Community Bank System Inc. (CBU, Financial) filed Quarterly Report for the period ended 2009-03-31.
Community Bank System Inc. is a bank holding company. Community Bank System Inc. has a market cap of $559.3 million; its shares were traded at around $17.08 with a P/E ratio of 11.7 and P/S ratio of 1.8. The dividend yield of Community Bank System Inc. stocks is 5.1%. Community Bank System Inc. had an annual average earning growth of 1.7% over the past 10 years.
First quarter net income of $10.5 million, or $0.32 per share decreased 11% or $0.04 from the $0.36 per share reported in the first quarter of 2008. Increased operating expenses, principally acquisition related, and significantly higher FDIC insurance assessments and a higher provision for loan losses resulted in the decrease. These were partially offset by higher net interest income generated through organic and acquired growth of both loans and core deposits, continued expansion of non-interest income sources, increased secondary market mortgage activity and a stable net interest margin. Cash earnings per share (which excludes the after-tax effect of the amortization of intangibles assets and acquisition-related market value adjustments) were $0.37 versus $0.41 for the prior year s first quarter.
As shown in Table 1, net income for the quarter of $10.5 million declined 4.0% versus the first quarter of 2008. Earnings per share for the first quarter of $0.32 was $0.04 lower than the EPS generated in the same period of last year. First quarter net interest income of $40.2 million was up $4.6 million or 12.9% from the comparable prior year period. The current quarter s provision for loan losses increased $2.0 million as compared to the first quarter of 2008 and increased $0.4 million from the fourth quarter of 2008. First quarter noninterest income, excluding securities gains and losses, was $20.4 million, up $3.0 million or 17% from the first quarter of 2008. Operating expenses of $44.4 million for the quarter were up $6.0 million or 16% from the comparable prior year period, a significant portion of the increase was attributable to the acquisitions of ABG and Citizens during the second and fourth quarters of 2008, as well as higher FDIC insurance assessments due to significant increases in premium rates and the incurrence of higher pension costs.
In addition to the earnings results presented above in accordance with generally accepted accounting principles (GAAP), the Company provides cash earnings per share, which excludes the after-tax effect of the amortization of intangible assets and acquisition-related market value adjustments. Management believes that this information helps investors better understand the effect of acquisition activity in reported results. Cash earnings per share for the first quarter of 2009 was $0.37, down 9.8% from the $0.41 earned in the comparable period of 2008.
As shown in Table 3, net interest income (with nontaxable income converted to a fully tax-equivalent basis) for the first quarter of 2009 was $44.2 million, a $4.7 million increase from the same period last year and was consistent with the fourth quarter of 2008. A $526 million increase in first quarter interest-earning assets and a one basis point increase in the net interest margin versus the prior year had a greater impact than the $442 million increase in average interest-bearing liabilities. As reflected in Table 4, the volume increase from interest bearing assets and the rate decrease on interest bearing liabilities had a $15.7 million favorable impact on net interest income, while the volume increase from interest bearing liabilities and rate decrease on interest bearing assets had a $11.0 million unfavorable impact on net interest income. The decrease in the cost of funding had a slightly greater favorable impact on net interest margin than the lower yields on interest bearing assets.
Higher first quarter average loan balances were attributable to $201 million of organic loan growth since the first quarter of 2008, driven by growth in all portfolios: consumer installment, consumer mortgage and business lending. The remaining contribution to the increase in the average first quarter loan balance was the $117 million of loans acquired in the Citizens acquisition. Average investments and cash equivalents for the first quarter period were $207 million higher than the respective period of 2008, reflective of the net liquidity generated from the Citizens acquisition and organic deposit growth. In comparison to the prior year, total average deposits were up $559 million or 17% for the quarter as a result of the November 2008 acquisition of Citizens. First quarter average deposits from the Citizens acquisition were $565 million. On an organic basis, average deposits for the first quarter decreased $5.7 million from the first quarter of 2008, as a result of the Company s objective of lowering its overall funding costs by reducing higher cost time deposits. Quarterly average borrowings decreased $21 million as compared to the first quarter of 2008 as a portion of the net liquidity from the branch acquisition was used to eliminate short-term borrowings.
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Community Bank System Inc. is a bank holding company. Community Bank System Inc. has a market cap of $559.3 million; its shares were traded at around $17.08 with a P/E ratio of 11.7 and P/S ratio of 1.8. The dividend yield of Community Bank System Inc. stocks is 5.1%. Community Bank System Inc. had an annual average earning growth of 1.7% over the past 10 years.
Highlight of Business Operations:
On November 7, 2008, the Company acquired 18 branch-banking centers in northern New York from Citizens Financial Group, Inc. (“Citizens”) in an all cash transaction. The Company acquired approximately $109 million in loans and $565 million in deposits at a blended deposit premium of 12%. The results of operations for the 18 branches acquired from Citizens have been included in the consolidated financial statements since that date. In support of the transaction, the Company raised approximately $50 million of equity capital in the form of common stock in October 2008.First quarter net income of $10.5 million, or $0.32 per share decreased 11% or $0.04 from the $0.36 per share reported in the first quarter of 2008. Increased operating expenses, principally acquisition related, and significantly higher FDIC insurance assessments and a higher provision for loan losses resulted in the decrease. These were partially offset by higher net interest income generated through organic and acquired growth of both loans and core deposits, continued expansion of non-interest income sources, increased secondary market mortgage activity and a stable net interest margin. Cash earnings per share (which excludes the after-tax effect of the amortization of intangibles assets and acquisition-related market value adjustments) were $0.37 versus $0.41 for the prior year s first quarter.
As shown in Table 1, net income for the quarter of $10.5 million declined 4.0% versus the first quarter of 2008. Earnings per share for the first quarter of $0.32 was $0.04 lower than the EPS generated in the same period of last year. First quarter net interest income of $40.2 million was up $4.6 million or 12.9% from the comparable prior year period. The current quarter s provision for loan losses increased $2.0 million as compared to the first quarter of 2008 and increased $0.4 million from the fourth quarter of 2008. First quarter noninterest income, excluding securities gains and losses, was $20.4 million, up $3.0 million or 17% from the first quarter of 2008. Operating expenses of $44.4 million for the quarter were up $6.0 million or 16% from the comparable prior year period, a significant portion of the increase was attributable to the acquisitions of ABG and Citizens during the second and fourth quarters of 2008, as well as higher FDIC insurance assessments due to significant increases in premium rates and the incurrence of higher pension costs.
In addition to the earnings results presented above in accordance with generally accepted accounting principles (GAAP), the Company provides cash earnings per share, which excludes the after-tax effect of the amortization of intangible assets and acquisition-related market value adjustments. Management believes that this information helps investors better understand the effect of acquisition activity in reported results. Cash earnings per share for the first quarter of 2009 was $0.37, down 9.8% from the $0.41 earned in the comparable period of 2008.
As shown in Table 3, net interest income (with nontaxable income converted to a fully tax-equivalent basis) for the first quarter of 2009 was $44.2 million, a $4.7 million increase from the same period last year and was consistent with the fourth quarter of 2008. A $526 million increase in first quarter interest-earning assets and a one basis point increase in the net interest margin versus the prior year had a greater impact than the $442 million increase in average interest-bearing liabilities. As reflected in Table 4, the volume increase from interest bearing assets and the rate decrease on interest bearing liabilities had a $15.7 million favorable impact on net interest income, while the volume increase from interest bearing liabilities and rate decrease on interest bearing assets had a $11.0 million unfavorable impact on net interest income. The decrease in the cost of funding had a slightly greater favorable impact on net interest margin than the lower yields on interest bearing assets.
Higher first quarter average loan balances were attributable to $201 million of organic loan growth since the first quarter of 2008, driven by growth in all portfolios: consumer installment, consumer mortgage and business lending. The remaining contribution to the increase in the average first quarter loan balance was the $117 million of loans acquired in the Citizens acquisition. Average investments and cash equivalents for the first quarter period were $207 million higher than the respective period of 2008, reflective of the net liquidity generated from the Citizens acquisition and organic deposit growth. In comparison to the prior year, total average deposits were up $559 million or 17% for the quarter as a result of the November 2008 acquisition of Citizens. First quarter average deposits from the Citizens acquisition were $565 million. On an organic basis, average deposits for the first quarter decreased $5.7 million from the first quarter of 2008, as a result of the Company s objective of lowering its overall funding costs by reducing higher cost time deposits. Quarterly average borrowings decreased $21 million as compared to the first quarter of 2008 as a portion of the net liquidity from the branch acquisition was used to eliminate short-term borrowings.
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