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Stocks Under $10 with 50-100% upside potential - 14 days FREE!

5 Bank Stocks That Won't Bankrupt You or America (Update 1)

5. Community Bank System

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Shares of Community Bank System (CBU) of DeWitt, N.Y., closed at $27.74 Monday, down slightly year-to-date, following a 4% return in 2011. Based on a quarterly payout of 26 cents, the shares have a dividend yield of 3.60%.

The company on Jan. 23 priced a public offering of 1,852,000 shares at a price of $27, looking to raise $50 million, in part to pay for the purchase of 19 Upstate New York branches and $955 million in deposits from First Niagara Financial Group (FNFG), in connection to that company's purchase of roughly 200 branches from HSBC (HBC).

Community Bank System had $6.5 billion in total assets as of Dec. 30. The company's ROA ranged between 1.14% and 1.24% in 2011, according to HighlineFI.

The shares trade for 2.5 times tangible book value, and for 13 times the consensus 2012 earnings estimate of $2.08 a share. The consensus 2013 EPS estimate is $2.20.

Guggenheim analyst David Darst has a neutral rating on Community Bank System, with a $28 price target, based on the relatively high valuation of the shares, but said on Feb 1 that "the branch acquisition creates a great outcome for CBU in the FNFG divestiture given improved market conditions for the capital raise and management's ability to craft mid-single-digit EPS accretion from the acquisition given cost-saving opportunities."

Interested in more on Community Bank System? See TheStreet Ratings' report card for this stock.

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