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Community Bank Upped to Strong Buy

Zacks Equity Research

On Sep 14, 2013, Zacks Investment Research upgraded Community Bank System Inc. (CBU) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Community Bank has been witnessing rising earnings estimates following the announcement of second-quarter 2013 results. Further, the company’s expected long-term earnings growth rate is 9.90%.

Community Bank reported second-quarter 2013 results on Jul 23. Earnings per share came in at 52 cents, beating the Zacks Consensus Estimate of 50 cents. Better-than- expected results were primarily driven by top-line improvement, partially offset by higher operating expenses.

While net interest income increased 1.1% from the year-ago quarter to $58.4 million, non-interest income increased 14.4% to $27.1 million. However operating expenses rose 10.1% from the previous-year quarter to $54.4 million.

The quarter also witnessed rise in loans and deposits, which aided organic growth. Total loans were $3.9 billion, up 10.5% year over year. Total deposits were $5.7 billion, up 15.5% from year-ago quarter.

Further, Community Bank’s credit quality improved and was healthier than most of its peers in the reported quarter. Net charge-offs declined to $0.8 million from $2.1 million in the year-ago quarter. Nonperforming loans as a percentage of total loans were 0.62% versus 0.90% as of Jun 30, 2012.

Moreover, during the last 60 days, the Zacks Consensus Estimate for 2013 increased 3.0% to $2.06 per share. For 2014, the Zacks Consensus Estimate advanced 4.4% to $2.12 per share over the same time period.

Other Stocks to Consider

Apart from Community Bank, other banks worth considering include Eagle Bancorp, Inc. (EGBN), Metro Bancorp, Inc. (METR) and S&T Bancorp Inc. (STBA). All these stocks carry the same Zacks Rank as Community Bank.

Read the Full Research Report on EGBNRead the Full Research Report on CBURead the Full Research Report on STBARead the Full Research Report on METRZacks Investment Research