Community Financial is bullish after strong 2024 performance

DeWITT — Improving interest rates, robust markets, new product offerings, and more helped boost earnings at Community Financial System, Inc. (NYSE: CBU) in 2024. The DeWitt–based company reported record revenue across its four business lines — banking, employee benefits, insurance services, and wealth management. “Reflecting on 2024, there is a lot to be pleased about such as margin expansion and excellent liquidity, robust fee income performance, strong credit quality, and well-managed expenses,” Community Financial President/CEO Dimitar A. Karaivanov said in the earnings report. “All four of our businesses … achieved record revenues while our core operating performance improved.” In the fourth quarter of 2024, Community Financial reported net income of $49.8 million, or 94 cents per share, on revenue of $196.3 million — a new quarterly record — compared with net income of $33.7 million, or 63 cents, on revenue of $177 million in the same quarter a year earlier. For the full year, Community’s net income was $182.5 million, or $3.44 per share, up from $131.9 million, or $2.45 a share, in 2023, a year that included a $52.3 million realized loss on sales of investment securities. The growth is attributable to a number of factors, Community Financial executive VP and CFO Joseph Sutaris tells CNYBJ. “We have had a challenging interest rate environment for a number of years prior to 2024,” he notes. When interest rates decreased last year, it provided relief for short-term interest rates on borrowings between financial institutions and allowed Community to level off its funding costs. Community Financial reported net interest income of $120 million for the fourth quarter and $449.1 million for the full year. “That’s one side of the equation,” Sutaris says. On the other side, Community saw a fair amount of loan turnover with old loans with lower interest rates closing and being replaced by new ones with higher rates. “That allows for net interest income expansion.” Community Financial also grew its total loans by 7.5 percent to $10.43 billion at the end of 2024. The company also saw increased revenue across its other business lines. Its Benefits Plan Administrative Services, Inc., subsidiary reported $131 million in revenue, an 11 percent increase. “We’ve been very successful in picking up new plans and growing participants,” he notes. Robust equity markets also spurred growth. OneGroup NY, the company’s insurance-agency subsidiary, generated revenue of $50.2 million, a 6.7 percent increase. “Some of that is just a combination of acquisitions and insurance premiums have continued to trend up,” Sutaris says. Community’s wealth management operating unit produced revenue of $36.7 million, an increase of 4.8 percent, primarily tied to market performance. The unit also added more than a billion dollars in funds under advisement, he notes. “In addition, we also introduced some new products on the banking side that generate fees,” he says. Community Financial is the holding company for Community Bank, N.A. On the heels of the strong fourth-quarter and full-year performance, Sutaris says he is very bullish about 2025. The net interest environment remains favorable, asset and credit quality is good, and “the economy overall is doing pretty well.” The change of federal administration in the wake of the November elections has created a perception of opportunity, he adds. With an eye to mergers and acquisitions, the industry thoughts lean toward some deregulation that would speed up the timeline for such deals. That makes them more favorable because the acquiring institution can be more certain of the value of the asset it is acquiring if the timeline is shorter, Sutaris explains. Looking ahead, he expects the growing Central New York economy will provide even more opportunity for Community Financial to grow. “I’m pretty bullish on our company, for the sector, and for the local economy for 2025 and hopefully beyond that,” he says. Community Financial’s stock got off to a good start in 2025, increasing nearly 9 percent year to date, as of midday trading on Feb. 5. The S&P 500 index, measuring the broader market, was up 3 percent in the same period. Headquartered in DeWitt, Community Financial operates 200 Community Bank branches across New York, Pennsylvania, Vermont, and Massachusetts.