Community Bank System, Inc. (NYSE:CBU) Q1 2024 Earnings Call Transcript

We pulled forward three years’ worth of cash flows, and we’re getting those back now with the higher-for-longer scenario for probably 18 months instead of the two years that we estimated initially. So very positive NPV transaction. If we have another opportunity to do so, we’re going to look into it. But my guess is until we get kind of that for handle — and again, as a reminder, our portfolio is 85% treasury. So, it is very certain in terms of outcome, but it is tied to that treasury curve.

Matthew Breese: Got it. Okay. And then last one for me is just inventory on whole bank M&A, it feels like deals are more under the microscope from a regulatory perspective than ever. Certain deals that you’re expecting a fairly routine are taking longer or having gotten done. And I was curious if that’s played into your thinking or how that might be a competitive advantage given all the deals over the years.

Joseph Sutaris: Yes. I think, Matt, it does. We feel like we’ve got a very good track record of execution. So, to your point, it does enable us to make a case and differentiate ourselves in discussions. I think what this does, though, if you’re just kind of sitting there and thinking about capital deployment is, you’ve got now uncertainty on timing. And in our experience, deals and acquisitions don’t get better over time as they sit in uncertainty. So, the question is how do you price that uncertainty in the transaction? And that’s also a hard discussion to have with a seller, right, because it’s kind of no one’s fault. But clearly, that asset is going to be worth less to us in 18 months than it is in nine months and than it is in six months.

So that’s something that’s kind of percolating in the back of some of those discussions. It’s hopefully that as we get more transactions kind of through the pipeline as an industry, there will be a little bit more of a playbook. Right now, the playbook is also a little bit uncertain because every agency came out with kind of new proposed rules, and they’re proposed, but sometimes that means a little bit more than just proposed. So, we have to evaluate all of that as we think about capital deployment.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Karaivanov for any closing remarks.

Dimitar Karaivanov: Thank you, Nick, and thank you, everybody, who participated and listen to our call. We really appreciate your support and interest in our company, and we look forward to speaking to you after the second quarter. Thank you.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.