DeWITT — Community Bank System, Inc.’s (NYSE: CBU) wealth-management services are a key growth driver for the company, producing nearly 20-percent revenue growth in the third quarter and almost 23-percent growth through nine months of 2013.

Along with being the parent company of Community Bank, N.A., Community Bank System also operates four subsidiaries that operate collectively as its financial-services division under the Community Bank Wealth Management moniker.

Those subsidiaries are: Community Investment Services, Inc., a full-service brokerage and wealth-management firm offering products through the bank’s branches; Nottingham Advisors, Inc., a national boutique investment headquartered in Buffalo; CBNA Insurance Agency, Inc. a property and casualty insurance firm with five northern New York offices; and Community Bank Trust Services, which offers a range of trust services, such as estate settlement, as well as investment management.

Community Bank decided to align those business units and create Community Bank Wealth Management (CBWM) about two years ago, says Paul Restante, managing director of CBWM and president of Community Investment Services. Each of the business units has generated growth, and collectively contributes to Community Bank System’s top and bottom lines, he notes.

CBWM, which has nearly $3.75 billion in assets under management, generated over $3.8 million in revenue in the third quarter, up from nearly $3.2 million a year ago — driven by business expansion in trust services, asset management and advisory services, and favorable market conditions, Community Bank System said in its earnings report. Through three quarters of 2013, CBWM has produced almost $11.6 million in revenue, up from more than $9.4 million in the year-ago period.

Wealth-management services contributed more than one-eighth of Community Bank System’s reported non-interest income of $27.6 million in the third quarter (see side bar article for more on the earnings report).

Knowing that the work CBWM is doing contributes directly to the bank’s financial results is a pretty good feeling, Restante says. “That really relates to the share price,” he says. Community Bank System’s stock price is up about 35 percent year to date (as of Oct. 25.)

To help CBWM continue its upward trend, Restante is looking at the four subsidiaries individually to target growth opportunities.

Community Investment Services, with a staff of 30 full-time financial consultants, is already poised to grow about 46 percent this year, with revenue projected to rise to $7 million, compared to $3.9 million last year, Restante says. That growth has come from a variety of factors including better integration with Community Bank branch personnel, he says. Branch employees are being trained to better identify customers with a need for investment services and help arrange meetings between customers and Community Investment Services financial consultants.

Restante plans to continue that growth by continuing to promote that integration, sharpening the focus on advisory fee-based planning, new hires to increase the sales force, and encouraging employees to concentrate on developing relationships with their clients, which can boost cross-selling of other products.

Community Bank Trust Services is producing growth as many other banks get out of the trust business, Restante says, as well as from an increased market need for investment-management services. That opens up opportunity for CBWM to capture new clients as individuals and institutions are looking for a new provider of trust, estate settlement, and fiduciary services, he notes. Trust services are also growing as CBWM expands geographically. It already provides such services in Wisconsin, Florida, Maryland, and Virginia and is able to branch out “anywhere where we have clients that have gravitated to other states that need trust services,” Restante says.

Nottingham Advisors, which has offices in Williamsville as well as in Palm Beach, Fla., works with businesses, institutional investors, and high-net worth individuals. The firm has produced growth by marketing to other independent broker/dealers and financial advisors, many of whom are looking for the services Nottingham offers without the hassle and paperwork that comes with staying on top of regulations on their own. Growth will also come from expanding further in Florida. The firm, which currently has an office in North Palm Beach, is looking at making inroads along the west coast of the Sunshine State, particularly in the Tampa and Naples areas. Both are strategic areas that make sense to target, Restante says.

CBNA Insurance Company, which started in Tupper Lake and has multiple offices across northern New York, has grown a great deal over the past five years through a series of strategic acquisitions, Restante says. He sees a lot of acquisition opportunities as many independent agencies have owners looking to retire or to align with a larger agency that can provide a broader selection of products as well as tech support and regulatory oversight, he says. However, not every opportunity is a good fit, so CBNA is very selective in the process, often taking a year or more to conduct its due diligence. That said, Restante says the firm is currently in negotiations with about seven different agencies it is considering acquiring.

Community Bank System also operates Benefit Plan Administrative Services, Inc. (BPAS), which has clients in 45 states and Puerto Rico, more than 250 employees, annual revenue of $40 million, and $6.2 billion in assets under administration. BPAS, in partnership with more than 190 financial “intermediaries,” provides retirement-plan administration and provides actuarial services. Local offices include Harbridge Consulting Group, LLC in Syracuse and BPAS locations in Utica and Syracuse.

Community Bank System’s headquarters office is located at 5790 Widewaters Parkway in DeWitt. Community Bank, N.A. has more than 180 branches across New York and Pennsylvania and more than $7 billion in assets.

Contact The Business Journal at news@cnybj.com

———————————————–

Community Bank third-quarter profit jumps nearly 20 percent

DeWITT — Community Bank System, Inc. (NYSE: CBU) reported net income of $22 million in the third quarter, up almost 20 percent from $18.4 million in the year-ago period.

The DeWitt–based banking company generated earnings per share (EPS) of 54 cents in the latest quarter, up 17 percent from 46 cents in third quarter of 2012, which included eight cents per share of acquisition expenses. This quarter’s EPS beat analysts’ expectations for 52 cents, according to Yahoo Finance/Thomson Financial data.

Community Bank produced revenue of $88.2 million in the third quarter of 2013, up 4.2 percent from a year prior. Revenue growth was bolstered by higher non-interest income from a larger core deposit account base, along with continued organic growth in wealth management and benefits-administration services, the banking company said.

Non-interest income rose nearly 7 percent to $27.6 million, and net interest income climbed more than 3 percent to $60.6 million, respectively, when compared to the year-ago quarter, Community Bank reported.

“We continued to perform at a very high level during the third quarter of 2013, generating record earnings, solid organic loan growth, high single-digit, year-over-year growth in financial services revenue, and continued strong asset quality metrics,” Mark E. Tryniski, president and CEO of Community Bank, said in the earnings report. “During the third quarter, we also announced an agreement to acquire eight branch-banking locations from Bank of America, N.A., which will further expand and strengthen our market presence across our Northeast Pennsylvania service footprint.”

Community Bank System has more than $7.3 billion in assets.

Contact Rombel at arombel@cnybj.com

Cyber attacks against small businesses are growing increasingly sophisticated. Criminals use spoofed emails, malicious software, and online social networks to obtain login credentials to businesses’ accounts, transfer funds from the accounts, and steal private information, a fraud referred to as “corporate account takeover.” To combat this type of fraud, the American Bankers Association is providing advice to small-business owners.

“Our nation’s small businesses remain in the crosshairs of cybercriminals,” said Frank Keating, ABA president and CEO. “A strong partnership with your financial institution is the best way to prevent and protect your business against these attacks.”

As part of National Cybersecurity Awareness Month, ABA offers small businesses these tips to help prevent account takeover:

Protect your online environment.

It is important to protect your cyber environment just as you would your physical location. Do not use unprotected Internet connections. Encrypt sensitive data and keep updated anti-virus and anti-spyware protection on your computers. Change passwords from the default to something complex, including at point-of-sale terminals.

Partner with your bank for payment authentication.

Talk to your banker about services that offer call backs, device authentication, multi-person approval processes, batch limits, and other tools that help protect you from unauthorized transactions.

Pay attention to suspicious activity and react quickly.

Put your employees on alert. Look out for strange network activity, do not open suspicious emails, and never share account information. If you suspect a problem, disconnect the compromised computer from your network and contact your banker. Keep records of what happened.

Understand your responsibilities and liabilities.

The account agreement with your financial institution will detail what commercially reasonable security measures are required in your business. It is critical that you understand and implement the security safeguards in the agreement. If you don’t, you could be liable for losses resulting from a takeover. Talk to your banker if you have any questions about your responsibilities.

To learn more, see ABA’s Small Business Guide to Corporate Account Takeover (http://www.aba.com/Tools/Function/Fraud/Pages/CorporateAccountTakeoverSmallBusiness.aspx).

The American Bankers Association represents banks of all sizes and charters and is the voice for the nation’s $14 trillion banking industry and its 2 million employees. The majority of ABA’s members are banks with less than $185 million in assets. Learn more at aba.com.