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Earnings Per Share (EPS): $0.83, up $0.01 year-over-year, down $0.08 quarter-over-quarter.
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Operating Diluted EPS: $0.88, up $0.01 year-over-year, down $0.07 quarter-over-quarter.
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Total Operating Revenues: $189.1 million, up 7.8% year-over-year, up 3.2% quarter-over-quarter.
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Net Interest Income: $112.7 million, up 3% quarter-over-quarter.
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Net Interest Margin: Increased to 3.05% from 3.04% quarter-over-quarter.
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Non-Interest Expenses: $124.2 million, up 6.6% year-over-year, up 4.4% quarter-over-quarter.
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Provision for Credit Losses: $7.7 million, up from $2.9 million year-over-year and $2.7 million quarter-over-quarter.
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Effective Tax Rate: 23%, up from 21.2% year-over-year.
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Loan Growth: $227.8 million increase, marking the 13th consecutive quarter of growth.
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Deposit Growth: $338.3 million increase, driven by municipal deposits.
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Non-Performing Loans: $62.8 million, up from $36.9 million year-over-year.
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Net Charge-Offs: $2.8 million, up from $1.2 million year-over-year.
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Allowance for Credit Losses: $76.2 million, up $4.7 million quarter-over-quarter.
Release Date: October 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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Community Financial System Inc (NYSE:CBU) reported a solid operating performance with a PPNR of $1.29 per share, marking an 11.2% increase compared to the previous year.
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The banking business experienced strong growth, with net interest income surpassing previous peaks and positioning the company well for continued growth.
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The company celebrated the opening of its first branch from a strategic expansion plan, indicating progress in its growth strategy.
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The benefit administration business saw expanded revenues and profitability, with BPAS recognized as a top five record keeper by the National Association of Plan Advisors.
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The insurance services business reached new revenue highs and was recognized as the 66th largest broker in the US, showing significant growth and industry recognition.
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An increase in provision expenses was noted, driven by industry trends towards credit normalization and expectations of increased unemployment.
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The accrual for performance-based incentive compensation expenses increased, impacting bottom-line earnings.
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Non-performing loans increased to $62.8 million, primarily due to one loan relationship moving to non-accrual status.
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The company’s allowance for credit losses increased, reflecting qualitative factor adjustments and an increase in loans outstanding.
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Non-interest expenses rose by 6.6% compared to the previous year, driven by increases in salaries, employee benefits, and acquisition costs.
Q: Can you provide an outlook on Net Interest Income (NII) and Net Interest Margin (NIM), and discuss deposit costs and loan repricing? A: Dimitar Karaivanov, CEO, explained that NII has been expanding for two consecutive quarters, even before the recent Fed rate cut. The company expects continued loan repricing at better spreads, which should positively impact NII. Deposit costs have been adjusted down, capturing about 50% of the Fed cut, with expectations for further adjustments. Joseph Sutaris, CFO, added that approximately $1.5 billion in fixed-rate loans are expected to reprice over the next 12 months, potentially boosting NII.
Q: What is the outlook for loan growth, considering recent larger credit closings? A: Dimitar Karaivanov, CEO, noted that the $200+ million loan growth in the third quarter was above trend due to a few significant closings. He expects future growth to align more closely with previous quarters, driven by strong market share gains and client acquisitions.
Q: With increased loan growth and late-cycle credit normalization, will reserves and provisions continue to rise? A: Dimitar Karaivanov, CEO, indicated that the company’s CECL model suggests a prudent reserve level, with current charge-offs at 11 basis points and ACL coverage at 74 basis points. He anticipates moderate increases in reserves and provisions, aligning with expected credit loss trends.
Q: Can you elaborate on the economic activity in Upstate New York and its impact on the company? A: Dimitar Karaivanov, CEO, highlighted significant economic activity driven by onshoring manufacturing, government subsidies, and advanced technology investments. This has led to increased infrastructure and housing development, benefiting the company’s markets and supporting strong client performance.
Q: How are you managing expenses, particularly with recent hires and investments? A: Joseph Sutaris, CFO, stated that expenses are expected to grow at a mid-single-digit rate annually. The company is investing in organic growth capabilities, and while recent investments are yielding results, the pace of expense growth is expected to stabilize, reflecting longer-term trends.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
