Community Bank posts strong Q4, 2014 profit growth

DeWITT — Community Bank System Inc. (NYSE: CBU) reported Jan. 21 that its net income jumped nearly 50 percent to $23.1 million in the fourth quarter from $15.5 million in the year-ago quarter.

The banking company generated growth in its wealth management and employee-benefits businesses as well as overall revenue to drive the profit increase. Another factor was not posting the same one-time expenses and losses that DeWitt–based Community Bank reported a year ago.

Community Bank’s earnings per share (EPS) leapt to 56 cents in the fourth quarter of 2014, from 38 cents in the fourth quarter of 2013, which included 15 cents per share of acquisition expenses and net losses on the sale of investment securities and retirement of debt.

But analysts, on average, were expecting Community Bank to report EPS of 58 cents, according to Zacks Investment Research.

The banking company reported its financial results after the close of trading on Jan. 21. Community Bank’s share price rose by a cumulative 1.3 percent in the first three trading days that followed.

Community Bank said its revenue totaled $91.7 million in the fourth quarter, up 3.2 percent from the prior-year period — excluding the $6.9 million of net losses on sales of investment securities and debt extinguishments recorded in the fourth quarter of 2013. Revenue was boosted by a 1.6 percent increase in average earning assets along with continued “strong” noninterest income generation, as well as a slight improvement in its net interest margin from the year-ago quarter, the company reported. 

Continued organic growth produced a 9 percent increase in Community Bank’s revenue from its wealth management and employee-benefits services businesses. 

“Our fourth quarter results mirrored a strong 2014 operating performance characterized by solid revenue growth, organic expansion of the loan portfolio, a continuation of our stable and favorable asset quality profile and improved operating leverage,” Mark E. Tryniski, president and CEO, said in the earnings report. “We continue to focus on building additional value into our enterprise through selective acquisitions, disciplined lending and a consistent approach to business regardless of economic conditions.

For the full-year 2014, Community Bank reported net income of $91.4 million, or $2.22 a share, up 16 percent from $78.8 million, or $1.94 per share, in 2013.

Tryniski said Community Bank is positioned for a strong 2015.

“Looking ahead to 2015 we have very good operating momentum, much of which is a result of the progress in growth initiatives in the past two years. We also have right now the best balance sheet we’ve ever had in terms of asset mix, funding, credit quality, and capital,” Tryniski said in a Jan. 22 conference call with analysts, investors, and the media. “Our capital accumulation over the past several years has been considerable, which creates [a] particularly favorable opportunity. We are tremendously well positioned as we enter 2015 and we’ll be disciplined and work hard to deploy capital to continue to grow earnings and grow dividends for the benefit of our shareholders.”

Community Bank System has about $7.5 billion in assets and more than 190 branch offices across upstate New York and northeastern Pennsylvania through its banking subsidiary, Community Bank, N.A.

Community Bank ranks fifth in deposit market share in the 16-county Central New York area, with nearly $1.7 billion in deposits and a 6.3 percent share of the market’s total deposits, according to the latest FDIC data. It has more than 50 branches in the region.