Welcome to the Community Bank System First Quarter 2023 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 risks 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. Please note this conference is being recorded. 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 and Chief Operating Officer, for the question-and-answer session. Gentlemen, you may begin.

Thank you. Good morning, everyone, and thank you for joining our first quarter conference call. Certainly, it has been an eventful quarter for the industry. I typically comment on earnings first, but it feels like I should start with the balance sheet. First off, the events of the weekend of March 10 had virtually no impact on us beyond the minimal level of customer inquiries. We proactively reached out to our larger consumer, commercial, and municipal customers with no movement at all in those deposits or relationships. Total deposits were actually up almost $100 million during the quarter, mostly CDs, with the mix otherwise being remarkably consistent. Our uninsured deposits are 17% of total deposits, and our average consumer and commercial account balances are $12,000 and $60,000, respectively. We have no broker or wholesale deposits of any kind. We did need to move rates in the quarter, which raised our deposit funding costs up to 31 basis points. As of the end of March, our full cycle deposit beta is 5%. Joe will speak further on this topic, but we have $4.7 billion of immediately available liquidity. Loan growth in the quarter was solid at $173 million, mostly in business and auto lending, and asset quality remains exceptional. Earnings for the quarter were lower than we expected due mainly to expenses and the elimination of some retail fees, both of which Joe will discuss further. But year-over-year, we delivered greater net interest income and record revenues from our nonbanking businesses, which continued to grow despite capital market conditions. Looking ahead, we think our funding and liquidity are really well positioned, and we have another $350 million of treasury securities maturing next month that will be additive to margin and earnings. We have one of the best deposit bases of any bank in the U.S. Our lending businesses are all executing really well, and we expect that to continue. Credit quality remains exceptional, and our lending portfolios are highly diversified and highly granular. Our nonbanking businesses continued to grow despite market conditions. So, I think we are extremely well positioned for the future and expect our formats to reflect that regardless of the operating environment. Joe?

Thank you, Mark, and good morning, everyone. As Mark noted, fully diluted GAAP earnings per share were $0.11 in the quarter. This compares to a fully diluted GAAP earnings per share of $0.86 in the first quarter of '22 and $0.97 in the linked fourth quarter of 2022. During the quarter, the company strategically repositioned its balance sheet by selling available-for-sale investment securities with a market value of $733.8 million, the proceeds of which were used to pay down expensive overnight borrowings to provide the company with greater flexibility to manage balance sheet growth and deposit funding. In connection with the repositioning, the company recognized a pretax realized loss on sale of $52.3 million, resulting in a $0.75 per share after-tax loss on the sale. Excluding the loss on the sale of investment securities, acquisition-related expenses, and gains on debt extinguishment, the company's fully diluted operating earnings per share for the quarter was $0.86. This compares to $0.87 of fully diluted operating earnings per share in the first quarter of 2022 and $0.96 in the linked fourth quarter. The $0.01 decrease in operating earnings per share on a year-over-year basis was driven by a decrease in banking-related noninterest revenues, an increase in the provision for credit losses, and higher operating expenses, partially offset by increases in net interest income and financial services business revenues and decreases in income taxes and fully diluted shares outstanding. The $0.1 per share decrease in operating earnings per share on a linked quarter basis was largely driven by an increase in operating expenses and lower deposit service fees. First quarter 2023 adjusted pretax pre-provision net revenue per share, which is a non-GAAP measure as defined in our earnings release, was $1.16, which was up $0.04 as compared to the first quarter of 2022 and down $0.13 compared to the fourth quarter of 2022. The company recorded total revenues of $124.5 million in the first quarter of 2023, a decrease of $36 million or 22.4% from the prior year's first quarter. The decrease in total revenues between the periods was primarily driven by the previously mentioned loss on sale during the quarter. Total operating revenues, which excludes net realized and unrealized securities gains and losses and gains on debt extinguishment, were $176.6 million in the first quarter of 2023, an increase of $16.1 million or 10% from the prior year's first quarter, primarily driven by an increase in net interest income. Comparatively, total revenues were down $51.4 million or 29.2% from the fourth quarter of 2022 results but up $0.7 million or 0.4% on an operating basis. The company reported net interest income of $111 million in the first quarter of 2023. This was up $16.2 million or 17% over the prior year's first quarter. The company's tax equivalent net interest margin increased by 47 basis points from 2.73% in the first quarter of 2022 to 3.20% in the first quarter of 2023. The tax filing yield on average interest-earning assets was up 82 basis points over the prior year's first quarter, while the average cost of funds increased 35 basis points over the same period. Comparatively, the company's net interest margin increased 18 basis points on a linked quarter basis, while net interest income decreased $1.2 million due in part to a lower day count in the quarter. Excluding the impact of a loss on sold investment securities and the gain on debt extinguishment, noninterest revenues decreased $0.1 million between the comparable annual quarters, with a $1.1 million increase in insured services revenues in the quarter offset by a $0.6 million decrease in banking-related revenues, a $0.2 million decrease in employee benefit services revenues, and a $0.4 million decrease in wealth management revenues. The decrease in banking-related noninterest revenues was driven by a decrease in debit interchange revenues and overdraft occurrences, as well as the recent implementation of certain deposit fee changes, including the elimination of non-sufficient funds and available fund fees. Despite the organic growth in the employee benefits services and wealth management businesses, revenues were down due to market-related headwinds. On a linked-quarter basis, noninterest revenues, excluding the loss on the sale of securities and the gain on debt extinguishment, increased $1.9 million or 2.9%. An increase in revenues in all three of the financial services businesses totaling $4.4 million or 10% was partially offset by a $2.6 million or 13.6% decrease in banking-related noninterest revenues. During the first quarter of 2023, the company recorded a provision for credit losses of $3.5 million, driven by a weaker economic forecast combined with a $172.9 million increase in outstanding loans. Comparatively, the company recorded a provision for credit losses of $0.9 million during the first quarter of 2022 and $2.8 million in the fourth quarter of 2022. The company reported $114 million in total operating expenses in the first quarter of 2023, compared to $99.8 million in total operating expenses in the prior year's first quarter. The $14.2 million increase in operating expenses was primarily attributable to a $9.8 million increase in salaries and employee benefits and a $4.2 million increase in other expenses. The increase in salaries and employee benefits expenses was driven by increases in merit, severance, and incentive-related employee wages, including minimal wage-related compression on the lower end of the company's PayScale, acquisition-related and other additions, higher payroll taxes, and higher employee benefit-related expenses. Other expenses were up due to an increase in insurance costs, including larger FDIC insurance expenses, higher professional fees, business development travel, and marketing expenses, along with incremental expenses associated with operating an expanded franchise subsequent to the Elmira acquisition in the second quarter of 2022. In comparison, the company reported $105.9 million of total operating expenses in the fourth quarter of 2022. An $8.2 million or 7.7% increase in total operating expenses between the fourth quarter of '22 and the first quarter of 2023 was largely attributable to a $7.4 million or 11.5% increase in salaries and employee benefits and a $0.7 million or 5% increase in other expenses. For the remaining three quarters of 2023, management anticipates that total operating expenses, excluding any future acquisition activities, will remain generally in line with first quarter levels. Set another way, on a full calendar year-over-year basis, the company anticipates total operating expenses to increase between 5% and 9%. The effective tax rate for the first quarter of 2023 was 16.9%, down from 21.4% in the first quarter of 2022. Excluding the impact of tax benefits related to stock-based compensation activity, the effective tax rate was 21.4% in the first quarter of 2023, down from 22.3% in the first quarter of 2022. The company's total assets were $15.26 billion at March 31, 2023, representing a $369.9 million or 2.4% decrease from one year prior and a $579.7 million or 3.7% decrease from the end of the fourth quarter of 2022. The book value of average interest-earning assets decreased $662.1 million or 4.5% during the first quarter, due primarily to a decrease in the average book value of the investment securities, partially offset by higher average loan balances. At the end of the quarter, the book value of interest-earning assets was $14.03 billion, comprised of $8.90 billion of loans, $5.02 billion in investment securities, and $28 million of cash equivalents. Ending loans increased $1.56 billion or 21% over the prior year and $172.9 million or 2% during the quarter. The increase in ending loans year-over-year was driven by increases in all loan categories due to net organic growth from the Elmira acquisition. Increased loans outstanding on a linked quarter basis were driven by a $102.3 million or 2.8% increase in business lending and a $70.7 million, a 1.4% net increase in the company's consumer loan portfolios. The company's liquidity position remains strong. The company's funding base is largely comprised of core noninterest-bearing demand deposit accounts and interest-bearing checking, savings, and money market public accounts with customers that operate, reside, or work within our branch footprint. At March 31, 2023, the company's readily available source of liquidity totaled $4.69 billion, including cash and cash equivalent balances net of float of $109.7 million, $1.54 billion of funding availability at the Federal Reserve Bank discount window, $1.84 billion of unused borrowing capacity at the Federal Home Loan Bank of New York, and $1.2 billion of unpledged investment securities that could be pledged as collateral for additional borrowing capacity. These sources of immediately available liquidity represent over 200% of the company's noninsured deposits and net of collateralized deposits, which are estimated at $2.3 billion. The company's ending total loans were up $98 million from the end of the fourth quarter or approximately 1%. The deposit base is well diversified across customer segments, comprised of approximately 63% consumer balances, 25% business balances, and 12% municipal balances, and is broadly dispersed with an average consumer deposit account balance of $12,000 and an average business deposit relationship of approximately $60,000. The company's cycle-to-date deposit beta is 5%, reflective of a high proportion of noninterest-bearing deposits, which represent over 30% of total deposits and the stability of the customer base, while the cycle-to-date total funding beta is 7%. At the end of the quarter, 74% of the company's total deposit balances were in checking and savings accounts, and the weighted average age of the company's non-maturity deposit accounts is approximately 15 years. The company does not currently have any brokered or wholesale deposits on its balance sheet. The company's loan-to-deposit ratio at the end of the first quarter was 68.5%, providing future opportunity to migrate lower-yielding investment security balances into higher-yielding loans. In addition, during the remaining three quarters of 2023, the company anticipates receiving over $600 million of investment security cash flows to support its funding needs. At March 31, 2023, the company's and the bank's regulatory capital ratio significantly exceeded well-capitalized standards. More specifically, the company's Tier 1 leverage ratio was 9.06% on March 31, 2023, which substantially exceeds the regulatory well-capitalized standard of 5%. The company's net tangible equity to net tangible assets ratio was 5.41% on March 31, 2023, up 77 basis points from the end of the fourth quarter of 2022. During the first quarter, the company repurchased 200,000 shares of its common stock pursuant to its board-approved 2023 stock repurchase program. As of March 31, 2023, the company's allowance for credit losses totaled $63.2 million, or 0.70% of total loans outstanding. This compares to $61.1 million or 0.69% of total loans outstanding at the end of the fourth quarter of 2022 and $50.1 million, or 0.68% of total loans outstanding at March 31, 2022. During the first quarter of 2023, the company reported net charge-offs of $1.5 million or 7 basis points of average annual loans annualized. This compares to 3 basis points of annualized net charge-offs in the first quarter of 2022 and 9 basis points in the fourth quarter of 2022. At March 31, 2023, nonperforming loans totaled $33.8 million or 0.38% of total loans outstanding, with loans 30 to 89 days delinquent at 0.35% of total loans outstanding at March 31, 2023, down from 0.51% at the end of the fourth quarter of 2022. We believe the company's strong liquidity profile, capital reserves, core deposit base, asset quality, and revenue profile provide a solid foundation for future opportunities. Looking forward, we are encouraged by the momentum in our business. The company continued to organically grow its loan portfolios, and asset quality remains strong. The company's granular Main Street-focused deposit base and strong liquidity profile are expected to support future growth in our banking business. In addition, new business opportunities in the financial services businesses remain strong. Thank you. I will now turn it back to the Operator to open the line for questions.

The first question comes from Alex Twerdahl from Piper Sandler. Please go ahead.

Good morning. First off, can you just elaborate a little bit on what you did with the NSF fee this quarter and whether or not that $16.2 million is the right run rate for deposit service fees over the remainder of the year?

Yes. So late in the fourth quarter and also, I guess, really kicking in, in the early part of the first quarter, we made some changes, particularly on NSF and unavailable fund fees. Our expectation on a full-year basis is that we'll effectively reduce overall deposit service fees by $6 million to $8 million. Also, in the first quarter, Alex, we just had lower occurrences of overdraft fees, and just typically deposit service fees are down a bit in the first quarter as compared to the fourth quarter. So, that run rate that we have in the first quarter is potentially just slightly below expectations for the next three quarters because typically, the first quarter is a little bit slower in terms of debit interchange and overdraft occurrences. But on an annualized run rate basis, we expect the changes will effectively reduce fees by $6 million to $8 million.

Thank you. Can you provide more details about the $600 million in cash flows from the securities portfolio for the year? I believe Mark mentioned $350 million in May. Could you clarify the timing for the remaining amount and share your expectations for deposits? I understand that municipal deposits typically occur in the first quarter; how much do we anticipate flowing out in the second quarter? Additionally, what trends are you observing that might help us better understand overall liquidity management in the coming quarters?

Yes. So, the $350 million, as Mark mentioned, matures in the middle of May. So we do expect that, that's a treasury security, so it's going to happen. We have another $150 million in mid-August, also a treasury security. Those two pieces comprise the lion's share of the $600 million. The other cash flows come throughout the year, basically mortgage-backed security principal repayments. On a blended basis, those two treasury securities are coming off at about a 2.5% yield. So, we do expect to be able to redeploy those proceeds to either pay off overnight borrowings should we see some drift down in the deposit base, or potentially, that could be redeployed into loan growth if that opportunity is there. So, we do expect some, call it, net interest income pickup on maturities, Alex. With respect to deposit flows, we typically do see an increase in municipal flows in the first quarter. As we talked about tax collection cycles in New York State, that typically is a couple of hundred million dollars on a net basis in the quarter, and we do typically see those flow out throughout most of the second quarter. We sometimes trip down a bit in the third quarter. Another $100 million or so, and then tax collection occurs in September again for the districts, and we see a lot of that restore into the late part of the third quarter and into the fourth quarter. With respect to IPC deposits, I think we're just sort of seeing the results of the overall M2 supply, which reflects the M2 money supply going down. I think the entire industry is seeing flow out of the deposit balances, and I think that's kind of what we'll probably have across the industry and potentially to us as well.

Great. Thanks for taking my question.

The next question comes from Steve Moss of Raymond James. Please go ahead.

Good morning. Maybe just starting on loan pricing here and loan growth, good loan growth in the quarter. Just curious what are the yields you're seeing these days? And let's just start there.

So, Steve, it's Dimitar. In the first quarter, we achieved about a 6.3% yield on originations. Looking at different categories, commercial yields are in the mid-to-high 6s, while we're currently at 7% for auto loans. In the mortgage sector, yields depend on overall rates, but have generally been between 6% and 6.5%. There hasn't been much change in those ranges. For the second quarter, we did experience a couple of interest rate hikes in the first quarter that we didn't fully benefit from because they occurred at the end of March, and there are potentially more hikes coming next week. Therefore, some of the loans tied to Prime should see an increase. Overall, I think staying in the 6% range is a reasonable estimate for Q2.

Okay. That's helpful, Dimitar. And then in terms of just the margin, you have a lot of balance sheet movement here during the current quarter and obviously, upcoming with the treasuries maturing. Just kind of curious, maybe you have a spot margin at quarter end, and kind of how you're thinking about margin trends for the second and third quarters?

So, we actually, Steve, the month of March was our highest net interest income our existing month on record. So, we kind of saw a peak NII at the end of the quarter. So, if you think about the catalysts for NII for the balance of 2023. And really, if you look at kind of the second quarter, because it's a little bit difficult to make the call relative to the third and fourth quarter because of the potential funding costs. But if you look at the next quarter, we had the securities maturity of $350 million, which that's maturing at about $240 million. So that's going to be led in either loans or to pay off overnight borrowings. We have a couple of extra days of interest-earning days in Q2, which is helpful as well. We also have all replacements, right? So, we have about $350 million that's maturing. And if that's just replacing it, we don't simply we don't grow, we just replace what's coming off. We're picking up about 175 basis points on the replacement yields. So, that's a catalyst for NII. As Dimitar mentioned, we also have an increase in prime that really didn't catch if you will, in the first quarter, which we'll see that in the second quarter. In the next 90 days or so, we have about $850 million of loans that are going to reprice. There's another roughly $1 billion beyond that. The balance of the first 90 days, there's about $850 million that's going to reprice. So, that's helpful. And then, of course, there's potential for additional loan growth in the quarter. So, this catalyst on the interest income side, obviously, the question around the cost of funds and cost of deposits remain to be seen. And I would just say that we do have a really strong core deposit franchise. But the rate increases were so rapid in 2022, there's going to be some necessary increases in funding costs in 2023 as we sort of catch up to some of the changes that were made on prime and fed funds and the short end of the curve. So, I think there's going to be a little bit of catch-up. In other words, I don't believe that our deposit beta will stay at 5% for the full cycle. It's simply going to accelerate. And I think it has, and I think the whole industry has seen that happen in the last couple of quarters.

Right. Okay. That's helpful. And then just on expenses here. Just on the drivers of the increase in compensation expense here. I hear you guys on the full year, relatively stable versus this bounce. Maybe just a little bit of color. I'm not sure if I missed it. Thanks.

Yes. So, Steve, probably could have spoken, I guess, more directly about the first quarter results on the last quarter's conference call. But our typical pattern is to see a significant increase in expenses in Q1, and part of that is we provide our merit increases across the board in Q1. Other companies might feather them out throughout the year. We typically do it in the first quarter. Along with that comes higher bank expenses. We had some severance expenses in the quarter around salaries. We did have wage pressures, particularly on the lower end, which there's a compression component to that, which pushes up the lower end of our pay scale. So, some of that effectively is, I'll call it, embedded in the future run rate on salaries, but there are also components that are effectively higher in the first quarter. So, our expectation is that all-in operating expenses that we would expect the next three quarters to be in line with first quarter. Most of our increase is absorbed in the first quarter. We also have some other expenses around just facilities costs, given our climate in the first quarter that typically we don't see in the following quarters. So, there are a couple of items that contribute to just a higher OpEx line in Q1, but we do expect that basically off for the balance of the year. If you look at a full year-over-year basis on operating expenses, our expectations are somewhere between, call it, 5% and 9% on a full year 2023 basis versus a full year 2022 basis.

The next question comes from Daniel Novas of DA Davidson. Please go ahead.

Hey, good morning, gentlemen. Filling in for Manuel today. I have a few questions on loan growth outlook and pipeline. So first up, just loan growth outlook of mid-single digits still hold from last quarter, especially after the balance sheet repositioning, has there been a change of mindset? Just want some color on that, please?

Yes. I believe that our expectations are the same, which is mid-single digits for loan growth. What I think is a favorable change for us is just the competitive dynamic, which is driven by the environment; a number of our peers are in a tougher spot from a strong balance sheet perspective and their ability to service customers. So, we're seeing higher quality opportunities at substantially better rates than maybe what we expected at the beginning of the year. I don't think that we expect to do a lot more than what was communicated before, but I think the better quality of the better rates is what we're striving for right now. So, that guidance is still intact.

Great. Thanks. Could you also talk about your pipeline? And also, some color on your auto portfolio, any credit issues or anything like that, that we need to be aware of?

Sure. So, on the pipeline, if you look at our commercial pipeline, still very strong, a little bit lower than it was at the end of the fourth quarter, as we would expect, given the market environment, but still very strong compared to our historicals. And again, that is a reflection of competitive dynamics and our retooling of the company over the past 18 months in terms of capabilities and people. On the mortgage side, similarly, I think we've communicated that we spent a lot of time and effort, and money in retooling our go-to-market strategy. That's paying off dividends. In fact, last week's mortgage applications were higher than a year ago's week, which is a nice change in trend, given everything that's happening in the mortgage market. So, our efforts there are paying us as we expected that portfolio will grow as well. Auto is a little bit more of a wildcard from quarter to quarter. We probably didn't expect the stronger growth in the first quarter as we got in that portfolio. But again, we are writing the same type of credit, 750 average FICO, very appealing loan to values, and better rates practically every month. So, like I said, we're roughly at 7%. So, that risk-reward in that paper right now is pretty good. As it relates to asset quality, maybe kind of starting backwards from auto, our charge-offs this quarter were about 30 basis points, which is right in the historical range of our loss experience in auto. Again, this is 755 FICO super-prime paper basically. We expect that it's going to be somewhere in that range for the rest of the year. Mortgage has virtually no charge-offs, very little below historical averages. We expect that to maybe normalize. Again, we've been talking about normalization for a while. We're planning for that. You've seen us provision a little bit more ahead of that. But so far, no stresses on the consumer side. And commercial, I mean, we're basically at zero in terms of losses right now. We had a recovery in the prior quarter, I believe. So, things are going pretty well. We're very vigilant around it. We ask ourselves multiple times a week what's happening with credit, we're proactively staying in front of our borrowers. But right now, credit quality is as good as we would want it to be.

Great. Thanks for taking my questions.

The next question comes from Matthew Breese of Stephens Inc. Please go ahead.

Good morning, everybody. I was hoping to start on deposit costs, get a sense for where we exited the quarter in terms of overall deposit costs. And Joe, I know you'd mentioned that expectations are not for a full cycle, 5% deposit beta, but would love some thoughts or color around where you think you might end up?

Sure, Matt. We ended the quarter with deposit funding costs at 38 basis points, showing some acceleration in deposit cost increases. Regarding our margin in net interest income, I have a couple of positive expectations for Q2. I anticipate a better outcome in Q2, though perhaps only marginally, and we'll see how things develop in Q4. In terms of the full cycle beta, if there were a 500-basis point increase on the short end of the curve, it would be reasonable to expect our deposit beta to be around 23% or more in the long run, which I believe would significantly outperform the industry. These expectations seem realistic.

Yes. To add to that, if we examine our peers across the country, we would find ourselves among the top institutions when it comes to betas and deposit costs. We anticipate that we will continue to be among those top institutions moving forward. The underlying dynamics show that many personnel deposits are being reallocated within cities rather than exiting the bank entirely. In terms of commercial deposits, we've witnessed some withdrawals as clients utilize cash for projects and pay taxes, which typically occur early in the year. This has contributed to a temporary decline that we do not expect to persist. As businesses manage their finances over the year, we hope to see those balances grow. On the public side, we've discussed seasonality, making it challenging to determine the ultimate long-term cost. There are numerous factors at play, and as Joe mentioned, we're aiming for a beta that will not reach 5% but ideally be less than 20%. We are focusing on being proactive and maintaining our position as one of the few banks with strong deposit bases in the United States.

Understood. There's 200,000 shares repurchased for the quarter. Obviously, like so many other banks in the industry, the stock is down a bit, but your capital levels are improving, and it seems like fingers crossed with the repositioning, some of the worst of the AOCI stuff is behind us. Share repurchases on the radar in a more aggressive fashion than we've seen you do historically.

Yes, Matt, I wouldn't say terribly more aggressive than we've done historically. We typically try to at least repurchase the shares that are issued in our equity plans. So, I would expect for the balance of the year, maybe $0.5 million or less in terms of total shares, that would be repurchased over 200,000 shares, potentially another $300,000 throughout the year. I mean, that could change later in the year, but right now, I think would be on the high end of our expectations.

Okay, maybe just turning to M&A. Obviously, it feels like the banking industry is everybody is a bit inward-focused right now. But do you have expectations that M&A picks up in the back half of the year? And how do you feel about your ability to participate in that? And would you?

It's currently challenging to predict what the rest of the year will bring due to the uncertainty in our environment, which includes both industry-specific and broader economic factors such as interest rates, GDP, and inflation. This uncertainty impacts perceptions around mergers and acquisitions. At present, the market appears relatively quiet. We are always interested in collaborating with organizations that offer valuable assets. Recent developments in the industry indicate that there will likely be a divide between companies with strong balance sheets and those facing difficulties. We wouldn't pursue partnerships that would compromise the quality of our balance sheet. However, our strategy regarding high-value acquisitions remains unchanged. We are focusing significantly on non-banking businesses, which we believe hold promising opportunities and are vital for our company's strength and strategic capital allocation. We are actively engaging in the non-bank sector. On the banking side, activity has been less pronounced. We continue discussions with other banks of interest, but the prevailing uncertainty complicates matters. Valuations are declining across the industry, including ours, making it harder to finalize deals, particularly from the seller's viewpoint regarding valuation expectations. Our interest persists, and our strategy remains consistent. We are concentrating on the non-bank sectors where we hold significant positions in wealth management, benefits, and insurance, and we aim to invest in those areas possibly at an even quicker pace compared to the banking segment.

The next question comes from Eric Zwick of Hovde Group. Please go ahead.

Hey, good morning guys. Mark, on for Eric today. I think most of my questions have already been answered, but just a quick one, and apologies if I already missed it. But did you have an average price per share on the buyback this quarter?

Yes, it was just about $54.

The next question comes from Chris O'Connell of KBW. Please go ahead.

Good morning. I appreciate all the color you guys have given around kind of NII and the impacts from securities maturing over the next couple of quarters here. Given you guys have a good amount of aim to kind of defend the margin into 2Q and 3Q, I mean how are you guys thinking about where the eventual margin begins to settle out as we get toward 4Q or year-end post some of those kinds of balance sheet opportunities?

Yes, Chris, that's a difficult question to answer because it really depends on the funding beta. I think we have a clear understanding of what happens on the asset side. The funding side is less certain. Currently, we have about $13.5 billion in funding from deposits and borrowings. The question is whether that increases by 10, 20, or 30 basis points throughout the year. As we move further into Q2 and Q3, we'll see where the market stabilizes. However, predicting Q4 is challenging. I don't expect the industry to experience significant margin expansion by Q4. In fact, I think the industry might see a decline in margin by that time. Nonetheless, we may perform slightly better than the industry given our locked base. Therefore, it’s difficult to make a prediction for Q4 at this moment.

Got it. Regarding the borrowings on the balance sheet, is that primarily overnight? If not, what is the duration of those? I've also noticed that the yield or cost of those borrowings for the quarter is quite low. Was that just a timing issue?

Yes. At the end of the quarter, we had about $58 million in overnight borrowings. Additionally, we typically maintain over $300 million in customer repurchase agreements, which are classified as borrowings but are more comparable to deposits. Most of this is within our Vermont New England footprint, with many municipal and some commercial customers. Overall, we view this portfolio as similar to deposits. While it is somewhat more sensitive to rates than demand deposits, it doesn't necessarily align with typical borrowing costs. A significant portion of our borrowings is associated with customer repurchase agreements.

All right. That makes sense. And for the CDs that you guys are putting on, what are the rates that those are coming out?

So, Chris, on the CD side, I think we're right around 4% right now on kind of probably published in blended rates in some markets a little bit lower and some markets a little bit higher.

Thank you. I know you mentioned this earlier, but are there any areas where you're noticing credit stress or pulling back on growth that are raising concerns within your markets? Or is the outlook still cautiously optimistic for the near future?

Chris, I wouldn't say any sort of stress. I would say we're just being a little bit more vigilant around the sectors you would typically think about, like commercial real estate resets and ability to stress test for rates. With that said, the new paper that's coming in, you could argue that if you've got 1.3, 1.4 coverage on rates in the seventh, it's a pretty good stress test on day one for those customers. But we're looking at those that are resetting a little bit tighter, paying a little bit closer attention to the indirect paper as well. Again, right in the middle of historical ranges. We don't necessarily expect that to change much, but we're just being a little bit more vigilant around trends and making sure that we're not seeing anything worse on which we're not right now.

Great. And last one for me. Just what's a good go-forward tax rate?

A fair range to expect moving forward is between 21.5% and 22.5%.

Great. I appreciate the time. Thanks for taking my questions.

This concludes the question-and-answer session. I would like to turn the conference back over to Mr. Tryniski for closing remarks.

Thank you. Nothing more from our end. Thank you all for joining us, and we'll talk again after the end of Q2. Thank you.

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