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Community Bank System Reports Strong Second Quarter Results

Stocks in this article: CBU

Community Bank System, Inc. (NYSE: CBU) reported second quarter 2012 net income of $21.1 million, or $0.53 per share, an increase of 17.2% over the $18.0 million, or $0.49 per share, reported for the second quarter of 2011. Year-to-date earnings of $39.9 million, or $1.01 per share, increased 16.8% and five cents per share, compared to the first six months of 2011.

Total revenue for the second quarter of 2012 was $81.5 million, an increase of $4.5 million, or 5.9%, over the prior year second quarter. The higher revenue was a result of an 11.4% increase in average earning assets, including growth in both loans and investment securities. The net interest income generated by these increases in earning assets was partially offset by a 17-basis point decline in the Company’s net interest margin to 3.96%. The quarterly provision for loan losses of $2.2 million was $1.1 million higher than the second quarter of 2011 and consistent with the increase in quarterly net charge-offs and generally stable asset quality trends. Total operating expenses were $49.4 million for the quarter, down $1.8 million or 3.4% from the second quarter of 2011, reflecting lower acquisition-related expenses.

“We produced strong operating results for the second quarter, characterized by earning asset growth that drove a six percent increase in top line revenues, disciplined operating expense management and continued stable and favorable asset quality metrics,” said President and Chief Executive Officer Mark E. Tryniski. “We grew loans by $101 million in the quarter, with improvements across all portfolios. We continued to appropriately manage our cost of funds and were able to maintain a stable net interest margin through the first half of this year. On July 23, 2012, we completed the acquisition and conversion of 16 former HSBC branch locations, which will strengthen our competitive presence across our Upstate New York footprint. We are pleased with the successful conversion process, and excited by the opportunity to solidify and expand our relationship with these new customers. We expect to complete the conversion process of the remaining three branches that we are acquiring from First Niagara in early September. We believe that we’re positioned to produce solid core results for the remainder of 2012, and are enthusiastic about the potential to create incremental shareholder value from the recent acquisitions.”

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