DeWITT — Community Bank System, Inc. (NYSE: CBU) reported net income of $24.4 million in the first quarter, up 9.4 percent from $22.3 million in the year-ago quarter, as it benefitted from the assets it acquired in its $158.5 million acquisition of Oneida Financial Corp. Earnings per share at Community Bank rose to 55 cents […]
DeWITT — Community Bank System, Inc. (NYSE: CBU) reported net income of $24.4 million in the first quarter, up 9.4 percent from $22.3 million in the year-ago quarter, as it benefitted from the assets it acquired in its $158.5 million acquisition of Oneida Financial Corp.
Earnings per share at Community Bank rose to 55 cents in this year’s first quarter from 54 cents in the first quarter of 2015, it reported on April 25. The banking company incurred about $100,000 and $400,000 of acquisition expenses in the first quarter of 2016 and 2015, respectively.
“Our improved first quarter operating results were driven by solid earning-asset growth, a continuation of excellent credit quality, and a full quarter impact of the Oneida Financial transaction completed in late 2015,” Mark E. Tryniski, president and CEO of Community Bank, said in the bank’s earnings report. “A productive start in both our lending and core funding activities in the first quarter of 2016 positions us well for the balance of the year.”
The acquisition of Oneida Financial, which closed on Dec. 4, 2015, extended Community Bank’s Central New York service coverage by expanding its market presence in the Syracuse and Utica–Rome metro areas and added to its insurance, benefits administration, and wealth management product and service offerings, he said.
Community Bank generated $105.2 million in total revenue in this year’s first quarter, up more than 18 percent, over the prior-year quarter, as it benefitted from a full quarter of business from the acquired Oneida Financial, parent of Oneida Savings Bank and OneGroup. Specifically, Community Bank saw a 14.2 percent increase in average earning assets and growth in noninterest income from acquired and organic sources. That more than offset its 16 basis-point reduction in net interest margin from the year-ago quarter.
Community’s average loan balances grew by $622 million, or nearly 15 percent, while average loan yields declined 12 basis points year-over-year to 4.33 percent. That resulted in a $6.1 million increase in quarterly loan interest income. Community Bank said it acquired about $400 million in loans in its Oneida Financial deal.
Wealth management and insurance revenue at Community Bank soared by $6.5 million, or 146.5 percent, in this year’s first quarter compared to the first quarter of 2015, mainly because of the Oneida Financial acquisition.
The enlarged Community Bank generated first-quarter operating expenses of $67.7 million, up $11.7 million, or nearly 21 percent, from the year-earlier period. That reflected a full quarter of operating expenses from the Oneida Financial business units it added. Salaries and employee-benefit costs increased by $8.1 million, or 26 percent, compared to the first quarter of 2015 for the same reason.
Community Bank said it took a provision for loan losses of $1.3 million in the first quarter, up $0.7 million from the first quarter of 2015, reflecting quarterly net charge-offs of $1.1 million and organic loan growth of nearly $20 million during the quarter.
The banking company’s effective tax rate for the first quarter of 2016 was 32.5 percent, up from the 31 percent rate in the year-earlier period. The majority of that increase resulted from higher New York State taxes based upon the banking company’s increased consolidated asset size, as well as a higher proportion of its income coming from fully taxable sources, Community Bank said in the earnings report.
As previously announced in December, Community Bank’s board of directors approved a stock-repurchase program authorizing the repurchase of up to 2.2 million shares of the banking company’s common stock during a 12-month period starting Jan. 1, 2016. Community Bank said it did not buy back any shares under this authorization in the first quarter.
Contact Rombel at arombel@cnybj.com