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Jun 30, 2022
Community Bank Q2 2022 Earnings Report
Community Bank System, Inc. reported second quarter net income of $39.8 million, or $0.73 per fully-diluted share.
Key Takeaways
Community Bank System, Inc. reported a decrease in net income for Q2 2022 compared to Q2 2021, with earnings per share decreasing primarily due to increases in the provision for credit losses and operating expenses, offset by increases in net interest income and noninterest revenues. The company successfully acquired and integrated Elmira Savings Bank, contributing to loan growth and net interest margin improvement.
Net income for Q2 2022 was $39.8 million, or $0.73 per fully-diluted share, compared to $47.9 million, or $0.88 per fully-diluted share for Q2 2021.
Operating earnings per share (non-GAAP) was $0.85 for Q2 2022, compared to $0.88 in Q2 2021.
Ending loans increased $313.4 million, or 4.2% during the quarter, excluding Elmira acquisition and PPP loans.
Total revenues increased by $15.7 million, or 10.3%, over the prior year’s second quarter, driven by increases in net interest income and noninterest revenues.
Community Bank
Community Bank
Forward Guidance
The company expects interest expense to increase in both the third and fourth quarters of 2022.
Positive Outlook
- The Company achieved its fourth consecutive quarter of growth in loans outstanding.
- The combination of organic loan growth, the Elmira acquisition, the deployment of low yield cash equivalents into the investment securities portfolio, stable funding costs and higher market interest rates for new loans drove an $11.0 million, or 12.0%, increase in net interest income over the prior year’s second quarter.
- Loan growth momentum, including healthy pipelines, and a solid set of new business opportunities in our financial services operations.
- The Company added eight branch locations and acquired total deposits of approximately $522.3 million and total loans of approximately $437.0 million due to Elmira Savings Bank acquisition.
- Asset quality remained strong with annualized net charge-offs of just two basis points in the quarter.
Challenges Ahead
- Ending total deposit balances were up in the second quarter driven by the Elmira acquisition, municipal deposits decreased $368.4 million during the quarter due in part to seasonal factors.
- GAAP basis earnings per share were $0.73 for the quarter, as compared to GAAP earnings per share of $0.88 in the second quarter of 2021.
- The increase in the provision for credit losses and the decrease in PPP-related revenues, net of tax, were responsible for a $0.13 decrease in fully-diluted operating earnings per share year-over-year.
- Market-driven conditions began to impact the Company’s financial services revenues.
- Shareholders’ equity of $1.66 billion at June 30, 2022 was $399.4 million, or 19.4%, lower than one year ago due to a decline in the after-tax market value adjustment on the Company’s available-for-sale investment securities portfolio due to higher market interest rates.