TrustCo Announces Increased First Quarter 2017 Earnings

Executive Snapshot:

• Continued solid financial results:

  • Key metrics for first quarter of 2017 results:
    — Net income of $10.9 million in the first quarter of 2017 compared to $10.4 million in the first quarter of 2016 and $10.8 in the fourth quarter of 2016
    — Return on average assets (ROA) of 0.91% compared to 0.89% in the first quarter of 2016
    — Return on average equity (ROE) of 10.17% compared to 9.98% in the first quarter of 2016
    — Efficiency ratio of 55.81% compared to 56.22% in the first quarter of 2016 (Non-GAAP measure; see P. 10 for definition)

• Asset quality remains solid:

  • Asset quality measures improved compared to the first quarter of 2016
  • Nonperforming assets (NPAs) fell by $6.4 million compared to March 31, 2016
  • NPAs to total assets improved to 0.61%, compared to 0.76% at March 31, 2016
  • Quarterly net chargeoffs decreased to 0.05% of average loans on an annualized basis, compared to 0.14% for the first quarter of 2016, reaching the lowest level since 2008

• Continued expansion of customer base:

  • Focus on capitalizing on opportunities presented by expanded branch network
  • Average deposits per branch grew $587 thousand to $29.2 million from March 31, 2016 to March 31, 2017
  • Average core (non-maturity) deposits were $75 million higher in the first quarter of 2017 compared to the first quarter of 2016

• Loan portfolio reaches all-time high:

  • Average loans were up $142 million for the first quarter of 2017 compared to first quarter of 2016
  • At $3.45 billion as of March 31, 2017, loans reached an all-time high

TrustCo Announces Increased First Quarter 2017 Earnings

GLENVILLE, N.Y., April 21, 2017 (GLOBE NEWSWIRE) —

TrustCo Bank Corp NY (TrustCo) (Nasdaq:TRST) today announced first quarter of 2017 net income of $10.9 million compared to $10.4 million for the first quarter of 2016, an increase of 5.2%. 

Summary

Robert J. McCormick, President and Chief Executive Officer noted, “We are pleased to be able to report an increase in earnings in the first quarter of 2017 as compared to the first quarter of 2016.  Improved revenue growth provided an encouraging start to 2017.  Our focus on traditional lending criteria and conservative balance sheet management has enabled us to produce consistent earnings, maintain strong liquidity and capital and allowed us to continue to grow our business and take advantage of changes in market and competitive conditions.  In terms of our core business, we continue to add customer relationships, which ultimately drive future growth.  We will continue to take advantage of opportunities as they are presented during the balance of 2017 and beyond.” 

TrustCo saw continued solid loan growth in the first quarter of 2017 compared to the prior year, led by an increase in residential mortgages.  Loan portfolio expansion was funded by a combination of utilizing a portion of our strong cash balances and by the growth of our deposit base.  The continued shift toward loans helped offset the margin impact from continued comparatively low yields on cash and investments, although the recent moves by the Federal Reserve to raise short term interest rates have contributed to our results and will provide a further benefit in the second quarter of 2017 and beyond.  The growth in average deposits in the first quarter of 2017 versus the prior year was led by lower cost checking and savings deposits.  TrustCo’s strong liquidity position continues to allow it to take advantage of opportunities when interest rate conditions change.

Asset quality measures improved versus March 31, 2016, with nonperforming assets (NPAs) declining $6.4 million.

Details

Average loans were up $142.5 million or 4.3% in the first quarter of 2017 over the same period in 2016.  Loan growth in the first quarter is typically slowed by weather conditions in our New York markets. Average residential loans, our primary lending focus, were up $185.2 million or 6.8% in the first quarter of 2017, over the same period in 2016.  Overall loan growth was constrained by a $13.8 million decline in average commercial loans, which have become less attractive on a risk adjusted basis, and a $28.5 million decline in average outstandings on home equity lines of credit, as well as a small decline in installment loans. Average deposits were up $74.3 million or 1.8% for the first quarter of 2017 over the same period a year earlier.  The increase in deposits came from core deposit accounts, which consist of checking, savings and money market deposits, although checking and savings were entirely responsible for the growth within core deposits.  Average core deposits increased $74.8 million from the first quarter of 2016 to the first quarter of 2017, while average time deposit balances were down slightly.  Within core, money market balances were down $23.8 million, while checking was up $86.3 million (including interest bearing and non-interest bearing balances) and savings were up $12.3 million.  Core deposits typically represent longer term customer relationships and are generally lower cost than time deposits.  The cost of interest bearing deposits declined from 0.39% in the first quarter of 2016 to 0.35% in the first quarter of 2017.  The shift out of money market balances was also beneficial, as that category is the most expensive type of core deposit.  Mr. McCormick noted that, “The year-over-year growth of our loans and core deposit base reflect the long term strategic focus of the Company.”

For the first quarter of 2017, return on average assets and return on average equity were 0.91% and 10.17%, respectively, compared to 0.89% and 9.98% for the first quarter of 2016.  Diluted earnings per share were $0.114 for the first quarter of 2017, compared to $0.109 for the first quarter of 2016.  As discussed in recent quarters, increased operating costs in response to regulatory requirements have pushed overall expense levels higher.  However, revenue growth exceeded the increase in costs in the first quarter of 2017 as compared to the first quarter of 2016.  We anticipate being able to control expense growth effectively in 2017.  Some of the costs associated with regulatory issues will be recurring, but others will diminish over time.

“While some banks have backed away from branches, a customer-friendly branch franchise continues to be the key to our long term plans.  We continue to make good progress expanding loans and deposits throughout our entire branch network.  We expect that trend to continue as the newer branches continue to mature.”

“At March 31, 2017, our average deposits per branch were $29.2 million, compared to $28.6 million a year earlier.  We have always designed our branches to be smaller and more cost effective than those built by many of our competitors.  We use open floor plans that help maximize the value of our branches.  We remain mindful that fully achieving our goals for newer branches will take time and continued work.  We believe success in growing customer relationships provides basic building blocks that will help drive profit growth for the coming years.”

Asset quality and loan loss reserve measures improved versus March 31, 2016.  Nonperforming loans (NPLs) were $26.4 million at March 31, 2017, compared to $30.4 million at March 31, 2016.  NPLs were equal to 0.77% of total loans at March 31, 2017, compared to 0.92% at March 31, 2016.  The coverage ratio, or allowance for loan losses to NPLs, was 166.7% at March 31, 2017, compared to 146.3% at March 31, 2016.  Nonperforming assets (NPAs) were $29.6 million at March 31, 2017 compared to $36.0 million at March 31, 2016.  The ratio of loan loss allowance to total loans was 1.28% as of March 31, 2017, compared to 1.34% at March 31, 2016 and reflects both the improvement in asset quality and economic conditions in our lending areas.  The allowance for loan losses was $44.0 million at March 31, 2017 compared to $44.4 million at March 31, 2016.  Net chargeoffs for the first quarter of 2017 decreased versus the first quarter of 2016, falling to $442 thousand from $1.2 million in the year earlier period.  The annualized net chargeoff ratio was 0.05% for the first quarter of 2017, compared to 0.14% in the first quarter of 2016 and was at the lowest level since the first quarter of 2008.  The provision for loan losses was $600 thousand for the first quarter of 2017, compared to $800 thousand in the first quarter of 2016.

The net interest margin for the first quarter of 2017 was 3.14%, up one basis point versus both the fourth quarter of 2016 and the first quarter of 2016. 

At March 31, 2017 the equity to asset ratio was 8.98%, compared to 8.88% at March 31, 2016.  Book value per share at March 31, 2017 was $4.57 compared to $4.44 a year earlier.

TrustCo Bank Corp NY is a $4.9 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 144 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at March 31, 2017.

In addition, the Bank’s Financial Services Department offers a full range of investment services, retirement planning and trust and estate administration services. The common shares of TrustCo are traded on the NASDAQ Global Select Market under the symbol TRST.

A conference call to discuss first quarter 2017 results will be held at 9:00 a.m. Eastern Time on April 24, 2017.  Those wishing to participate in the call may dial toll-free 1-888-339-0764.  International callers must dial 1-412-902-4195.   Please ask to be joined into the TrustCo Bank Corp NY / TRST call.  A replay of the call will be available for thirty days by dialing 1-877-344-7529 (1-412-317-0088 for international callers), Conference Number 10105301. The call will also be audio webcast at: http://services.choruscall.com/links/trst170424.html, and will be available for one year. 

Safe Harbor Statement 
All statements in this news release that are not historical are forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended.  Forward-looking statements can be identified by words such as “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding our expectations for our performance during 2017 and for the growth of loans and deposits throughout our branch network, our ability to capitalize on economic changes in the areas in which we operate and the extent to which higher expenses to fulfill operating and regulatory requirements recur or diminish over time.  Such forward-looking statements are subject to factors that could cause actual results to differ materially for TrustCo from those discussed. TrustCo wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The following important factors, among others, in some cases have affected and in the future could affect TrustCo’s actual results and could cause TrustCo’s actual financial performance to differ materially from that expressed in any forward-looking statement:  our ability to continue to originate a significant volume of one-to-four family mortgage loans in our market areas; our ability to continue to maintain noninterest expense and other overhead costs at reasonable levels relative to income; our ability to comply with the supervisory agreement entered into with Trustco Bank’s regulator and potential regulatory actions if we fail to comply; restrictions or conditions imposed by our regulators on our operations that may make it more difficult for us to achieve our goals; the future earnings and capital levels of Trustco Bank and the continued ability of Trustco Bank under regulatory rules and the supervisory agreement to distribute capital to TrustCo, which could affect our ability to pay dividends; results of supervisory monitoring or examinations of Trustco Bank and TrustCo by our respective regulators; our ability to make accurate assumptions and judgments regarding the credit risks associated with lending and investing activities; the effect of changes in financial services laws and regulations and the impact of other governmental initiatives affecting the financial services industry; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board, inflation, interest rates, market and monetary fluctuations; adverse conditions on the securities markets that lead to impairment in the value of securities in our investment portfolio; changes in law and policy accompanying the new presidential administration and uncertainty or speculation pending the enactment of such changes; the perceived overall value of our products and services by users, including in comparison to competitors’ products and services and the willingness of current and prospective customers to substitute competitors’ products and services for our products and services; ; changes in consumer spending, borrowing and saving habits; technological changes and electronic, cyber, and physical security breaches; real estate and collateral values; changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the FASB or PCAOB; changes in local market areas and general business and economic trends, as well as changes in consumer spending and saving habits; our success at managing the risks involved in the foregoing and managing our business; and other risks and uncertainties under the heading “Risk Factors” in our most recent annual report on Form 10-K and, if any, in our subsequent quarterly reports on Form 10-Q or other securities filings.

TRUSTCO BANK CORP NY              
GLENVILLE, NY              
               
FINANCIAL HIGHLIGHTS              
               
(dollars in thousands, except per share data)              
(Unaudited)              
     Three Months Ended      
    03/31/17 12/31/16 03/31/16      
Summary of operations              
  Net interest income (TE) $   37,413     36,921     36,196        
  Provision for loan losses     600     600     800        
  Noninterest income, excluding net gain on securities transactions     4,727     4,512     4,572        
  Noninterest expense     24,019     23,365     23,439        
  Net income     10,947     10,798     10,409        
               
Per common share              
  Net income per share:              
  – Basic $   0.114     0.113     0.109        
  – Diluted     0.114     0.113     0.109        
  Cash dividends     0.066     0.066     0.066        
  Book value at period end     4.57     4.52     4.44        
  Market price at period end     7.85     8.75     6.06        
               
At period end              
  Full time equivalent employees   802   808   784        
  Full service banking offices   144   145   145        
               
Performance ratios              
  Return on average assets   0.91 % 0.89   0.89        
  Return on average equity   10.17   9.87   9.98        
  Efficiency (1)   55.81   54.65   56.22        
  Net interest spread (TE)   3.08   3.07   3.07        
  Net interest margin (TE)   3.14   3.13   3.13        
  Dividend payout ratio   57.47   58.20   60.13        
               
Capital ratio at period end              
  Consolidated equity to assets   8.98 % 8.89   8.88        
  Consolidated tangible equity to tangible assets (2)   8.97 % 8.88   8.87        
               
Asset quality analysis at period end              
  Nonperforming loans to total loans   0.77   0.73   0.92        
  Nonperforming assets to total assets   0.61   0.60   0.76        
  Allowance for loan losses to total loans   1.28   1.28   1.34        
  Coverage ratio (3)   1.7 x 1.8   1.5        
               
               
(1)  Non-GAAP measure; calculated as noninterest expense (excluding ORE income/expense)          
divided by taxable equivalent net interest income plus noninterest income.              
(2)  Non-GAAP measure; calculated as total equity less $553 of intangible assets divided by          
total assets less $553 of intangible assets.              
(3)  Calculated as allowance for loan losses divided by total nonperforming loans.              
               
               
TE = Taxable equivalent.              
               
               
CONSOLIDATED STATEMENTS OF INCOME              
               
(dollars in thousands, except per share data)              
(Unaudited)              
    Three Months Ended    
    3/31/2017 12/31/2016 9/30/2016 6/30/2016 3/31/2016  
Interest and dividend income:               
Interest and fees on loans $   36,044     36,251     36,171     35,652     35,605    
Interest and dividends on securities available for sale:               
 U. S. government sponsored enterprises     595     422     408     404     255    
 State and political subdivisions      12     12     13     13     14    
 Mortgage-backed securities and collateralized mortgage obligations-residential     1,958     1,849     1,829     2,169     2,116    
 Corporate bonds     151     149     97     –     –    
 Small Business Administration-guaranteed participation securities     415     430     445     450     476    
 Mortgage-backed securities and collateralized mortgage obligations-commercial     23     23     36     38     36    
 Other securities     4     4     4     4     4    
  Total interest and dividends on securities available for sale     3,158     2,889     2,832     3,078     2,901    
               
Interest on held to maturity securities:               
 Mortgage-backed securities and collateralized mortgage obligations-residential     316     331     347     374     402    
 Corporate bonds     154     153     156     154     154    
  Total interest on held to maturity securities     470     484     503     528     556    
               
 Federal Reserve Bank and Federal Home Loan Bank stock     134     133     131     118     120    
               
Interest on federal funds sold and other short-term investments     1,246     865     866     832     844    
  Total interest income     41,052     40,622     40,503     40,208     40,026    
               
Interest expense:               
 Interest on deposits:               
 Interest-bearing checking     124     123     120     116     114    
 Savings     430     436     504     604     604    
 Money market deposit accounts     466     459     463     467     496    
 Time deposits     2,283     2,406     2,468     2,460     2,373    
 Interest on short-term borrowings     349     291     281     262     257    
  Total interest expense     3,652     3,715     3,836     3,909     3,844    
               
  Net interest income     37,400     36,907     36,667     36,299     36,182    
               
Provision for loan losses     600     600     750     800     800    
Net interest income after provision for loan losses      36,800     36,307     35,917     35,499     35,382    
               
Noninterest income:              
 Trustco Financial Services income     1,858     1,422     1,347     1,512     1,605    
 Fees for services to customers     2,637     2,795     2,664     2,737     2,661    
 Net gain on securities transactions     –     –     –     668     –    
 Other     232     295     718     282     306    
  Total noninterest income     4,727     4,512     4,729     5,199     4,572    
               
Noninterest expenses:               
 Salaries and employee benefits     10,210     9,576     8,995     8,934     9,003    
 Net occupancy expense     4,109     4,185     3,887     3,918     4,088    
 Equipment expense     1,556     1,370     1,596     1,840     1,514    
 Professional services     1,928     1,997     1,959     2,098     2,146    
 Outsourced services     1,500     1,775     1,465     1,425     1,551    
 Advertising expense     713     727     489     570     729    
 FDIC and other insurance     1,047     901     1,127     1,949     1,990    
 Other real estate expense, net     499     721     895     423     519    
 Other     2,457     2,113     2,636     2,817     1,899    
  Total noninterest expenses     24,019     23,365     23,049     23,974     23,439    
               
Income before taxes     17,508     17,454     17,597     16,724     16,515    
Income taxes     6,561     6,656     6,667     6,260     6,106    
               
Net income $   10,947     10,798     10,930     10,464     10,409    
Net income per common share:               
  – Basic $ 0.114   0.113   0.114   0.110   0.109    
               
  – Diluted   0.114   0.113   0.114   0.109   0.109    
               
Average basic shares (in thousands)     95,879     95,732     95,603     95,487     95,365    
Average diluted shares (in thousands)     95,987     95,877     95,722     95,580     95,412    
               
Note:  Taxable equivalent net interest income $   37,413     36,921     36,681     36,311     36,196    
               
               
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION              
               
(dollars in thousands)              
(Unaudited)              
               
               
    3/31/2017 12/31/2016 9/30/2016 6/30/2016 3/31/2016  
  ASSETS:              
               
 Cash and due from banks $ 41,352   48,719   42,296   39,787   37,373    
 Federal funds sold and other short term investments     641,839   658,555   622,132   718,609   722,805    
  Total cash and cash equivalents     683,191   707,274   664,428   758,396   760,178    
             
 Securities available for sale:            
  U. S. government sponsored enterprises     162,341   117,266   116,327   116,595   66,920    
  States and political subdivisions     887   886   970   974   974    
  Mortgage-backed securities and collateralized mortgage obligations-residential     357,683   372,308   400,575   404,138   422,189    
  Small Business Administration-guaranteed participation securities   75,429   78,499   84,687   87,740   89,053    
  Mortgage-backed securities and collateralized mortgage obligations-commercial     9,923   10,011   10,233   10,374   10,307    
  Corporate bonds   40,612     40,705     41,025     –      –     
  Other securities     685   685   685   685   685    
   Total securities available for sale     647,560   620,360   654,502   620,506   590,128    
               
 Held to maturity securities:              
  Mortgage-backed securities and collateralized mortgage obligations-residential   33,276   35,500   38,044   40,702   43,595    
  Corporate bonds   9,994   9,990   9,986   9,982   9,979    
   Total held to maturity securities   43,270   45,490   48,030   50,684   53,574    
               
 Federal Reserve Bank and Federal Home Loan Bank stock   9,579   9,579   9,579   9,579   9,480    
             
 Loans:            
  Commercial     184,451   191,194   189,795   195,698   198,765    
  Residential mortgage loans     2,929,928   2,895,733   2,845,876   2,786,951   2,737,784    
  Home equity line of credit     326,280   334,841   343,445   352,069   356,163    
  Installment loans     8,277   8,818   8,515   8,476   8,667    
 Loans, net of deferred net costs     3,448,936   3,430,586   3,387,631   3,343,194   3,301,379    
 Less:            
  Allowance for loan losses     44,048   43,890   43,950   44,064   44,398    
  Net loans     3,404,888   3,386,696   3,343,681   3,299,130   3,256,981    
               
 Bank premises and equipment, net     35,175   35,466   36,110   36,793   37,360    
 Other assets     63,080   63,941   56,519   55,825   55,561    
             
  Total assets $ 4,886,743   4,868,806   4,812,849   4,830,913   4,763,262    
             
  LIABILITIES:            
 Deposits:            
  Demand $ 373,930   377,755   380,090   376,669   359,060    
  Interest-bearing checking     838,936   815,534   785,118   766,322   746,562    
  Savings accounts     1,287,802   1,271,449   1,277,734   1,282,006   1,272,394    
  Money market deposit accounts     583,909   571,962   566,097   577,063   595,585    
  Time deposits     1,113,892   1,159,463   1,159,199   1,178,567   1,168,887    
   Total deposits     4,198,469   4,196,163   4,168,238   4,180,627   4,142,488    
             
 Short-term borrowings     220,946   209,406   179,204   190,542   169,528    
 Accrued expenses and other liabilities     28,628   30,551   29,799   29,479   28,221    
             
  Total liabilities     4,448,043   4,436,120   4,377,241   4,400,648   4,340,237    
             
  SHAREHOLDERS’ EQUITY:            
 Capital stock     99,493   99,214   99,121   99,071   98,973    
 Surplus     172,628   171,425   171,093   171,174   171,113    
 Undivided profits     206,173   201,517   197,013   192,356   188,159    
 Accumulated other comprehensive (loss) income, net of tax     (5,568 ) (6,251 ) 2,328   2,395   73    
 Treasury stock at cost   (34,026 ) (33,219 ) (33,947 ) (34,731 ) (35,293 )  
             
  Total shareholders’ equity   438,700   432,686   435,608   430,265   423,025    
               
  Total liabilities and shareholders’ equity $ 4,886,743   4,868,806   4,812,849   4,830,913   4,763,262    
               
Outstanding shares (in thousands)     95,917     95,780     95,614     95,493     95,369    
               

 

NONPERFORMING ASSETS              
               
(dollars in thousands)              
(Unaudited)              
               
Nonperforming Assets              
    03/31/17 12/31/16 09/30/16 06/30/16 03/31/16  
New York and other states*              
Loans in nonaccrual status:              
  Commercial $   1,858     1,843     2,366     2,690     2,762    
  Real estate mortgage – 1 to 4 family     22,772     21,198     21,678     23,559     25,669    
  Installment     41     48     70     49     74    
Total non-accrual loans     24,671     23,089     24,114     26,298     28,505    
Other nonperforming real estate mortgages – 1 to 4 family     41     42     44     45     47    
Total nonperforming loans     24,712     23,131     24,158     26,343     28,552    
Other real estate owned     3,191     4,268     4,768     4,602     5,208    
Total nonperforming assets $   27,903     27,399     28,926     30,945     33,760    
               
Florida              
Loans in nonaccrual status:              
  Commercial $   –      –      –      –      –     
  Real estate mortgage – 1 to 4 family     1,712     1,929     1,844     1,900     1,802    
  Installment     –      –      –      –     –    
Total non-accrual loans     1,712     1,929     1,844     1,900     1,802    
Other nonperforming real estate mortgages – 1 to 4 family     –      –      –      –     –    
Total nonperforming loans     1,712     1,929     1,844     1,900     1,802    
Other real estate owned     –      –      –      –     476    
Total nonperforming assets $   1,712     1,929     1,844     1,900     2,278    
               
Total              
Loans in nonaccrual status:              
  Commercial $   1,858     1,843     2,366     2,690     2,762    
  Real estate mortgage – 1 to 4 family     24,484     23,127     23,522     25,459     27,471    
  Installment     41     48     70     49     74    
Total non-accrual loans     26,383     25,018     25,958     28,198     30,307    
Other nonperforming real estate mortgages – 1 to 4 family     41     42     44     45     47    
Total nonperforming loans     26,424     25,060     26,002     28,243     30,354    
Other real estate owned     3,191     4,268     4,768     4,602     5,684    
Total nonperforming assets $   29,615     29,328     30,770     32,845     36,038    
               
               
Quarterly Net Chargeoffs (Recoveries)              
    03/31/17 12/31/16 09/30/16 06/30/16 03/31/16  
New York and other states*              
Commercial $   64     (56 )   353     67     224    
Real estate mortgage – 1 to 4 family     261     619     471     973     771    
Installment     31     55     37     77     70    
  Total net chargeoffs $   356     618     861     1,117     1,065    
               
Florida              
Commercial $   –      –      –      –      –     
Real estate mortgage – 1 to 4 family     84     23     –      16     83    
Installment     2     19     3     1     16    
  Total net chargeoffs $   86     42     3     17     99    
               
Total              
Commercial $   64     (56 )   353     67     224    
Real estate mortgage – 1 to 4 family     345     642     471     989     854    
Installment     33     74     40     78     86    
  Total net chargeoffs $   442     660     864     1,134     1,164    
               
               
Asset Quality Ratios              
    03/31/17 12/31/16 09/30/16 06/30/16 03/31/16  
               
Total nonperforming loans(1) $   26,424     25,060     26,002     28,243     30,354    
Total nonperforming assets(1)     29,615     29,328     30,770     32,845     36,038    
Total net chargeoffs(2)     442     660     864     1,134     1,164    
               
Allowance for loan losses(1)     44,048   43,890   43,950   44,064   44,398    
               
Nonperforming loans to total loans   0.77 % 0.73 % 0.77 % 0.84 % 0.92 %  
Nonperforming assets to total assets   0.61 % 0.60 % 0.64 % 0.68 % 0.76 %  
Allowance for loan losses to total loans   1.28 % 1.28 % 1.30 % 1.32 % 1.34 %  
Coverage ratio(1)   166.7 % 175.1 % 169.0 % 156.0 % 146.3 %  
Annualized net chargeoffs to average loans(2)   0.05 % 0.08 % 0.10 % 0.14 % 0.14 %  
Allowance for loan losses to annualized net chargeoffs(2)   24.9 x 16.6 x 12.7 x 9.7 x 9.5 x  
               
* Includes New York, New Jersey, Vermont and Massachusetts.              
(1)  At period-end              
(2)  For the period ended              
               

 

DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY-    
INTEREST RATES AND INTEREST DIFFERENTIAL    
                           
(dollars in thousands)   Three months ended     Three months ended    
(Unaudited)   March 31, 2017     March 31, 2016    
    Average   Interest Average     Average   Interest Average    
    Balance     Rate     Balance     Rate    
                           
Assets                          
                           
Securities available for sale:                          
U. S. government sponsored enterprises $ 142,495     595   1.67 % $ 75,031     255   1.36 %  
Mortgage backed securities and                          
  collateralized mortgage obligations-residential   367,956     1,958   2.13     412,499     2,116   2.05    
State and political subdivisions   873     19   8.71     1,114     22   7.90    
Corporate bonds   41,580     151   1.45              
Small Business Administration-guaranteed participation securities   78,591     415   2.11     90,611     476   2.10    
Mortgage backed securities and                          
  collateralized mortgage obligations-commercial   10,089     23   0.91     10,394     36   1.40    
Other   685     4   2.34     685     4   2.34    
                           
  Total securities available for sale   642,269     3,165   1.97     590,334     2,909   1.97    
                           
Federal funds sold and other                          
 short-term Investments   641,126     1,246   0.78     675,586     844   0.50    
                           
Held to maturity securities:                          
Corporate bonds   9,992     154   6.16     9,977     154   6.17    
Mortgage backed securities and                          
  collateralized mortgage obligations-residential   34,303     316   3.68     45,112     402   3.56    
                           
  Total held to maturity securities   44,295     470   4.24     55,089     556   4.03    
                           
Federal Reserve Bank and Federal Home Loan Bank stock   9,579     134   5.60     9,480     120   5.06    
                           
Commercial loans   187,590     2,429   5.18     201,367     2,617   5.20    
Residential mortgage loans   2,911,987     30,367   4.17     2,726,811     29,622   4.35    
Home equity lines of credit   330,338     3,085   3.74     358,817     3,179   3.56    
Installment loans   8,228     169   8.22     8,659     193   8.94    
                           
Loans, net of unearned income   3,438,143     36,050   4.19     3,295,654     35,611   4.33    
                           
  Total interest earning assets   4,775,412     41,065   3.44     4,626,143     40,040   3.47    
                           
Allowance for loan losses   (44,236 )           (45,271 )          
Cash & non-interest earning assets   130,186             135,532            
                           
                           
Total assets $ 4,861,362           $ 4,716,404            
                           
                           
Liabilities and shareholders’ equity                          
                           
Deposits:                          
Interest bearing checking accounts $ 809,039     124   0.06 % $ 735,098     114   0.06 %  
Money market accounts   580,006     466   0.32     603,774     496   0.33    
Savings   1,274,757     430   0.13     1,262,467     604   0.19    
Time deposits   1,133,942     2,283   0.81     1,134,459     2,373   0.84    
                           
  Total interest bearing deposits   3,797,744     3,303   0.35     3,735,798     3,587   0.39    
Short-term borrowings   229,719     349   0.61     176,119     257   0.59    
                           
  Total interest bearing liabilities   4,027,463     3,652   0.36     3,911,917     3,844   0.40    
                           
Demand deposits   370,552             358,224            
Other liabilities   26,781             26,917            
Shareholders’ equity   436,566             419,346            
                           
Total liabilities and shareholders’ equity $ 4,861,362           $ 4,716,404            
                           
Net interest income, tax equivalent       37,413             36,196        
                           
Net interest spread         3.08 %         3.07 %  
                           
Net interest margin (net interest income                          
to total interest earning assets)         3.14 %         3.13 %  
                           
Tax equivalent adjustment       (13 )           (14 )      
                           
                           
  Net interest income        37,400             36,182        
                               

Non-GAAP Financial Measures Reconciliation

Tangible equity as a percentage of tangible assets at period end is a non-GAAP financial measure derived from GAAP-based amounts. We calculate tangible equity and tangible assets by excluding the balance of intangible assets from shareholders’ equity and total assets, respectively. We calculate tangible equity as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end. We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios. 

The efficiency ratio is a non-GAAP measure of expense control relative to revenue from net interest income and fee income.  We calculate the efficiency ratio by dividing total noninterest expenses as determined under GAAP, but excluding other real estate expense, net, by net interest income (fully taxable equivalent) and total noninterest income as determined under GAAP, but excluding net gains on the sale of nonperforming loans and securities from this calculation.  We believe that this provides a reasonable measure of primary banking expenses relative to primary banking revenue. 

We believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our financial results. Our management internally assesses our performance based, in part, on these measures.  However, these non-GAAP financial measures are supplemental and not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these measures, this presentation may not be comparable to other similarly titled measures reported by other companies. A reconciliation of the non-GAAP measures of tangible common equity, tangible book value per share, efficiency ratio, net income and net income per share to the underlying GAAP numbers is set forth below.

NON-GAAP FINANCIAL MEASURES RECONCILIATION            
             
(dollars in thousands, except per share amounts)            
(Unaudited)            
    03/31/17 12/31/16 03/31/16    
Tangible Equity to Tangible Assets            
Total Assets   4,886,743   4,868,806   4,763,262      
Less: Intangible assets     553     553     553      
  Tangible assets     4,886,190     4,868,253     4,762,709      
             
Equity $   438,700     432,686     423,025      
Less: Intangible assets     553     553     553      
  Tangible equity     438,147     432,133     422,472      
Tangible Equity to Tangible Assets   8.97 % 8.88 % 8.87 %    
Equity to Assets   8.98 % 8.89 % 8.88 %    
             
    3 Months Ended    
Efficiency Ratio   03/31/17 12/31/16 03/31/16    
             
Net interest income $   37,400     36,907     36,182      
Taxable equivalent adjustment     13     14     14      
Net interest income (fully taxable equivalent)     37,413     36,921     36,196      
Non-interest income     4,727     4,512     4,572      
  Revenue used for efficiency ratio     42,140     41,433     40,768      
             
Total noninterest expense     24,019     23,365     23,439      
Less:  Other real estate expense, net     499     721     519      
  Expense used for efficiency ratio     23,520     22,644     22,920      
             
Efficiency Ratio   55.81 % 54.65 % 56.22 %    

 

CONTACT: Contact:  
Kevin T. Timmons
Vice President/Treasurer
(518) 381-3607