit service fees increased 10.7% year-over-year, the result of increased card-related revenues offset by modestly lower fees from account overdraft protection programs, including the additional activities from the Oneida transaction. The current quarter's results also included $1.0 million of nonrecurring insurance-related gains. The quarterly provision for loan losses of $1.8 million was consistent with the $1.9 million reported in the third quarter of 2015, reflective of comparable credit trends and loan portfolio growth. Non-performing asset and delinquent loan ratios improved somewhat from the prior year, and remain at very favorable and manageable levels. Total operating expenses of $66.2 million for the quarter were $10.1 million, or 18.1% above the third quarter of 2015, and included the incremental operating expenses from the Oneida Financial acquisition. The third quarter of 2015 also included $0.6 million of acquisition expenses. 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 32.8% in the third quarter of 2016, compared to 30.0% in the third quarter of 2015, an outcome that resulted in a two cent per share headwind compared to the prior year.
Third quarter 2016 net interest income was $68.5 million, an increase of $6.1 million, or 9.8%, compared to the third quarter of 2015. Modestly improved funding costs combined with a one basis point improvement in earning asset yields to produce the net two basis-point increase in year-over-year net interest margin. While average loan balances grew $626.5 million, or 14.6%, average loan yields declined four basis points year-over-year, resulting in a $6.7 million increase in quarterly loan interest income. Quarterly loan income also included $0.5 million of early termination fees on an unusually high level of unscheduled commercial payoffs, of over $32 million in the quarter. Investment interest income was $0.6 million lower than the third quarter of 2015 as average investment securities (including cash equivalents) declined by $66.4 million, and the yield declined seven basis points. Third quarter 2016 interest expense was $0.1 million lower than the previous year's quarter, driven by an $872.6 million increase in average deposits and a $348.4 million decline in average borrowings, including the impact of the Oneida acquisition. Wealth management, insurance and employee benefit services revenues increased $6.3 million, or 39.8%, compared to the third quarter of 2015, to $22.2 million, principally from the acquired activities of Oneida Financial. Revenues from mortgage banking and other banking services increased $0.8 million from the third quarter of 2015, and included nearly $1.0 million in non-recurring, insurance-related gains.

Third quarter 2016 operating expenses of $66.2 million increased $10.1 million over the third quarter of 2015, including the operating activities added from the Oneida Financial transaction. Salaries and employee benefits increased $7.1 million, or 22.8%, and included personnel added from the Oneida transaction as well as planned merit increases. All other expenses increased 12.2% and reflected the occupancy, equipment and other operating costs of Oneida, including higher intangible amortization, compared to the third quarter of 2015. The third quarter and year-to-date 2016 effective income tax rates of 32.8% and 32.7%, respectively, were higher than the 30.0% and 30.5%, in last year's comparable periods. Third quarter 2016 operating expenses were consistent with the second quarter of this year despite an additional day of payroll.
Financial Position
Average earning assets of $7.68 billion for the third quarter of 2016 were up $560.1 million from the third quarter of 2015, and were $29.6 million higher than the second quarter of 2016. Compared to the prior year, total average earning asset balances included acquired and organic growth of $626.5 million in average loan balances, while average investment securities and interest-earning cash balances decreased by $66.4 million. Average deposit balances grew $872.6 million compared to the third quarter of 2015, and were $74.5 million lower than the second quarter of 2016, as seasonally expected. Average borrowings in the third quarter of 2016 of $327.6 million, were $78.3 million higher than the second quarter of this year.
Ending loans at September 30, 2016 increased $627.1 million, or 14.5%, year-over-year, reflecting productive organic growth in almost every one of the Company's lending portfolios, and loans acquired in the Oneida Financial transaction. Ending loans increased $35.8 million in the third quarter of 2016, as solid growth in consumer lending portfolios more than offset a $29.7 million decline in commercial balances, a result of the previously mentioned unscheduled payoffs. Investment securities totaled $2.88 billion at September 30, 2016, a level consistent with the previous four quarter-ends.
Shareholders' equity of $1.24 billion at September 30, 2016 was $195.6 million, or 18.7%, higher than the prior year third quarter-end, driven by strong earnings generation and capital retention over the last four quarters as well as the issuance of 2.38 million shares of common stock, or $102.2 million, reflecting the equity portion of the consideration in the Oneida transaction. The Company's net tangible equity to net tangible assets ratio was 9.66% at September 30, 2016, up from 9.14% at September 30, 2015. The Company's Tier 1 leverage ratio was 10.35% at the end of the third quarter.
As previously announced, in December 2015 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, 2016. Such repurchases may be made at the discretion of the Company's senior management depending 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. No shares were repurchased under this authorization in the first nine months of 2016.
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 credit risk management and underwriting standards. Net charge-offs were $1.5 million for the third quarter, compared to $1.6 million for the third quarter of 2015 and $1.4 million for the second quarter of 2016. Net charge-offs as an annualized percentage of average loans were 0.12% in the third quarter of 2016, compared to 0.15% in the prior year third quarter and 0.11% in the second quarter of 2016. Nonperforming loans as a percentage of total loans at September 30, 2016 were 0.47%, improved from 0.58% at September 30, 2015 and 0.49% as of June 30, 2016. The total loan delinquency ratio of 1.06% at the end of the third quarter was down 13 basis points from the end of the third quarter of 2015, and down four basis points from June 30, 2016. The third quarter provision for loan losses of $1.8 million was $0.1 million lower than the third quarter of 2015, and $0.5 million lower than the second quarter of 2016. The allowance for loan losses to nonperforming loans was 201% at September 30, 2016, compared with the 181% and 193% levels at the end of the third quarter of 2015 and the second 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 2.7% based upon its' closing price of $47.50 on October 21, 2016.
Conference Call Scheduled
Company management will conduct an investor call at 11:00 a.m. (ET) tomorrow (Tuesday, October 25, 2016) to discuss third quarter results. The conference call can be accessed at 888-503-8171 (1-719-325-2133 if outside the United States and Canada) using the conference ID code 5675553. Investors may also listen live via the Internet at: http://www.webcaster4.com/Webcast/Page/995/17761.
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-to-Date |
| September 30, 2016 | September 30, 2015 | September 30, 2016 | September 30, 2015
Earnings |  |  |  |  |  |  |  |  |  |  |  |
Loan income |  | $ | 53,706 |  |  | $ | 47,040 |  |  | $ | 157,865 |  |  | $ | 138,422 |
Investment income |  |  | 17,616 |  |  |  | 18,244 |  |  |  | 54,323 |  |  |  | 53,196 |
Total interest income |  |  | 71,322 |  |  |  | 65,284 |  |  |  | 212,188 |  |  |  | 191,618 |
Interest expense |  |  | 2,859 |  |  |  | 2,921 |  |  |  | 8,538 |  |  |  | 8,187 |
Net interest income |  |  | 68,463 |  |  |  | 62,363 |  |  |  | 203,650 |  |  |  | 183,431 |
Provision for loan losses |  |  | 1,790 |  |  |  | 1,906 |  |  |  | 5,436 |  |  |  | 3,120 |
Net interest income after provision for loan losses |  |  | 66,673 |  |  |  | 60,457 |  |  |  | 198,214 |  |  |  | 180,311 |
Deposit service fees |  |  | 14,894 |  |  |  | 13,459 |  |  |  | 43,636 |  |  |  | 39,142 |
Revenues from mortgage banking and other banking services |  |  | 2,863 |  |  |  | 2,045 |  |  |  | 6,039 |  |  |  | 3,899 |
Wealth management and insurance services |  |  | 10,928 |  |  |  | 4,552 |  |  |  | 32,381 |  |  |  | 13,383 |
Employee benefit services |  |  | 11,267 |  |  |  | 11,330 |  |  |  | 34,949 |  |  |  | 33,727 |
Total noninterest income |  |  | 39,952 |  |  |  | 31,386 |  |  |  | 117,005 |  |  |  | 90,151 |
Salaries and employee benefits |  |  | 38,300 |  |  |  | 31,179 |  |  |  | 115,388 |  |  |  | 93,218 |
Occupancy and equipment |  |  | 7,373 |  |  |  | 6,652 |  |  |  | 22,445 |  |  |  | 20,891 |
Amortization of intangible assets |  |  | 1,359 |  |  |  | 843 |  |  |  | 4,204 |  |  |  | 2,642 |
Acquisition expenses |  |  | 2 |  |  |  | 562 |  |  |  | 342 |  |  |  | 1,318 |
Other |  |  | 19,192 |  |  |  | 16,843 |  |  |  | 57,872 |  |  |  | 50,006 |
Total operating expenses |  |  | 66,226 |  |  |  | 56,079 |  |  |  | 200,251 |  |  |  | 168,075 |
Income before income taxes |  |  | 40,399 |  |  |  | 35,764 |  |  |  | 114,968 |  |  |  | 102,387 |
Income taxes |  |  | 13,239 |  |  |  | 10,742 |  |  |  | 37,548 |  |  |  | 31,228 |
Net income |  | $ | 27,160 |  |  | $ | 25,022 |  |  | $ | 77,420 |  |  | $ | 71,159 |
Basic earnings per share |  | $ | 0.61 |  |  | $ | 0.61 |  |  | $ | 1.75 |  |  | $ | 1.74 |
Diluted earnings per share |  | $ | 0.61 |  |  | $ | 0.60 |  |  | $ | 1.74 |  |  | $ | 1.72 |

Summary of Financial Data |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(Dollars in thousands, except per share data) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | 2016 |  |  | 2015 |
|  | 3rd Qtr |  |  | 2nd Qtr |  |  | 1st Qtr |  |  | 4th Qtr |  |  | 3rd Qtr |
Earnings |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loan income |  | $ | 53,706 |  |  | $ | 52,509 |  |  | $ | 51,650 |  |  | $ | 49,321 |  |  | $ | 47,040 |
Investment income |  |  | 17,616 |  |  |  | 18,601 |  |  |  | 18,106 |  |  |  | 18,683 |  |  |  | 18,244 |
Total interest income |  |  | 71,322 |  |  |  | 71,110 |  |  |  | 69,756 |  |  |  | 68,004 |  |  |  | 65,284 |
Interest expense |  |  | 2,859 |  |  |  | 2,804 |  |  |  | 2,875 |  |  |  | 3,015 |  |  |  | 2,921 |
Net interest income |  |  | 68,463 |  |  |  | 68,306 |  |  |  | 66,881 |  |  |  | 64,989 |  |  |  | 62,363 |
Provision for loan losses |  |  | 1,790 |  |  |  | 2,305 |  |  |  | 1,341 |  |  |  | 3,327 |  |  |  | 1,906 |
Net interest income after provision for loan losses |  |  | 66,673 |  |  |  | 66,001 |  |  |  | 65,540 |  |  |  | 61,662 |  |  |  | 60,457 |
Deposit service fees |  |  | 14,894 |  |  |  | 15,008 |  |  |  | 13,734 |  |  |  | 13,605 |  |  |  | 13,459 |
Revenues from mortgage banking and other banking services |  |  | 2,863 |  |  |  | 1,597 |  |  |  | 1,579 |  |  |  | 1,061 |  |  |  | 2,045 |
Wealth management and insurance services |  |  | 10,928 |  |  |  | 10,496 |  |  |  | 10,957 |  |  |  | 6,825 |  |  |  | 4,552 |
Employee benefit services |  |  | 11,267 |  |  |  | 11,671 |  |  |  | 12,011 |  |  |  | 11,661 |  |  |  | 11,330 |
Loss on sale of investments |  |  | 0 |  |  |  | 0 |  |  |  | 0 |  |  |  | (4 | ) |  |  | 0 |
Total noninterest income |  |  | 39,952 |  |  |  | 38,772 |  |  |  | 38,281 |  |  |  | 33,148 |  |  |  | 31,386 |
Salaries and employee benefits |  |  | 38,300 |  |  |  | 37,950 |  |  |  | 39,138 |  |  |  | 33,138 |  |  |  | 31,179 |
Occupancy and equipment |  |  | 7,373 |  |  |  | 7,409 |  |  |  | 7,663 |  |  |  | 6,702 |  |  |  | 6,652 |
Amortization of intangible assets |  |  | 1,359 |  |  |  | 1,403 |  |  |  | 1,442 |  |  |  | 1,021 |  |  |  | 843 |
Acquisition expenses |  |  | 2 |  |  |  | 263 |  |  |  | 77 |  |  |  | 5,719 |  |  |  | 562 |
Other |  |  | 19,192 |  |  |  | 19,331 |  |  |  | 19,349 |  |  |  | 18,400 |  |  |  | 16,843 |
Total operating expenses |  |  | 66,226 |  |  |  | 66,356 |  |  |  | 67,669 |  |  |  | 64,980 |  |  |  | 56,079 |
Income before income taxes |  |  | 40,399 |  |  |  | 38,417 |  |  |  | 36,152 |  |  |  | 29,830 |  |  |  | 35,764 |
Income taxes |  |  | 13,239 |  |  |  | 12,560 |  |  |  | 11,749 |  |  |  | 9,759 |  |  |  | 10,742 |
Net income |  |  | 27,160 |  |  |  | 25,857 |  |  |  | 24,403 |  |  |  | 20,071 |  |  |  | 25,022 |
Basic earnings per share |  | $ | 0.61 |  |  | $ | 0.58 |  |  | $ | 0.55 |  |  | $ | 0.48 |  |  | $ | 0.61 |
Diluted earnings per share |  | $ | 0.61 |  |  | $ | 0.58 |  |  | $ | 0.55 |  |  | $ | 0.47 |  |  | $ | 0.60 |
Profitability |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Return on assets |  |  | 1.24 | % |  |  | 1.20 | % |  |  | 1.14 | % |  |  | 0.98 | % |  |  | 1.25 | %
Return on equity |  |  | 8.71 | % |  |  | 8.62 | % |  |  | 8.34 | % |  |  | 7.41 | % |  |  | 9.77 | %
Return on tangible equity(3) |  |  | 13.52 | % |  |  | 13.63 | % |  |  | 13.38 | % |  |  | 10.98 | % |  |  | 14.82 | %
Noninterest income/operating income (FTE) (1) |  |  | 36.0 | % |  |  | 35.3 | % |  |  | 35.5 | % |  |  | 32.8 | % |  |  | 32.4 | %
Efficiency ratio (2) |  |  | 58.5 | % |  |  | 59.0 | % |  |  | 61.4 | % |  |  | 57.6 | % |  |  | 56.4 | %
Components of Net Interest Margin (FTE) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loan yield |  |  | 4.36 | % |  |  | 4.35 | % |  |  | 4.33 | % |  |  | 4.43 | % |  |  | 4.40 | %
Cash equivalents yield |  |  | 0.46 | % |  |  | 0.46 | % |  |  | 0.47 | % |  |  | 0.25 | % |  |  | 0.22 | %
Investment yield |  |  | 2.88 | % |  |  | 3.06 | % |  |  | 2.97 | % |  |  | 2.98 | % |  |  | 2.94 | %
Earning asset yield |  |  | 3.82 | % |  |  | 3.87 | % |  |  | 3.82 | % |  |  | 3.86 | % |  |  | 3.81 | %
Interest-bearing deposit rate |  |  | 0.13 | % |  |  | 0.14 | % |  |  | 0.14 | % |  |  | 0.14 | % |  |  | 0.14 | %
Borrowing rate |  |  | 1.31 | % |  |  | 1.50 | % |  |  | 1.33 | % |  |  | 0.83 | % |  |  | 0.72 | %
Cost of all interest-bearing funds |  |  | 0.20 | % |  |  | 0.20 | % |  |  | 0.20 | % |  |  | 0.22 | % |  |  | 0.21 | %
Cost of funds (includes DDA) |  |  | 0.16 | % |  |  | 0.15 | % |  |  | 0.16 | % |  |  | 0.17 | % |  |  | 0.17 | %
Net interest margin (FTE) |  |  | 3.67 | % |  |  | 3.73 | % |  |  | 3.67 | % |  |  | 3.70 | % |  |  | 3.65 | %
Fully tax-equivalent adjustment |  | $ | 2,450 |  |  | $ | 2,605 |  |  | $ | 2,524 |  |  | $ | 3,041 |  |  | $ | 3,162 |

Summary of Financial Data |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(Dollars in thousands, except per share data) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | 2016 |  |  | 2015 |
|  | 3rd Qtr |  |  | 2nd Qtr |  |  | 1st Qtr |  |  | 4th Qtr |  |  | 3rd Qtr |
Average Balances |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans |  | $ | 4,913,517 |  |  | $ | 4,866,574 |  |  | $ | 4,812,575 |  |  | $ | 4,459,575 |  |  | $ | 4,287,062 |
Cash equivalents |  |  | 19,110 |  |  |  | 19,456 |  |  |  | 22,355 |  |  |  | 12,448 |  |  |  | 12,395 |
Taxable investment securities |  |  | 2,179,044 |  |  |  | 2,178,448 |  |  |  | 2,172,983 |  |  |  | 2,214,690 |  |  |  | 2,187,818 |
Nontaxable investment securities |  |  | 571,327 |  |  |  | 588,897 |  |  |  | 603,297 |  |  |  | 614,891 |  |  |  | 635,627 |
Total interest-earning assets |  |  | 7,682,998 |  |  |  | 7,653,375 |  |  |  | 7,611,210 |  |  |  | 7,301,604 |  |  |  | 7,122,902 |
Total assets |  |  | 8,712,758 |  |  |  | 8,656,653 |  |  |  | 8,604,264 |  |  |  | 8,161,843 |  |  |  | 7,919,966 |
Interest-bearing deposits |  |  | 5,405,180 |  |  |  | 5,517,287 |  |  |  | 5,458,273 |  |  |  | 4,943,210 |  |  |  | 4,739,513 |
Borrowings |  |  | 327,578 |  |  |  | 249,263 |  |  |  | 296,964 |  |  |  | 607,771 |  |  |  | 675,958 |
Total interest-bearing liabilities |  |  | 5,732,758 |  |  |  | 5,766,550 |  |  |  | 5,755,237 |  |  |  | 5,550,981 |  |  |  | 5,415,471 |
Noninterest-bearing deposits |  |  | 1,569,960 |  |  |  | 1,532,322 |  |  |  | 1,527,585 |  |  |  | 1,405,416 |  |  |  | 1,363,022 |
Shareholders' equity |  |  | 1,239,927 |  |  |  | 1,206,353 |  |  |  | 1,177,246 |  |  |  | 1,074,243 |  |  |  | 1,016,448 |
Balance Sheet Data |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 161,542 |  |  | $ | 161,634 |  |  | $ | 138,513 |  |  | $ | 153,210 |  |  | $ | 156,836 |
Investment securities |  |  | 2,877,644 |  |  |  | 2,931,301 |  |  |  | 2,902,878 |  |  |  | 2,847,940 |  |  |  | 2,917,263 |
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer mortgage |  |  | 1,798,748 |  |  |  | 1,779,295 |  |  |  | 1,777,792 |  |  |  | 1,769,754 |  |  |  | 1,621,862 |
Business lending |  |  | 1,506,878 |  |  |  | 1,536,546 |  |  |  | 1,509,421 |  |  |  | 1,497,271 |  |  |  | 1,288,772 |
Consumer indirect |  |  | 1,037,077 |  |  |  | 993,132 |  |  |  | 941,151 |  |  |  | 935,760 |  |  |  | 872,988 |
Home equity |  |  | 401,784 |  |  |  | 399,870 |  |  |  | 403,273 |  |  |  | 403,514 |  |  |  | 345,446 |
Consumer direct |  |  | 196,134 |  |  |  | 195,959 |  |  |  | 189,535 |  |  |  | 195,076 |  |  |  | 184,479 |
Total loans |  |  | 4,940,621 |  |  |  | 4,904,802 |  |  |  | 4,821,172 |  |  |  | 4,801,375 |  |  |  | 4,313,547 |
Allowance for loan losses |  |  | 46,789 |  |  |  | 46,526 |  |  |  | 45,596 |  |  |  | 45,401 |  |  |  | 45,588 |
Intangible assets, net |  |  | 482,119 |  |  |  | 483,478 |  |  |  | 484,881 |  |  |  | 484,146 |  |  |  | 384,525 |
Other assets |  |  | 312,609 |  |  |  | 307,422 |  |  |  | 314,053 |  |  |  | 311,399 |  |  |  | 270,583 |
Total assets |  |  | 8,727,746 |  |  |  | 8,742,111 |  |  |  | 8,615,901 |  |  |  | 8,552,669 |  |  |  | 7,997,166 |
Deposits: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Noninterest-bearing |  |  | 1,577,194 |  |  |  | 1,546,253 |  |  |  | 1,533,085 |  |  |  | 1,499,616 |  |  |  | 1,357,554 |
Non-maturity interest-bearing |  |  | 4,771,436 |  |  |  | 4,664,635 |  |  |  | 4,808,650 |  |  |  | 4,569,310 |  |  |  | 4,081,796 |
Time |  |  | 728,789 |  |  |  | 746,966 |  |  |  | 777,327 |  |  |  | 804,548 |  |  |  | 708,760 |
Total deposits |  |  | 7,077,419 |  |  |  | 6,957,854 |  |  |  | 7,119,062 |  |  |  | 6,873,474 |  |  |  | 6,148,110 |
Borrowings |  |  | 133,900 |  |  |  | 267,600 |  |  |  | 33,700 |  |  |  | 301,300 |  |  |  | 558,100 |
Subordinated debt held by unconsolidated subsidiary trusts |  |  | 102,164 |  |  |  | 102,158 |  |  |  | 102,152 |  |  |  | 102,146 |  |  |  | 102,140 |
Accrued interest and other liabilities |  |  | 173,681 |  |  |  | 177,570 |  |  |  | 160,322 |  |  |  | 135,102 |  |  |  | 143,790 |
Total liabilities |  |  | 7,487,164 |  |  |  | 7,505,182 |  |  |  | 7,415,236 |  |  |  | 7,412,022 |  |  |  | 6,952,140 |
Shareholders' equity |  |  | 1,240,582 |  |  |  | 1,236,929 |  |  |  | 1,200,665 |  |  |  | 1,140,647 |  |  |  | 1,045,026 |
Total liabilities and shareholders' equity |  |  | 8,727,746 |  |  |  | 8,742,111 |  |  |  | 8,615,901 |  |  |  | 8,552,669 |  |  |  | 7,997,166 |
Capital |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Tier 1 leverage ratio |  |  | 10.35 | % |  |  | 10.14 | % |  |  | 9.95 | % |  |  | 10.32 | % |  |  | 10.09 | %
Tangible equity/net tangible assets (3) |  |  | 9.66 | % |  |  | 9.58 | % |  |  | 9.25 | % |  |  | 8.59 | % |  |  | 9.14 | %
Diluted weighted average common shares O/S |  |  | 44,835 |  |  |  | 44,636 |  |  |  | 44,356 |  |  |  | 42,373 |  |  |  | 41,470 |
Period end common shares outstanding |  |  | 44,357 |  |  |  | 44,179 |  |  |  | 44,070 |  |  |  | 43,775 |  |  |  | 41,019 |
Cash dividends declared per common share |  | $ | 0.32 |  |  | $ | 0.31 |  |  | $ | 0.31 |  |  | $ | 0.31 |  |  | $ | 0.31 |
Book value |  | $ | 27.97 |  |  | $ | 28.00 |  |  | $ | 27.24 |  |  | $ | 26.06 |  |  | $ | 25.48 |
Tangible book value(3) |  | $ | 18.06 |  |  | $ | 17.99 |  |  | $ | 17.16 |  |  | $ | 15.90 |  |  | $ | 17.05 |
Common stock price (end of period) |  | $ | 48.11 |  |  | $ | 41.09 |  |  | $ | 38.21 |  |  | $ | 39.94 |  |  | $ | 37.17 |

Summary of Financial Data |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(Dollars in thousands, except per share data) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | 2016 |  |  | 2015 |
|  | 3rd Qtr |  |  | 2nd Qtr |  |  | 1st Qtr |  |  | 4th Qtr |  |  | 3rd Qtr |
Asset Quality |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Nonaccrual loans |  | $ | 21,301 |  |  | $ | 22,150 |  |  | $ | 23,765 |  |  | $ | 21,728 |  |  | $ | 23,133 |
Accruing loans 90+ days delinquent |  |  | 2,015 |  |  |  | 1,909 |  |  |  | 2,327 |  |  |  | 2,195 |  |  |  | 2,075 |
Total nonperforming loans |  |  | 23,316 |  |  |  | 24,059 |  |  |  | 26,092 |  |  |  | 23,923 |  |  |  | 25,208 |
Other real estate owned (OREO) |  |  | 2,060 |  |  |  | 1,726 |  |  |  | 2,031 |  |  |  | 2,088 |  |  |  | 2,531 |
Total nonperforming assets |  |  | 25,376 |  |  |  | 25,785 |  |  |  | 28,123 |  |  |  | 26,011 |  |  |  | 27,739 |
Net charge-offs |  |  | 1,527 |  |  |  | 1,375 |  |  |  | 1,146 |  |  |  | 3,514 |  |  |  | 1,600 |
Allowance for loan losses/loans outstanding |  |  | 0.95 | % |  |  | 0.95 | % |  |  | 0.95 | % |  |  | 0.95 | % |  |  | 1.06 | %
Nonperforming loans/loans outstanding |  |  | 0.47 | % |  |  | 0.49 | % |  |  | 0.54 | % |  |  | 0.50 | % |  |  | 0.58 | %
Allowance for loan losses/nonperforming loans |  |  | 201 | % |  |  | 193 | % |  |  | 175 | % |  |  | 190 | % |  |  | 181 | %
Net charge-offs/average loans |  |  | 0.12 | % |  |  | 0.11 | % |  |  | 0.10 | % |  |  | 0.31 | % |  |  | 0.15 | %
Delinquent loans/ending loans |  |  | 1.06 | % |  |  | 1.10 | % |  |  | 1.00 | % |  |  | 1.16 | % |  |  | 1.19 | %
Loan loss provision/net charge-offs |  |  | 117 | % |  |  | 168 | % |  |  | 117 | % |  |  | 95 | % |  |  | 119 | %
Nonperforming assets/total assets |  |  | 0.29 | % |  |  | 0.29 | % |  |  | 0.33 | % |  |  | 0.30 | % |  |  | 0.35 | %
Asset Quality (excluding loans acquired since 1/1/09) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Nonaccrual loans |  | $ | 16,967 |  |  | $ | 18,259 |  |  | $ | 20,045 |  |  | $ | 18,804 |  |  | $ | 20,504 |
Accruing loans 90+ days delinquent |  |  | 1,870 |  |  |  | 1,573 |  |  |  | 1,837 |  |  |  | 1,802 |  |  |  | 1,876 |
Total nonperforming loans |  |  | 18,837 |  |  |  | 19,832 |  |  |  | 21,882 |  |  |  | 20,606 |  |  |  | 22,380 |
Other real estate owned (OREO) |  |  | 1,594 |  |  |  | 1,258 |  |  |  | 1,497 |  |  |  | 1,546 |  |  |  | 1,720 |
Total nonperforming assets |  |  | 20,431 |  |  |  | 21,090 |  |  |  | 23,379 |  |  |  | 22,152 |  |  |  | 24,100 |
Net charge-offs |  |  | 1,432 |  |  |  | 1,404 |  |  |  | 898 |  |  |  | 3,420 |  |  |  | 1,473 |
Allowance for loan losses/loans outstanding |  |  | 1.02 | % |  |  | 1.02 | % |  |  | 1.04 | % |  |  | 1.05 | % |  |  | 1.10 | %
Nonperforming loans/loans outstanding |  |  | 0.43 | % |  |  | 0.46 | % |  |  | 0.52 | % |  |  | 0.49 | % |  |  | 0.55 | %
Allowance for loan losses/nonperforming loans |  |  | 238 | % |  |  | 224 | % |  |  | 200 | % |  |  | 212 | % |  |  | 201 | %
Net charge-offs/average loans |  |  | 0.13 | % |  |  | 0.13 | % |  |  | 0.09 | % |  |  | 0.34 | % |  |  | 0.14 | %
Delinquent loans/ending loans |  |  | 1.01 | % |  |  | 1.08 | % |  |  | 1.00 | % |  |  | 1.19 | % |  |  | 1.14 | %
Loan loss provision/net charge-offs |  |  | 124 | % |  |  | 144 | % |  |  | 112 | % |  |  | 62 | % |  |  | 127 | %
Nonperforming assets/total assets |  |  | 0.25 | % |  |  | 0.26 | % |  |  | 0.29 | % |  |  | 0.28 | % |  |  | 0.31 | %

(1) Excludes gains and losses on sales of investment securities and debt prepayments.
(2) Excludes intangible amortization, acquisition expenses, litigation settlement charge, gains and losses on sales of investment securities and losses on debt extinguishments.
(3) Includes deferred tax liabilities (of approximately $42.5 million at 9/30/16) generated from tax deductible goodwill.

# # #
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.