Community Bank System, Inc. (NYSE:CBU) Q2 2024 Earnings Conference Call July 23, 2024 11:00 AM ET

Company Participants

Dimitar Karaivanov - President and Chief Executive Officer
Joseph Sutaris - Chief Financial Officer

Conference Call Participants

Matthew Breese - Stephens Inc
Christopher O'Connell - KBW
Steve Moss - B. Riley FBR

Operator

Good day and welcome to the Community Financial System Second Quarter 2024 Earnings Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Dimitar Karaivanov, President and Chief Executive Officer of Community Financial Systems. Please go ahead.

Dimitar Karaivanov

Thank you, Ashiya. Good morning, everyone, and welcome to our second quarter 2024 earnings call. I would like to first note that during the quarter, we changed our holding company name to Community Financial System as a better reflection of the uniquely diversified nature of our financial services company and also a better reflection of how we run the business, how we interact internally and how we go to market. We are truly unique amongst the industry. We have the highest percentage of non-banking revenues amongst KRX peers and an overall peer revenue percentage of 40% versus KRX peers of 18%. We're now also providing enhanced disclosures in our quarterly filings and investor presentations in line with how we operate our business segments.

Now turning to the quarter, this was a productive quarter for us. Our Company recorded a new quarterly record for revenues while expenses remained well controlled, leading to $0.91 of GAAP and $0.95 of operating earnings per share. In our Banking business, both NII and fee income expanded from the first quarter. NII growth was driven by both the strength of our core funding and our strong lending growth. Loans grew by $140 million or 1.4%, which is inclusive of $25 million seasonal decline in municipal loans. Deposits decreased by $214 million, which included $278 million seasonal decline in municipal deposits and $63 million increase in consumer and business deposits. Credit remains a foundational strength of our banking business with 5 basis points of charge offs for the quarter.

In our Employee Benefit Services business, we achieved a new quarterly record of $32.1 million in revenue, up 12% over last year. We continue to add participants and assets to the platform and are also benefiting from strong asset values in both our record keeping and fund administration parts of BPaas. Our Insurance Services business also achieved a new quarterly record of $13.3 million in revenue, up 12% over last year. As expected, we're now in positive territory for the year with growth of 4.4%. We continue to remain focused on both organic and inorganic growth and during the quarter executed on two roll up acquisitions.