About Community Bank System

Community Bank System, Inc. operates as the bank holding company for Community Bank, N.A. that provides a broad array of banking and other financial services to retail, commercial and municipal customers. The company is a registered financial holding company which wholly-owns two significant subsidiaries: Community Bank, N.A. (the bank or CBNA), and Benefit Plans Administrative Services, Inc. (BPAS). As of December 31, 2022, BPAS owns five subsidiaries: Benefit Plans Administrative Services, LLC (BPA), a provider of defined contribution plan administration services; Northeast Retirement Services, LLC (NRS), a provider of institutional transfer agency, master recordkeeping services, fund administration, trust, and retirement plan services; BPAS Actuarial & Pension Services, LLC (BPAS-APS), a provider of actuarial and benefit consulting services; BPAS Trust Company of Puerto Rico, a Puerto Rican trust company; and Hand Benefits & Trust Company (HB&T), a provider of collective investment fund administration and institutional trust services. BPA owns one subsidiary, Fringe Benefits Design of Minnesota, Inc. (FBD), a provider of retirement plan administration and benefit consulting services. NRS owns one subsidiary, Global Trust Company, Inc. (GTC), a non-depository trust company which provides fiduciary services for collective investment trusts and other products. HB&T owns one subsidiary, Hand Securities, Inc. (HSI), an introducing broker-dealer. The company’s business philosophy is to operate as a diversified financial services enterprise providing a broad array of banking and other financial services to retail, commercial and municipal customers. The company operates full-service branches and drive-thru only locations throughout 42 counties of Upstate New York, six counties of Northeastern Pennsylvania, 12 counties of Vermont, and one County of Western Massachusetts. The company offers a range of commercial and retail banking services. The company owns the following operating subsidiaries: The Carta Group, Inc. (Carta Group), CBNA Preferred Funding Corporation (PFC), CBNA Treasury Management Corporation (TMC), Community Investment Services, Inc. (CISI), Nottingham Advisors, Inc. (Nottingham), OneGroup NY, Inc. (OneGroup), OneGroup Wealth Partners, Inc. (Wealth Partners), Oneida Preferred Funding II LLC (OPFC II) and E.S.B. Realty Corp. (ESB Realty). OneGroup is a full-service insurance agency offering personal and commercial lines of insurance and other risk management products and services. PFC, ESB Realty and OPFC II primarily act as investors in residential and commercial real estate activities. TMC provides cash management, investment, and treasury services to the bank. CISI, Carta Group and Wealth Partners provide broker-dealer and investment advisory services. Nottingham provides asset management services to individuals, corporations, corporate pension and profit sharing plans, and foundations. The company maintains a website at cbna.com. JMD Associates On November 1, 2022, the company, through its subsidiary OneGroup, completed its acquisition of certain assets of JMD Associates, LLC (JMD), an insurance agency headquartered in Boca Raton, Florida. Elmira Savings Bank On May 13, 2022, the company completed its merger with Elmira Savings Bank (Elmira), a New York State chartered savings bank headquartered in Elmira, New York. Insurance Agencies On January 1, 2022, the company, through its subsidiary OneGroup, completed acquisitions of certain assets of three insurance agencies. Thomas Gregory Associates Insurance Brokers, Inc. On August 2, 2021, the company, through its subsidiary OneGroup NY, Inc. (OneGroup), completed its acquisition of certain assets of Thomas Gregory Associates Insurance Brokers, Inc. (TGA), a specialty-lines insurance broker based in the Boston, Massachusetts area. Fringe Benefits Design of Minnesota, Inc. On July 1, 2021, the company, through its subsidiary BPA, completed its acquisition of FBD, a provider of retirement plan administration and benefit consulting services with offices in Minnesota and South Dakota. NuVantage Insurance Corp. On June 1, 2021, the company, through its subsidiary OneGroup, completed its acquisition of certain assets of NuVantage Insurance Corp. (NuVantage), an insurance agency headquartered in Melbourne, Florida. Services Banking The bank is a community bank committed to the philosophy of serving the financial needs of customers in local communities. The bank's branches are generally located in smaller towns and cities within its geographic market areas of Upstate New York, Northeastern Pennsylvania, Vermont and Western Massachusetts. The company is a member of the Federal Reserve System, the Federal Home Loan Bank of New York and the Federal Home Loan Bank of Boston (as a non-member bank) (collectively, referred to as FHLB), and its deposits are insured by the Federal Deposit Insurance Corporation (FDIC) up to applicable limits. Employee Benefit Services Through BPAS and its subsidiaries, the company operates a national practice that provides employee benefit trust, collective investment fund, retirement plan administration, fund administration, transfer agency, actuarial, VEBA/HRA and health and welfare consulting services to a diverse array of clients spanning the United States and Puerto Rico. Wealth Management Services Through the bank’s trust department, CISI, Carta Group, Nottingham, and Wealth Partners, the company provides wealth management, retirement planning, higher educational planning, fiduciary, risk management, trust services and personal financial planning services. The company offers investment alternatives including stocks, bonds, exchange-traded funds, mutual funds, insurance and advisory products. Insurance Services Through OneGroup, the company offers personal and commercial lines of insurance and other risk management products and services. In addition, OneGroup offers employee benefit related services. OneGroup represents many leading insurance companies. The segments of the company’s loan portfolio are disaggregated into the following classes that allow management to monitor risk and performance: Business lending consists of general purpose commercial and industrial loans, including but not limited to, agricultural-related and dealer floor plans, loans to not-for-profit enterprises, as well as mortgages on commercial property and Paycheck Protection Program (PPP) loans. The portfolio segment is further broken into portfolio classes based on risks associated with the collateral supporting the loans. Each class of business lending can also have different payment structures. Business lending loans are generally higher dollar loans and a large portion are risk rated at least annually. Consumer mortgages consist primarily of fixed rate residential instruments, typically 10 to 30 years in contractual term, secured by first liens on real property. FICO credit scores are used to monitor higher risks related to this type of lending with the Company segmenting consumer mortgages into FICO AB and FICO CDE. FICO AB refers to higher tiered loans with FICO scores greater than or equal to 720 as compared to FICO CDE with FICO scores less than 720 and potentially higher risk. Consumer indirect consists primarily of installment loans originated through selected dealerships and are generally secured by automobiles, marine and other recreational vehicles. Collateral securing the loans was used to further disaggregate this portfolio as charge-offs can vary depending on the purpose of the loan. Non-auto loans often have longer terms, and generally have higher risk due to declines in collateral value given the nature of the property. Consumer direct consists of all other loans to consumers, such as personal installment loans and check credit lines of credit. Home equity products are installment loans or lines of credit most often secured by a first or second lien position on residential real estate with terms up to 30 years. Segments The company operates through three segments: Banking, Employee Benefit Services, and All Other. The bank operates the Banking segment that provides full-service banking to consumers, businesses, and governmental units in Upstate New York, as well as Northeastern Pennsylvania, Vermont, and Western Massachusetts. Employee Benefit Services, which includes operating subsidiaries of BPAS, BPA, BPAS-APS, BPAS Trust Company of Puerto Rico, NRS, GTC, HB&T, and FBD, provides employee benefit trust, collective investment fund, retirement plan administration, fund administration, transfer agency, actuarial, VEBA/HRA, and health and welfare consulting services. The All Other segment consists of wealth management services, including trust services provided by the personal trust unit within the bank, broker-dealer and investment advisory services provided by CISI; The Carta Group, Inc. (Carta Group); and Wealth Partners, as well as asset management provided by Nottingham Advisors, Inc. (Nottingham); and full-service insurance, risk management and employee benefit services provided by OneGroup. Deposits As of December 31, 2022, the company’s deposits included noninterest checking deposits; interest checking deposits; savings deposits; money market deposits; and time deposits. Supervision and Regulation The company, as a bank holding company, is subject to extensive regulation, supervision and examination by the Board of Governors of the Federal Reserve System (FRB) as its primary federal regulator. The bank is a nationally-chartered bank and is subject to extensive regulation, supervision and examination by the Office of the Comptroller of the Currency (OCC) as its primary federal regulator, and as to certain matters, the FRB, the Consumer Financial Protection Bureau (CFPB), and the Federal Deposit Insurance Corporation (FDIC). The company is also subject to the jurisdiction of the Securities and Exchange Commission (SEC) and is subject to disclosure and regulatory requirements under the Securities Act of 1933, as amended; and the Securities Exchange Act of 1934, as amended. The company’s common stock is listed on the New York Stock Exchange (NYSE) and it is subject to NYSE’s rules for listed companies. Affiliated entities, including BPAS, BPA, NRS, GTC, HB&T, HSI, BPAS Trust Company of Puerto Rico, FBD, Nottingham, CISI, OneGroup, Carta Group, and Wealth Partners are subject to the jurisdiction of certain state and federal regulators and self-regulatory organizations including, but not limited to, the SEC, the Texas Department of Banking, the State of Maine Bureau of Financial Institutions, the Financial Industry Regulatory Authority (FINRA), Puerto Rico Office of the Commissioner of Financial Institutions, the U.S. Department of Labor, and state securities and insurance regulators. The bank’s most recent the Community Reinvestment Act of 1977, as amended (CRA) rating was Satisfactory. Because the company is a financial holding company, it is subject to regulatory capital requirements and required by the FRB to, among other things, maintain cash reserves against its deposits. Effective on March 26, 2020, the FRB reduced this cash reserve requirement to zero percent. The bank is supervised and regularly examined by the OCC. The bank is well capitalized under regulatory standards administered by the OCC. The bank is a member of the FHLB, which provides a central credit facility primarily for member institutions for home mortgage and neighborhood lending. The bank is subject to the rules and requirements of the FHLB, including the purchase of shares of FHLB activity-based stock in the amount of 4.5% of the dollar amount of outstanding advances and FHLB capital stock in an amount equal to the greater of $1,000 or the sum of 0.15% of the mortgage-related assets held by the bank based upon the previous year-end financial information. The bank was in compliance with the rules and requirements of the FHLB as of December 31, 2022. Deposits of the bank are insured up to the applicable limits by the Deposit Insurance Fund (DIF) and are subject to deposit insurance assessments to maintain the DIF. In connection with its banking activities, the bank is subject to a number of federal and state laws designed to protect borrowers and promote lending to various sectors of the economy. These laws include but are not limited to the Equal Credit Opportunity Act, the Gramm-Leach-Bliley Act (GLB Act), the Fair Credit Reporting Act (FCRA), the Fair and Accurate Credit Transactions Act of 2003 (FACT Act), the Electronic Funds Transfer Act, the Truth in Lending Act, the Home Mortgage Disclosure Act, the Dodd-Frank Act, the Real Estate Settlement Procedures Act, the Secure and Fair Enforcement for Mortgage Licensing Act (SAFE), the Servicemembers Civil Relief Act (SCRA), the Military Lending Act (MLA), and various state law counterparts. The FRB and the Federal Trade Commission have extensive rulemaking authority under the FACT Act, and the company and the bank are subject to the rules that have been created under the FACT Act, including rules regarding limitations on affiliate marketing and implementation of programs to identify, detect and mitigate certain identity theft red flags. The company has approved policies and procedures that are designed to comply with the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 and its regulations. The company has established a bank secrecy act /anti-money laundering program and taken other appropriate measures in order to comply with the Bank Secrecy Act requirements. History Community Bank System, Inc. was founded in 1866. The company was incorporated in 1983 under the Delaware General Corporation Law.