trending Market Intelligence /marketintelligence/en/news-insights/trending/yb9T58gymXZ2zWOMVaoqmQ2 content
Log in to other products

Login to Market Intelligence Platform

 /


Looking for more?

Contact Us

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

If your company has a current subscription with S&P Global Market Intelligence, you can register as a new user for access to the platform(s) covered by your license at Market Intelligence platform or S&P Capital IQ.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *
  • We generated a verification code for you

  • Enter verification Code here*

* Required

Thank you for your interest in S&P Global Market Intelligence! We noticed you've identified yourself as a student. Through existing partnerships with academic institutions around the globe, it's likely you already have access to our resources. Please contact your professors, library, or administrative staff to receive your student login.

At this time we are unable to offer free trials or product demonstrations directly to students. If you discover that our solutions are not available to you, we encourage you to advocate at your university for a best-in-class learning experience that will help you long after you've completed your degree. We apologize for any inconvenience this may cause.

In This List

New York bank expecting 30% cost savings in deal before branch closures kick in

Street Talk - Ep. 64: Coronavirus jumpstarts digital adoption

Street Talk Podcast

Street Talk - Ep. 63: Deal talks continue amid bank M&A freeze, setting up for strong Q4

Street Talk Podcast

Street Talk - Ep. 62: 'Brutal' outlook for oil demand offers banks in oil patch no relief

Amid Q1 APAC Fintech Funding Slump, Payment Companies Drove Investments


New York bank expecting 30% cost savings in deal before branch closures kick in

One New York-based bank expects to achieve 30% cost savings on a recently announced merger, a total that does not yet include branch consolidation, management said.

De Witt, N.Y.-based Community Bank System Inc. announced it will acquire Hornell, N.Y.-based Steuben Trust Corp. in a deal expected to close in the second quarter of 2020. The bank currently expects operating expense cost savings to be about 30%, but it did not include any branch closures in that calculation, management said during their third-quarter earnings call.

The bank may increase cost savings by closing branches, but management is holding off on announcing consolidations for now.

"We have to evaluate the performance in those markets, the customer patterns, customer trends, before we make any decisions relative to a potential consolidation of branches," CFO Joseph Sutaris said in an interview. "The geographies would lend themselves to future consolidation."

With branch closures, the bank could bring its cost savings up to between 35% and 40%, estimated Erik Zwick, an analyst with Boenning & Scattergood. The bank's branches are close to each other, but not "within a couple miles," Zwick said in an interview.

The 30% cost savings will come from eliminating redundant operational costs, including technology systems, Sutaris said.

The bank has used acquisitions as a way to gain market share in the past, and it looks to buy banks in contiguous or overlapping counties, Sutaris said.

"Steuben is in four overlapping counties to our market, so it gives us an opportunity to continue to gain market share in those counties and also allows us to expand a couple additional counties," he said.

Zwick called it a "fairly smart deal" for Community Bank System. "It makes a lot of sense from both a fundamental and a pricing perspective," he said.

The Steuben Trust deal was announced about three months after Community Bank System closed an earlier deal with Kinderhook, N.Y.-based Kinderhook Bank Corp., and the bank expects to keep hunting for deals. Sutaris said the bank would look to rural and small-town markets to the west and south of its current markets, as well as potentially into New England. The bank is looking to expand into the northern half of Pennsylvania and west into Ohio, said Sutaris.

Zwick said he expects the bank to expand south into Pennsylvania, west into Ohio and to add scale in New York. Community Bank System's legacy markets tend to have slower growth, said Zwick.

"Acquisition is a viable strategy for them to continue to grow the balance sheet, in absence of organic growth," the analyst said.