Community Bank to acquire seven Santander branches in Allentown

SYRACUSE, N.Y. - Community Bank, N.A., a subsidiary of Community Financial System, Inc. (NYSE:CBU), announced Wednesday it has entered into an agreement to acquire seven branch locations from Santander Bank in the Allentown, Pennsylvania area. The $2.97 billion market cap financial institution, which currently trades at a P/E ratio of 16x and offers a 3.27% dividend yield, has shown consistent growth with revenue increasing 7.37% over the last twelve months. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value assessment.

The transaction includes approximately $600 million in deposits and $33 million in branch-related loans, along with wealth management relationships. Community Bank will pay an 8% deposit premium, estimated at $48 million in cash consideration. InvestingPro’s analysis shows the company maintains strong financial health metrics, with 5 analysts recently revising their earnings expectations upward for the upcoming period.

The acquisition is expected to close during the fourth quarter of 2025, subject to regulatory approval. All branches will remain open and employees will be offered continued employment.

This move will expand Community Bank’s presence in the Greater Lehigh Valley to 12 total retail locations, positioning it among the top five banks in the market. The company stated the transaction is expected to be slightly accretive to earnings.

"The transaction accelerates Community Bank’s de novo expansion in the Greater Lehigh Valley and complements its existing commercial and consumer lending presence in the market," according to the press release statement.

Lazard Frères & Co served as financial advisor and Luse Gorman, PC as legal advisor to Community Financial System in the transaction. Ambassador Financial Group also assisted with the expansion.

Community Financial System operates approximately 200 customer facilities across Upstate New York, Northeastern Pennsylvania, Vermont and Western Massachusetts, with over $16 billion in assets. The company has maintained dividend payments for 42 consecutive years, with 27 years of consecutive dividend increases, demonstrating its commitment to shareholder returns. For detailed financial analysis and additional insights, investors can access the comprehensive research report available on InvestingPro.

In other recent news, Community Bank System Inc. reported its financial results for the first quarter of 2025, showcasing a mixed performance. The company exceeded earnings expectations with a GAAP earnings per share (EPS) of $0.93, surpassing the forecast of $0.91. However, revenue slightly missed projections, coming in at $196.2 million compared to the anticipated $197.1 million. Despite the revenue shortfall, the company experienced a 10.6% increase in revenue year-over-year, and net interest income rose by 12% to $120.2 million.

Community Bank System continues to expand its branch network and maintain a strong liquidity position, with a robust $5.9 billion in readily available liquidity at the end of the first quarter. Analysts from Piper Sandler and Raymond James discussed the company’s performance during the earnings call, noting some challenges in the commercial and auto lending sectors due to competitive pressures. The company also announced the retirement of Joe Suterres, its long-serving CFO, and welcomed Mariah Lohs as the new Chief Financial Officer.

Looking forward, Community Bank System projects mid-single-digit growth in its fee income businesses and anticipates net interest margin expansion of 2-7 basis points per quarter. The company remains cautious due to economic uncertainties, which could impact future performance.

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