Updated 3/6/25
Community Financial System, Inc. (CBU) is a steady player in the regional banking space, known for its consistent approach to shareholder returns. With a market cap of around $3.14 billion and a reputation for stability, it has become a reliable name for investors seeking dependable dividends.
Unlike high-growth tech stocks, banks like CBU appeal to long-term investors who value consistent cash flow. The company has a solid return on equity of 10.55% and a profit margin of 25.22%, both strong indicators of financial health.
With the stock currently priced at $58.67, it’s trading in the middle of its 52-week range, which has swung from $41.50 to $73.39. That kind of movement creates opportunities for investors who want to balance growth with income.
Here’s a deep dive into what makes CBU an interesting stock for dividend-focused portfolios.
Key Dividend Metrics
📈 Dividend Yield: 3.09% (Above 5-year average of 2.94%)
💰 Annual Dividend: $1.84 per share
📆 Next Dividend Date: April 10, 2025
📉 Ex-Dividend Date: March 14, 2025
🔄 Payout Ratio: 52.91% (A sustainable range)
📊 5-Year Dividend CAGR: Consistently positive
💵 Dividend Stability: Strong track record
Dividend Overview
CBU currently offers a dividend yield of 3.09%, slightly higher than its five-year average of 2.94%. That’s a solid yield for a banking stock, especially one that has shown consistency in its payments.
For those looking to grab the next dividend, the ex-dividend date is March 14, 2025, meaning investors need to hold shares before then. The next payment of $1.84 per share is set to be distributed on April 10, 2025.
One of the most reassuring aspects of CBU’s dividend is its reliability. Unlike some companies that cut dividends in tough times, CBU has built a reputation for steady payouts.
Dividend Growth and Safety
A strong dividend isn’t just about a high yield—it’s about how sustainable that payout is. CBU’s payout ratio of 52.91% is in a healthy range, meaning it’s returning just over half of its earnings to shareholders while keeping enough cash to grow the business.
The bank has maintained a measured approach to dividend increases, favoring consistency over aggressive hikes. That’s exactly what long-term investors want to see—growth that matches earnings, ensuring the dividend remains intact even during economic downturns.
One of the standout stats here is the 47.7% year-over-year earnings growth. With profits climbing at this rate, there’s plenty of room for CBU to continue rewarding investors over the long haul.
Chart Analysis
Price Action
CBU’s stock has been in an overall uptrend for most of the past year but is now showing signs of potential weakness. After peaking above $70, the stock has been sliding downward, with the most recent close at $59.53. This decline has pushed the price below the 50-day moving average, which suggests short-term momentum has turned bearish.
The 200-day moving average remains intact as a longer-term support level, sitting below the current price. If the stock continues to fall, that level could be an important area to watch for potential support.
Moving Averages
The 50-day moving average (orange line) had been trending above the 200-day moving average (blue line) for much of the rally, confirming bullish momentum. However, the recent drop in price has brought the 50-day moving average close to rolling over, signaling possible trend weakness.
A crossover of the 50-day below the 200-day—known as a death cross—could suggest a shift in momentum toward a more prolonged correction. The stock is not there yet, but the gap between these moving averages is narrowing.
Volume Activity
Trading volume has been relatively steady, with occasional spikes during key price movements. The volume profile shows higher trading activity during the run-up in late summer and fall, followed by lower volume as the stock reached its peak. More recently, there have been some larger red volume bars, indicating stronger selling pressure.
If selling volume continues to rise while the stock declines, it could confirm a broader shift in sentiment. On the other hand, if volume dries up on the decline, it may suggest a more temporary pullback rather than a prolonged downtrend.
Relative Strength Index (RSI)
The RSI indicator, shown at the bottom of the chart, has been trending downward for some time. This signals weakening momentum, with the RSI now approaching oversold levels. If RSI dips below 30, it would indicate extreme selling pressure, which can sometimes lead to a short-term bounce.
That being said, an oversold RSI alone is not enough to assume a reversal. If the downtrend in price continues, RSI can stay in oversold territory for extended periods. It will be important to watch whether RSI stabilizes or continues to decline.
Analyst Ratings
📈 In recent months, Community Financial System, Inc. (CBU) has received a mix of analyst opinions, reflecting both optimism and caution regarding its stock performance.
Upgrades
🔼 On October 28, 2024, Raymond James upgraded CBU from Market Perform to Outperform, raising the price target to $67. Analysts pointed to the company’s strong earnings growth and solid return on equity as key drivers behind this decision. The stock’s ability to maintain steady profit margins, despite economic uncertainties, was another factor that contributed to the positive outlook.
Downgrades
🔽 On May 2, 2024, Piper Sandler downgraded CBU, adjusting their rating from Neutral to Underweight, with a revised price target of $66. The downgrade was based on concerns over interest rate fluctuations and their potential impact on the bank’s lending margins. Additionally, analysts highlighted broader economic conditions that could slow down loan demand and increase credit risk.
Consensus Price Target
📊 The consensus price target among analysts currently stands at $73, indicating a potential upside from the stock’s recent levels. While some analysts see CBU’s strong fundamentals as a reason for optimism, others remain cautious about the challenges posed by fluctuating interest rates and economic headwinds.
🔍 Overall, analysts present a balanced perspective—acknowledging both the company’s financial strengths and the external risks that could influence future performance.
Earnings Report Summary
Community Financial System, Inc. (CBU) wrapped up 2024 with strong financial results, showing steady growth and resilience in a shifting economic environment. Both the fourth quarter and full-year numbers reflect a company that continues to expand its business while maintaining financial stability.
Fourth Quarter Highlights
CBU reported net income of $49.8 million for the fourth quarter, which works out to $0.94 per share. That’s a noticeable jump from the same quarter last year and also an improvement from the previous quarter. Total revenue came in at $196.3 million, up 10.9 percent year over year.
Net interest income set a new company record at $120 million, driven by higher loan balances and steady deposit growth. Noninterest revenue, which includes insurance, employee benefits, and wealth management services, also performed well, reaching $56 million, a 13.1 percent increase compared to last year.
Full Year 2024 Performance
For the full year, CBU posted net income of $182.5 million, or $3.44 per share, marking a nearly one-dollar-per-share increase over the prior year. Total revenue hit $746.3 million, a 14.4 percent increase from last year.
Net interest income continued its long-term upward trend, climbing to $449.1 million, making this the eighteenth consecutive year of growth. Noninterest revenues also rose by 10.6 percent, showing strength across the company’s diverse financial services.
Balance Sheet and Financial Strength
CBU’s loan portfolio saw steady expansion, reaching $10.43 billion, up 7.5 percent from the prior year. Deposits also grew, totaling $13.44 billion, an increase of 4.0 percent. These numbers reflect a healthy, growing customer base and strong business fundamentals.
From a financial health perspective, CBU remains in a strong position. The bank ended the year with a Tier 1 leverage ratio of 9.19 percent, which is well above regulatory requirements. This solid capital position provides flexibility and stability in case of economic uncertainty.
The latest earnings report reinforces CBU’s reputation for consistency and financial strength, positioning it well for the road ahead.
Financial Health and Stability
CBU’s balance sheet is in good shape, with $474.04 million in cash and a book value per share of $33.47. That’s a strong position, giving the company flexibility to manage debt while still paying dividends.
Speaking of debt, the bank carries $1.06 billion in total liabilities, which isn’t unusual for a financial institution. However, it’s something to watch, as excessive debt can eat into future earnings.
Profitability is another strong suit for CBU. A return on assets (ROA) of 1.14% and an ROE of 10.55% suggest that management is using capital efficiently. These numbers are well within the healthy range for a regional bank and indicate long-term stability.
Valuation and Stock Performance
At a trailing price-to-earnings (P/E) ratio of 17.31 and a forward P/E of 14.06, CBU is trading at a fair valuation. It’s neither too cheap nor too expensive, making it a reasonable pick for investors looking for stable income.
The stock’s price-to-book ratio (P/B) of 1.78 is in line with industry norms, further confirming that CBU isn’t overpriced.
Looking at recent price action, CBU has traded between $41.50 and $73.39 over the past year. The current price of $58.67 sits closer to the middle of that range. With a 50-day moving average of $63.55 and a 200-day moving average of $59.08, the stock has seen some recent pullbacks, potentially opening up an opportunity for long-term investors.
Risks and Considerations
Every investment comes with risks, and CBU is no exception. Here are a few factors that dividend investors should keep in mind:
- Interest Rate Sensitivity: As a bank, CBU’s profits depend heavily on interest rates. If rates fall, the bank’s net interest margin could take a hit, affecting earnings.
- Economic Slowdowns: A weakening economy could lead to more loan defaults, which would pressure earnings and potentially impact dividends.
- Debt Management: With $1.06 billion in total debt, CBU needs to continue balancing its liabilities while maintaining profitability.
- Stock Volatility: While not as volatile as tech stocks, CBU has had meaningful swings over the past year. Investors should be prepared for price fluctuations.
None of these risks are deal-breakers, but they’re important to consider when deciding how CBU fits into a long-term income portfolio.
Final Thoughts
CBU checks a lot of the right boxes for dividend investors. It offers a yield above its five-year average, a sustainable payout ratio, and strong earnings growth. Combined with its solid financial health, the company is well-positioned to continue rewarding shareholders.
With the stock trading near its historical averages, there’s no major urgency to jump in, but for those who prioritize steady, long-term income, CBU remains an appealing option.
Recent Comments