Community Bank System, Inc. (NYSE: CBU) reported second quarter 2011 net income of $18.0 million ($0.49 per share), an increase of 11.3% over the $16.2 million reported for the second quarter of 2010. The second quarter 2011 results included $3.6 million ($0.07 per share) of acquisition expenses related to the Company’s purchase of The Wilber Corporation, completed in early April. Excluding acquisition expenses and special charges, earnings per share were up 16.7% over the prior year to $0.56, a record for the Company’s second quarter. 2011 year-to-date earnings of $34.1 million, or $0.96 per share, include $4.3 million ($0.09 per share) of acquisition expenses.
Total revenue for the second quarter of 2011 was $76.9 million, an increase of $8.6 million, or 12.6%, over the second quarter of last year. The higher revenue was a result of a 16.2% increase in average earning assets, principally from the Wilber acquisition, and a three-basis point improvement in the Company’s net interest margin to 4.13%. The quarterly provision for loan losses of $1.1 million was $1.0 million lower than the second quarter of 2010, reflective of lower net charge-offs and the continuation of generally stable and favorable asset quality metrics. Total operating expenses were $51.1 million for the quarter, including $3.6 million of acquisition expenses related to Wilber. Recurring operating expenses of $47.5 million (excluding acquisition expenses and special charges) for the quarter were $3.5 million, or 7.9%, higher than the second quarter of 2010, reflective of the additional operating costs from the Wilber acquisition, partially offset by lower intangible amortization.
“With record operating earnings in each of the first two quarters, the closing of a strategic acquisition and continued strong operating metrics, we are well positioned for the second half of 2011,” said President and Chief Executive Officer Mark E. Tryniski. “Our team is successfully integrating the former Wilber National Bank branch locations that mark our substantive entry into the eastern half of Upstate New York. This acquisition remains an exciting and significant opportunity to expand our Upstate New York service area. We entered this contiguous region with significant market presence, attractive deposit share and a history of effectively attracting and retaining customers in areas with similar demographic characteristics. In addition, it would be difficult to overstate the importance of our ability to continue to deliver superior asset quality in relation to our bottom line performance. With second quarter net charge-offs of $0.7 million, or 0.08% of average loans, and nonperforming loans to total loans of 0.58%, the quality of our loan portfolio remains a significant operating strength.”
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