TrustCo Announces 15% Increase in Third Quarter 2017 Net Income

Executive Snapshot:

  • Continued solid financial results:
    • Key metrics for third quarter of 2017 results:
      • Net income of $12.6 million in the third quarter of 2017, up 15.2% compared to $10.9 million in the third quarter of 2016
      • Return on average assets (ROA) of 1.02% compared to 0.90% in the third quarter of 2016
      • Return on average equity (ROE) of 11.06% compared to 10.05% in the third quarter of 2016
      • Efficiency ratio of 52.79% compared to 54.11% in the third quarter of 2016 (Non-GAAP measure; see P. 15 for definition)
         
  • Asset quality remains solid:
    • Nonperforming assets (NPAs) fell by $3.3 million compared to September 30, 2016
    • NPAs to total assets improved to 0.56%, compared to 0.64% at September 30, 2016
    • Quarterly net chargeoffs were equal to 0.07% of average loans on an annualized basis, compared to 0.10% for the third quarter of 2016
       
  • Continued expansion of customer base:
    • Focus on capitalizing on opportunities presented by expanded branch network
    • Average deposits per branch grew $180 thousand to $28.9 million from September 30, 2016 to September 30, 2017
    • Average core (non-maturity) deposits were $89.8million higher in the third quarter of 2017 compared to the third quarter of 2016, an increase of 3.0%.
       
  • Loan portfolio reaches all-time high:
    • Average loans were up $171 million for the third quarter of 2017 compared to third quarter of 2016
    • At $3.58 billion as of September 30, 2017, loans reached an all-time high

TrustCo Announces 15% Increase in Third Quarter 2017 Net Income

GLENVILLE, N.Y., Oct. 23, 2017 (GLOBE NEWSWIRE) — TrustCo Bank Corp NY (TrustCo) (Nasdaq:TRST) today announced third quarter of 2017 net income of $12.6 million compared to $10.9 million for the third quarter of 2016, an increase of 15.2%. 

Summary

Robert J. McCormick, President and Chief Executive Officer noted, “We are pleased to be able to report a 15% increase in net income in the third quarter of 2017 as compared to the third quarter of 2016.  Solid revenue growth and expense control combined to produce a solid quarter, building on an encouraging first half of 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 third 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 cash flow from investments.  The continued shift toward loans helped offset the margin impact from continued comparatively low yields on cash and investments.  The Federal Reserve decision to begin to raise the target Federal Funds rate has contributed to our results during 2017 as our cash position immediately repriced upward, and is likely to continue to do so in 2018 to the extent there are additional rate increases.  While total average deposits were roughly flat in the third quarter of 2017 versus the prior year, core deposits were up $89.8 million over that time frame, contributing to a decline in our cost of funds.   The gain in core deposits was led by demand deposits and low cost interest bearing checking deposits.  TrustCo’s strong liquidity position continues to allow it to take advantage of opportunities as they arise.

Asset quality measures improved versus September 30, 2016, with nonperforming assets (NPAs) declining $3.3 million.

Details

Average loans were up $171.0 million or 5.1% in the third quarter of 2017 over the same period in 2016. Average residential loans, our primary lending focus, were up $216.4 million or 7.7% in the third quarter of 2017, over the same period in 2016.  Overall loan growth was constrained by an $11.2 million decline in average commercial loans, which have become less attractive on a risk adjusted basis, and a $33.9 million decline in average outstandings on home equity lines of credit, as well as a small decline in installment loans. Average deposits were down $8.3 million or 0.2% for the third quarter of 2017 over the same period a year earlier.  The decrease in deposits was the result of a $98.0 million decline in average time deposits as the company focused on less costly non-maturity deposits.  Excluding time deposits, core deposit accounts, which consist of checking, savings and money market deposits, were up $89.8 million from the third quarter of 2016 to the third quarter of 2017.  Within core, money market balances were up $835 thousand, checking balances were up $93.2 million (including interest bearing and non-interest bearing balances) and savings were down $4.2 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 0.37% in the third quarter of 2016 to 0.34% in the third quarter of 2017.  The cost of core deposits, including demand, declined from 0.14% to 0.13% over this same time frame.  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 third quarter of 2017, return on average assets and return on average equity were 1.02% and 11.06%, respectively, compared to 0.90% and 10.05% for the third quarter of 2016.  Diluted earnings per share were $0.131 for the third quarter of 2017, compared to $0.114 for the third quarter of 2016.  As previously discussed, some operating costs remain at elevated levels in response to regulatory requirements, however overall expense control remains a key area of focus.  Total operating expenses increased by $477 thousand in the third quarter of 2017 as compared to the third quarter of 2016, with increases in compensation and several other categories partly offset by declines in ORE costs and several other categories.  The modest increase in expenses was more than offset by a $2.6 million increase in revenue (net interest income plus non-interest income), which coupled with a slightly lower effective tax rate resulted in the bottom line improvement noted. 

“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 September 30, 2017, our average deposits per branch were $28.9 million, compared to $28.7 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 were generally consistent with June 30, 2017 metrics and generally improved versus September 30, 2016.  Nonperforming loans (NPLs) were $24.6 million at September 30, 2017, compared to $26.0 million at September 30, 2016.  NPLs were equal to 0.69% of total loans at September 30, 2017, compared to 0.77% at September 30, 2016.  The coverage ratio, or allowance for loan losses to NPLs, was 179.3% at September 30, 2017, compared to 169.0% at September 30, 2016.  Nonperforming assets (NPAs) were $27.5 million at September 30, 2017 compared to $30.8 million at September 30, 2016.  The ratio of loan loss allowance to total loans was 1.23% as of September 30, 2017, compared to 1.30% at September 30, 2016 and reflects both the improvement in asset quality and economic conditions in our lending areas.  The allowance for loan losses was $44.1 million at September 30, 2017 compared to $44.0 million at September 30, 2016.  The provision for loan losses was $550 thousand for the third quarter of 2017, compared to $750 thousand in the third quarter of 2016.  Net chargeoffs for the third quarter of 2017 decreased versus the third quarter of 2016, falling to $630 thousand from $864 thousand in the year earlier period.  The annualized net chargeoff ratio was 0.07% for the third quarter of 2017, compared to 0.10% in the third quarter of 2016.  

The net interest margin for the third quarter of 2017 was 3.26%, up 17 basis points versus the third quarter of 2016, as increases in short term interest rates led to significantly higher earnings on cash, while slightly better returns were also achieved in the investment portfolio.  Loan yields did decline, but that was more than offset by higher volumes in terms of income.  During the same period, the cost of interest bearing liabilities declined, reflecting TrustCo’s strong funding base.

For the first nine months of 2017, net income was $35.8 million, up 12.5% as compared to $31.8 million in the first nine months of 2016, or $0.372 and $0.333, respectively, per diluted share. 

At September 30, 2017 the equity to asset ratio was 9.34%, compared to 9.05% at September 30, 2016.  Book value per share at September 30, 2017 was $4.73 compared to $4.55 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 September 30, 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 third quarter 2017 results will be held at 9:00 a.m. Eastern Time on October 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 10113238. The call will also be audio webcast at: http://services.choruscall.com/links/trst171024.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, the impact of Federal Reserve actions regarding interest rates and 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.

Contact: 

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

 

               
TRUSTCO BANK CORP NY              
GLENVILLE, NY              
               
FINANCIAL HIGHLIGHTS              
               
(dollars in thousands, except per share data)              
(Unaudited)              
     Three Months Ended      
    09/30/17 06/30/17 09/30/16      
Summary of operations              
  Net interest income (TE) $   39,190     38,553     36,681        
  Provision for loan losses     550     550     750        
  Net gain on securities transactions     –      –      –         
  Noninterest income, excluding net gain on securities transactions     4,854     4,504     4,729        
  Noninterest expense     23,526     22,913     23,049        
  Net income     12,596     12,240     10,930        
               
Per common share              
  Net income per share:              
    – Basic $   0.131     0.127     0.114        
    – Diluted     0.131     0.127     0.114        
  Cash dividends     0.066     0.066     0.066        
  Book value at period end     4.73     4.66     4.55        
  Market price at period end     8.90     7.75     7.09        
               
At period end              
  Full time equivalent employees   815   813   790        
  Full service banking offices   144   144   145        
               
Performance ratios              
  Return on average assets   1.02 % 1.00   0.90        
  Return on average equity   11.06   11.05   10.05        
  Efficiency (1)   52.79   53.33   54.11        
  Net interest spread (TE)   3.21   3.15   3.03        
  Net interest margin (TE)   3.26   3.21   3.09        
  Dividend payout ratio   50.07   51.48   57.40        
               
Capital ratio at period end              
  Consolidated equity to assets   9.34 % 9.09   9.05        
  Consolidated tangible equity to tangible assets (1)   9.33 % 9.08   9.04        
               
Asset quality analysis at period end              
  Nonperforming loans to total loans   0.69   0.70   0.77        
  Nonperforming assets to total assets   0.56   0.57   0.64        
  Allowance for loan losses to total loans   1.23   1.26   1.30        
  Coverage ratio (3)   1.8x   1.8   1.6        
               
               
(1)  Non-GAAP measure; please refer to Non-GAAP disclosures on Page 14 .              
(2)  Calculated as allowance for loan losses divided by total nonperforming loans.              
               
TE = Taxable equivalent.              
               
               
               
FINANCIAL HIGHLIGHTS, Continued              
               
(dollars in thousands, except per share data)              
(Unaudited)              
    Nine Months Ended        
    09/30/17 09/30/16        
Summary of operations              
  Net interest income (TE) $   115,152     109,188          
  Provision for loan losses     1,700     2,350          
  Net gain on securities transactions     –      668          
  Noninterest income, excluding net gain on securities transactions     14,085     13,832          
  Noninterest expense     70,458     70,462          
  Net income     35,783     31,803          
               
Per common share              
  Net income per share:              
    – Basic $   0.373     0.333          
    – Diluted     0.372     0.333          
  Cash dividends     0.197     0.197          
  Book value at period end     4.73     4.55          
  Market price at period end     8.90     7.09          
               
Performance ratios              
  Return on average assets   0.98 % 0.89          
  Return on average equity   10.77   9.97          
  Efficiency (1)   53.96   56.01          
  Net interest spread (TE)   3.14   3.04          
  Net interest margin (TE)   3.20   3.10          
  Dividend payout ratio   52.82   59.11          
               
               
(1)  Non-GAAP measure; please refer to Non-GAAP disclosures on Page 14 .              
               
TE = Taxable equivalent.              
               
               
               
CONSOLIDATED STATEMENTS OF INCOME              
               
(dollars in thousands, except per share data)              
(Unaudited)              
    Three Months Ended  
    9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016  
Interest and dividend income:               
Interest and fees on loans $   37,513     36,662     36,044     36,251     36,171    
Interest and dividends on securities available for sale:               
 U. S. government sponsored enterprises     465     607     595     422     408    
 State and political subdivisions      6     11     12     12     13    
 Mortgage-backed securities and collateralized mortgage obligations-residential     1,815     1,944     1,958     1,849     1,829    
 Corporate bonds     153     154     151     149     97    
 Small Business Administration-guaranteed participation securities     380     394     415     430     445    
 Mortgage-backed securities and collateralized mortgage obligations-commercial     22     21     23     23     36    
 Other securities     4     4     4     4     4    
  Total interest and dividends on securities available for sale     2,845     3,135     3,158     2,889     2,832    
               
Interest on held to maturity securities:               
 Mortgage-backed securities and collateralized mortgage obligations-residential     276     296     316     331     347    
 Corporate bonds     102     154     154     153     156    
  Total interest on held to maturity securities     378     450     470     484     503    
               
 Federal Reserve Bank and Federal Home Loan Bank stock     125     134     134     133     131    
               
Interest on federal funds sold and other short-term investments     1,927     1,727     1,246     865     866    
  Total interest income     42,788     42,108     41,052     40,622     40,503    
               
Interest expense:               
 Interest on deposits:               
 Interest-bearing checking     113     134     124     123     120    
 Savings     435     435     430     436     504    
 Money market deposit accounts     469     468     466     459     463    
 Time deposits     2,247     2,181     2,283     2,406     2,468    
 Interest on short-term borrowings     345     349     349     291     281    
  Total interest expense     3,609     3,567     3,652     3,715     3,836    
               
    Net interest income     39,179     38,541     37,400     36,907     36,667    
               
Provision for loan losses     550     550     600     600     750    
Net interest income after provision for loan losses      38,629     37,991     36,800     36,307     35,917    
               
Noninterest income:              
 Trustco Financial Services income     1,844     1,425     1,858     1,422     1,347    
 Fees for services to customers     2,767     2,797     2,637     2,795     2,664    
 Net gain on securities transactions     –     –     –     –     –    
 Other     243     282     232     295     718    
  Total noninterest income     4,854     4,504     4,727     4,512     4,729    
               
Noninterest expenses:               
 Salaries and employee benefits     10,360     9,559     10,210     9,576     8,995    
 Net occupancy expense     4,027     4,267     4,109     4,185     3,887    
 Equipment expense     1,669     1,428     1,556     1,370     1,596    
 Professional services     1,679     1,963     1,928     1,997     1,959    
 Outsourced services     1,650     1,500     1,500     1,775     1,465    
 Advertising expense     699     607     713     727     489    
 FDIC and other insurance     1,018     1,012     1,047     901     1,127    
 Other real estate (income) expense, net     275     (4 )   499     721     895    
 Other     2,149     2,581     2,457     2,113     2,636    
  Total noninterest expenses     23,526     22,913     24,019     23,365     23,049    
               
Income before taxes     19,957     19,582     17,508     17,454     17,597    
Income taxes     7,361     7,342     6,561     6,656     6,667    
               
Net income $   12,596     12,240     10,947     10,798     10,930    
Net income per common share:               
   – Basic $ 0.131   0.127   0.114   0.113   0.114    
               
   – Diluted   0.131   0.127   0.114   0.113   0.114    
               
Average basic shares (in thousands)     96,102     96,003     95,879     95,732     95,603    
Average diluted shares (in thousands)     96,205     96,073     95,987     95,877     95,722    
               
Note:  Taxable equivalent net interest income $   39,190     38,553     37,413     36,921     36,681    
               
               
               
CONSOLIDATED STATEMENTS OF INCOME              
               
(dollars in thousands, except per share data)              
(Unaudited)              
    Nine Months Ended        
    9/30/2017 9/30/2016        
               
Interest and dividend income:               
Interest and fees on loans $   110,219     107,428          
Interest and dividends on securities available for sale:               
 U. S. government sponsored enterprises     1,667     1,067          
 State and political subdivisions      29     40          
 Mortgage-backed securities and collateralized mortgage obligations-residential     5,717     6,114          
 Corporate bonds     458     97          
 Small Business Administration-guaranteed participation securities     1,189     1,371          
 Mortgage-backed securities and collateralized mortgage obligations-commercial     66     110          
 Other securities     12     12          
  Total interest and dividends on securities available for sale     9,138     8,811          
               
Interest on held to maturity securities:               
 Mortgage-backed securities-residential     888     1,123          
 Corporate bonds     410     464          
  Total interest on held to maturity securities     1,298     1,587          
               
 Federal Reserve Bank and Federal Home Loan Bank stock     393     369          
               
Interest on federal funds sold and other short-term investments     4,900     2,542          
  Total interest income     125,948     120,737          
               
Interest expense:               
 Interest on deposits:               
 Interest-bearing checking     371     350          
 Savings     1,300     1,712          
 Money market deposit accounts     1,403     1,426          
 Time deposits     6,711     7,301          
 Interest on short-term borrowings     1,043     800          
  Total interest expense     10,828     11,589          
               
    Net interest income     115,120     109,148          
               
Provision for loan losses     1,700     2,350          
Net interest income after provision for loan losses      113,420     106,798          
               
Noninterest income:              
 Trust department income     5,127     4,464          
 Fees for services to customers     8,201     8,062          
 Net gain on securities transactions     –     668          
 Other     757     1,306          
  Total noninterest income     14,085     14,500          
               
Noninterest expenses:               
 Salaries and employee benefits     30,129     26,932          
 Net occupancy expense     12,403     11,893          
 Equipment expense     4,653     4,950          
 Professional services     5,570     6,203          
 Outsourced services     4,650     4,441          
 Advertising expense     2,019     1,788          
 FDIC and other insurance     3,077     5,066          
 Other real estate expense, net     770     1,837          
 Other     7,187     7,352          
  Total noninterest expenses     70,458     70,462          
               
Income before taxes     57,047     50,836          
Income taxes     21,264     19,033          
               
Net income $   35,783     31,803          
               
Net income per Common Share:               
   – Basic $ 0.373   0.333          
               
   – Diluted   0.372   0.333          
               
Average basic shares (thousands)     95,997     95,486          
Average diluted shares (thousands)     96,091     95,572          
               
Note:  Taxable equivalent net interest income $   115,152     109,188          
               
               
               
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION              
               
(dollars in thousands)              
(Unaudited)              
               
               
    9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016  
  ASSETS:              
               
 Cash and due from banks $ 41,598   43,783   41,352   48,719   42,296    
 Federal funds sold and other short term investments     582,599   663,360   641,839   658,555   622,132    
  Total cash and cash equivalents     624,197   707,143   683,191   707,274   664,428    
             
 Securities available for sale:            
  U. S. government sponsored enterprises     123,658   128,386   162,341   117,266   116,327    
  States and political subdivisions     534   536   887   886   970    
  Mortgage-backed securities and collateralized mortgage obligations-residential     335,530   352,591   357,683   372,308   400,575    
  Small Business Administration-guaranteed participation securities   69,818   72,858   75,429   78,499   84,687    
  Mortgage-backed securities and collateralized mortgage obligations-commercial     9,824   9,903   9,923   10,011   10,233    
  Corporate bonds   40,381   40,498     40,612     40,705     41,025    
  Other securities     685   685   685   685   685    
  Total securities available for sale     580,430   605,457   647,560   620,360   654,502    
               
 Held to maturity securities:              
  Mortgage-backed securities and collateralized mortgage obligations-residential   29,268   31,211   33,276   35,500   38,044    
  Corporate bonds   0   9,997   9,994   9,990   9,986    
  Total held to maturity securities   29,268   41,208   43,270   45,490   48,030    
               
 Federal Reserve Bank and Federal Home Loan Bank stock   8,779   9,723   9,579   9,579   9,579    
             
 Loans:            
  Commercial     187,281   183,035   184,451   191,194   189,795    
  Residential mortgage loans     3,070,970   2,999,306   2,929,928   2,895,733   2,845,876    
  Home equity line of credit     311,753   316,674   326,280   334,841   343,445    
  Installment loans     8,278   8,458   8,277   8,818   8,515    
 Loans, net of deferred net costs     3,578,282   3,507,473   3,448,936   3,430,586   3,387,631    
 Less:            
  Allowance for loan losses     44,082   44,162   44,048   43,890   43,950    
  Net loans     3,534,200   3,463,311   3,404,888   3,386,696   3,343,681    
               
 Bank premises and equipment, net     35,028   35,174   35,175   35,466   36,110    
 Other assets     58,373   58,466   63,080   63,941   56,519    
             
  Total assets $ 4,870,275   4,920,482   4,886,743   4,868,806   4,812,849    
             
  LIABILITIES:            
 Deposits:            
  Demand $ 397,623   390,120   373,930   377,755   380,090    
  Interest-bearing checking     862,067   871,004   838,936   815,534   785,118    
  Savings accounts     1,265,229   1,285,886   1,287,802   1,271,449   1,277,734    
  Money market deposit accounts     564,557   572,580   583,909   571,962   566,097    
  Time deposits     1,075,886   1,088,824   1,113,892   1,159,463   1,159,199    
  Total deposits     4,165,362   4,208,414   4,198,469   4,196,163   4,168,238    
             
 Short-term borrowings     216,508   233,621   220,946   209,406   179,204    
 Accrued expenses and other liabilities     33,477   31,081   28,628   30,551   29,799    
             
  Total liabilities     4,415,347   4,473,116   4,448,043   4,436,120   4,377,241    
             
  SHAREHOLDERS’ EQUITY:            
 Capital stock     99,562   99,511   99,493   99,214   99,121    
 Surplus     172,712   172,603   172,628   171,425   171,093    
 Undivided profits     218,401   212,112   206,173   201,517   197,013    
 Accumulated other comprehensive (loss) income, net of tax     (3,060 ) (3,593 ) (5,568 ) (6,251 ) 2,328    
 Treasury stock at cost   (32,687 ) (33,267 ) (34,026 ) (33,219 ) (33,947 )  
             
  Total shareholders’ equity   454,928   447,366   438,700   432,686   435,608    
               
  Total liabilities and shareholders’ equity $ 4,870,275   4,920,482   4,886,743   4,868,806   4,812,849    
               
Outstanding shares (in thousands)     96,108     96,015     95,917     95,780     95,614    
               

 

NONPERFORMING ASSETS              
               
(dollars in thousands)              
(Unaudited)              
               
Nonperforming Assets              
    09/30/17 06/30/17 03/31/17 12/31/16 09/30/16  
New York and other states*              
Loans in nonaccrual status:              
  Commercial $   1,696     1,711     1,858     1,843     2,366    
  Real estate mortgage – 1 to 4 family     20,926     20,639     22,772     21,198     21,678    
  Installment     30     25     41     48     70    
Total non-accrual loans     22,652     22,375     24,671     23,089     24,114    
Other nonperforming real estate mortgages – 1 to 4 family     40     41     41     42     44    
Total nonperforming loans     22,692     22,416     24,712     23,131     24,158    
Other real estate owned     2,879     3,585     3,191     4,268     4,768    
Total nonperforming assets $   25,571     26,001     27,903     27,399     28,926    
               
Florida              
Loans in nonaccrual status:              
  Commercial $   –      –      –      –      –     
  Real estate mortgage – 1 to 4 family     1,895     2,112     1,712     1,929     1,844    
  Installment     –      –      –      –      –    
Total non-accrual loans     1,895     2,112     1,712     1,929     1,844    
Other nonperforming real estate mortgages – 1 to 4 family     –      –      –      –      –    
Total nonperforming loans     1,895     2,112     1,712     1,929     1,844    
Other real estate owned     –      –      –      –      –    
Total nonperforming assets $   1,895     2,112     1,712     1,929     1,844    
               
Total              
Loans in nonaccrual status:              
  Commercial $   1,696     1,711     1,858     1,843     2,366    
  Real estate mortgage – 1 to 4 family     22,821     22,751     24,484     23,127     23,522    
  Installment     30     25     41     48     70    
Total non-accrual loans     24,547     24,487     26,383     25,018     25,958    
Other nonperforming real estate mortgages – 1 to 4 family     40     41     41     42     44    
Total nonperforming loans     24,587     24,528     26,424     25,060     26,002    
Other real estate owned     2,879     3,585     3,191     4,268     4,768    
Total nonperforming assets $   27,466     28,113     29,615     29,328     30,770    
               
               
Quarterly Net Chargeoffs (Recoveries)              
    09/30/17 06/30/17 03/31/17 12/31/16 09/30/16  
New York and other states*              
Commercial $   (2 )   –      64     (56 )   353    
Real estate mortgage – 1 to 4 family     613     334     261     619     471    
Installment     56     37     31     55     37    
  Total net chargeoffs $   667     371     356     618     861    
               
Florida              
Commercial $   –      –      –      –      –     
Real estate mortgage – 1 to 4 family     (41 )   52     84     23     –    
Installment     4     13     2     19     3    
  Total net chargeoffs $   (37 )   65     86     42     3    
               
Total              
Commercial $   (2 )   –      64     (56 )   353    
Real estate mortgage – 1 to 4 family     572     386     345     642     471    
Installment     60     50     33     74     40    
  Total net chargeoffs $   630     436     442     660     864    
               
               
Asset Quality Ratios              
    09/30/17 06/30/17 03/31/17 12/31/16 09/30/16  
               
Total nonperforming loans(1) $   24,587     24,528     26,424     25,060     26,002    
Total nonperforming assets(1)     27,466     28,113     29,615     29,328     30,770    
Total net chargeoffs(2)     630     436     442     660     864    
               
Allowance for loan losses(1)     44,082   44,162   44,048   43,890   43,950    
               
Nonperforming loans to total loans   0.69 % 0.70 % 0.77 % 0.73 % 0.77 %  
Nonperforming assets to total assets   0.56 % 0.57 % 0.61 % 0.60 % 0.64 %  
Allowance for loan losses to total loans   1.23 % 1.26 % 1.28 % 1.28 % 1.30 %  
Coverage ratio(1)   179.3 % 180.0 % 166.7 % 175.1 % 169.0 %  
Annualized net chargeoffs to average loans(2)   0.07 % 0.05 % 0.05 % 0.08 % 0.10 %  
Allowance for loan losses to annualized net chargeoffs(2)   17.5x 25.3x 24.9x 16.6x 12.7x  
               
* 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)   September 30, 2017     September 30, 2016    
    Average   Interest Average     Average   Interest Average    
    Balance     Rate     Balance     Rate    
                           
Assets                          
                           
Securities available for sale:                          
U. S. government sponsored enterprises $ 123,055     465   1.51 % $ 109,488     408   1.49 %  
Mortgage backed securities and                          
  collateralized mortgage obligations-residential   345,248     1,815   2.10     400,103     1,829   1.83    
State and political subdivisions   522     11   8.43     953     20   8.39    
Corporate bonds   42,528     153   1.44     27,161     97   1.43    
Small Business Administration-guaranteed participation securities   72,204     380   2.11     85,305     445   2.09    
Mortgage backed securities and                          
  collateralized mortgage obligations-commercial   9,918     22   0.89     10,247     36   1.41    
Other   685     4   2.34     685     4   2.34    
                           
  Total securities available for sale   594,160     2,850   1.92     633,942     2,839   1.79    
                           
Federal funds sold and other                          
 short-term Investments   621,878     1,927   1.24     683,777     866   0.50    
                           
Held to maturity securities:                          
Corporate bonds   6,738     102   6.06     10,644     156   5.86    
Mortgage backed securities and                          
  collateralized mortgage obligations-residential   30,161     276   3.66     39,307     347   3.53    
                           
  Total held to maturity securities   36,899     378   4.10     49,951     503   4.03    
                           
Federal Reserve Bank and Federal Home Loan Bank stock   9,117     125   5.48     9,579     131   5.47    
                           
Commercial loans   183,867     2,482   5.40     195,115     2,597   5.32    
Residential mortgage loans   3,035,745     31,600   4.16     2,819,343     30,175   4.28    
Home equity lines of credit   312,812     3,237   4.14     346,744     3,211   3.70    
Installment loans   8,096     200   9.88     8,331     195   9.36    
                           
Loans, net of unearned income   3,540,520     37,519   4.24     3,369,533     36,178   4.29    
                           
  Total interest earning assets   4,802,574     42,799   3.56     4,746,782     40,517   3.41    
                           
Allowance for loan losses   (44,284 )           (44,473 )          
Cash & non-interest earning assets   127,004             137,462            
                           
                           
Total assets $ 4,885,294           $ 4,839,771            
                           
                           
Liabilities and shareholders’ equity                          
                           
Deposits:                          
Interest bearing checking accounts $ 861,387     113   0.05 % $ 780,058     120   0.06 %  
Money market accounts   572,168     469   0.33     571,333     463   0.32    
Savings   1,280,318     435   0.14     1,284,533     504   0.16    
Time deposits   1,078,085     2,247   0.83     1,176,115     2,468   0.84    
                           
  Total interest bearing deposits   3,791,958     3,264   0.34     3,812,039     3,555   0.37    
Short-term borrowings   223,238     345   0.62     189,910     281   0.59    
                           
  Total interest bearing liabilities   4,015,196     3,609   0.36     4,001,949     3,836   0.38    
                           
Demand deposits   389,286             377,455            
Other liabilities   28,809             27,496            
Shareholders’ equity   452,003             432,871            
                           
Total liabilities and shareholders’ equity $ 4,885,294           $ 4,839,771            
                           
Net interest income, tax equivalent       39,190             36,681        
                           
Net interest spread         3.21 %         3.03 %  
                           
Net interest margin (net interest income                          
to total interest earning assets)         3.26 %         3.09 %  
                           
Tax equivalent adjustment       (11 )           (14 )      
                           
                           
  Net interest income        39,179             36,667        
                           
                           
                           
                           
                           
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY-    
INTEREST RATES AND INTEREST DIFFERENTIAL    
(dollars in thousands)   Nine Months ended     Nine Months ended    
(Unaudited)   September 30, 2017     September 30, 2016    
    Average   Interest Average     Average   Interest Average    
    Balance     Rate     Balance     Rate    
                           
Assets                          
                           
Securities available for sale:                          
U. S. government sponsored enterprises $ 139,629     1,667   1.59 % $ 97,281     1,067   1.46 %  
Mortgage backed securities and                          
  collateralized mortgage obligations-residential   357,347     5,717   2.13     419,185     6,114   1.94    
State and political subdivisions   736     41   7.43     1,007     60   7.94    
Corporate bonds   42,272     458   1.44     9,120     97   1.42    
Small Business Administration-guaranteed participation securities   75,429     1,189   2.10     87,896     1,371   2.08    
Mortgage backed securities and                          
  collateralized mortgage obligations-commercial   10,003     66   0.88     10,320     110   1.42    
Other   685     12   2.34     683     12   2.34    
                           
  Total securities available for sale   626,101     9,150   1.95     625,492     8,831   1.88    
                           
Federal funds sold and other                          
 short-term Investments   635,450     4,900   1.03     675,948     2,542   0.50    
                           
Held to maturity securities:                          
Corporate bonds   8,897     410   6.14     10,202     464   6.06    
Mortgage backed securities and                          
  collateralized mortgage obligations-residential   32,202     888   3.68     42,192     1,123   3.55    
                           
  Total held to maturity securities   41,099     1,298   4.21     52,394     1,587   4.04    
                           
Federal Reserve Bank and Federal Home Loan Bank stock   9,467     393   5.54     9,545     369   5.15    
                           
Commercial loans   184,932     7,313   5.27     198,461     7,777   5.22    
Residential mortgage loans   2,969,363     92,910   4.17     2,768,579     89,523   4.31    
Home equity lines of credit   321,276     9,453   3.92     353,461     9,569   3.61    
Installment loans   8,117     563   9.25     8,435     579   9.15    
                           
Loans, net of unearned income   3,483,688     110,239   4.22     3,328,936     107,448   4.30    
                           
  Total interest earning assets   4,795,805     125,980   3.50     4,692,315     120,777   3.43    
                           
Allowance for loan losses   (44,317 )           (44,832 )          
Cash & non-interest earning assets   129,384             136,584            
                           
                           
Total assets $ 4,880,872           $ 4,784,067            
                           
                           
Liabilities and shareholders’ equity                          
                           
Deposits:                          
Interest bearing checking accounts $ 840,322     371   0.06 % $ 758,314     350   0.06 %  
Money market accounts   576,518     1,403   0.32     585,019     1,426   0.33    
Savings   1,280,473     1,300   0.14     1,273,565     1,712   0.18    
Time deposits   1,104,731     6,711   0.81     1,162,603     7,301   0.84    
                           
  Total interest bearing deposits   3,802,044     9,785   0.34     3,779,501     10,789   0.38    
Short-term borrowings   226,447     1,043   0.61     182,453     800   0.58    
                           
  Total interest bearing liabilities   4,028,491     10,828   0.36     3,961,954     11,589   0.39    
                           
Demand deposits   380,216             368,852            
Other liabilities   27,880             27,179            
Shareholders’ equity   444,285             426,082            
                           
Total liabilities and shareholders’ equity $ 4,880,872           $ 4,784,067            
                           
Net interest income, tax equivalent       115,152             109,188        
                           
Net interest spread         3.14 %         3.04 %  
                           
Net interest margin (net interest income                          
to total interest earning assets)         3.20 %         3.10 %  
                           
Tax equivalent adjustment       (32 )           (40 )      
                           
                           
  Net interest income        115,120             109,148        
                           

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 and other non-routine items 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)                
    09/30/17 06/30/17 09/30/16        
Tangible Equity to Tangible Assets                
Total Assets   4,870,275   4,920,482   4,812,849          
Less: Intangible assets     553     553     553          
  Tangible assets     4,869,722     4,919,929     4,812,296          
                 
Equity $   454,928     447,366     435,608          
Less: Intangible assets     553     553     553          
  Tangible equity     454,375     446,813     435,055          
Tangible Equity to Tangible Assets   9.33 % 9.08 % 9.04 %        
Equity to Assets   9.34 % 9.09 % 9.05 %        
                 
    3 Months Ended   Nine Months Ended  
Efficiency Ratio   09/30/17 06/30/17 09/30/16   09/30/17 09/30/16  
                 
Net interest income $   39,179     38,541     36,667       115,120     109,148    
Taxable equivalent adjustment     11     12     14       32     40    
Net interest income (fully taxable equivalent)     39,190     38,553     36,681       115,152     109,188    
Non-interest income     4,854     4,504     4,729       14,085     14,500    
Less:  Net gain on sale of building     –     –     469       –     469    
Less:  Net gain on sale of nonperforming loans     –     84     –       84     24    
Less:  Net gain on securities     –     –     –       –     668    
  Revenue used for efficiency ratio     44,044     42,973     40,941       129,153     122,527    
                 
Total noninterest expense     23,526     22,913     23,049       70,458     70,462    
Less:  Other real estate (income) expense, net     275     (4 )   895       770     1,837    
  Expense used for efficiency ratio     23,251     22,917     22,154       69,688     68,625    
                 
Efficiency Ratio   52.79 % 53.33 % 54.11 %   53.96 % 56.01 %