Community Bank System, Inc. (CBU)’s Fourth Quarter and Year End 2014 Earnings Conference Call Transcript

Scott Kingsley – Executive Vice President & Chief Financial Officer
You know its interesting Collyn, its really, it was sort of across the board, across all of our portfolios and its not the first occurrence where our fourth quarter net charge-offs were larger than every quarter of the year that was the same pattern in 13, same pattern in 12, same pattern in 11. So, my guess is that we’ve been bringing something along in a productive fashion throughout the year and we have not reached our conclusion in the fourth quarter, we’re very active relative to these charge-offs.

Collyn Gilbert – KBW
Great, ok, that’s it. That’s all I had. Thanks, guys.

Mark Tryniski – President & Chief Executive Officer
Thank you, Collyn.

Operator
And once again, if you’d like to ask a question please press *1 at this time. Next we’ll move to a question from Matthew Breese with Sterne Agee.

Matthew Breese – Sterne Agee
Good morning, guys.

Scott Kingsley – Executive Vice President & Chief Financial Officer
Good morning, Matt.

Mark Tryniski – President & Chief Executive Officer
Good morning.

Matthew Breese – Sterne Agee
Scott, you had mentioned earlier that you are expecting for 15 some margin compression and I was hoping you could give a bit more color around that and maybe provide, what extent you would expect the margin to compress given the current yield curve?

Scott Kingsley – Executive Vice President & Chief Financial Officer
Yes, great, question Matt. I try to frame a little bit just using the third and the fourth quarter together, so understanding these will expect a better reserve and better dividend towards the year, but if you remove that from the third quarter versus the fourth quarter where we had a very similar mix of assets, we actually had an organic drop in net interest margin of three basis points. We’ve been giving that kind of two to four basis points a quarter guidance over the course of the last say 12 to 15 months or maybe a little bit longer than that.

And I’ll acknowledge that in some cases we’ve done better than that, so we’ve been able to actually leak a little bit out of our funding costs or productively add some cash flows to the investment portfolio that have offset some of that. That being said on the surface from just as your modeling standpoint I would look at that sort of two to three basis points a quarter going forward in the net interest margin. And really it’s a function of us being productive at redeploying cash flows in the investment portfolio to take off what we don’t use in the mix change to loans.