DeWITT — Third-quarter profit slipped 8 percent at DeWitt–based Community Bank System, Inc. (NYSE: CBU) to $18.4 million, or 46 cents a share.

Acquisition costs totaling $4.8 million for the period, compared with $400,000 a year earlier, helped push earnings lower. 

Community Bank System has $7.6 billion in assets and more than 180 branches. The banking company also operates subsidiaries in employee benefits, insurance, investment management and advising, and wealth management.

The bank acquired 19 new branches during the third quarter.

It added three First Niagara Bank branches in Canandaigua and Geneva and 16 HSBC locations in Adams, Alexandria Bay, Avon, Fulton, Geneseo, Gowanda, Lowville, Newark, Oswego, Palmyra, Plattsburgh, Springville, Watertown, Watkins Glen, and Westfield.

Community Bank later consolidated five of the acquired branches into existing branches of its own, President and CEO Mark Tryniski said during a conference call Oct. 24, discussing the bank’s latest earnings report.

The HSBC locations were part of First Niagara’s acquisition of 195 HSBC locations in upstate New York, Westchester County, and Connecticut.

Buffalo–based First Niagara made deals with Community Bank, KeyBank, and Five Star Bank to sell off some of the HSBC branches involved as well as some of its own offices. The bank made the divestitures to comply with federal anti-trust rules.

First Niagara leaders also said some of the branches were in markets, including the North Country, where they were not interested in competing.

Tryniski said Community Bank will continue to look for solid acquisition opportunities within and near its existing footprint. That could include new markets like New Jersey or Ohio, he said.

He also said the company could continue to add to its employee benefits business, which now brings in $35 million a year in revenue. Community Bank has made several acquisitions in that space in recent years.

The HSBC-First Niagara deal could continue to benefit Community Bank as customers moved around in the shakeup examine their long-term banking relationships, Community Bank CFO Scott Kingsley said during the conference call.

“Any kind of displacement creates opportunities for other institutions,” he said.

He also noted that the commercial-banking landscape remains competitive.

Net interest income at Community Bank rose 7.7 percent to $58.8 million in the latest quarter, compared to the third quarter of 2011. The increase resulted from a rise in average interest-earning assets thanks to loan growth and additional investment securities, according to the bank.

Noninterest income totaled more than $25.8 million, up from $23.2 million. Higher benefits administration and consulting fees, service fees, and wealth-management revenues helped drive the increase, according to Community Bank.

Total loans rose to $3.8 billion as of Sept. 30, up from more than $3.5 billion at the end of the second quarter and more than $3.4 billion at the end of the third quarter in 2011. Deposits increased to $5.7 billion in this year’s third quarter, up from $4.9 billion at the end of the second quarter and $4.8 billion in the year-earlier period.

Net charge-offs for the latest quarter totaled $1.7 million, down from $2.1 million in the second quarter and up from $1.1 million in the third quarter last year. The provision for loan losses was $2.6 million, up $500,000 from the second quarter and up from 

$1.6 million in the third quarter of 2011.

The increase resulted from organic loan growth as well as $500,000 from certain loans acquired in the branch deal, according to the bank. Nonperforming loans totaled $30.7 million at the end of the period, down from $32 million at the end of the second quarter and up from $18.8 million a year earlier.       

Contact Tampone at 

ktampone@cnybj.com

Job cuts announced in October at First Niagara Financial Group, Inc. (NASDAQ: FNFG) eliminated just a few positions in Central New York.

The Buffalo–based banking company cut 180 positions across its four-state footprint, but just five of the jobs were located in Central New York, according to an email from David Lanzillo, a First Niagara spokesman. First Niagara Bank has 430 branches, $36 billion in assets, and 6,000 employees in upstate New York, Pennsylvania, Connecticut, and Massachusetts.

The positions eliminated didn’t directly support running the business First Niagara has today or its plans in the next few years, Lanzillo said in the email. About 30 of the jobs were in facilities and building maintenance, which First Niagara outsourced to another company.

First Niagara is currently recruiting to fill more than 250 open positions across the company. The net loss of jobs from the recent cuts is expected to be about 100 positions after planned new hiring takes place, Lanzillo said.

“The work-force realignments we made earlier this month were designed to ensure that we have the right people in the right positions to best support our growth strategy,” he said.

First Niagara Bank is number four in the Syracuse metro area deposit market with 21 branches, more than $808 million in deposits, and a deposit market share of more than 7.5 percent, according to the latest statistics from the Federal Deposit Insurance Corp. First Niagara is also number four in the Utica–Rome market with nine branches, $405.9 million in deposits, and a market share of about 11 percent.

The bank is number two in the Binghamton market with 10 branches, $342.5 million in deposits, and a market share of 12.8 percent.

First Niagara President and CEO John Koelmel said the company must be more efficient in all it does going forward.

“It’s not about slashing expenses or taking costs out,” he said during a conference call Oct. 19, discussing the bank’s latest financial results. “It’s about doing things more efficiently across the organization.”

As for the third quarter, First Niagara earned $50.8 million in the third quarter, down from $57 million a year earlier.

Earnings per share in the period totaled 14 cents, down from 19 cents a share in the third quarter of 2011. The third quarter’s results were improved from a loss of $18.5 million, or 5 cents a share, in the second quarter.

The net income total also includes a preferred stock dividend of $7.5 million. Excluding that item, the Buffalo–based banking company earned $58.4 million.

Operating income for the third quarter, which excludes items such as gains on securities and merger costs, was $74 million, up from $73.6 million a year earlier and $66.6 million in the second quarter this year.

Total loans and leases increased to $19.1 billion as of Sept. 30, up from $16.4 billion a year earlier. Deposits at the end of the third quarter totaled $27.7 billion, up from $19.6 billion at the end of the third quarter in 2011.

Net interest income for the period was $269.6 million, up from $235.4 million a year earlier. Noninterest income totaled $102.2 million, up from $68.7 million.

Noninterest expenses totaled $266.5 million, up from $203.9 million a year earlier. The most recent quarter’s expenses included more than $29 million in acquisition and restructuring costs associated with First Niagara’s deal for 195 HSBC branches in upstate New York and Connecticut.

The provision for loan losses during the third quarter was $21.8 million, up from $13.8 million last year as First Niagara’s balance sheet has grown. Net charge-offs for the period totaled $10.1 million, up from $8.1 million

Nonperforming loans totaled $142.4 million at the end of the third quarter, up from $81.9 million a year earlier.       

Contact Tampone at 

ktampone@cnybj.com

KeyCorp (NYSE: KEY) remains on track to cut $150 million to $200 million in annual expenses by December 2013.

The Cleveland–based banking company’s plans include closing up to 5 percent of its nationwide branch-office network, reducing staffing levels, and examining its contracts with third-party vendors, Key leaders said during a conference call Oct. 18, discussing the company’s latest quarterly results. The branch closures are expected to have an incremental impact in Key’s Central New York region, according to the bank.

KeyBank recently opened a new branch in Manlius after closing a location in Dannemora (Clinton County) earlier this year and one in Syracuse in September. Key has also relocated branches in Cazenovia and Fayetteville to new sites in recent years.

Key has more than 1,000 branches in 14 states and assets of $87 billion. The bank closed 16 branch offices in the third quarter and has plans to shutter another three in the fourth quarter, Senior Executive Vice President and CFO Jeffrey Weeden said during the conference call.

Savings are on pace to reach $30 million to $50 million by the end of 2012 with cost-cutting efforts continuing next year, Weeden said. He also said the bank will continue to invest in other areas to ensure future growth.

“Our efforts are not all about cost cutting,” he said. “They are about improving profitability.”

Key is the number two bank in the Syracuse metro area deposit market with 27 branches, more than $1.8 billion in deposits, and a market share of 16.8 percent, according to the latest statistics from the Federal Deposit Insurance Corp. The bank has two offices, more than $58 million in deposits, and a market share of 1.58 percent in the Utica–Rome area.

Third-quarter net income from continuing operations attributable to common shareholders at Key totaled $214 million, down from $229 million a year earlier. Earnings per share totaled 23 cents, down from 24 cents a year earlier.

The bank closed an acquisition of 37 former HSBC branches in the Buffalo and Rochester markets during the period. The locations were involved in First Niagara Bank’s deal for 195 HSBC locations in upstate New York and Connecticut.

First Niagara completed that deal in May and divested some of the locations to Key and others to comply with anti-trust rules.

Also during the third quarter, Key re-entered the credit-card business by acquiring a $725 million Key-branded credit-card portfolio made up of its own customers. The bank also started to self-issue cards.

Net interest income in the third quarter totaled $578 million, up from $555 million a year earlier. Noninterest income totaled $544 million in the latest quarter, up from $483 million.

Noninterest expense totaled $734 million in the third quarter, up from $692 million in the same period last year.

Key had more than $51.4 billion in loans as of Sept. 30, up from $48.2 billion a year earlier. Deposits at the end of the quarter totaled $64.2 billion, up from $61 billion a year earlier.

The bank’s provision for loan losses was $109 million for the third quarter, compared with $10 million a year earlier. Net charge-offs for the period totaled $109 million, even with the third quarter of 2011.

Nonperforming loans at the end of the quarter totaled $653 million, down from $788 million at the end of the same period last year.         

Contact Tampone at 

ktampone@cnybj.com

HSBC’s remaining businesses in upstate New York lost a major signpost when the bank sold its retail branch network in the region earlier this year.

“The branch network gave us great visibility,” says Kevin Quinn, HSBC senior vice president and the new head of corporate banking for upstate New York. “I think what we learned through the sale is we have an extremely loyal customer base. Our challenge going forward is making sure the market knows we’re still present.”

Buffalo–based First Niagara Bank acquired 195 HSBC branches in upstate New York and Connecticut in May. HSBC kept businesses like corporate middle-market banking, investment banking, and private banking and the bank still employs 3,000 people across the region.

HSBC has a commercial-banking office at 250 S. Clinton St. in Syracuse with a staff of 12. Worldwide, the bank has 6,900 offices in 84 countries and assets of more than $2.6 trillion.

Given HSBC’s international ties, Quinn says the bank can set itself apart in its upstate markets by focusing on companies with global ambitions.

“That’s where we think we can be a thought leader and where we think we can be a resource for the region,” Quinn says. “There’s been a great emphasis across the U.S. as well as in New York state on supporting further export development and growth.

“We’re ideally positioned because we have that international footprint. For any company with international aspirations, we think we stand at the forefront.”

Quinn, a native of Buffalo, will be based there in his new position. He succeeds Paul Cronin, who accepted a New York City–based senior leadership role with HSBC.

Quinn previously worked as senior vice president and regional commercial executive manager for upstate New York. He has 18 years of commercial-banking experience, serving large corporate and middle- market companies in a 14-state region in the Midwest, as well as the Canadian provinces of Ontario and Quebec. 

Prior to banking, he practiced law in Cleveland, Ohio, with an emphasis on mergers and acquisitions, according to HSBC. He’s been with HSBC for seven years and back living in upstate New York for 18 years.

Quinn will be responsible for the Rochester, Syracuse, and Albany markets, in addition to Buffalo.

Demand for loans varies across industries in the region, but in general, the market remains soft, Quinn says. Uncertainty will likely continue until the U.S. presidential election passes.

Companies with business overseas are also concerned about the situation in Europe and Asia, Quinn notes.

Most firms continue to focus on lean and efficient operations, he adds. In some cases, they’re building substantial amounts of cash.

“Eventually, that cash needs to be deployed,” Quinn says.

Lately, he says he’s seen an uptick in mergers and acquisitions. All banks, including HSBC, are looking to grow loans, which makes for a competitive environment, he adds.

“We think we’re ideally positioned in the upstate region,” he says. “There are few organizations that have the international connectivity that HSBC has.”       

Contact Tampone at ktampone@cnybj.com

Higher mortgage-banking revenue, more net interest income, and a lower provision for loan losses drove profit higher at M&T Bank Corp. (NYSE: MTB) in the third quarter.

Expenses also fell in the period by 7 percent from a year earlier as the integration of Wilmington Trust Corp., which M&T acquired last year, is now complete. Profit at Buffalo–based M&T rose 60 percent in the third quarter to $293 million, or $2.17 per share.

Earnings in the third quarter of 2011 totaled $183 million, or $1.32 per share.

M&T has more than 700 branch offices in Delaware, Maryland, New York, Pennsylvania, Virginia, West Virginia, and Washington, D.C. The bank has total assets of more than $81 billion.

M&T is the leading bank in the Syracuse metro area deposit market with 30 branches, more than $2.5 billion in deposits, and a market share of 23.4 percent, according to the latest statistics from the Federal Deposit Insurance Corp. The bank is second in the Utica–Rome area with 12 branches, $627.5 million in deposits, and a market share of about 17 percent.

M&T also leads the Binghamton–area market with 16 branches, more than $1.3 billion in deposits, and a market share of more than 50 percent.

During the third quarter, M&T announced plans to acquire Paramus, N.J.–based Hudson City Bancorp, Inc. (NASDAQ: HCBK). The deal remains on track to close in the second quarter of 2013, M&T Executive Vice President and CFO Rene Jones said during a conference call Oct. 17, discussing the bank’s latest results.

The $3.7 billion acquisition will bring M&T $25 billion in deposits and $28 billion in loans. Most of Hudson City’s 135 branches are in New Jersey, where M&T said it will have the fourth largest deposit share following the acquisition’s closing. 

Hudson City has other branches in downstate New York and Connecticut.

Also during the third quarter, M&T completed its exit from the U.S. Treasury Department’s Troubled Asset Relief Program (TARP) program. The Treasury sold its preferred stock in M&T to the public and no longer holds any M&T shares.

M&T in 2011 repaid more than $700 million in TARP funds, some acquired through acquisition. Those repayments left the Treasury with M&T shares worth more than $381 million.

Net interest income in the third quarter totaled more than $662.7 million at M&T, up 7 percent from the same period in 2011. Noninterest income was $446 million, up from $368 million a year earlier.

Loans and leases as of Sept. 30 totaled $64.1 billion, up 10 percent from the previous year. Deposits totaled $64 billion at the end of the third quarter, up 8 percent from Sept. 30, 2011.

M&T’s provision for credit losses was $46 million in the third quarter, down from $58 million a year earlier. Net charge-offs totaled $42 million, down from $57 million in the same period in 2011.

Nonaccrual loans fell to $925 million as of Sept. 30, down from $1.1 billion a year earlier.

Noninterest expense for the period was $616 million, down from $662 million a year earlier.       

Contact Tampone at ktampone@cnybj.com