REGULATORY MATTERS

12 Months Ended

Dec. 31, 2022

REGULATORY MATTERS

REGULATORY MATTERS

NOTE P: REGULATORY MATTERS

The Company and the Bank are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Company’s and the Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Management believes, as of December 31, 2022, that the Company and Bank meet all applicable capital adequacy requirements.

The Company and the Bank are required to maintain a “capital conservation buffer,” composed entirely of common equity Tier 1 capital, in addition to minimum risk-based capital ratios. The required capital conservation buffer is 2.50% for both 2022 and 2021. Therefore, to satisfy both the minimum risk-based capital ratios and the capital conservation buffer in 2022 and 2021, the Company and the Bank must maintain: (i) Common equity Tier 1 capital to total risk-weighted assets of at least 7.0%, (ii) Tier 1 capital to total risk-weighted assets of at least 8.5%, and (iii) Total capital (Tier 1 capital plus Tier 2 capital) to total risk-weighted assets of at least 10.5%. As of December 31, 2022 and 2021, the amounts, ratios and requirements for the Company are presented below. As of December 31, 2022, the OCC categorized the Company and Bank as “well capitalized” under the regulatory framework for prompt corrective action.

									For capital adequacy				To be well-capitalized
					For capital adequacy				purposes plus Capital				under prompt
	Actual				purposes				Conservation Buffer				corrective action
(000’s omitted)	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
Community Bank System, Inc.:
2022
Tier 1 Leverage ratio	$	1,381,598	8.79	%	$	628,485	4.00	%					$	785,606	5.00	%
Tier 1 risk-based capital		1,381,598	15.71	%		527,695	6.00	%	$	747,568	8.50	%		703,593	8.00	%
Total risk-based capital		1,442,529	16.40	%		703,593	8.00	%		923,466	10.50	%		879,491	10.00	%
Common equity tier 1 capital		1,381,439	15.71	%		395,771	4.50	%		615,644	7.00	%		571,669	6.50	%
2021
Tier 1 Leverage ratio	$	1,331,368	9.09	%	$	585,594	4.00	%					$	731,993	5.00	%
Tier 1 risk-based capital		1,331,368	18.60	%		429,559	6.00	%	$	608,542	8.50	%		572,746	8.00	%
Total risk-based capital		1,380,458	19.28	%		572,746	8.00	%		751,729	10.50	%		715,932	10.00	%
Common equity tier 1 capital		1,331,259	18.60	%		322,169	4.50	%		501,152	7.00	%		465,356	6.50	%
Community Bank, N.A.:
2022
Tier 1 Leverage ratio	$	1,122,639	7.26	%	$	618,874	4.00	%					$	773,593	5.00	%
Tier 1 risk-based capital		1,122,639	12.86	%		523,733	6.00	%	$	741,955	8.50	%		698,311	8.00	%
Total risk-based capital		1,183,570	13.56	%		698,311	8.00	%		916,533	10.50	%		872,889	10.00	%
Common equity tier 1 capital		1,122,480	12.86	%		392,800	4.50	%		611,022	7.00	%		567,378	6.50	%
2021
Tier 1 Leverage ratio	$	1,058,091	7.26	%	$	582,631	4.00	%					$	728,289	5.00	%
Tier 1 risk-based capital		1,058,091	14.92	%		425,393	6.00	%	$	602,640	8.50	%		567,190	8.00	%
Total risk-based capital		1,107,181	15.62	%		567,190	8.00	%		744,437	10.50	%		708,988	10.00	%
Common equity tier 1 capital		1,057,982	14.92	%		319,045	4.50	%		496,292	7.00	%		460,842	6.50	%