Community Bank System, which operates 33 branches in the eight counties of Western New York, said profits rose 2.1 percent in the first quarter, driven by growth in loans and deposits and higher fees.
The DeWitt-based banking company, which has 130 branches across upstate New York and northeastern Pennsylvania, including one in Erie County, reported earnings of $9.7 million, or 32 cents per share, up from $9.5 million, or 31 cents, a year ago.
Total revenues rose 1.3 percent to $46.8 million, as a drop of less than 1 percent in net interest income from taking deposits and making loans, to $33.4 million, was offset by a 7.7 percent rise in fees to $13.5 million.
"We are pleased to report improved earnings for the first quarter of 2007 that are in line with previously communicated expectations," said President and CEO Mark E. Tryniski.
Banks have been struggling with tighter profit margins on lending because short-term interest rates used for deposits have risen faster than long-term rates used for loans. That's forced banks to rely more on cost-cutting, fee income, and businesses other than lending to grow revenues.
In Community Bank's case, total loans grew 11 percent to $2.68 billion, while deposits rose 7 percent to $3.28 billion. Together with the increase in fees and good credit quality -- the bank set aside just $200,000 for loan losses, versus $2.15 million last year -- the bank overcame a profit margin that dropped by one-third of a percentage point from last year.
In particular, Tryniski credited the bank's Pennsylvania region, which operates under the First Liberty Bank & Trust brand, for strong results in both commercial lending and consumer deposits. Community Bank also benefited from its purchases last year of Elmira Savings & Loan in August and Ontario National Bank in December, although that was also the principal contributor to operating expenses rising 6.4 percent to $33.5 million.
The company will complete its purchases of Hand Benefit & Trust and Tupper Lake National Bank in May and June, respectively.