x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2012
|
|
OR | |
o |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from to . | |
Commission File Number: 001-13695 |
COMMUNITY BANK SYSTEM, INC. |
(Exact name of registrant as specified in its charter)
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Delaware | 16-1213679 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
5790 Widewaters Parkway, DeWitt, New York | 13214-1883 | |
(Address of principal executive offices) | (Zip Code) | |
(315) 445-2282 | ||
(Registrant's telephone number, including area code)
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||
NONE | ||
(Former name, former address and former fiscal year, if changed since last report)
|
Large accelerated filer x | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o. |
(Do not check if a smaller reporting company)
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Part I.
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Financial Information
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Page
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Item 1.
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Financial Statements (Unaudited)
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|
Consolidated Statements of Condition
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||
June 30, 2012 and December 31, 2011
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3
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Consolidated Statements of Income
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||
Three and six months ended June 30, 2012 and 2011
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4
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Consolidated Statements of Comprehensive Income
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||
Three and six months ended June 30, 2012 and 2011
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5
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Consolidated Statement of Changes in Shareholders’ Equity
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||
Six months ended June 30, 2012
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6
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Consolidated Statements of Cash Flows
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||
Six months ended June 30, 2012 and 2011
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7
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Notes to the Consolidated Financial Statements
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||
June 30, 2012
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8
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Item 2.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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25
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Item 3.
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Quantitative and Qualitative Disclosures about Market Risk
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41
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Item 4.
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Controls and Procedures
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42
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Part II.
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Other Information
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Item 1.
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Legal Proceedings
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42
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Item 1A.
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Risk Factors
|
42
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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42
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Item 3.
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Defaults Upon Senior Securities
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43
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Item 4.
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Mine Safety Disclosures
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43
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Item 5.
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Other Information
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43
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Item 6.
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Exhibits
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43
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June 30,
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December 31,
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2012
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2011
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Assets:
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||
Cash and cash equivalents
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$130,902
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$324,878
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Available-for-sale investment securities (cost of $2,076,249 and $1,453,461, respectively)
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2,206,147
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1,538,973
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Held-to-maturity investment securities (fair value of $717,179 and $617,835, respectively)
|
647,747
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553,495
|
Other securities, at cost
|
78,024
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58,902
|
Loans held for sale, at fair value
|
0
|
532
|
Loans
|
3,561,670
|
3,471,025
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Allowance for loan losses
|
(41,828)
|
(42,213)
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Net loans
|
3,519,842
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3,428,812
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Goodwill, net
|
345,050
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345,050
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Core deposit intangibles, net
|
9,941
|
11,519
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Other intangibles, net
|
3,444
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3,995
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Intangible assets, net
|
358,435
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360,564
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Premises and equipment, net
|
84,575
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85,956
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Accrued interest receivable
|
32,577
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28,579
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Other assets
|
108,082
|
107,584
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Total assets
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$7,166,331
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$6,488,275
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Liabilities:
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||
Noninterest-bearing deposits
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$944,695
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$894,464
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Interest-bearing deposits
|
3,965,657
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3,900,781
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Total deposits
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4,910,352
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4,795,245
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Borrowings
|
1,157,872
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728,281
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Subordinated debt held by unconsolidated subsidiary trusts
|
102,060
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102,048
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Accrued interest and other liabilities
|
110,988
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88,118
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Total liabilities
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6,281,272
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5,713,692
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Commitments and contingencies (See Note J)
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||
Shareholders' equity:
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||
Preferred stock $1.00 par value, 500,000 shares authorized, 0 shares issued
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-
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-
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Common stock, $1.00 par value, 50,000,000 shares authorized; 40,273,189 and
|
||
37,794,532 shares issued, respectively
|
40,273
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37,795
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Additional paid-in capital
|
373,926
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313,501
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Retained earnings
|
431,226
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411,805
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Accumulated other comprehensive income
|
57,167
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29,165
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Treasury stock, at cost (801,260 and 808,123 shares, respectively)
|
(17,533)
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(17,683)
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Total shareholders' equity
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885,059
|
774,583
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Total liabilities and shareholders' equity
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$7,166,331
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$6,488,275
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Three Months Ended
|
Six Months Ended
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|||||
June 30,
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June 30,
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|||||
2012
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2011
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2012
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2011
|
|||
Interest income:
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||||||
Interest and fees on loans
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$47,077
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$49,471
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$94,715
|
$91,768
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||
Interest and dividends on taxable investments
|
17,450
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14,640
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31,725
|
26,869
|
||
Interest and dividends on nontaxable investments
|
6,018
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5,739
|
11,616
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11,500
|
||
Total interest income
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70,545
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69,850
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138,056
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130,137
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||
|
||||||
Interest expense:
|
||||||
Interest on deposits
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4,380
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6,791
|
9,889
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12,797
|
||
Interest on borrowings
|
7,713
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7,389
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15,113
|
14,680
|
||
Interest on subordinated debt held by unconsolidated subsidiary trusts
|
681
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1,483
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1,374
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2,950
|
||
Total interest expense
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12,774
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15,663
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26,376
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30,427
|
||
Net interest income
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57,771
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54,187
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111,680
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99,710
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||
Less: provision for loan losses
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2,155
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1,050
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3,799
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2,100
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||
Net interest income after provision for loan losses
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55,616
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53,137
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107,881
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97,610
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Noninterest income:
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||||||
Deposit service fees
|
11,035
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10,488
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21,404
|
20,173
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||
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Mortgage and other banking services
|
896
|
1,627
|
1,890
|
2,421
|
|
Benefit trust, administration, consulting and actuarial fees
|
8,664
|
7,854
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17,637
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16,037
|
||
Wealth management services
|
3,101
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2,782
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6,233
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4,962
|
||
Gain on investment securities & debt extinguishments, net
|
0
|
14
|
0
|
14
|
||
Total noninterest income
|
23,696
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22,765
|
47,164
|
43,607
|
||
Operating expenses:
|
||||||
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Salaries and employee benefits
|
26,844
|
25,531
|
54,269
|
48,642
|
|
Occupancy and equipment
|
6,130
|
6,253
|
12,593
|
12,310
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||
Data processing and communications
|
5,768
|
5,179
|
11,351
|
9,949
|
||
Amortization of intangible assets
|
1,045
|
1,189
|
2,131
|
2,090
|
||
Legal and professional fees
|
1,804
|
1,307
|
4,012
|
2,646
|
||
Office supplies and postage
|
1,382
|
1,377
|
2,850
|
2,573
|
||
Business development and marketing
|
1,876
|
2,183
|
3,048
|
3,438
|
||
FDIC insurance premiums
|
903
|
1,177
|
1,809
|
2,538
|
||
Acquisition expenses
|
164
|
3,617
|
424
|
4,308
|
||
Other
|
3,454
|
3,313
|
6,286
|
5,948
|
||
Total operating expenses
|
49,370
|
51,126
|
98,773
|
94,442
|
||
Income before income taxes
|
29,942
|
24,776
|
56,272
|
46,775
|
||
Income taxes
|
8,871
|
6,790
|
16,375
|
12,629
|
||
Net income
|
$21,071
|
$17,986
|
$39,897
|
$34,146
|
||
Basic earnings per share
|
$0.53
|
$0.49
|
$1.02
|
$0.97
|
||
Diluted earnings per share
|
$0.53
|
$0.49
|
$1.01
|
$0.96
|
||
Dividends declared per share
|
$0.26
|
$0.24
|
$0.52
|
$0.48
|
Three Months Ended
|
Six Months Ended
|
|||||
June 30,
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June 30,
|
|||||
2012
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2011
|
2012
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2011
|
|||
Other comprehensive income, before tax:
|
||||||
Change in accumulated unrealized gain or loss for pension and other post retirement obligations
|
$683
|
$174
|
$1,365
|
$349
|
||
Change in unrealized losses on derivative instruments used in cash flow hedging relationships
|
0
|
804
|
0
|
1,592
|
||
Unrealized gains on securities:
|
||||||
Unrealized holding gains arising during period
|
51,396
|
19,425
|
44,386
|
28,402
|
||
Reclassification adjustment for gains included in net income
|
0
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(106)
|
0
|
(106)
|
||
Other comprehensive income, before tax:
|
52,079
|
20,297
|
45,751
|
30,237
|
||
Income tax expense related to other comprehensive income
|
(19,909)
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(7,620)
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(17,749)
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(11,441)
|
||
Other comprehensive income, net of tax:
|
32,170
|
12,677
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28,002
|
18,796
|
||
Net income
|
21,071
|
17,986
|
39,897
|
34,146
|
||
Comprehensive income
|
$53,241
|
$30,663
|
$67,899
|
$52,942
|
Three Months Ended
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Six Months Ended
|
|||||
June 30,
|
June 30,
|
|||||
2012
|
2011
|
2012
|
2011
|
|||
Tax Effect Allocated To Each Component Of Comprehensive Income:
|
||||||
Tax effect of unrealized loss for pension and other postretirement obligations
|
($266)
|
($67)
|
($530)
|
($135)
|
||
Tax effect of unrealized losses on derivative instruments used in cash flow hedging relationships
|
0
|
(310)
|
0
|
(613)
|
||
Tax effect of unrealized gains and losses on available-for-sale securities arising during period
|
(19,643)
|
(7,243)
|
(17,219)
|
(10,693)
|
||
Income tax benefit (expense) related to other comprehensive loss
|
($19,909)
|
($7,620)
|
($17,749)
|
($11,441)
|
||
As of
June 30,
|
As of
December 31,
|
|||||
2012
|
2011
|
|||||
Accumulated Other Comprehensive Income By Component:
|
||||||
Unrealized loss for pension and other postretirement obligations
|
($39,112)
|
($40,477)
|
||||
Tax effect
|
15,073
|
15,603
|
||||
Net unrealized loss for pension and other postretirement obligations
|
(24,039)
|
(24,874)
|
||||
Unrealized losses on derivative instruments used in cash flow hedging relationships
|
0
|
0
|
||||
Tax effect
|
0
|
0
|
||||
Net unrealized losses on derivative instruments used in cash flow hedging relationships
|
0
|
0
|
||||
Unrealized gain on available-for-sale securities
|
129,898
|
85,512
|
||||
Tax effect
|
(48,692)
|
(31,473)
|
||||
Net unrealized gain on available-for-sale securities
|
81,206
|
54,039
|
||||
Accumulated other comprehensive income
|
$57,167
|
$29,165
|
Accumulated
|
|||||||
Common Stock
|
Additional
|
Other
|
|||||
Shares
|
Amount
|
Paid-In
|
Retained
|
Comprehensive
|
Treasury
|
||
Outstanding
|
Issued
|
Capital
|
Earnings
|
Income
|
Stock
|
Total
|
|
Balance at December 31, 2011
|
36,986,409
|
$37,795
|
$313,501
|
$411,805
|
$29,165
|
($17,683)
|
$774,583
|
Net income
|
39,897
|
39,897
|
|||||
Other comprehensive income, net of tax
|
28,002
|
28,002
|
|||||
Dividends declared:
|
|||||||
Common, $0.52 per share
|
(20,476)
|
(20,476)
|
|||||
Common stock issued under employee
|
|||||||
stock plan, including tax benefits of $720
|
355,720
|
348
|
5,602
|
150
|
6,100
|
||
Stock-based compensation
|
2,036
|
2,036
|
|||||
|
|||||||
Common stock issuance
|
2,129,800
|
2,130
|
52,787
|
54,917
|
|||
Balance at June 30, 2012
|
39,471,929
|
$40,273
|
$373,926
|
$431,226
|
$57,167
|
($17,533)
|
$885,059
|
Six Months Ended June 30,
|
||
2012
|
2011
|
|
Operating activities:
|
||
Net income
|
$39,897
|
$34,146
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
||
Depreciation
|
5,551
|
5,659
|
Amortization of intangible assets
|
2,131
|
2,090
|
Net accretion of premiums & discounts on securities, loans and borrowings
|
(2,584)
|
(1,431)
|
Stock-based compensation
|
2,036
|
2,292
|
Provision for loan losses
|
3,799
|
2,100
|
Amortization of mortgage servicing rights
|
365
|
446
|
Income from bank-owned life insurance policies
|
(536)
|
(374)
|
Gain on investment securities and debt extinguishments, net
|
0
|
(14)
|
Net gain from sale of loans and other assets
|
(82)
|
(524)
|
Net change in loans held for sale
|
576
|
3,538
|
Change in other assets and liabilities
|
789
|
2,464
|
Net cash provided by operating activities
|
51,942
|
50,392
|
Investing activities:
|
||
Proceeds from sales of available-for-sale investment securities
|
0
|
10,795
|
Proceeds from maturities of available-for-sale investment securities
|
103,709
|
103,299
|
Proceeds from maturities of held-to-maturity investment securities
|
12,602
|
18,627
|
Proceeds from maturities of other investment securities
|
1
|
1,195
|
Purchases of available-for-sale investment securities
|
(724,530)
|
(147,898)
|
Purchases of held-to-maturity investment securities
|
(106,226)
|
(5,354)
|
Purchases of other securities
|
(19,123)
|
(2)
|
Net (increase) decrease in loans
|
(94,829)
|
10,916
|
Cash paid for acquisition
|
0
|
6,258
|
Purchases of premises and equipment
|
(4,132)
|
(4,235)
|
Net cash used in investing activities
|
(832,528)
|
(6,399)
|
Financing activities:
|
||
Net increase in deposits
|
115,107
|
51,503
|
Net increase (decrease) in borrowings
|
429,591
|
(19,779)
|
Issuance of common stock
|
61,017
|
1,852
|
Cash dividends paid
|
(19,825)
|
(15,997)
|
Tax benefits from share-based payment arrangements
|
720
|
284
|
Net cash provided by financing activities
|
586,610
|
17,863
|
Change in cash and cash equivalents
|
(193,976)
|
61,856
|
Cash and cash equivalents at beginning of period
|
324,878
|
211,837
|
Cash and cash equivalents at end of period
|
$130,902
|
$273,693
|
Supplemental disclosures of cash flow information:
|
||
Cash paid for interest
|
$26,775
|
$30,134
|
Cash paid for income taxes
|
9,655
|
9,689
|
Supplemental disclosures of noncash financing and investing activities:
|
||
Dividends declared and unpaid
|
10,260
|
8,831
|
Transfers from loans to other real estate
|
1,977
|
3,405
|
Acquisitions:
|
||
Fair value of assets acquired, excluding acquired cash and intangibles
|
0
|
814,144
|
Fair value of liabilities assumed
|
0
|
791,222
|
June 30, 2012
|
December 31, 2011
|
||||||||
Gross
|
Gross
|
Estimated
|
Gross
|
Gross
|
Estimated
|
||||
Amortized
|
Unrealized
|
Unrealized
|
Fair
|
Amortized
|
Unrealized
|
Unrealized
|
Fair
|
||
(000's omitted)
|
Cost
|
Gains
|
Losses
|
Value
|
Cost
|
Gains
|
Losses
|
Value
|
|
Held-to-Maturity Portfolio:
|
|||||||||
U.S. Treasury and agency securities
|
$547,294
|
$62,053
|
$0
|
$609,347
|
$448,260
|
$56,800
|
$0
|
$505,060
|
|
Obligations of state and political subdivisions
|
69,669
|
5,707
|
0
|
75,376
|
69,623
|
5,088
|
0
|
74,711
|
|
Government agency mortgage-backed securities
|
27,822
|
1,669
|
0
|
29,491
|
35,576
|
2,452
|
0
|
38,028
|
|
Corporate debt securities
|
2,935
|
3
|
0
|
2,938
|
0
|
0
|
0
|
0
|
|
Other securities
|
27
|
0
|
0
|
27
|
36
|
0
|
0
|
36
|
|
Total held-to-maturity portfolio
|
$647,747
|
$69,432
|
$0
|
$717,179
|
$553,495
|
$64,340
|
$0
|
$617,835
|
|
Available-for-Sale Portfolio:
|
|||||||||
U.S. Treasury and agency securities
|
$994,415
|
$94,877
|
$0
|
$1,089,292
|
$463,922
|
$56,626
|
$0
|
$520,548
|
|
Obligations of state and political subdivisions
|
685,086
|
29,560
|
1,414
|
713,232
|
543,527
|
29,721
|
236
|
573,012
|
|
Government agency mortgage-backed securities
|
277,971
|
20,364
|
21
|
298,314
|
310,541
|
20,840
|
2
|
331,379
|
|
Pooled trust preferred securities
|
64,688
|
0
|
15,902
|
48,786
|
68,115
|
0
|
24,269
|
43,846
|
|
Government agency collateralized mortgage obligations
|
38,713
|
1,258
|
61
|
39,910
|
45,481
|
1,572
|
110
|
46,943
|
|
Corporate debt securities
|
14,995
|
1,236
|
0
|
16,231
|
21,495
|
1,360
|
0
|
22,855
|
|
Marketable equity securities
|
381
|
80
|
79
|
382
|
380
|
92
|
82
|
390
|
|
Total available-for-sale portfolio
|
$2,076,249
|
$147,375
|
$17,477
|
$2,206,147
|
$1,453,461
|
$110,211
|
$24,699
|
$1,538,973
|
|
Other Securities:
|
|||||||||
Federal Home Loan Bank common stock
|
$57,452
|
$57,452
|
$38,343
|
$38,343
|
|||||
Federal Reserve Bank common stock
|
15,451
|
15,451
|
15,451
|
15,451
|
|||||
Other equity securities
|
5,121
|
5,121
|
5,108
|
5,108
|
|||||
Total other securities
|
$78,024
|
$78,024
|
$58,902
|
$58,902
|
Less than 12 Months
|
12 Months or Longer
|
Total
|
||||||||||
Gross
|
Gross | Gross | ||||||||||
Fair
|
Unrealized
|
Fair | Unrealized | Fair | Unrealized | |||||||
(000's omitted)
|
# | Value | Losses | # | Value | Losses | # | Value | Losses | |||
Available-for-Sale Portfolio: |
|
|
|
|||||||||
Obligations of state and political subdivisions
|
156
|
$109,974
|
$1,413
|
1
|
$561
|
$1
|
157
|
$110,535
|
$1,414
|
|||
Government agency mortgage-backed securities
|
2
|
4,826
|
21
|
1
|
23
|
0
|
3
|
4,849
|
21
|
|||
Pooled trust preferred securities
|
0
|
0
|
0
|
3
|
48,786
|
15,902
|
3
|
48,786
|
15,902
|
|||
Government agency collateralized mortgage obligations
|
2
|
432
|
2
|
9
|
4,562
|
59
|
11
|
4,994
|
61
|
|||
Marketable equity securities
|
2
|
137
|
76
|
3
|
13
|
3
|
5
|
150
|
79
|
|||
Total available-for-sale/investment portfolio
|
162
|
$115,369
|
$1,512
|
17
|
$53,945
|
$15,965
|
179
|
$169,314
|
$17,477
|
Less than 12 Months
|
12 Months or Longer
|
Total
|
||||||||||
Gross
|
Gross | Gross | ||||||||||
Fair
|
Unrealized
|
Fair | Unrealized | Fair | Unrealized | |||||||
(000's omitted)
|
#
|
Value
|
Losses
|
# | Value | Losses | # | Value | Losses | |||
Available-for-Sale Portfolio: | ||||||||||||
Obligations of state and political subdivisions
|
2
|
$211
|
$0
|
6
|
$6,038
|
$236
|
8
|
$6,249
|
$236
|
|||
Government agency mortgage-backed securities
|
3
|
2,415
|
2
|
0
|
0
|
0
|
3
|
2,415
|
2
|
|||
Pooled trust preferred securities
|
0
|
0
|
0
|
3
|
43,846
|
24,269
|
3
|
43,846
|
24,269
|
|||
Government agency collateralized mortgage obligations
|
17
|
6,648
|
110
|
0
|
0
|
0
|
17
|
6,648
|
110
|
|||
Marketable equity securities
|
1
|
123
|
78
|
3
|
12
|
4
|
4
|
135
|
82
|
|||
Total available-for-sale/investment portfolio
|
23
|
$9,397
|
$190
|
12
|
$49,896
|
$24,509
|
35
|
$59,293
|
$24,699
|
Held-to-Maturity
|
Available-for-Sale
|
|||||
Amortized
|
Fair
|
Amortized
|
Fair
|
|||
(000's omitted)
|
Cost
|
Value
|
Cost
|
Value
|
||
Due in one year or less
|
$22,134
|
$22,631
|
$31,757
|
$32,476
|
||
Due after one through five years
|
270,054
|
299,848
|
226,808
|
243,177
|
||
Due after five years through ten years
|
164,044
|
187,712
|
979,205
|
1,046,438
|
||
Due after ten years
|
163,693
|
177,497
|
521,414
|
545,450
|
||
Subtotal
|
619,925
|
687,688
|
1,759,184
|
1,867,541
|
||
Government agency collateralized mortgage obligations
|
0
|
0
|
38,713
|
39,910
|
||
Government agency mortgage-backed securities
|
27,822
|
29,491
|
277,971
|
298,314
|
||
Total
|
$647,747
|
$717,179
|
$2,075,868
|
$2,205,765
|
June 30,
|
December 31,
|
|
(000's omitted)
|
2012
|
2011
|
Consumer mortgage
|
$1,289,155
|
$1,214,621
|
Business lending
|
1,216,309
|
1,226,439
|
Consumer installment - indirect
|
591,249
|
556,955
|
Consumer installment - direct
|
154,402
|
149,170
|
Home equity
|
310,555
|
323,840
|
Gross loans, including deferred origination costs
|
3,561,670
|
3,471,025
|
Allowance for loan losses
|
(41,828)
|
(42,213)
|
Loans, net of allowance for loan losses
|
$3,519,842
|
$3,428,812
|
Balance at December 31, 2011
|
$2,610
|
Accretion recognized, to-date
|
(860)
|
Net reclassification to accretable from nonaccretable
|
261
|
Balance at June 30, 2012
|
$2,011
|
(000’s omitted)
|
30 - 89 Days
|
90+ Days Past Due and
Still Accruing
|
Nonaccrual
|
Troubled
Debt Restructure
|
Total
Past Due
|
Current
|
Total Loans
|
Consumer mortgage
|
$12,174
|
$2,516
|
$6,484
|
$0
|
$21,174
|
$1,197,920
|
$1,219,094
|
Business lending
|
4,473
|
138
|
12,965
|
1,986
|
19,562
|
962,886
|
982,448
|
Consumer installment - indirect
|
6,798
|
38
|
0
|
0
|
6,836
|
570,213
|
577,049
|
Consumer installment – direct
|
1,414
|
36
|
0
|
0
|
1,450
|
146,099
|
147,549
|
Home equity
|
1,578
|
342
|
960
|
0
|
2,880
|
277,880
|
280,760
|
Total
|
$26,437
|
$3,070
|
$20,409
|
$1,986
|
$51,902
|
$3,154,998
|
$3,206,900
|
(000’s omitted)
|
30 - 89 Days
|
90+ Days Past Due and
Still Accruing
|
Nonaccrual
|
Total
Past Due
|
Acquired Impaired(1)
|
Current
|
Total Loans
|
Consumer mortgage
|
$479
|
$367
|
$997
|
$1,843
|
$0
|
$68,218
|
$70,061
|
Business lending
|
782
|
0
|
4,795
|
5,577
|
15,168
|
213,116
|
233,861
|
Consumer installment - indirect
|
527
|
0
|
1
|
528
|
0
|
13,672
|
14,200
|
Consumer installment – direct
|
167
|
0
|
0
|
167
|
0
|
6,686
|
6,853
|
Home equity
|
335
|
0
|
383
|
718
|
0
|
29,077
|
29,795
|
Total
|
$2,290
|
$367
|
$6,176
|
$8,833
|
$15,168
|
$330,769
|
$354,770
|
(1)
|
Acquired impaired loans were not classified as nonperforming assets as the loans are considered to be performing under ASC 310-30. As a result interest income, through the accretion of the difference between the carrying amount of the loans and the expected cashflows, is being recognized on all acquired impaired loans.
|
(000’s omitted)
|
30 - 89 Days
|
90+ Days Past Due and
Still Accruing
|
Nonaccrual
|
Total
Past Due
|
Current
|
Total Loans
|
Consumer mortgage
|
$16,026
|
$2,144
|
$5,755
|
$23,925
|
$1,111,795
|
$1,135,720
|
Business lending
|
4,799
|
389
|
10,966
|
16,154
|
953,745
|
969,899
|
Consumer installment – indirect
|
8,847
|
32
|
0
|
8,879
|
527,030
|
535,909
|
Consumer installment – direct
|
1,912
|
95
|
0
|
2,007
|
138,500
|
140,507
|
Home equity
|
2,269
|
218
|
864
|
3,351
|
290,093
|
293,444
|
Total
|
$33,853
|
$2,878
|
$17,585
|
$54,316
|
$3,021,163
|
$3,075,479
|
(000’s omitted)
|
30 - 89 Days
|
90+ Days Past Due and
Still Accruing
|
Nonaccrual
|
Total
Past Due
|
Acquired Impaired(1)
|
Current
|
Total Loans
|
Consumer mortgage
|
$985
|
$27
|
$765
|
$1,777
|
$0
|
$77,124
|
$78,901
|
Business lending
|
3,473
|
10
|
9,592
|
13,075
|
17,428
|
226,037
|
256,540
|
Consumer installment – indirect
|
737
|
0
|
2
|
739
|
0
|
20,307
|
21,046
|
Consumer installment – direct
|
167
|
0
|
0
|
167
|
0
|
8,496
|
8,663
|
Home equity
|
465
|
175
|
341
|
981
|
0
|
29,415
|
30,396
|
Total
|
$5,827
|
$212
|
$10,700
|
$16,739
|
$17,428
|
$361,379
|
$395,546
|
(1)
|
Acquired impaired loans were not classified as nonperforming assets as the loans are considered to be performing under ASC 310-30. As a result interest income, through the accretion of the difference between the carrying amount of the loans and the expected cashflows, is being recognized on all acquired impaired loans.
|
Pass | In general, the condition of the borrower and the performance of the loans are satisfactory or better. |
Special Mention | In general, the condition of the borrower has deteriorated although the loan performs as agreed. |
Classified
|
In general, the condition of the borrower has significantly deteriorated and the performance of the loan |
could further deteriorate, if deficiencies are not corrected. | |
Doubtful | In general, the condition of the borrower has deteriorated to the point that collection of the balance is |
improbable based on currently facts and conditions. |
June 30, 2012
|
December 31, 2011
|
||||||
(000’s omitted)
|
Legacy
|
Acquired
|
Total
|
Legacy
|
Acquired
|
Total
|
|
Pass
|
$760,690
|
$141,785
|
$902,475
|
$732,873
|
$157,494
|
$890,367
|
|
Special mention
|
108,703
|
34,065
|
142,768
|
118,800
|
47,890
|
166,690
|
|
Classified
|
112,678
|
42,843
|
155,521
|
118,226
|
33,728
|
151,954
|
|
Doubtful
|
377
|
-
|
377
|
0
|
0
|
0
|
|
Acquired impaired
|
-
|
15,168
|
15,168
|
0
|
17,428
|
17,428
|
|
Total
|
$982,448
|
$233,861
|
$1,216,309
|
$969,899
|
$256,540
|
$1,226,439
|
(000’s omitted)
|
Consumer
Mortgage
|
Consumer Indirect
|
Consumer Direct
|
Home Equity
|
Total
|
Performing
|
$1,210,094
|
$577,011
|
$147,513
|
$279,458
|
$2,214,076
|
Nonperforming
|
9,000
|
38
|
36
|
1,302
|
10,376
|
Total
|
$1,219,094
|
$577,049
|
$147,549
|
$280,760
|
$2,224,452
|
(000’s omitted)
|
Consumer
Mortgage
|
Consumer Indirect
|
Consumer Direct
|
Home Equity
|
Total
|
Performing
|
$68,697
|
$14,199
|
$6,853
|
$29,412
|
$119,161
|
Nonperforming
|
1,364
|
1
|
0
|
383
|
1,748
|
Total
|
$70,061
|
$14,200
|
$6,853
|
$29,795
|
$120,909
|
(000’s omitted)
|
Consumer
Mortgage
|
Consumer Indirect
|
Consumer Direct
|
Home Equity
|
Total
|
Performing
|
$1,127,821
|
$535,877
|
$140,412
|
$292,362
|
$2,096,472
|
Nonperforming
|
7,899
|
32
|
95
|
1,082
|
9,108
|
Total
|
$1,135,720
|
$535,909
|
$140,507
|
$293,444
|
$2,105,580
|
(000’s omitted)
|
Consumer
Mortgage
|
Consumer Indirect
|
Consumer Direct
|
Home Equity
|
Total
|
Performing
|
$78,109
|
$21,044
|
$8,663
|
$29,880
|
$137,696
|
Nonperforming
|
792
|
2
|
0
|
516
|
1,310
|
Total
|
$78,901
|
$21,046
|
$8,663
|
$30,396
|
$139,006
|
June 30,
|
December 31,
|
|
(000’s omitted)
|
2012
|
2011
|
Loans with allowance allocation
|
$2,424
|
$4,118
|
Loans without allowance allocation
|
13,245
|
2,308
|
Carrying balance
|
15,669
|
6,426
|
Contractual balance
|
20,818
|
8,527
|
Specifically allocated allowance
|
604
|
895
|
Three Months Ended June 30, 2012
|
||||||||
Consumer
|
Business
|
Consumer
|
Consumer
|
Home
|
Acquired
|
|||
(000’s omitted)
|
Mortgage
|
Lending
|
Indirect
|
Direct
|
Equity
|
Unallocated
|
Impaired
|
Total
|
Beginning balance
|
$4,885
|
$21,413
|
$7,938
|
$3,066
|
$1,281
|
$2,770
|
$456
|
$41,809
|
Charge-offs
|
(150)
|
(1,662)
|
(1,134)
|
(273)
|
(65)
|
0
|
0
|
(3,284)
|
Recoveries
|
4
|
178
|
782
|
182
|
2
|
0
|
0
|
1,148
|
Provision
|
1,574
|
(1,458)
|
1,084
|
248
|
174
|
342
|
191
|
2,155
|
Ending balance
|
$6,313
|
$18,471
|
$8,670
|
$3,223
|
$1,392
|
$3,112
|
$647
|
$41,828
|
Three Months Ended June 30, 2011
|
||||||||
Consumer
|
Business
|
Consumer
|
Consumer
|
Home
|
Acquired
|
|||
(000’s omitted)
|
Mortgage
|
Lending
|
Indirect
|
Direct
|
Equity
|
Unallocated
|
Impaired
|
Total
|
Beginning balance
|
$3,099
|
$21,559
|
$9,639
|
$3,794
|
$860
|
$3,196
|
$0
|
$42,147
|
Charge-offs
|
(108)
|
(727)
|
(930)
|
(203)
|
(95)
|
0
|
0
|
(2,063)
|
Recoveries
|
7
|
232
|
976
|
178
|
4
|
0
|
0
|
1,397
|
Provision
|
288
|
(115)
|
592
|
109
|
142
|
34
|
0
|
1,050
|
Ending balance
|
$3,286
|
$20,949
|
$10,277
|
$3,878
|
$911
|
$3,230
|
$0
|
$42,531
|
Six Months Ended June 30, 2012
|
||||||||
Consumer
|
Business
|
Consumer
|
Consumer
|
Home
|
Acquired
|
|||
(000’s omitted)
|
Mortgage
|
Lending
|
Indirect
|
Direct
|
Equity
|
Unallocated
|
Impaired
|
Total
|
Beginning balance
|
$4,651
|
$20,574
|
$8,960
|
$3,290
|
$1,130
|
$3,222
|
$386
|
$42,213
|
Charge-offs
|
(419)
|
(3,227)
|
(2,173)
|
(730)
|
(181)
|
0
|
0
|
(6,730)
|
Recoveries
|
17
|
333
|
1,824
|
354
|
18
|
0
|
0
|
2,546
|
Provision
|
2,064
|
791
|
59
|
309
|
425
|
(110)
|
261
|
3,799
|
Ending balance
|
$6,313
|
$18,471
|
$8,670
|
$3,223
|
$1,392
|
$3,112
|
$647
|
$41,828
|
Six Months Ended June 30, 2011
|
||||||||
Consumer
|
Business
|
Consumer
|
Consumer
|
Home
|
Acquired
|
|||
(000’s omitted)
|
Mortgage
|
Lending
|
Indirect
|
Direct
|
Equity
|
Unallocated
|
Impaired
|
Total
|
Beginning balance
|
$2,451
|
$22,326
|
$9,922
|
$3,977
|
$689
|
$3,145
|
$0
|
$42,510
|
Charge-offs
|
(344)
|
(1,570)
|
(1,956)
|
(620)
|
(131)
|
0
|
0
|
(4,621)
|
Recoveries
|
26
|
318
|
1,793
|
394
|
11
|
0
|
0
|
2,542
|
Provision
|
1,153
|
(125)
|
518
|
127
|
342
|
85
|
0
|
2,100
|
Ending balance
|
$3,286
|
$20,949
|
$10,277
|
$3,878
|
$911
|
$3,230
|
$0
|
$42,531
|
June 30, 2012
|
December 31, 2011
|
|||||||
Gross
|
Net
|
Gross
|
Net
|
|||||
Carrying
|
Accumulated
|
Carrying
|
Carrying
|
Accumulated
|
Carrying
|
|||
(000's omitted)
|
Amount
|
Amortization
|
Amount
|
Amount
|
Amortization
|
Amount
|
||
Amortizing intangible assets:
|
||||||||
Core deposit intangibles
|
$32,437
|
($22,496)
|
$9,941
|
$32,437
|
($20,918)
|
$11,519
|
||
Other intangibles
|
9,431
|
(5,987)
|
3,444
|
9,429
|
(5,434)
|
3,995
|
||
Total amortizing intangibles
|
$41,868
|
($28,483)
|
$13,385
|
$41,866
|
($26,352)
|
$15,514
|
Jul - Dec 2012
|
$1,982
|
2013
|
3,305
|
2014
|
2,579
|
2015
|
1,905
|
2016
|
1,314
|
Thereafter
|
2,300
|
Total
|
$13,385
|
(000’s omitted)
|
December 31, 2011
|
Activity
|
June 30, 2012
|
Goodwill
|
$349,874
|
$0
|
$349,874
|
Accumulated impairment
|
(4,824)
|
0
|
(4,824)
|
Goodwill, net
|
$345,050
|
$0
|
$345,050
|
Issuance
|
Par
|
Maturity
|
|||
Trust
|
Date
|
Amount
|
Interest Rate
|
Date
|
Call Price
|
III
|
7/31/2001
|
$24.5 million
|
3 month LIBOR plus 3.58% (4.05%)
|
7/31/2031
|
Par
|
IV
|
12/8/2006
|
$75 million
|
3 month LIBOR plus 1.65% (2.12%)
|
12/15/2036
|
Par
|
Pension Benefits
|
Post-retirement Benefits
|
|||||||||||
Three Months Ended
|
Six Months Ended
|
Three Months Ended
|
Six Months Ended
|
|||||||||
June 30,
|
June 30,
|
June 30,
|
June 30,
|
|||||||||
(000's omitted)
|
2012
|
2011
|
2012
|
2011
|
2012
|
2011
|
2012
|
2011
|
||||
Service cost
|
$848
|
$784
|
$1,696
|
$1,470
|
$0
|
$0
|
$0
|
$0
|
||||
Interest cost
|
1,098
|
1,191
|
2,197
|
2,153
|
29
|
38
|
57
|
76
|
||||
Expected return on plan assets
|
(2,299)
|
(2,167)
|
(4,598)
|
(3,934)
|
0
|
0
|
0
|
0
|
||||
Amortization of unrecognized net loss
|
922
|
474
|
1,844
|
948
|
3
|
2
|
6
|
4
|
||||
Amortization of prior service cost
|
(37)
|
(37)
|
(74)
|
(75)
|
(206)
|
(264)
|
(411)
|
(529)
|
||||
Net periodic benefit cost
|
$532
|
$245
|
$1,065
|
$562
|
($174)
|
($224)
|
($348)
|
($449)
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
||||
(000's omitted, except per share data)
|
2012
|
2011
|
2012
|
2011
|
|
Net income
|
$21,071
|
$17,986
|
$39,897
|
$34,146
|
|
Income attributable to unvested stock-based compensation awards
|
(144)
|
(136)
|
(247)
|
(267)
|
|
Income available to common shareholders
|
$20,927
|
$17,850
|
$39,650
|
$33,879
|
|
Weighted-average common shares outstanding – basic
|
39,324
|
36,346
|
38,948
|
34,804
|
|
Basic earnings per share
|
$0.53
|
$0.49
|
$1.02
|
$0.97
|
|
Net income
|
$21,071
|
$17,986
|
$39,897
|
$34,146
|
|
Income attributable to unvested stock-based compensation awards
|
(144)
|
(136)
|
(247)
|
(267)
|
|
Income available to common shareholders
|
$20,927
|
$17,850
|
$39,650
|
$33,879
|
|
Weighted-average common shares outstanding
|
39,324
|
36,346
|
38,948
|
34,804
|
|
Assumed exercise of stock options
|
463
|
438
|
501
|
486
|
|
Weighted-average shares – diluted
|
39,787
|
36,784
|
39,449
|
35,290
|
|
Diluted earnings per share
|
$0.53
|
$0.49
|
$1.01
|
$0.96
|
(000's omitted)
|
June 30,
2012
|
December 31,
2011
|
Commitments to extend credit
|
$563,647
|
$572,393
|
Standby letters of credit
|
25,048
|
25,279
|
Total
|
$588,695
|
$597,672
|
· | Level 1 – Quoted prices in active markets for identical assets or liabilities. |
· | Level 2 – Quoted prices in active markets for similar assets or liabilities, or quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices |
that are observable for the asset or liability. | |
· | Level 3 – Significant valuation assumptions not readily observable in a market. |
June 30, 2012
|
||||
(000's omitted)
|
Level 1
|
Level 2
|
Level 3
|
Total Fair
Value
|
Available-for-sale investment securities:
|
||||
U.S. Treasury and agency securities
|
$890,160
|
$199,132
|
$0
|
$1,089,292
|
Obligations of state and political subdivisions
|
0
|
713,232
|
0
|
713,232
|
Government agency mortgage-backed securities
|
0
|
298,314
|
0
|
298,314
|
Pooled trust preferred securities
|
0
|
0
|
48,786
|
48,786
|
Government agency collateralized mortgage obligations
|
0
|
39,910
|
0
|
39,910
|
Corporate debt securities
|
0
|
16,231
|
0
|
16,231
|
Marketable equity securities
|
382
|
0
|
0
|
382
|
Total available-for-sale investment securities
|
$890,542
|
$1,266,819
|
$48,786
|
$2,206,147
|
December 31, 2011
|
||||
(000's omitted)
|
Level 1
|
Level 2
|
Level 3
|
Total Fair Value
|
Available-for-sale investment securities:
|
||||
U.S. Treasury and agency securities
|
$311,958
|
$208,590
|
$0
|
$520,548
|
Obligations of state and political subdivisions
|
0
|
573,012
|
0
|
573,012
|
Government agency mortgage-backed securities
|
0
|
331,379
|
0
|
331,379
|
Pooled trust preferred securities
|
0
|
0
|
43,846
|
43,846
|
Government agency collateralized mortgage obligations
|
0
|
46,943
|
0
|
46,943
|
Corporate debt securities
|
0
|
22,855
|
0
|
22,855
|
Marketable equity securities
|
390
|
0
|
0
|
390
|
Total available-for-sale investment securities
|
312,348
|
1,182,779
|
43,846
|
1,538,973
|
Mortgage loans held for sale
|
0
|
532
|
0
|
532
|
Total
|
$312,348
|
$1,183,311
|
$43,846
|
$1,539,505
|
The valuation techniques used to measure fair value for the items in the table above are as follows:
|
·
|
Available for sale investment securities – The fair value of available-for-sale investment securities is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using quoted market prices for similar securities or model-based valuation techniques. Level 1 securities include U.S. Treasury obligations and marketable equity securities that are traded by dealers or brokers in active over-the-counter markets. Level 2 securities include U.S. agency securities, mortgage-backed securities issued by government-sponsored entities, municipal securities and corporate debt securities that are valued by reference to prices for similar securities or through model-based techniques in which all significant inputs, such as reported trades, trade execution data, LIBOR swap yield curve, market prepayment speeds, credit information, market spreads, and security’s terms and conditions, are observable. Securities classified as Level 3 include pooled trust preferred securities in less liquid markets. The value of these instruments is determined using multiple pricing models or similar techniques from third party sources as well as significant unobservable inputs such as judgment or estimation by the Company in the weighting of the models. See Note D for further discussion of the fair value of investment securities.
|
·
|
Mortgage loans held for sale – Mortgage loans held for sale are carried at fair value, which is determined using quoted secondary-market prices of loans with similar characteristics and, as such, have been classified as a Level 2 valuation. The Company did not hold any mortgage loans held for sale at June 30, 2012. Unrealized gains and losses on mortgage loans held for sale, when they occur, are recognized in other banking services income in the consolidated statement of income.
|
Three Months Ended June 30,
|
|||||
2012
|
2011
|
||||
(000's omitted)
|
Pooled Trust Preferred Securities
|
Pooled Trust Preferred Securities
|
Commitments
to Originate
Real Estate Loans for Sale
|
Total
|
|
Beginning balance
|
$47,385
|
$48,172
|
$58
|
$48,230
|
|
Total gains (losses) included in earnings (1)(2)
|
96
|
25
|
(58)
|
(33)
|
|
Total gains included in other comprehensive income(3)
|
3,800
|
1,156
|
0
|
1,156
|
|
Principal reductions
|
(2,495)
|
(381)
|
0
|
(381)
|
|
Commitments to originate real estate loans held for sale, net
|
0
|
0
|
142
|
142
|
|
Ending balance
|
$48,786
|
$48,972
|
$142
|
$49,114
|
|
(1) Amounts included in earnings associated with the pooled trust preferred securities relate to accretion of related discount and are reported in interest and dividends on taxable investments.
(2) Amounts included in earnings associated with the commitments to originate real estate loans for sale are reported as a component of other banking service fees.
(3) Amounts included in other comprehensive income associated with the pooled trust preferred securities are relate to changes in unrealized loss and are reported as a component of unrealized gains on securities in the Statement of Comprehensive Income.
|
|||||
Six Months Ended June 30,
|
|||||
2012
|
2011
|
||||
(000's omitted)
|
Pooled Trust Preferred Securities
|
Pooled Trust Preferred Securities
|
Commitments
to Originate
Real Estate Loans for Sale
|
Total
|
|
Beginning balance
|
$43,846
|
$41,993
|
$58
|
$42,051
|
|
Total gains (losses) included in earnings (1)(2)
|
144
|
48
|
(116)
|
(68)
|
|
Total gains included in other comprehensive income(3)
|
8,367
|
7,679
|
0
|
7,679
|
|
Principal reductions
|
(3,571)
|
(748)
|
0
|
(748)
|
|
Commitments to originate real estate loans held for sale, net
|
0
|
0
|
200
|
200
|
|
Ending balance
|
$48,786
|
$48,972
|
$142
|
$49,114
|
|
(1) Amounts included in earnings associated with the pooled trust preferred securities relate to accretion of related discount and are reported in interest and dividends on taxable investments.
(2) Amounts included in earnings associated with the commitments to originate real estate loans for sale are reported as a component of other banking service fees.
(3) Amounts included in other comprehensive income associated with the pooled trust preferred securities are relate to changes in unrealized loss and are reported as a component of unrealized gains on securities in the Statement of Comprehensive Income.
|
June 30, 2012
|
December 31, 2011
|
||||||||
(000's omitted)
|
Level 1
|
Level 2
|
Level 3
|
Total Fair
Value
|
Level 1
|
Level 2
|
Level 3
|
Total Fair Value
|
|
Impaired loans
|
$0
|
$0
|
$2,487
|
$2,487
|
$0
|
$0
|
$4,118
|
$4,118
|
|
Other real estate owned
|
0
|
0
|
2,899
|
2,899
|
0
|
0
|
2,682
|
2,682
|
|
Mortgage servicing rights
|
0
|
0
|
797
|
797
|
0
|
0
|
1,747
|
1,747
|
|
Total
|
$0
|
$0
|
$6,183
|
$6,183
|
$0
|
$0
|
$8,547
|
$8,547
|
Originated mortgage servicing rights are recorded at their fair value at the time of sale of the underlying loan, and are amortized in proportion to and over the estimated period of net servicing income. In accordance with GAAP, the Company must record impairment charges, on a nonrecurring basis, when the carrying value of a stratum exceeds its estimated fair value. The fair value of mortgage servicing rights is based on a valuation model incorporating inputs that market participants would use in estimating future net servicing income. Such inputs include estimates of the cost of servicing loans, appropriate discount rate and prepayment speeds and are considered to be unobservable and contribute to the Level 3 classification of mortgage servicing rights. The amount of impairment recognized is the amount by which the carrying value of the capitalized servicing rights for a stratum exceeds estimated fair value. Impairment is recognized through a valuation allowance. There is a valuation allowance of approximately $297,000 at June 30, 2012.
|
(000's omitted)
|
Fair Value at
June 30, 2012
|
Valuation
Technique
|
Significant Unobservable Inputs
|
Significant
Unobservable Input
Range
(Weighted Average)
|
Pooled trust preferred securities
|
$48,786
|
Consensus pricing
|
Weighting of offered quotes
|
56.3% – 83.5% (73.8%)
|
Impaired loans
|
6,423
|
Fair value of collateral
|
Estimated cost of disposal
|
11%-25% (18%)
|
Other real estate owned
|
2,899
|
Fair value of collateral
|
Estimated cost of disposal
|
11%-69% (22%)
|
Mortgage servicing rights
|
797
|
Discounted cash flow
|
Weighted average constant prepayment rate
|
17.1% - 32.3% (26.5%)
|
Weighted average discount rate
|
2.42% - 3.13% (2.95%)
|
|||
Adequate compensation
|
$7/loan
|
June 30, 2012
|
December 31, 2011
|
|||||
Carrying
|
Fair
|
Carrying
|
Fair
|
|||
(000's omitted)
|
Value
|
Value
|
Value
|
Value
|
||
Financial assets:
|
||||||
Net loans
|
$3,561,670
|
$3,585,324
|
$3,471,025
|
$3,491,729
|
||
Financial liabilities:
|
||||||
Deposits
|
4,910,352
|
4,919,010
|
4,795,245
|
4,810,856
|
||
Borrowings
|
1,157,872
|
1,256,257
|
728,281
|
828,018
|
||
Subordinated debt held by unconsolidated subsidiary trusts
|
102,060
|
71,905
|
102,048
|
73,211
|
(000's omitted)
|
Banking
|
Other
|
Eliminations
|
Consolidated
Total
|
Three Months Ended June 30, 2012
|
||||
Net interest income
|
$57,730
|
$41
|
$0
|
$57,771
|
Provision for loan losses
|
2,155
|
0
|
0
|
2,155
|
Noninterest income
|
11,929
|
12,281
|
(514)
|
23,696
|
Amortization of intangible assets
|
774
|
271
|
0
|
1,045
|
Other operating expenses
|
38,588
|
10,251
|
(514)
|
48,325
|
Income before income taxes
|
$28,142
|
$1,800
|
$0
|
$29,942
|
Assets
|
$7,141,681
|
$39,632
|
($14,982)
|
$7,166,331
|
Goodwill
|
$334,554
|
$10,496
|
$0
|
$345,050
|
Three Months Ended June 30, 2011
|
||||
Net interest income
|
$54,162
|
$25
|
$0
|
$54,187
|
Provision for loan losses
|
1,050
|
0
|
0
|
1,050
|
Noninterest income
|
12,115
|
11,081
|
(445)
|
22,751
|
Gain on investment securities & debt extinguishments
|
14
|
0
|
0
|
14
|
Amortization of intangible assets
|
921
|
268
|
0
|
1,189
|
Other operating expenses
|
41,778
|
8,604
|
(445)
|
49,937
|
Income before income taxes
|
$22,542
|
$2,234
|
$0
|
$24,776
|
Assets
|
$6,365,080
|
$36,688
|
($11,283)
|
$6,390,485
|
Goodwill
|
$335,634
|
$10,281
|
$0
|
$345,915
|
Six Months Ended June 30, 2012
|
||||
Net interest income
|
$111,599
|
$81
|
$0
|
$111,680
|
Provision for loan losses
|
3,799
|
0
|
0
|
3,799
|
Noninterest income
|
23,292
|
24,961
|
(1,089)
|
47,164
|
Amortization of intangible assets
|
1,578
|
553
|
0
|
2,131
|
Other operating expenses
|
77,106
|
20,625
|
(1,089)
|
96,642
|
Income before income taxes
|
$52,408
|
$3,864
|
$0
|
$56,272
|
Six Months Ended June 30, 2011
|
||||
Net interest income
|
$99,663
|
$47
|
$0
|
$99,710
|
Provision for loan losses
|
2,100
|
0
|
0
|
2,100
|
Noninterest income
|
22,594
|
21,924
|
(925)
|
43,593
|
Gain on investment securities & debt extinguishments
|
14
|
0
|
0
|
14
|
Amortization of intangible assets
|
1,621
|
469
|
0
|
2,090
|
Other operating expenses
|
76,327
|
16,950
|
(925)
|
92,352
|
Income before income taxes
|
$42,223
|
$4,552
|
$0
|
$46,775
|
·
|
Acquired loans – Acquired loans are initially recorded at their acquisition date fair values. The carryover of allowance for loan losses is prohibited as any credit losses in the loans are included in the determination of the fair value of the loans at the acquisition date. Fair values for acquired loans are based on a discounted cash flow methodology that involves assumptions and judgments as to credit risk, prepayment risk, liquidity risk, default rates, loss severity, payment speeds, collateral values and discount rate. Subsequent to the acquisition of acquired impaired loans, GAAP requires the continued estimation of expected cash flows to be received. This estimation requires numerous assumptions, interpretations and judgments using internal and third-party credit quality information. Changes in expected cash flows could result in the recognition of impairment through provision for credit losses.
|
|
For acquired loans that are not deemed impaired at acquisition, credit discounts representing the principal losses expected over the life of the loan are a component of the initial fair value. Subsequent to the purchase date, the methods utilized to estimate the required allowance for loan losses for the non-impaired acquired loans is similar to originated loans, however, the Company records a provision for loan losses only when the required allowance exceeds any remaining pooled discounts for loans evaluated collectively for impairment. For loans individually evaluated for impairment, a provision is recoded when the required allowance exceeds any remaining discount on the loan.
|
·
|
Allowance for loan losses – The allowance for loan losses reflects management’s best estimate of probable loan losses in the Company’s loan portfolio. Determination of the allowance for loan losses is inherently subjective. It requires significant estimates including the amounts and timing of expected future cash flows on impaired loans and the amount of estimated losses on pools of homogeneous loans which is based on historical loss experience and consideration of current economic trends, all of which may be susceptible to significant change.
|
·
|
Investment securities – Investment securities are classified as held-to-maturity, available-for-sale, or trading. The appropriate classification is based partially on the Company’s ability to hold the securities to maturity and largely on management’s intentions with respect to either holding or selling the securities. The classification of investment securities is significant since it directly impacts the accounting for unrealized gains and losses on securities. Unrealized gains and losses on available-for-sale securities are recorded in accumulated other comprehensive income or loss, as a separate component of shareholders’ equity and do not affect earnings until realized. The fair values of investment securities are generally determined by reference to quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments, or a discounted cash flow model using market estimates of interest rates and volatility. Investment securities with significant declines in fair value are evaluated to determine whether they should be considered other-than-temporarily impaired (“OTTI”). An unrealized loss is generally deemed to be other-than-temporary and a credit loss is deemed to exist if the present value of the expected future cash flows is less than the amortized cost basis of the debt security. The credit loss component of an OTTI write-down is recorded in earnings, while the remaining portion of the impairment loss is recognized in other comprehensive income (loss), provided the Company does not intend to sell the underlying debt security, and it is not more likely than not that the Company will be required to sell the debt security prior to recovery of the full value of its amortized cost basis.
|
·
|
Retirement benefits – The Company provides defined benefit pension benefits to eligible employees and post-retirement health and life insurance benefits to certain eligible retirees. The Company also provides deferred compensation and supplemental executive retirement plans for selected current and former employees and officers. Expense under these plans is charged to current operations and consists of several components of net periodic benefit cost based on various actuarial assumptions regarding future experience under the plans, including, but not limited to, discount rate, rate of future compensation increases, mortality rates, future health care costs and expected return on plan assets.
|
·
|
Provision for income taxes – The Company is subject to examinations from various taxing authorities. Such examinations may result in challenges to the tax return treatment applied by the Company to specific transactions. Management believes that the assumptions and judgments used to record tax related assets or liabilities have been appropriate. Should tax laws change or the taxing authorities determine that management’s assumptions were inappropriate, an adjustment may be required which could have a material effect on the Company’s results of operations.
|
·
|
Intangible assets – As a result of acquisitions, the Company has acquired goodwill and identifiable intangible assets. Goodwill represents the cost of acquired companies in excess of the fair value of net assets at the acquisition date. Goodwill is evaluated at least annually, or when business conditions suggest impairment may have occurred and will be reduced to its carrying value through a charge to earnings if impairment exists. Core deposits and other identifiable intangible assets are amortized to expense over their estimated useful lives. The determination of whether or not impairment exists is based upon discounted cash flow modeling techniques that require management to make estimates regarding the amount and timing of expected future cash flows. It also requires them to select a discount rate that reflects the current return requirements of the market in relation to present risk-free interest rates, expected equity market premiums, peer volatility indicators and company-specific risk indicators, all of which are susceptible to change based on changes in economic conditions and other factors. Future events or changes in the estimates used to determine the carrying value of goodwill and identifiable intangible assets could have a material impact on the Company’s results of operations.
|
Three Months Ended
|
Six Months Ended
|
|||||
June 30,
|
June 30,
|
|||||
(000's omitted, except per share data)
|
2012
|
2011
|
2012
|
2011
|
||
Net interest income
|
$57,771
|
$54,187
|
$111,680
|
$99,710
|
||
Provision for loan losses
|
2,155
|
1,050
|
3,799
|
2,100
|
||
Noninterest income
|
23,696
|
22,751
|
47,164
|
43,593
|
||
Gain on sale of investment securities & debt extinguishment, net
|
0
|
14
|
0
|
14
|
||
Operating expenses
|
49,370
|
51,126
|
98,773
|
94,442
|
||
Income before taxes
|
29,942
|
24,776
|
56,272
|
46,775
|
||
Income taxes
|
8,871
|
6,790
|
16,375
|
12,629
|
||
Net income
|
$21,071
|
$17,986
|
$39,897
|
$34,146
|
||
Diluted weighted average common shares outstanding
|
40,057
|
37,061
|
39,692
|
35,564
|
||
Diluted earnings per share
|
$0.53
|
$0.49
|
$1.01
|
$0.96
|
Three Months Ended
|
Three Months Ended
|
||||||
June 30, 2012
|
June 30, 2011
|
||||||
Avg.
|
Avg.
|
||||||
Average
|
Yield/Rate
|
Average
|
Yield/Rate
|
||||
(000's omitted except yields and rates)
|
Balance
|
Interest
|
Paid
|
Balance
|
Interest
|
Paid
|
|
Interest-earning assets:
|
|||||||
Cash equivalents
|
$10,017
|
$8
|
0.34%
|
$177,154
|
$107
|
0.24%
|
|
Taxable investment securities (1)
|
2,091,575
|
17,977
|
3.46%
|
1,447,815
|
14,995
|
4.15%
|
|
Nontaxable investment securities (1)
|
692,839
|
9,540
|
5.54%
|
579,795
|
9,038
|
6.25%
|
|
Loans (net of unearned discount)(2)
|
3,512,427
|
47,355
|
5.42%
|
3,454,246
|
49,728
|
5.77%
|
|
Total interest-earning assets
|
6,306,858
|
74,880
|
4.78%
|
5,659,010
|
73,868
|
5.24%
|
|
Noninterest-earning assets
|
751,615
|
654,381
|
|||||
Total assets
|
$7,058,473
|
$6,313,391
|
|||||
Interest-bearing liabilities:
|
|||||||
Interest checking, savings and money market deposits
|
$2,957,483
|
1,561
|
0.21%
|
$2,694,125
|
2,619
|
0.39%
|
|
Time deposits
|
1,045,730
|
2,819
|
1.08%
|
1,170,546
|
4,172
|
1.43%
|
|
Borrowings
|
1,182,707
|
8,394
|
2.85%
|
839,003
|
8,872
|
4.24%
|
|
Total interest-bearing liabilities
|
5,185,920
|
12,774
|
0.99%
|
4,703,674
|
15,663
|
1.34%
|
|
Noninterest-bearing liabilities:
|
|||||||
Noninterest checking deposits
|
907,153
|
813,789
|
|||||
Other liabilities
|
102,653
|
85,163
|
|||||
Shareholders' equity
|
862,747
|
710,765
|
|||||
Total liabilities and shareholders' equity
|
$7,058,473
|
$6,313,391
|
|||||
Net interest earnings
|
$62,106
|
$58,205
|
|||||
Net interest spread
|
3.79%
|
3.90%
|
|||||
Net interest margin on interest-earning assets
|
3.96%
|
4.13%
|
|||||
Fully tax-equivalent adjustment
|
$4,335
|
$4,018
|
(1) Averages for investment securities are based on historical cost basis and the yields do not give effect to changes in fair value |
that is reflected as a component of shareholders’ equity and deferred taxes. |
(2) The impact of interest and fees not recognized on nonaccrual loans was immaterial.
|
Six Months Ended
|
Six Months Ended
|
||||||
June 30, 2012
|
June 30, 2011
|
||||||
Avg.
|
Avg.
|
||||||
Average
|
Yield/Rate
|
Average
|
Yield/Rate
|
||||
(000's omitted except yields and rates)
|
Balance
|
Interest
|
Paid
|
Balance
|
Interest
|
Paid
|
|
Interest-earning assets:
|
|||||||
Cash equivalents
|
$130,923
|
$169
|
0.26%
|
$168,149
|
$205
|
0.25%
|
|
Taxable investment securities (1)
|
1,828,396
|
32,584
|
3.58%
|
1,318,716
|
27,580
|
4.22%
|
|
Nontaxable investment securities (1)
|
653,393
|
18,410
|
5.67%
|
572,719
|
18,115
|
6.38%
|
|
Loans (net of unearned discount)(2)
|
3,483,333
|
95,259
|
5.50%
|
3,231,325
|
92,224
|
5.76%
|
|
Total interest-earning assets
|
6,096,045
|
146,422
|
4.83%
|
5,290,909
|
138,124
|
5.26%
|
|
Noninterest-earning assets
|
742,598
|
611,877
|
|||||
Total assets
|
$6,838,643
|
$5,902,786
|
|||||
Interest-bearing liabilities:
|
|||||||
Interest checking, savings and money market deposits
|
$2,910,151
|
3,579
|
0.25%
|
$2,509,678
|
4,979
|
0.40%
|
|
Time deposits
|
1,073,486
|
6,310
|
1.18%
|
1,041,890
|
7,818
|
1.51%
|
|
Borrowings
|
1,021,241
|
16,487
|
3.25%
|
834,752
|
17,630
|
4.26%
|
|
Total interest-bearing liabilities
|
5,004,878
|
26,376
|
1.06%
|
4,386,320
|
30,427
|
1.40%
|
|
Noninterest-bearing liabilities:
|
|||||||
Noninterest checking deposits
|
895,802
|
776,857
|
|||||
Other liabilities
|
96,068
|
77,676
|
|||||
Shareholders' equity
|
841,895
|
661,933
|
|||||
Total liabilities and shareholders' equity
|
$6,838,643
|
$5,902,786
|
|||||
Net interest earnings
|
$120,046
|
$107,697
|
|||||
Net interest spread
|
3.77%
|
3.86%
|
|||||
Net interest margin on interest-earning assets
|
3.96%
|
4.10%
|
|||||
Fully tax-equivalent adjustment
|
$8,366
|
$7,987
|
(1) Averages for investment securities are based on historical cost basis and the yields do not give effect to changes in fair value |
that is reflected as a component of shareholders’ equity and deferred taxes. |
(2) The impact of interest and fees not recognized on nonaccrual loans was immaterial.
|
Three Months Ended June 30, 2012
versus June 30, 2011
|
Six Months Ended June 30, 2012
versus June 30, 2011
|
|||||
Increase (Decrease) Due to Change in (1)
|
Increase (Decrease) Due to Change in (1)
|
|||||
(000's omitted)
|
Volume
|
Rate
|
Net Change
|
Volume
|
Rate
|
Net Change
|
Interest earned on:
|
||||||
Cash equivalents
|
($129)
|
$30
|
($99)
|
($47)
|
$11
|
($36)
|
Taxable investment securities
|
5,848
|
(2,866)
|
2,982
|
9,519
|
(4,515)
|
5,004
|
Nontaxable investment securities
|
1,634
|
(1,132)
|
502
|
2,395
|
(2,100)
|
295
|
Loans (net of unearned discount)
|
827
|
(3,200)
|
(2,373)
|
6,998
|
(3,963)
|
3,035
|
Total interest-earning assets (2)
|
8,030
|
(7,018)
|
1,012
|
19,918
|
(11,620)
|
8,298
|
Interest paid on:
|
||||||
Interest checking, savings and
money market deposits
|
235
|
(1,293)
|
(1,058)
|
706
|
(2,106)
|
(1,400)
|
Time deposits
|
(412)
|
(941)
|
(1,353)
|
231
|
(1,739)
|
(1,508)
|
Borrowings
|
2,971
|
(3,449)
|
(478)
|
3,487
|
(4,630)
|
(1,143)
|
Total interest-bearing liabilities (2)
|
1,488
|
(4,377)
|
(2,889)
|
3,910
|
(7,961)
|
(4,051)
|
Net interest earnings (2)
|
6,458
|
(2,557)
|
3,901
|
15,954
|
(3,605)
|
12,349
|
(1) The change in interest due to both rate and volume has been allocated to volume and rate changes in proportion to the |
relationship of the absolute dollar amounts of such change in each component. |
(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. |
Three Months Ended
|
Six Months Ended
|
|||||
June 30,
|
June 30,
|
|||||
(000's omitted)
|
2012
|
2011
|
2012
|
2011
|
||
Deposit service fees
|
$11,035
|
$10,488
|
$21,404
|
$20,173
|
||
Benefit trust, administration, consulting and actuarial fees
|
8,664
|
7,854
|
17,637
|
16,037
|
||
Wealth management services
|
3,101
|
2,782
|
6,233
|
4,962
|
||
Other banking services
|
662
|
645
|
1,336
|
1,043
|
||
Mortgage banking
|
234
|
982
|
554
|
1,378
|
||
Subtotal
|
23,696
|
22,751
|
47,164
|
43,593
|
||
Gain on investment securities & debt extinguishments, net
|
0
|
14
|
0
|
14
|
||
Total noninterest income
|
$23,696
|
$22,765
|
$47,164
|
$43,607
|
||
Noninterest income/operating income (FTE basis) (1)
|
27.6%
|
28.1%
|
28.2%
|
28.8%
|
||
(1) For purposes of this ratio noninterest income excludes gains on investment securities and debt extinguishments. |
Operating income is defined as net interest income plus noninterest income, excluding gains on investment |
securities and debt extinguishments, plus a fully-tax equivalent basis adjustment. |
Three Months Ended
|
Six Months Ended
|
|||||
June 30,
|
June 30,
|
|||||
(000's omitted)
|
2012
|
2011
|
2012
|
2011
|
||
Salaries and employee benefits
|
$26,844
|
$25,531
|
$54,269
|
$48,642
|
||
Occupancy and equipment
|
6,130
|
6,253
|
12,593
|
12,310
|
||
Data processing and communications
|
5,768
|
5,179
|
11,351
|
9,949
|
||
Amortization of intangible assets
|
1,045
|
1,189
|
2,131
|
2,090
|
||
Legal and professional fees
|
1,804
|
1,307
|
4,012
|
2,646
|
||
Office supplies and postage
|
1,382
|
1,377
|
2,850
|
2,573
|
||
Business development and marketing
|
1,876
|
2,183
|
3,048
|
3,438
|
||
FDIC insurance premiums
|
903
|
1,177
|
1,809
|
2,538
|
||
Acquisition expenses
|
164
|
3,617
|
424
|
4,308
|
||
Other
|
3,454
|
3,313
|
6,286
|
5,948
|
||
Total operating expenses
|
$49,370
|
$51,126
|
$98,773
|
$94,442
|
||
Operating expenses(1)/average assets
|
2.74%
|
2.94%
|
2.83%
|
3.01%
|
||
Efficiency ratio
|
56.1%
|
57.2%
|
57.5%
|
58.2%
|
(1) Operating expenses are total noninterest expenses excluding acquisition expenses, contract |
termination charges, goodwill impairment and amortization of intangibles. |
June 30, 2012
|
December 31, 2011
|
June 30, 2011
|
|||||||
Amortized
|
Amortized
|
Amortized
|
|||||||
Cost/Book
|
Fair
|
Cost/Book
|
Fair
|
Cost/Book
|
Fair
|
||||
(000's omitted)
|
Value
|
Value
|
Value
|
Value
|
Value
|
Value
|
|||
Held-to-Maturity Portfolio:
|
|||||||||
U.S. Treasury and agency securities
|
$547,294
|
$609,347
|
$448,260
|
$505,060
|
$478,282
|
$508,589
|
|||
Obligations of state and political subdivisions
|
69,669
|
75,376
|
69,623
|
74,711
|
70,074
|
71,631
|
|||
Government agency mortgage-backed securities
|
27,822
|
29,491
|
35,576
|
38,028
|
43,676
|
45,823
|
|||
Corporate debt securities
|
2,935
|
2,938
|
0
|
0
|
0
|
0
|
|||
Other securities
|
27
|
27
|
36
|
36
|
42
|
42
|
|||
Total held-to-maturity portfolio
|
647,747
|
717,179
|
553,495
|
617,835
|
592,074
|
626,085
|
|||
Available-for-Sale Portfolio:
|
|||||||||
U.S. Treasury and agency securities
|
994,415
|
1,089,292
|
463,922
|
520,548
|
400,764
|
426,772
|
|||
Obligations of state and political subdivisions
|
685,086
|
713,232
|
543,527
|
573,012
|
517,872
|
533,245
|
|||
Government agency mortgage-backed securities
|
277,971
|
298,314
|
310,541
|
331,379
|
342,331
|
356,340
|
|||
Pooled trust preferred securities
|
64,688
|
48,786
|
68,115
|
43,846
|
68,809
|
48,972
|
|||
Government agency collateralized mortgage obligations
|
38,713
|
39,910
|
45,481
|
46,943
|
52,806
|
54,005
|
|||
Corporate debt securities
|
14,995
|
16,231
|
21,495
|
22,855
|
19,007
|
20,392
|
|||
Marketable equity securities
|
381
|
382
|
380
|
390
|
380
|
472
|
|||
Available-for-sale portfolio
|
2,076,249
|
2,206,147
|
1,453,461
|
1,538,973
|
1,401,969
|
1,440,198
|
|||
Net unrealized gain on available-for-sale portfolio
|
129,898
|
-
|
85,512
|
-
|
38,229
|
-
|
|||
Total available-for-sale portfolio
|
2,206,147
|
2,206,147
|
1,538,973
|
1,538,973
|
1,440,198
|
1,440,198
|
|||
Other Securities:
|
|||||||||
Federal Home Loan Bank common stock
|
57,452
|
57,452
|
38,343
|
38,343
|
38,347
|
38,347
|
|||
Federal Reserve Bank common stock
|
15,451
|
15,451
|
15,451
|
15,451
|
12,378
|
12,378
|
|||
Other equity securities
|
5,121
|
5,121
|
5,108
|
5,108
|
5,108
|
5,108
|
|||
Total other securities
|
78,024
|
78,024
|
58,902
|
58,902
|
55,833
|
55,833
|
|||
Total investments
|
$2,931,918
|
$3,001,350
|
$2,151,370
|
$2,215,710
|
$2,088,105
|
$2,122,116
|
(000’s omitted)
|
PreTSL XXVI
|
PreTSL XXVII
|
PreTSL XXVIII
|
|||
Single issuer or pooled
|
Pooled
|
Pooled
|
Pooled
|
|||
Class
|
A-1
|
A-1
|
A-1
|
|||
Book value at 6/30/12
|
$18,765
|
$22,729
|
$23,194
|
|||
Fair value at 6/30/12
|
13,677
|
17,977
|
17,132
|
|||
Unrealized loss at 6/30/12
|
5,088
|
4,752
|
6,062
|
|||
Rating (Moody’s/Fitch/S&P)
|
(Ba1/BB/BB-)
|
(Baa3/BB/BB-)
|
(Baa3/BB/B)
|
|||
Number of depository institutions/companies in issuance
|
60/70
|
42/49
|
45/56
|
|||
Deferrals and defaults as a percentage of collateral
|
29.4%
|
28.1%
|
26.9%
|
|||
Excess subordination
|
35.8%
|
31.9%
|
33.1%
|
(000's omitted)
|
June 30, 2012 | December 31, 2011 | June 30, 2011 | ||||||
Consumer mortgage
|
$1,289,155
|
36.2%
|
$1,214,621
|
35.0%
|
$1,149,219
|
33.0%
|
|||
Business lending
|
1,216,309
|
34.2%
|
1,226,439
|
35.3%
|
1,290,893
|
37.1%
|
|||
Consumer installment – indirect
|
591,249
|
16.6%
|
556,955
|
16.1%
|
549,449
|
15.8%
|
|||
Consumer installment – direct
|
154,402
|
4.3%
|
149,170
|
4.3%
|
158,376
|
4.6%
|
|||
Home equity
|
310,555
|
8.7%
|
323,840
|
9.3%
|
330,213
|
9.5%
|
|||
Total loans
|
$3,561,670
|
100.0%
|
$3,471,025
|
100.0%
|
$3,478,150
|
100.0%
|
June 30,
|
December 31,
|
June 30,
|
||||
(000's omitted)
|
2012
|
2011
|
2011
|
|||
Nonaccrual loans
|
||||||
Consumer mortgage
|
$7,481
|
$6,520
|
$5,881
|
|||
Business lending
|
17,760
|
20,558
|
10,928
|
|||
Consumer installment – indirect
|
1
|
2
|
4
|
|||
Consumer installment – direct
|
0
|
0
|
0
|
|||
Home equity
|
1,343
|
1,205
|
1,020
|
|||
Total nonaccrual loans
|
26,585
|
28,285
|
17,833
|
|||
Accruing loans 90+ days delinquent
|
||||||
Consumer mortgage
|
2,883
|
2,171
|
1,949
|
|||
Business lending
|
138
|
399
|
157
|
|||
Consumer installment – indirect
|
38
|
32
|
19
|
|||
Consumer installment – direct
|
36
|
95
|
101
|
|||
Home equity
|
342
|
393
|
273
|
|||
Total accruing loans 90+ days delinquent
|
3,437
|
3,090
|
2,499
|
|||
Restructured loans
|
||||||
Business lending
|
1,986
|
0
|
0
|
|||
Total nonperforming loans
|
||||||
Consumer mortgage
|
10,364
|
8,691
|
7,830
|
|||
Business lending
|
19,884
|
20,957
|
11,085
|
|||
Consumer installment – indirect
|
39
|
34
|
23
|
|||
Consumer installment – direct
|
36
|
95
|
101
|
|||
Home equity
|
1,685
|
1,598
|
1,293
|
|||
Total nonperforming loans
|
32,008
|
31,375
|
20,332
|
|||
Other real estate (OREO)
|
2,899
|
2,682
|
3,269
|
|||
Total nonperforming assets
|
$34,907
|
$34,057
|
$23,601
|
|||
Allowance for loan losses / total loans
|
1.17%
|
1.22%
|
1.22%
|
|||
Allowance for legacy loan losses / total legacy loans (1)
|
1.28%
|
1.36%
|
1.40%
|
|||
Allowance for loan losses / nonperforming loans
|
131%
|
135%
|
209%
|
|||
Allowance for legacy loans / nonperforming loans (1)
|
161%
|
197%
|
271%
|
|||
Nonperforming loans / total loans
|
0.90%
|
0.90%
|
0.58%
|
|||
Nonperforming assets / total loans and other real estate
|
0.98%
|
0.98%
|
0.67%
|
|||
Delinquent loans (30 days old to nonaccruing) to total loans
|
1.71%
|
2.05%
|
1.50%
|
|||
Net charge-offs to average loans outstanding (quarterly)
|
0.24%
|
0.21%
|
0.08%
|
|||
Net charge-offs to average legacy loans outstanding (quarterly)
|
0.16%
|
0.24%
|
0.09%
|
|||
Loan loss provision to net charge-offs (quarterly)
|
101%
|
94%
|
158%
|
|||
Legacy loan loss provision to net charge-offs (quarterly) (1)
|
180%
|
86%
|
158%
|
|||
(1)Legacy loans exclude loans acquired after January 1, 2009. These ratios are included for comparative purposes to
|
||||||
prior periods. |
Three Months Ended
|
Six Months Ended
|
|||||
June 30,
|
June 30,
|
|||||
(000's omitted)
|
2012
|
2011
|
2012
|
2011
|
||
Allowance for loan losses at beginning of period
|
$41,809
|
$42,147
|
$42,213
|
$42,510
|
||
Charge-offs:
|
||||||
Consumer mortgage
|
150
|
108
|
419
|
344
|
||
Business lending
|
1,662
|
727
|
3,227
|
1,570
|
||
Consumer installment - indirect
|
1,134
|
930
|
2,173
|
1,956
|
||
Consumer installment - direct
|
273
|
203
|
730
|
620
|
||
Home equity
|
65
|
95
|
181
|
131
|
||
Total charge-offs
|
3,284
|
2,063
|
6,730
|
4,621
|
||
Recoveries:
|
||||||
Consumer mortgage
|
4
|
7
|
17
|
26
|
||
Business lending
|
178
|
232
|
333
|
318
|
||
Consumer installment - indirect
|
782
|
976
|
1,824
|
1,793
|
||
Consumer installment - direct
|
182
|
178
|
354
|
394
|
||
Home equity
|
2
|
4
|
18
|
11
|
||
Total recoveries
|
1,148
|
1,397
|
2,546
|
2,542
|
||
Net charge-offs
|
2,136
|
666
|
4,184
|
2,079
|
||
Provision for loans losses
|
2,155
|
1,050
|
3,799
|
2,100
|
||
Allowance for loan losses at end of period
|
$41,828
|
$42,531
|
$41,828
|
$42,531
|
||
Net charge-offs (annualized) to average loans outstanding:
|
||||||
Consumer mortgage
|
0.05%
|
0.04%
|
0.06%
|
0.06%
|
||
Business lending
|
0.49%
|
0.15%
|
0.48%
|
0.22%
|
||
Consumer installment - indirect
|
0.25%
|
-0.03%
|
0.13%
|
0.06%
|
||
Consumer installment - direct
|
0.24%
|
0.07%
|
0.50%
|
0.30%
|
||
Home equity
|
0.08%
|
0.11%
|
0.10%
|
0.08%
|
||
Total loans
|
0.24%
|
0.08%
|
0.24%
|
0.13%
|
June 30,
|
December 31,
|
June 30,
|
||||
(000's omitted)
|
2012
|
2011
|
2011
|
|||
Noninterest checking deposits
|
$907,153
|
$878,443
|
$813,789
|
|||
Interest checking deposits
|
988,993
|
913,187
|
870,219
|
|||
Regular savings deposits
|
707,127
|
660,716
|
639,660
|
|||
Money market deposits
|
1,261,363
|
1,216,069
|
1,184,246
|
|||
Time deposits
|
1,045,730
|
1,139,260
|
1,170,546
|
|||
Total deposits
|
$4,910,366
|
$4,807,675
|
$4,678,460
|
|||
Nonpublic fund deposits
|
$4,387,175
|
$4,353,238
|
$4,196,106
|
|||
Public fund deposits
|
523,191
|
454,437
|
482,354
|
|||
Total deposits
|
$4,910,366
|
$4,807,675
|
$4,678,460
|
·
|
Asset and liability levels using June 30, 2012 as a starting point, which do not include the pro forma effect of any expected acquired assets and liabilities.
|
·
|
There are assumed to be conservative levels of balance sheet growth—low to mid single digit growth in loans and deposits, while using the cash flows from investment contractual maturities and prepayments to repay short-term capital market borrowings or reinvest into securities or cash equivalents.
|
·
|
The prime rate and federal funds rate are assumed to move up 200 basis points over a 12-month period while moving the long end of the treasury curve to spreads over federal funds that are more consistent with historical norms (normalized yield curve). In the 0 basis point model, the prime and federal funds rates remain at current levels while longer-term rates are lowered to create a modestly sloped yield curve that is below historical norms. Deposit rates are assumed to move in a manner that reflects the historical relationship between deposit rate movement and changes in the federal funds rate.
|
·
|
Cash flows are based on contractual maturity, optionality, and amortization schedules along with applicable prepayments derived from internal historical data and external sources.
|
Change in interest rates
|
Calculated annualized
increase (decrease) in
projected net interest income
at June 30, 2012
|
+200 basis points
|
($2,391,000)
|
0 basis points
|
($902,000)
|
31.1
|
Certification of Mark E. Tryniski, President and Chief Executive Officer of the Registrant, pursuant to Rule 13a-15(e) or Rule 15d-15(e) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
|
31.2
|
Certification of Scott Kingsley, Treasurer and Chief Financial Officer of the Registrant, pursuant to Rule 13a-15(e) or Rule 15d-15(e) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
|
32.1
|
Certification of Mark E. Tryniski, President and Chief Executive Officer of the Registrant, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
|
32.2
|
Certification of Scott Kingsley, Treasurer and Chief Financial Officer of the Registrant, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
|
101.INS
|
XBRL Instance Document. ***
|
101.SCH
|
XBRL Taxonomy Extension Schema Document. ***
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document. ***
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document. ***
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document. ***
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document. ***
|
* Filed herewith.
|
**Furnished herewith.
|
****XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.
|
Date: August 9, 2012 | /s/ Mark E. Tryniski | |
Mark E. Tryniski, President and Chief | ||
Executive Officer | ||
Date: August 9, 2012 | /s/ Scott Kingsley | |
Scott Kingsley, Treasurer and Chief | ||
Financial Officer |
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
COMMITMENTS, CONTINGENT LIABILITIES AND RESTRICTIONS (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2012
|
Dec. 31, 2011
|
---|---|---|
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Off-balance Sheet Risks, Liability | $ 588,695 | $ 597,672 |
Commitments to Extend Credit [Member]
|
||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Off-balance Sheet Risks, Liability | 563,647 | 572,393 |
Standby Letters of Credit [Member]
|
||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Off-balance Sheet Risks, Liability | $ 25,048 | $ 25,279 |
MANDATORILY REDEEMABLE PREFERRED SECURITIES (Tables)
|
6 Months Ended | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2012
|
|||||||||||||||||||||||||
MANDATORILY REDEEMABLE PREFERRED SECURITIES [Abstract] | |||||||||||||||||||||||||
Preferred Securities | The Company sponsors two business trusts, Community Statutory Trust III and Community Capital Trust IV ("Trust IV"), of which 100% of the common stock is owned by the Company. The trusts were formed for the purpose of issuing company-obligated mandatorily redeemable preferred securities to third-party investors and investing the proceeds from the sale of such preferred securities solely in junior subordinated debt securities of the Company. The debentures held by each trust are the sole assets of that trust. Distributions on the preferred securities issued by each trust are payable quarterly at a rate per annum equal to the interest rate being earned by the trust on the debentures held by that trust and are recorded as interest expense in the consolidated financial statements. The preferred securities are subject to mandatory redemption, in whole or in part, upon repayment of the debentures. The Company has entered into agreements which, taken collectively, fully and unconditionally guarantee the preferred securities subject to the terms of each of the guarantees. The terms of the preferred securities of each trust are as follows:
|
BENEFIT PLANS (Details) (USD $)
|
12 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2011
|
Jun. 30, 2012
Pension Plans, Defined Benefit [Member]
|
Jun. 30, 2011
Pension Plans, Defined Benefit [Member]
|
Jun. 30, 2012
Pension Plans, Defined Benefit [Member]
|
Jun. 30, 2011
Pension Plans, Defined Benefit [Member]
|
Jun. 30, 2012
Post-retirement Benefit Plans, Defined Benefit [Member]
|
Jun. 30, 2011
Post-retirement Benefit Plans, Defined Benefit [Member]
|
Jun. 30, 2012
Post-retirement Benefit Plans, Defined Benefit [Member]
|
Jun. 30, 2011
Post-retirement Benefit Plans, Defined Benefit [Member]
|
|
Net periodic benefit cost [Abstract] | |||||||||
Service cost | $ 848,000 | $ 784,000 | $ 1,696,000 | $ 1,470,000 | $ 0 | $ 0 | $ 0 | $ 0 | |
Interest cost | 1,098,000 | 1,191,000 | 2,197,000 | 2,153,000 | 29,000 | 38,000 | 57,000 | 76,000 | |
Expected return on plan assets | (2,299,000) | (2,167,000) | (4,598,000) | (3,934,000) | 0 | 0 | 0 | 0 | |
Amortization of unrecognized net loss | 922,000 | 474,000 | 1,844,000 | 948,000 | 3,000 | 2,000 | 6,000 | 4,000 | |
Amortization of prior service cost | (37,000) | (37,000) | (74,000) | (75,000) | (206,000) | (264,000) | (411,000) | (529,000) | |
Net periodic benefit cost | 532,000 | 245,000 | 1,065,000 | 562,000 | (174,000) | (224,000) | (348,000) | (449,000) | |
Plan assets of acquiree merged into pension plan | $ 20,500,000 |
BASIS OF PRESENTATION
|
6 Months Ended |
---|---|
Jun. 30, 2012
|
|
BASIS OF PRESENTATION [Abstract] | |
BASIS OF PRESENTATION | NOTE A: BASIS OF PRESENTATION The interim financial data as of and for the three and six months ended June 30, 2012 is unaudited; however, in the opinion of Community Bank System, Inc. (the "Company"), the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year or any other interim period. |