Community Financial System CBU Form 8-K filing Earnings

Exhibit 99.1

Community Financial System, Inc. Reports Second Quarter 2026 Results

SYRACUSE, N.Y. — July 28, 2026 — Community Financial System, Inc. (the “Company” or “CFSI”) (NYSE: CBU) reported second quarter 2026 results. The results are available within the “News” section of the Company's investor relations website or directly at https://ir.cfsi.com/Q2-2026-CBU-Earnings-Release.

Company management will host a conference call at 11:00 a.m. (ET) today, July 28, 2026, to discuss the second quarter 2026 results. The conference call can be accessed via webcast at https://app.webinar.net/b0yzqVAwxjN or via dial-in at 1-833-630-0464 (United States) or 1-412-317-1809 (International).

About Community Financial System, Inc.

Community Financial System, Inc. is a diversified financial services company that is focused on four main business lines – banking services, employee benefit services, insurance services and wealth management services. Its banking subsidiary, Community Bank, N.A., is among the country’s 100 largest banking institutions with over $17 billion in assets and operates approximately 200 customer facilities across Upstate New York, Northeastern Pennsylvania, Vermont, Western Massachusetts and Southern New Hampshire. The Company’s Benefit Plans Administrative Services, Inc. subsidiary is a leading provider of employee benefits administration, trust services, collective investment fund administration, and actuarial consulting services to customers on a national scale. The Company’s OneGroup NY, Inc. subsidiary is a top 68 U.S. insurance agency. The Company also offers comprehensive financial planning, trust administration and wealth management services through its Nottingham Financial Group operating unit. The Company is listed on the New York Stock Exchange and the Company’s stock trades under the symbol CBU. For more information about the Company and each of its four main business lines visit https://ir.cfsi.com.

Community Financial System, Inc. Reports Second Quarter 2026 Results

SYRACUSE, N.Y. — July 28, 2026

Community Financial System, Inc. (the “Company” or “CFSI”) (NYSE: CBU) reported second quarter 2026 net income of $61.3 million, or $1.16 per share and operating net income of $61.5 million, or $1.16 per share.

“Our Company delivered another quarter of solid core performance with operating diluted earnings per share¹ of $1.16, up 11.5% year-over-year and representing our fifth consecutive quarter of record results,” commented Dimitar A. Karaivanov, President and CEO.

“Our organic momentum continues across all businesses and is also supported by margin and market value tailwinds. During the quarter we achieved an operating return on assets¹ of 1.40% while continuing to actively invest in organic and inorganic growth initiatives including completing the acquisition of ClearPoint Federal Bank & Trust. At the same time, we remain focused on expanding operating leverage and ensuring that continued investments translate fully into bottom-line results. Importantly, our trajectory remains very attractive and we expect acceleration across all of our businesses into the second half of the year.”

¹ Non-GAAP Measure. For more information on Non-GAAP measures, refer to “Non-GAAP Measures” section along with the Quarterly GAAP to Non-GAAP Reconciliations included within the “Summary of Financial Data (unaudited)” tables below.

¹ Non-GAAP Measure. For more information on Non-GAAP measures, refer to “Non-GAAP Measures” section along with the Quarterly GAAP to Non-GAAP Reconciliations included within the “Summary of Financial Data (unaudited)” tables below.

² Refer to the “Summary of Financial Data (unaudited)” tables below for reconciliations of the reported measure of segment profit (adjusted income before income taxes) results to Company results and calculations of the segment adjusted return metrics. The reported measure of segment profit, the reported segment assets and the reported segment equity that are used in the calculations of the segment adjusted return metrics are presented in conformity with ASC 280: Segment Reporting and follow the methodology disclosed in the Company’s 2025 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 27, 2026.

³ The segment adjusted return metrics are reported on a pre-tax basis.

Results of Operations

The Company reported second quarter 2026 net income of $61.3 million, or $1.16 per share. This compares to net income of $51.3 million, or $0.97 per share, for the second quarter of 2025. The $0.19 increase in earnings per share was primarily driven by increases in net interest income and noninterest revenues, partially offset by increases in the provision for credit losses, noninterest expenses and income taxes. Comparatively, the Company’s earnings per share increased $0.08 from $1.08 per share for the linked first quarter of 2026, primarily due to increases in net interest income and noninterest revenues and a decrease in the provision for credit losses, partially offset by increases in noninterest expenses and income taxes.

Net Interest Income and Net Interest Margin

The Company’s record quarterly net interest income reflected diminishing funding cost pressures and organic loan growth, supporting continued margin expansion.

• Net interest income in the second quarter of 2026 was $139.1 million, up $14.4 million, or 11.5%, compared to the second quarter of 2025, and up $4.4 million, or 3.3%, from the first quarter of 2026.
• Net interest margin for the second quarter of 3.46% and fully tax-equivalent net interest margin, a non-GAAP measure, of 3.49%, both increased 19 basis points from the second quarter of 2025. These increases were primarily the result of a lower cost of interest-bearing liabilities and a higher yield on interest-earning assets.
• The yield on interest-earning assets increased 5 basis points to 4.61% over the prior year’s second quarter primarily driven by higher loan yields.
• The cost of interest-bearing liabilities decreased 18 basis points from 1.74% in the second quarter of 2025 to 1.56% in the second quarter of 2026, driven by a 15 basis point decrease in the average interest-bearing deposit rate.
• On a linked quarter basis, net interest margin and fully tax-equivalent net interest margin, a non-GAAP measure, increased by 3 basis points and 4 basis points, respectively. The yield on interest-earning assets increased 1 basis point, while the cost of funds decreased 2 basis points. This included a 3 basis point decrease in the cost of interest-bearing liabilities driven by a 3 basis point decrease in the average interest-bearing deposit rate to 1.44%. Excluding the impact of the semiannual Federal Reserve Bank dividend recorded in the second quarter of 2026, the yield on interest-earning assets decreased 1 basis point compared to the linked first quarter.

Noninterest Revenues

The Company’s noninterest revenue streams generated 38% of total revenues in the second quarter.

• Banking noninterest revenues, comprised of deposit service and other banking fees and mortgage banking revenues, totaled $21.3 million for the second quarter of 2026, an increase of $1.2 million, or 6.1%, from the second quarter of 2025 and a decrease of $0.5 million, or 2.4%, from the first quarter of 2026. The increase from the second quarter of 2025 was primarily comprised of higher debit interchange and ATM fees. The decrease from the linked first quarter reflected lower customer interest rate swap fee revenues.
• Employee benefit services revenues for the second quarter of 2026 were $34.9 million, an increase of $2.5 million, or 7.7%, in comparison to the second quarter of 2025 and an increase of $0.3 million, or 0.9%, from the first quarter of 2026. The increase from the prior year’s second quarter was largely driven by revenue growth in the recordkeeping and third-party administration services business line due in part to higher average market values of assets under administration.
• Insurance services revenues for the second quarter of 2026 were $13.2 million, which represents a $0.2 million, or 1.4%, decrease versus the prior year’s second quarter and a $0.6 million, or 4.8%, increase from the first quarter of 2026. The increase from the linked first quarter was due to changes in the timing of collections of contingent commission revenues. The decrease from the second quarter of 2025 was predominantly due to a softer insurance market and lower organic growth.
• Wealth management services revenues for the second quarter of 2026 totaled $10.4 million, an increase of $1.7 million, or 19.8%, from the second quarter of 2025 and an increase of $0.1 million, or 0.7%, from the first quarter of 2026. The increase from the second quarter of 2025 was reflective of revenue growth from the acquisition of ClearPoint Federal Bank & Trust (“ClearPoint”) and higher average market values of assets under management.
• The Company recognized a $4.7 million gain on equity securities during the second quarter of 2026 which included a $3.3 million gain associated with the sale of a limited partnership investment and a $0.9 million gain associated with the conversion of certain Visa Class B shares to Visa Class C shares.

Noninterest Expenses and Income Taxes

The Company continues to focus on managing expenses consistent with its organic growth strategies and scale objectives, while evaluating efficiency opportunities and the enhancement of operating leverage in all lines of business.

• The Company recorded $137.7 million in total noninterest expenses in the second quarter of 2026, compared to $129.1 million of total noninterest expenses in the prior year’s second quarter. The $8.6 million, or 6.7% increase between the periods was primarily driven by higher salaries and employee benefits expenses, data processing and communications expenses and occupancy and equipment expenses.
• Salaries and employee benefits expenses increased $3.4 million, or 4.3%, from the second quarter of 2025, primarily due to incremental costs associated with acquisitions and de novo bank branches opened between the periods, along with the impact of annual merit-based increases.
• Data processing and communications expenses increased $3.0 million, or 17.9%, from the second quarter of 2025 reflective of the Company’s continued investment in customer-facing and back-office technologies, including artificial intelligence applications and other workflow efficiency initiatives. The increase also included a one-time $0.6 million early termination charge related to a debit card processing platform conversion.
• Occupancy and equipment expenses increased $2.4 million, or 20.9%, from the prior year’s second quarter, driven by incremental costs associated with the opening of de novo bank branches and regional headquarters and the Santander Bank, N.A. (“Santander”) branch acquisition.
• The effective tax rate for the second quarter of 2026 was 24.1%, an increase from 22.3% in the second quarter of 2025 and an increase from 23.3% in the first quarter of 2026. The increase from the second quarter of 2025 was primarily due to an increase in certain state income taxes while the increase from the first quarter of 2026 reflected a decrease in tax benefits related to stock-based compensation activity.

Financial Position and Liquidity

The Company’s financial position and liquidity profile remain strong, demonstrating the effectiveness of its proactive asset and liability management and prudent financial planning.

• The Company’s total assets were $17.76 billion at June 30, 2026, representing a $1.10 billion, or 6.6%, increase from one year prior and an $18.9 million, or 0.1%, increase from the end of the first quarter of 2026. The increase in the Company’s total assets from one year prior was primarily driven by organic loan growth, the Santander branch acquisition and the ClearPoint acquisition.
• At June 30, 2026, the Company’s readily available sources of liquidity totaled $6.74 billion, including unrestricted cash and cash equivalents balances of $243.4 million, unpledged investment securities totaling $2.17 billion, unused borrowing capacity at the Federal Home Loan Bank of New York of $1.46 billion and $2.87 billion of funding availability at the Federal Reserve Bank’s discount window.
• The Company’s readily available sources of liquidity represent 239% of the Company’s estimated uninsured deposits, net of collateralized and intercompany deposits, at June 30, 2026.
• Estimated insured deposits, net of collateralized and intercompany deposits, represent 81% of total ending deposits at June 30, 2026.

Deposits and Funding

The Company continues to leverage its strong core deposit base, characterized by low funding costs, to support its financial operations.

• Ending deposits at June 30, 2026 of $14.71 billion were $159.7 million, or 1.1%, lower than the end of the first quarter of 2026 and were $1.01 billion, or 7.4%, higher than one year prior. The decrease from March 31, 2026 was primarily due to seasonal outflows of governmental deposit balances while the increase from one year prior was primarily driven by growth in consumer and business deposit balances, including the $543.7 million of deposits assumed in the Santander branch acquisition and the $120.1 million of deposits assumed in the ClearPoint acquisition.
• Ending borrowings of $764.1 million at June 30, 2026, which included $425.6 million of fixed rate Federal Home Loan Bank of New York term borrowings, $172.8 million of overnight borrowings, $157.6 million of customer repurchase agreements and $8.1 million of finance lease liabilities, increased $116.8 million, or 18.0%, from the end of the first quarter of 2026 and decreased $130.4 million, or 14.6%, from one year prior. The increase from the end of the linked first quarter primarily reflected an increase in overnight borrowings while the decrease from one year prior primarily reflected a decrease in fixed-rate term borrowings.
• The Company’s average cost of funds of 1.18% decreased 14 basis points from the second quarter of 2025 and decreased 2 basis points from the first quarter of 2026. The decreases between both periods reflected lower average deposit costs and a lower proportion of funding from higher rate borrowings.
• The quarterly average cost of total deposits of 1.07% remains comparatively low relative to the industry and decreased 12 basis points from the second quarter of 2025 and 3 basis points from the linked first quarter of 2026.
• 66% of the Company’s total deposits were in no- and relatively low-rate checking and savings accounts at the end of the second quarter of 2026. Time deposit accounts represented 14% of the Company’s total deposits at the end of the second quarter of 2026, a decrease of 1 percentage point from June 30, 2025 and consistent with the end of the linked first quarter.

Loans and Credit Quality

The Company’s predominantly footprint-based loan portfolio is well diversified, with credit performance remaining a central priority. The Company’s asset quality metrics, including net charge-offs and delinquent and nonperforming (nonaccrual loans and accruing loans 90 days or more past due) loan levels, remain strong compared to the banking industry, reflecting the Company’s robust risk management practices and disciplined credit quality standards.

• Ending loans at June 30, 2026 totaled $11.28 billion, an increase of $151.6 million, or 1.4%, compared to March 31, 2026 and an increase of $763.7 million, or 7.3%, compared to one year prior. The increase from one year prior primarily reflected organic growth in the overall business and consumer lending portfolios while the increase from the end of the linked first quarter primarily reflected organic growth in the business lending portfolio. The Company’s non-owner occupied and multifamily CRE exposure remains diverse both geographically and by property type, and relatively low at 16% of total assets, 25% of total loans and 201% of total bank-level regulatory capital.
• At June 30, 2026, the Company’s allowance for credit losses totaled $91.7 million, or 0.81% of total loans outstanding, compared to $90.2 million, or 0.81% of total loans outstanding, at March 31, 2026, and $81.9 million, or 0.78% of total loans outstanding, at June 30, 2025. The increases were driven by a net reserve build in the business lending portfolio reflective of organic CRE loan growth.
• The Company recorded a $4.6 million provision for credit losses during the second quarter of 2026 compared to $5.6 million in the linked first quarter and $4.1 million in the prior year’s second quarter, reflective of organic loan growth and stable credit quality metrics.
• The Company recorded net charge-offs of $3.3 million, or an annualized 0.12% of average loans, in the second quarter of 2026 compared to net charge-offs of $5.1 million, or an annualized 0.20% of average loans, in the second quarter of 2025 and net charge-offs of $3.0 million, or an annualized 0.11% of average loans, in the first quarter of 2026.
• Total delinquent loans, consisting of loans 30 or more days past due and nonaccrual loans, as a percentage of total loans outstanding was 1.04% at the end of the second quarter of 2026. This compares to 1.12% at March 31, 2026 and 1.01% at June 30, 2025.
• At June 30, 2026, nonperforming loans were $56.8 million, or 0.50% of total loans outstanding compared to $53.7 million, or 0.48% of total loans outstanding at March 31, 2026, and $53.3 million, or 0.51% of total loans outstanding one year earlier.

Shareholders’ Equity and Regulatory Capital

The Company’s capital planning and management activities, coupled with its diversified streams of income and prudent dividend practices, have allowed it to build and maintain a strong capital position. At June 30, 2026, all of the regulatory capital ratios of the Company and Community Bank, N.A. (“CBNA”) significantly exceeded well-capitalized standards.

• Shareholders’ equity of $2.07 billion at June 30, 2026 was $189.7 million, or 10.1%, higher than one year ago, primarily due to a $129.1 million increase in retained earnings and a $61.0 million decrease in accumulated other comprehensive loss related to the Company’s investment securities portfolio. Shareholders’ equity increased $48.8 million, or 2.4%, from March 31, 2026, primarily driven by a $36.6 million increase in retained earnings and an $8.2 million decrease in accumulated other comprehensive loss related to the Company’s investment securities portfolio.
• The Company’s shareholders’ equity to assets ratio was 11.67% at June 30, 2026, an increase from 11.30% at June 30, 2025 and 11.41% at March 31, 2026.
• The Company’s tier 1 leverage ratio of 9.26% at June 30, 2026 remained substantially above the regulatory well-capitalized standard of 5.0% and decreased 16 basis points from one year earlier and increased 6 basis points from March 31, 2026. The decrease in the Company’s tier 1 leverage ratio from one year prior was primarily due to the intangible assets added as part of the Santander branch and ClearPoint acquisitions, as well as the impact of $26.5 million of common stock repurchases over the past twelve months.
• The Company’s tangible equity to tangible assets ratio (non-GAAP) was 6.86% at June 30, 2026, up from 6.51% a year earlier and 6.68% at March 31, 2026. Tangible equity (non-GAAP) increased $125.9 million, or 12.2%, from one year prior due to the aforementioned increase in retained earnings and decrease in accumulated other comprehensive loss related to the Company’s investment securities portfolio. Tangible assets (non-GAAP) increased $1.03 billion, or 6.5%, from the prior year due primarily to organic loan growth and the Santander branch and ClearPoint acquisitions.

Dividend Increase and Stock Repurchase Program

The payment of a meaningful and growing dividend is an important component of the Company’s commitment to provide consistent and favorable long-term returns to its shareholders, and it reflects the continued strength of the Company’s long-term operating results and capital position, and management’s confidence in the future performance of the Company. The $0.02 increase in the quarterly dividend declared in the third quarter of 2026 marked the 34th consecutive year of dividend increases for the Company.

• During the second quarter of 2026, the Company declared a quarterly cash dividend of $0.47 per share on its common stock, up 2.2% from the $0.46 dividend declared in the second quarter of 2025.
• On July 22, 2026, the Company announced a $0.02, or 4.3%, increase in the quarterly dividend to $0.49 per share on its common stock, payable on October 13, 2026 to shareholders of record as of September 15, 2026, representing an annualized yield of 2.9% based upon on the $66.59 closing price of the Company’s stock on July 27, 2026. This increase marked the 34th consecutive year of dividend increases for the Company and is supported by the strong earnings growth the Company has generated in recent quarters.
• In December 2025, the Company’s Board of Directors (the “Board”) approved a stock repurchase program authorizing the repurchase of up to 2.63 million shares, or 5.0% of the Company’s common stock outstanding during the twelve-month period starting January 1, 2026. Such repurchases may be made at the discretion of the Company’s senior management based on market conditions and other relevant factors and will be acquired through open market or privately negotiated transactions as permitted under Rule 10b-18 of the Securities Exchange Act of 1934 and other applicable regulatory and legal requirements. There were 258,471 shares repurchased pursuant to the 2026 stock repurchase program during the first six months of 2026, including 8,471 shares repurchased during the second quarter of 2026.

Wealth Management Services Expansion with Acquisition of ClearPoint Federal Bank & Trust

On June 1, 2026, the Company announced that CBNA completed its acquisition of ClearPoint, a national leader in trust administration for the approximately $20 billion death care industry, with over $1.5 billion of assets under management and a historical 3-year revenue CAGR of 9.7%. Total consideration was $39.0 million in cash, subject to potential post-closing purchase price adjustments. Net assets acquired included $3.1 million of core deposit intangibles, $8.1 million of other intangibles and the Company recorded $10.4 million of goodwill in conjunction with the acquisition. The transaction significantly expands the revenue and offerings of Nottingham Financial Group, the Company’s wealth management services business, and contributes to the Company’s strategic capital deployment into durable, recurring and growing income streams. The new business operates as ClearPoint Trust, a division of CBNA.

Non-GAAP Measures

The Company also provides supplemental reporting of its results on an “operating” and “tangible” basis. Results on an “operating” basis exclude the after-tax effects of acquisition expenses, acquisition-related contingent consideration adjustments, restructuring expenses, litigation accrual, gain (loss) on equity securities and amortization of intangible assets. Results on a “tangible” basis exclude goodwill and intangible asset balances, net of accumulated amortization and applicable deferred tax amounts. The Company also provides supplemental ratio reporting at the segment level, which includes adjusted return on tangible equity. Adjusted return on tangible equity represents annualized adjusted income before income taxes applicable to each segment as a percentage of average tangible equity for each respective segment. In addition, the Company provides supplemental reporting for “operating pre-tax, pre-provision net revenues,” which subtracts the provision for credit losses, acquisition expenses, acquisition-related contingent consideration adjustments, restructuring expenses, litigation accrual, gain (loss) on equity securities and amortization of intangible assets from income before income taxes. Although these items are non-GAAP measures, the Company’s management believes this information helps investors and analysts measure underlying core performance and provides better comparability to other organizations that have not engaged in acquisitions. The Company also provides supplemental reporting of its net interest income and net interest margin on a fully tax-equivalent (“FTE”) basis, which includes an adjustment to net interest income that represents taxes that would have been paid had nontaxable investment securities and loans been taxable. Although FTE net interest income and net interest margin are non-GAAP measures, the Company’s management believes this information helps enhance comparability of the performance of assets that have different tax liabilities. The amounts for such items are presented in the tables that accompany this release.

Conference Call Scheduled

Company management will host a conference call at 11:00 a.m. (ET) today, July 28, 2026, to discuss the second quarter 2026 results. The conference call can be accessed via webcast at https://app.webinar.net/b0yzqVAwxjN or via dial-in at 1-833-630-0464 (United States) or 1-412-317-1809 (International).

This earnings release is also available within the ”News” section of the Company's investor relations website at https://ir.cfsi.com/news/. A replay of the earnings call webcast will also be available on this site for at least one year.

About Community Financial System, Inc.

Community Financial System, Inc. is a diversified financial services company that is focused on four main business lines – banking services, employee benefit services, insurance services and wealth management services. Its banking subsidiary, Community Bank, N.A., is among the country’s 100 largest banking institutions with over $17 billion in assets and operates approximately 200 customer facilities across Upstate New York, Northeastern Pennsylvania, Vermont, Western Massachusetts and Southern New Hampshire. The Company’s Benefit Plans Administrative Services, Inc. subsidiary is a leading provider of employee benefits administration, trust services, collective investment fund administration, and actuarial consulting services to customers on a national scale. The Company’s OneGroup NY, Inc. subsidiary is a top 68 U.S. insurance agency. The Company also offers comprehensive financial planning, trust administration and wealth management services through its Nottingham Financial Group operating unit. The Company is listed on the New York Stock Exchange and the Company’s stock trades under the symbol CBU. For more information about the Company and each of its four main business lines visit https://ir.cfsi.com.

Loan income $157,530 $146,534 $311,908 $289,438 Investment income 26,822 26,344 52,431 51,087 Total interest income 184,352 172,878 364,339 340,525 Interest expense 45,208 48,130 90,483 95,565 Net interest income 139,144 124,748 273,856 244,960 Provision for credit losses 4,607 4,117 10,243 10,807 Net interest income after provision for credit losses 134,537 120,631 263,613 234,153 Deposit service and other banking fees 20,098 19,086 40,809 37,194 Mortgage banking 1,191 972 2,291 1,970 Employee benefit services 34,877 32,380 69,449 65,002 Insurance services 13,195 13,388 25,781 27,589 Wealth management services 10,403 8,683 20,735 18,545 Gain (loss) on equity securities 4,710 (1) 4,309 244 Loss from equity method investments (463) 0 (789) 0 Total noninterest revenues 84,011 74,508 162,585 150,544 Salaries and employee benefits 82,431 79,021 162,753 155,463 Data processing and communications 19,686 16,699 37,557 32,821 Occupancy and equipment 13,885 11,486 28,767 24,184 Business development and marketing 2,556 4,001 5,091 7,131 Legal and professional fees 4,314 4,368 9,384 9,217 Amortization of intangible assets 4,408 3,369 8,654 6,851 Other 10,453 10,158 18,563 18,725 Total noninterest expenses 137,733 129,102 270,769 254,392 Income before income taxes 80,815 66,037 155,429 130,305 Income taxes 19,481 14,706 36,877 29,360 Net income $61,334 $51,331 $118,552 $100,945 Basic earnings per share $1.16 $0.97 $2.25 $1.91 Diluted earnings per share $1.16 $0.97 $2.24 $1.90

Summary of Financial Data (unaudited)

(Dollars in thousands, except per share data)

Summary of Financial Data (unaudited)

(Dollars in thousands, except per share data)

Summary of Financial Data (unaudited)

(Dollars in thousands, except per share data)

Summary of Financial Data (unaudited)

(Dollars in thousands, except per share data)

Summary of Financial Data (unaudited)

(Dollars in thousands, except per share data)

Summary of Financial Data (unaudited)

(Dollars in thousands, except per share data)

Summary of Financial Data (unaudited)

(Dollars in thousands, except per share data)

Summary of Financial Data (unaudited)

(Dollars in thousands, except per share data)

Summary of Financial Data (unaudited)

(Dollars in thousands, except per share data)

Summary of Financial Data (unaudited)

(Dollars in thousands, except per share data)

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