Community Bank System, Inc. (NYSE:CBU)
Q3 2022 Earnings Conference Call
October 24, 2022 11:00 AM ET
Company Participants
Mark Tryniski - President and CEO
Joseph Sutaris - EVP and CFO
Dimitar Karaivanov - EVP of Financial Services and Corporate Development
Conference Call Participants
Alex Twerdahl - Piper Sandler
Eric Zwick - Hovde Group
Chris O’Connell - KBW
Matthew Breese - Stephens, Inc.
Manuel Navas - D.A. Davidson
Presentation
Operator
Welcome to the Community Bank System Third Quarter 2022 Earnings Conference Call. Please note that this presentation contains forward-looking statements within the provisions of the Private Securities Litigation Reform Act of 1995 that are based on current expectations, estimates and projections about the industry, markets and economic environment in which the company operates. Such statements involve risk and uncertainties that could cause actual results to differ materially from the results discussed in these statements. These risks are detailed in the company's Annual Report and Form 10-K filed with the Securities and Exchange Commission.
Today's call presenters are Mark Tryniski, President and Chief Executive Officer; and Joseph Sutaris, Executive Vice President and Chief Financial Officer. They will be joined by Dimitar Karaivanov, Executive Vice President of Financial Services and Corporate Development for the question-and-answer session. Gentlemen, you may begin. Please go ahead.
Mark Tryniski
Thank you, [Marlese] (ph) Good morning, everyone. Hope all is well, and thank you all for joining our third quarter conference call. You can see from the release, this was one of the best operating quarters we've ever reported. In fact, I believe it is the best quarter we've ever reported, absent last year's post COVID reserve releases and PPE revenues in Q1. Earnings for the quarter were driven by improvement across-the-board, including solid loan growth, a growing margin, higher noninterest revenues in our Banking and Insurance segments, an improved efficiency ratio, and solid credit quality.
Loan growth was across all of our portfolios, and that momentum continues. 5% growth in the quarter follows 4% growth in Q2, so continues to be a performance highlight delivered by our credit generation teams. The larger loan loss provision was driven almost entirely by loan growth, and deteriorating qualitative factors in the CECL model. Deposit costs remain contained and average balances were flat for the quarter with public fund outflows of about $300 million, offset by growth in consumer and business balances of $300 million.
Overall, GAAP EPS is up 8% over last year and PPNR is up 20%. Both numbers would be even greater ex-PPP revenues in last year's quarter. So we could not be more pleased with this quarter's results and believe we are well-positioned heading into Q4 as well in terms of our pipelines and margin expectations. Looking-forward, we expect our current operating momentum to continue. Obviously, this is an unpredictable and volatile environment. But given our stable core funding base, a higher rate environment will continue to be additive to our results. Joe?