CBU - This Small Bank's Earnings Report Gives a Green Light to Dividend Investors
This is proving a difficult year for dividend investors. As a host of large-cap companies have reduced or suspended their dividend payments due to the continuing economic malaise caused by the COVID-19 pandemic, income-oriented investors have sought fresh ideas that offered relative safety.
Community banks with manageable exposure to lending in this recession may provide risk-adjusted income-investing opportunities. One compelling example is Community Bank System (NYSE: CBU), which has branches in upstate New York, western Massachusetts, Vermont, and northeastern Pennsylvania. Its most recent earnings results, released Monday, illustrate its attractiveness as a dividend play now.
Community Bank System reported second-quarter net income of $35.2 million, down from $45 million in Q2 2019. Diluted earnings per share fell from $0.86 to $0.66. The decline in earnings was primarily driven by higher loan-loss provisioning, as well as expenses related to the company's recent purchase of New York-based community bank Steuben Trust.