Market Overview

TrustCo Announces Second Quarter 2015 Earnings; Core Net Income Up 5%

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Executive Snapshot:

  • Continued strong financial results:
    • Core net income for second quarter 2015 compared to the same period in 2014:
      • Core net income up 4.9%;
      • Core diluted EPS up 3.7%;
    • GAAP earnings for the second quarter of 2015 compared to the same period in 2014:
      • Net income down 9.2%
      • Diluted EPS down 9.6%
      • Return on average assets (ROA) of 0.91%
      • Return on average equity (ROE) of 10.66%
      • Efficiency ratio of 54.71%
         
  • Asset quality improvement:
    • Asset quality measures continued to improve compared to both the second quarter of 2014 and for the first quarter of 2015
    • Nonperforming assets (NPAs) fell by $10.6 million when compared to June 30, 2014.
    • NPAs to total assets improved from 1.07% to 0.81% when compared to June 30, 2014.
    • Quarterly net chargeoffs at lowest level since the fourth quarter of 2008
       
  • Continued expansion of customer base:
    • Focus on capitalizing on opportunities presented by expanded branch network
    • Average deposits per branch grew $942 thousand from June 30, 2014 to June 30, 2015 on a same store basis
    • Average core deposits grew $93 million for the second quarter of 2015 compared to the second quarter of 2014
       
  • Loan portfolio reaches all-time high:
    • Average loans were up $252 million for the second quarter of 2015 compared to second quarter of 2014
    • At $3.24 billion at June 30, 2015, loans reached an all-time historic high

Note: See non-GAAP financial measures reconciliation on pages 14-15 for information on core income and earnings per share

TrustCo Announces Second Quarter 2015 Earnings;
Core Net Income Up 5%

GLENVILLE, N.Y., July 21, 2015 (GLOBE NEWSWIRE) --    

TrustCo Bank Corp NY (TrustCo) (Nasdaq: TRST) today announced that second quarter of 2015 core net income rose 4.9% to $10.7 million compared to $10.2 million for the second quarter of 2014. Second quarter 2014 results included a gain of $2.4 million on the previously disclosed sale of owned real estate that added $1.6 million to reported after-tax earnings. On a GAAP basis, second quarter 2014 net income was $11.8 million compared to $10.7 million in 2015.

Robert J. McCormick, President and Chief Executive Officer noted, "Our core results for the second quarter of 2015 build off of the solid results of the first quarter. In addition to core net income growth, we continued to add customer relationships which ultimately positions our business well for the future. Our highly liquid balance sheet continues to allow us to fund our loan growth without having to overpay for deposits. We look forward to the second half of 2015 with optimism. We will continue taking advantage of opportunities as they are presented."

TrustCo saw continued strong loan growth in the second quarter of 2015. Loan portfolio expansion was funded by utilization of a portion of the Bank's large cash position. Growth in core deposits was used to offset declines in higher cost certificates of deposit and cash management accounts, which are significantly more costly than core deposits. The continued shift toward loans helped offset the margin impact from continued comparatively low yields on cash and investments. TrustCo's strong liquidity position continues to allow the Company to take advantage of opportunities when interest rate conditions change.

Mr. McCormick also noted, "We are encouraged by the continued economic improvements in our market areas. We are pleased with the continued improvement in our asset quality during both the second quarter and over the last year. Our long-term focus on traditional lending criteria and conservative balance sheet management has enabled us to maintain strong liquidity and capital and report continued profit improvements. As a result, we have been able to focus on conducting business, which has put us in a position to take advantage of changes in market and competitive conditions."

For the second quarter of 2015, return on average assets and return on average equity were 0.91% and 10.66%, respectively, compared to 1.03% and 12.50% for the second quarter of 2014, all on a reported GAAP basis.  Reported GAAP diluted earnings per share were $0.113 for the second quarter of 2015, compared to $0.125 for the second quarter of 2014. Higher levels of assets and shareholders' equity as well as the $2.4 million gain noted earlier contributed to the decline in return on average assets and equity. Core diluted net income per share was $0.112 for the second quarter of 2015 compared to $0.108 for the second quarter of 2014.The reconciliation between core and GAAP earnings is shown in the table at the back of this release.

For the first six months of 2015, core diluted net income per share was $0.225, compared to $0.213 for the first six months of 2014. On a GAAP basis, diluted earnings per share were $0.225, compared to $0.241 over the same time periods. GAAP return on average assets and equity were 0.92% and 10.78% for the first six months of 2015, compared to 1.01% and 12.30% for the first six months of 2014.

Average loans were up $252.5 million or 8.5% in the second quarter of 2015, over the same period in 2014. Average deposits were up $138.8 million or 3.5% for the second quarter of 2015 over the same period a year earlier. Most of the increase in deposits came from core deposit accounts. Average core deposits increased $92.8 million from the second quarter of 2014 to the second quarter of 2015. Core deposits typically represent longer term customer relationships and are generally lower cost than time deposits. 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. 

"While some banks have backed away from branches, a customer friendly branch franchise continues to be the key to our long term plans. We opened one new office during the second quarter, in Orlando, Florida and now have a 50 branch network covering Central Florida. We continue to make significant progress expanding loans and deposits throughout our entire branch network. We expect that trend to continue as the newer branches continue to mature. 

"At June 30, 2015, our average branch size was $28.3 million. On a same store basis, our average deposits per branch grew by $942 thousand from June 30, 2014 to June 30, 2015. 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 the allowance for loan losses coverage of nonperforming loans (NPLs) improved from both June 30, 2014 and March 31, 2015 to June 30, 2015. NPLs declined to $32.5 million at June 30, 2015, compared to $40.9 million at June 30, 2014 and $33.5 million at March 31, 2015. NPLs were equal to 1.00% of total loans at June 30, 2015, compared to 1.36% a year earlier and 1.05% at March 31, 2015. The coverage ratio, or allowance for loan losses to NPLs, was 140.3% at June 30, 2015, compared to 137.2% at March 31, 2015 and 114.7% at June 30, 2014. Nonperforming assets (NPAs) declined to $38.6 million from $40.4 million at March 31, 2015 and $49.2 million at June 30, 2014. Overall, virtually every asset quality indicator improved during the second quarter of 2015 relative to the first quarter of 2015 and the second quarter of 2014. The ratio of loan loss allowance to total loans was 1.41% as of June 30, 2015, compared to 1.44% at March 31, 2015 and to 1.56% at June 30, 2014 and reflects both the improvement in asset quality and economic conditions in our lending areas. The allowance for loan losses was $45.6 million at June 30, 2015 compared to $45.9 million at March 31, 2015 and $46.9 million at June 30, 2014.

The net interest margin for the second quarter of 2015 was 3.07% compared to 3.08% in the first quarter of 2015 and 3.16% in the second quarter of 2014. 

At June 30, 2015 the tangible equity ratio was 8.48% compared to 8.44% at March 31, 2015 and 8.38% at June 30, 2014. Tangible book value per share at June 30, 2015 was $4.23 compared to $4.06 a year earlier.  

Trustco Bank entered into an agreement with its primary regulator, the Office of the Comptroller of the Currency (OCC), on July 21, 2015. The agreement calls for the Bank to take various actions in areas such as compliance, corporate governance, audit, capital planning including dividends, and strategic planning, among others. The agreement followed the completion of the OCC's regularly scheduled exam of the Bank. Since the completion of the examination, the Bank has been working to address the issues raised. The Bank's board of directors and management are committed to taking the necessary actions to fully address the provisions of the agreement and believe they have made significant progress towards that goal. Implementing the necessary action plans is expected to add annualized expenses of between $2.5 and $5.0 million. 

TrustCo Bank Corp NY is a $4.7 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 146 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at June 30, 2015.

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 second quarter 2015 results will be held at 9:00 a.m. Eastern Time on July 22, 2015. 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 10069090. The call will also be audio webcast at: http://services.choruscall.com/links/trst150722.html, and will be available for one year.

Note: See non-GAAP financial measures reconciliation on pages 14-15 for information on core income and earnings per share

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 2015 and for the growth of loans and deposits throughout our branch network and our ability to capitalize on economic changes in the areas in which we operate.  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 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; 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; 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 annual report on Form 10-K for the year ended December 31, 2014, as amended, 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    
  06/30/1503/31/1506/30/14   
Summary of operations       
Net interest income (TE)$   35,690    35,185    35,513    
Provision for loan losses    800    800    1,500    
Net securities transactions    -     249    -     
Noninterest income, excluding net securities transactions    4,454    4,374    4,505    
Noninterest expense    22,131    21,857    19,437    
Net income    10,727    10,715    11,808    
        
Per common share       
Net income per share:       
 - Basic$   0.113    0.113    0.125    
 - Diluted    0.113    0.113    0.125    
 Cash dividends    0.066    0.066    0.066    
 Tangible Book value at period end    4.23    4.21    4.06    
 Market price at period end    7.03    6.88    6.68    
        
At period end       
Full time equivalent employees  760  747  747    
Full service banking offices  146  145  141    
        
Performance ratios       
Return on average assets  0.91%   0.93  1.03    
Return on average equity  10.66  10.91  12.50    
Efficiency (1)  54.71  54.18  53.00    
Net interest spread (TE)  3.01  3.02  3.11    
Net interest margin (TE)  3.07  3.08  3.16    
Dividend payout ratio  58.15  58.12  52.62    
        
Capital ratio at period end       
Consolidated tangible equity to tangible assets (2)  8.48  8.44  8.38    
        
Asset quality analysis at period end       
Nonperforming loans to total loans  1.00  1.05  1.36    
Nonperforming assets to total assets  0.81  0.85  1.07    
Allowance for loan losses to total loans  1.41  1.44  1.56    
Coverage ratio (3)  1.4x  1.4  1.1    
        
        
(1)  Calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income (excluding net securities transactions, the net gain on sale of building, and the net sale of nonperforming loans).  
(2)  The tangible equity ratio excludes $553 of intangibles from both equity and assets.  
(3)  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)       
  Six Months Ended    
  06/30/1506/30/14    
Summary of operations       
Net interest income (TE)$   70,875    70,214     
Provision for loan losses    1,600    3,000     
Net securities transactions    249    6     
Noninterest income    8,828    10,258     
Noninterest expense    43,988    40,238     
Net income    21,442    22,819     
        
Per common share       
Net income per share:       
- Basic$   0.226    0.241     
- Diluted    0.225    0.241     
Cash dividends    0.131    0.131     
Tangible Book value at period end    4.23    4.06     
Market price at period end    7.03    6.68     
        
Performance ratios       
Return on average assets  0.92% 1.01     
Return on average equity  10.78  12.30     
Efficiency (1)  54.45  52.15     
Net interest spread (TE)  3.02  3.09     
Net interest margin (TE)  3.08  3.15     
Dividend payout ratio  58.14  54.42     
        
        
(1)  Calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income (excluding net securities transactions). 
        
TE = Taxable equivalent.       
        
        
CONSOLIDATED STATEMENTS OF INCOME       
        
(dollars in thousands, except per share data)       
(Unaudited)       
  Three Months Ended  
  6/30/20153/31/201512/31/20149/30/20146/30/2014 
Interest and dividend income:        
Interest and fees on loans$   35,343    34,983    35,051    34,421    33,614  
Interest and dividends on securities available for sale:        
U. S. government sponsored enterprises    366    212    233    297    381  
State and political subdivisions     23    25    29    38    44  
Mortgage-backed securities and collateralized mortgage obligations-residential    2,276    2,393    2,733    3,040    3,299  
Corporate bonds    -    1    2    2    2  
Small Business Administration-guaranteed participation securities    503    522    524    535    539  
Mortgage-backed securities and collateralized mortgage obligations-commercial    38    37    37    38    38  
Other securities    4    4    4    4    4  
Total interest and dividends on securities available for sale    3,210    3,194    3,562    3,954    4,307  
        
Interest on held to maturity securities:        
Mortgage-backed securities and collateralized mortgage obligations-residential    480    478    512    545    577  
Corporate bonds    154    154    154    153    154  
Total interest on held to maturity securities    634    632    666    698    731  
        
Federal Reserve Bank and Federal Home Loan Bank stock    118    116    123    127    128  
        
Interest on federal funds sold and other short-term investments    423    400    363    374    376  
Total interest income    39,728    39,325    39,765    39,574    39,156  
        
Interest expense:        
Interest on deposits:        
Interest-bearing checking    111    105    98    94    89  
Savings    599    658    663    644    592  
Money market deposit accounts    547    617    634    648    618  
Time deposits    2,500    2,434    2,366    2,213    2,035  
Interest on short-term borrowings    300    346    335    327    342  
Total interest expense    4,057    4,160    4,096    3,926    3,676  
        
Net interest income    35,671    35,165    35,669    35,648    35,480  
        
Provision for loan losses    800    800    1,000    1,100    1,500  
Net interest income after provision for loan losses     34,871    34,365    34,669    34,548    33,980  
        
Noninterest income:       
Trustco Financial Services income    1,478    1,653    1,451    1,471    1,405  
Fees for services to customers    2,691    2,524    2,753    2,838    2,732  
Net gain on securities transactions    -    249    335    376    -  
Other    285    197    213    205    368  
Total noninterest income    4,454    4,623    4,752    4,890    4,505  
        
Noninterest expenses:        
Salaries and employee benefits    8,164    8,481    9,003    8,272    8,012  
Net occupancy expense    3,878    4,108    3,869    4,013    4,110  
Equipment expense    1,803    1,942    1,919    1,725    1,823  
Professional services    2,066    1,507    1,536    1,547    1,438  
Outsourced services    1,425    1,425    1,225    1,375    1,425  
Advertising expense    733    600    602    629    657  
FDIC and other insurance    1,017    1,065    949    1,054    1,000  
Other real estate expense (income), net    201    424    841    1,001    (1,688) 
Other    2,844    2,305    2,296    2,576    2,660  
Total noninterest expenses    22,131    21,857    22,240    22,192    19,437  
        
Income before taxes    17,194    17,131    17,181    17,246    19,048  
Income taxes    6,467    6,416    6,521    6,532    7,240  
        
Net income$   10,727    10,715    10,660    10,714    11,808  
Net income per common share:        
- Basic$ 0.113  0.113  0.113  0.113  0.125  
        
- Diluted  0.113  0.113  0.112  0.113  0.125  
        
Average basic shares (in thousands)    95,056    94,947    94,681    94,628    94,559  
Average diluted shares (in thousands)    95,190    95,074    94,813    94,752    94,675  
        
Note: Taxable equivalent net interest income$   35,690    35,185    35,693    35,676    35,513  
        
        
CONSOLIDATED STATEMENTS OF INCOME       
        
(dollars in thousands, except per share data)       
(Unaudited)       
  Six Months Ended    
  6/30/20156/30/2014    
        
Interest and dividend income:        
Interest and fees on loans$   70,326    66,488     
Interest and dividends on securities available for sale:        
U. S. government sponsored enterprises    578    887     
State and political subdivisions     48    112     
Mortgage-backed securities and collateralized mortgage obligations-residential    4,669    6,377     
Corporate bonds    1    61     
Small Business Administration-guaranteed participation securities    1,025    1,095     
Mortgage-backed securities and collateralized mortgage obligations-commercial    75    76     
Other securities    8    8     
Total interest and dividends on securities available for sale    6,404    8,616     
        
Interest on held to maturity securities:        
Mortgage-backed securities-residential    958    1,202     
Corporate bonds    308    308     
Total interest on held to maturity securities    1,266    1,510     
        
 Federal Reserve Bank and Federal Home Loan Bank stock    234    261     
        
Interest on federal funds sold and other short-term investments    823    727     
Total interest income    79,053    77,602     
        
Interest expense:        
Interest on deposits:        
Interest-bearing checking    216    173     
Savings    1,257    1,355     
Money market deposit accounts    1,164    1,217     
Time deposits    4,934    3,986     
Interest on short-term borrowings    646    735     
Total interest expense    8,217    7,466     
        
Net interest income    70,836    70,136     
        
Provision for loan losses    1,600    3,000     
Net interest income after provision for loan losses     69,236    67,136     
        
Noninterest income:       
Trust department income    3,131    2,915     
Fees for services to customers    5,215    5,253     
Net gain on securities transactions    249    6     
Other    482    2,090     
Total noninterest income    9,077    10,264     
        
Noninterest expenses:        
Salaries and employee benefits    16,645    15,604     
Net occupancy expense    7,986    8,369     
Equipment expense    3,745    3,575     
Professional services    3,573    2,724     
Outsourced services    2,850    2,750     
Advertising expense    1,333    1,256     
FDIC and other insurance    2,082    1,904     
Other real estate (income) expense, net    625    (833)    
Other    5,149    4,889     
Total noninterest expenses    43,988    40,238     
        
Income before taxes    34,325    37,162     
Income taxes    12,883    14,343     
        
Net income$   21,442    22,819     
        
Net income per Common Share:        
- Basic$ 0.226  0.241     
        
- Diluted  0.225  0.241     
        
Average basic shares (thousands)    95,002    94,536     
Average diluted shares (thousands)    95,132    94,658     
        
Note:  Taxable equivalent net interest income$   70,875    70,214     
        
        
        
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION       
        
(dollars in thousands)       
(Unaudited)       
        
        
  6/30/20153/31/201512/31/20149/30/20146/30/2014 
 ASSETS:       
        
Cash and due from banks$ 37,574  44,853  43,505  43,724  48,034  
Federal funds sold and other short term investments  641,011  705,273  627,943  586,931  573,514  
Total cash and cash equivalents  678,585  750,126  671,448  630,655  621,548  
       
Securities available for sale:      
U. S. government sponsored enterprises  152,082  108,248  77,800  83,087  103,340  
States and political subdivisions  1,969  1,974  2,271  2,769  3,921  
Mortgage-backed securities and collateralized mortgage obligations-residential    429,205  445,273  483,560  523,779  589,517  
Corporate bonds    -   1,500  1,500  1,401  1,402  
Small Business Administration-guaranteed participation securities  95,323  98,668  100,496  100,491    102,367  
Mortgage-backed securities and collateralized mortgage obligations-commercial    10,399  10,503  10,447  10,417    10,544  
Other securities  685  685  685  679  679  
Total securities available for sale  689,663  666,851  676,759  722,623  811,770  
        
Held to maturity securities:       
Mortgage-backed securities and collateralized mortgage obligations-residential  53,576  57,296  60,986  64,223  67,974  
Corporate bonds  9,967  9,964  9,960  9,956  9,952  
Total held to maturity securities  63,543  67,260  70,946  74,179  77,926  
        
Federal Reserve Bank and Federal Home Loan Bank stock  9,480  9,228  9,228  9,228  10,951  
       
Loans:      
Commercial  209,399  212,145  223,382  219,825  222,655  
Residential mortgage loans  2,669,929  2,620,925  2,575,222  2,510,151  2,437,500  
Home equity line of credit  354,946  352,552  352,134  346,496  339,897  
Installment loans  8,674  8,003  7,594  6,557  6,098  
Loans, net of deferred fees and costs  3,242,948  3,193,625  3,158,332  3,083,029  3,006,150  
Less:      
Allowance for loan losses  45,571  45,944  46,327  46,512  46,935  
Net loans  3,197,377  3,147,681  3,112,005  3,036,517  2,959,215  
        
Bank premises and equipment, net  38,100  38,812  38,565  37,455  36,658  
Other assets  64,589  60,698  65,488  71,609  71,061  
       
Total assets$ 4,741,337  4,740,656  4,644,439  4,582,266  4,589,129  
       
LIABILITIES:      
Deposits:      
Demand$ 355,783  347,315  331,425  327,527  324,277  
Interest-bearing checking  713,001  696,137  682,210  646,862  643,473  
Savings accounts  1,250,154  1,237,115  1,216,831  1,215,087  1,233,347  
Money market deposit accounts  633,239  640,368  638,542  655,646  651,367  
Time deposits  1,185,264  1,196,233  1,163,233  1,139,919  1,142,723  
Total deposits  4,137,441  4,117,168  4,032,241  3,985,041  3,995,187  
       
Short-term borrowings  170,750  194,738  189,116  179,957  181,516  
Accrued expenses and other liabilities  30,687  28,274  29,638  27,781  27,409  
       
Total liabilities  4,338,878  4,340,180  4,250,995  4,192,779  4,204,112  
       
SHAREHOLDERS' EQUITY:      
Capital stock  98,964  98,964  98,945  98,942  98,927  
Surplus  171,988  172,237  172,353  172,598  172,769  
Undivided profits  175,721  171,232  166,745  162,326  157,832  
Accumulated other comprehensive loss, net of tax  (5,927) (2,687) (4,509) (3,508) (2,611) 
Treasury stock at cost  (38,287) (39,270) (40,090) (40,871) (41,900) 
       
Total shareholders' equity  402,459  400,476  393,444  389,487  385,017  
        
Total liabilities and shareholders' equity$ 4,741,337  4,740,656  4,644,439  4,582,266  4,589,129  
        
Outstanding shares (in thousands)    95,056    94,956    94,857    94,785    94,665  

 

NONPERFORMING ASSETS       
        
(dollars in thousands)       
(Unaudited)       
        
Nonperforming Assets       
  06/30/1503/31/1512/31/1409/30/1406/30/14 
New York and other states*       
Loans in nonaccrual status:       
Commercial$   3,263    2,489    3,835    4,226    5,132  
Real estate mortgage - 1 to 4 family    27,366    28,215    27,221    29,736    31,433  
Installment    79    77    77    95    87  
Total non-accrual loans    30,708    30,781    31,133    34,057    36,652  
Other nonperforming real estate mortgages - 1 to 4 family    74    75    125    155    159  
Total nonperforming loans    30,782    30,856    31,258    34,212    36,811  
Other real estate owned    5,833    6,288    5,533    5,238    3,930  
Total nonperforming assets$   36,615    37,144    36,791    39,450    40,741  
        
Florida       
Loans in nonaccrual status:       
Commercial$   -     -     -     517    517  
Real estate mortgage - 1 to 4 family    1,678    2,608    2,740    2,395    3,578  
Installment    10    20    13    1    1  
Total non-accrual loans    1,688    2,628    2,753    2,913    4,096  
Other nonperforming real estate mortgages - 1 to 4 family    -     -     -    -    -  
Total nonperforming loans    1,688    2,628    2,753    2,913    4,096  
Other real estate owned    275    670    908    1,188    4,365  
Total nonperforming assets$   1,963    3,298    3,661    4,101    8,461  
        
Total       
Loans in nonaccrual status:       
Commercial$   3,263    2,489    3,835    4,743    5,649  
Real estate mortgage - 1 to 4 family    29,044    30,823    29,961    32,131    35,011  
Installment    89    97    90    96    88  
Total non-accrual loans    32,396    33,409    33,886    36,970    40,748  
Other nonperforming real estate mortgages - 1 to 4 family    74    75    125    155    159  
Total nonperforming loans    32,470    33,484    34,011    37,125    40,907  
Other real estate owned    6,108    6,958    6,441    6,426    8,295  
Total nonperforming assets$   38,578    40,442    40,452    43,551    49,202  
        
        
Quarterly Net Chargeoffs (Recoveries)       
  06/30/1503/31/1512/31/1409/30/1406/30/14 
New York and other states*       
Commercial$   50    34    (16)   124    13  
Real estate mortgage - 1 to 4 family    933    1,004    1,591    1,105    1,496  
Installment    24    37    48    57    24  
Total net chargeoffs$   1,007    1,075    1,623    1,286    1,533  
        
Florida       
Commercial$   (1)   (1)   (476)   (1)   (2) 
Real estate mortgage - 1 to 4 family    167    109    37    242    59  
Installment    -     -     1    (4)   10  
Total net chargeoffs$   166    108    (438)   237    67  
        
Total       
Commercial$   49    33    (492)   123    11  
Real estate mortgage - 1 to 4 family    1,100    1,113    1,628    1,347    1,555  
Installment    24    37    49    53    34  
Total net chargeoffs$   1,173    1,183    1,185    1,523    1,600  
        
        
Asset Quality Ratios       
  06/30/1503/31/1512/31/1409/30/1406/30/14 
        
Total nonperforming loans(1)$   32,470    33,484    34,011    37,125    40,907  
Total nonperforming assets(1)    38,578    40,442    40,452    43,551    49,202  
Total net chargeoffs(2)    1,173    1,183    1,185    2,179    1,600  
        
Allowance for loan losses(1)    45,571  45,944  46,327  46,512  46,935  
        
Nonperforming loans to total loans  1.00% 1.05% 1.08% 1.20% 1.36% 
Nonperforming assets to total assets  0.81% 0.85% 0.87% 0.95% 1.07% 
Allowance for loan losses to total loans  1.41% 1.44% 1.47% 1.51% 1.56% 
Coverage ratio(1)  140.3% 137.2% 136.2% 125.3% 114.7% 
Annualized net chargeoffs to average loans(2)  0.15% 0.15% 0.15% 0.29% 0.22% 
Allowance for loan losses to annualized net chargeoffs(2)  9.7x  9.6x  9.8x  5.3x  7.3x  
        
* 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) June 30, 2015  June 30, 2014  
  Average InterestAverage  Average InterestAverage  
  Balance  Rate  Balance  Rate  
              
Assets             
              
Securities available for sale:             
U. S. government sponsored enterprises$ 114,279   366 1.28%$ 110,783   381 1.38% 
Mortgage backed securities and             
collateralized mortgage obligations-residential  441,754   2,276   2.06   589,334   3,299   2.24  
State and political subdivisions  1,939   36   7.36   3,823   70   7.32  
Corporate bonds  956     -  0.00   1,403   2 0.48  
Small Business Administration-guaranteed participation securities  98,894   503   2.03   108,072   539   1.99  
Mortgage backed securities and             
collateralized mortgage obligations-commercial  10,600   38   1.41   10,871   38   1.40  
Other  685   4   2.34   665   4   2.41  
              
Total securities available for sale  669,107   3,223   1.93   824,951   4,333   2.10  
              
Federal funds sold and other             
short-term Investments  683,110   423 0.25   606,809   376 0.25  
              
Held to maturity securities:             
Corporate bonds  9,965   154 6.17   9,950   154 6.18  
Mortgage backed securities and             
collateralized mortgage obligations-residential  55,509   480 3.46   70,377   577 3.28  
              
Total held to maturity securities  65,474   634 3.87   80,327   731 3.64  
              
Federal Reserve Bank and Federal Home Loan Bank stock  9,466   118   4.99   10,937   128   4.68  
              
Commercial loans  210,424   2,710   5.15   221,819   2,842   5.12  
Residential mortgage loans  2,648,320   29,371 4.44   2,401,020   27,548 4.59  
Home equity lines of credit  354,053   3,092 3.50   339,884   3,064 3.62  
Installment loans  8,226   176 8.60   5,827   167 11.47  
              
Loans, net of unearned income  3,221,023   35,349 4.39   2,968,550   33,621 4.53  
              
Total interest earning assets  4,648,180   39,747 3.42   4,491,574   39,189 3.49  
              
Allowance for loan losses  (46,190)      (47,389)     
Cash & non-interest earning assets  137,329       135,326      
              
              
Total assets$ 4,739,319     $ 4,579,511      
              
              
Liabilities and shareholders' equity             
              
Deposits:             
Interest bearing checking accounts$ 706,767   111 0.06%$ 632,266   89 0.06% 
Money market accounts  635,347   547 0.35   655,009   618 0.38  
Savings  1,249,865   599 0.19   1,240,158   592 0.19  
Time deposits  1,190,234   2,500 0.84   1,144,165   2,035 0.71  
              
Total interest bearing deposits  3,782,213   3,757 0.40   3,671,598   3,334 0.36  
Short-term borrowings  182,829   300 0.66   189,802   342 0.72  
              
Total interest bearing liabilities  3,965,042   4,057 0.41   3,861,400   3,676 0.38  
              
Demand deposits  344,982       316,759      
Other liabilities  25,591       22,325      
Shareholders' equity  403,704       379,027      
              
Total liabilities and shareholders' equity$ 4,739,319     $ 4,579,511      
              
Net interest income, tax equivalent    35,690       35,513    
              
Net interest spread    3.01%    3.11% 
              
Net interest margin (net interest income             
to total interest earning assets)    3.07%    3.16% 
              
Tax equivalent adjustment    (19)      (33)   
              
              
Net interest income     35,671       35,480    
              
              
              
              
              
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY-  
INTEREST RATES AND INTEREST DIFFERENTIAL  
(dollars in thousands) Six months ended  Six months ended  
(Unaudited) June 30, 2015  June 30, 2014  
  Average InterestAverage  Average InterestAverage  
  Balance  Rate  Balance  Rate  
              
Assets             
              
Securities available for sale:             
U. S. government sponsored enterprises$ 96,172   578 1.20%$ 139,907   887 1.27% 
Mortgage backed securities and             
collateralized mortgage obligations-residential  459,980   4,669   2.03   567,700   6,377   2.25  
State and political subdivisions  2,015   74   7.31   4,971   175   7.04  
Corporate bonds  1,226   1 0.16   4,956   61 2.47  
Small Business Administration-guaranteed participation securities  100,270   1,025   2.05   109,079   1,095   2.01  
Mortgage backed securities and             
collateralized mortgage obligations-commercial  10,635   75   1.41   10,904   76   1.39  
Other  685   8   2.34   662   8   2.42  
              
Total securities available for sale  670,983   6,430   1.92   838,179   8,679   2.07  
              
Federal funds sold and other             
short-term Investments  668,269   823 0.25   591,167   727 0.25  
              
Held to maturity securities:             
Corporate bonds  9,964   308 6.17   9,948   308 6.18  
Mortgage backed securities and             
collateralized mortgage obligations-residential  57,419   958 3.34   72,340   1,202 3.32  
              
Total held to maturity securities  67,383   1,266 3.76   82,288   1,510 3.67  
              
Federal Reserve Bank and Federal Home Loan Bank stock  9,348   234   5.01   10,720   261   4.87  
              
Commercial loans  214,713   5,506   5.13   222,074   5,639   5.08  
Residential mortgage loans  2,621,417   58,329 4.46   2,378,199   54,530 4.59  
Home equity lines of credit  353,161   6,153 3.51   340,281   6,000 3.56  
Installment loans  8,011   351 8.84   5,712   334 11.78  
              
Loans, net of unearned income  3,197,302   70,339 4.41   2,946,266   66,503 4.52  
              
Total interest earning assets  4,613,285   79,092 3.44   4,468,620   77,680 3.48  
              
Allowance for loan losses  (46,392)      (47,802)     
Cash & non-interest earning assets  138,319       132,906      
              
              
Total assets$ 4,705,212     $ 4,553,724      
              
              
Liabilities and shareholders' equity             
              
Deposits:             
Interest bearing checking accounts$ 692,445   216 0.06%$ 619,076   173 0.06% 
Money market accounts  636,596   1,164 0.37   650,828   1,217 0.38  
Savings  1,239,737   1,257 0.20   1,232,803   1,355 0.22  
Time deposits  1,185,363   4,934 0.84   1,142,001   3,986 0.70  
              
Total interest bearing deposits  3,754,141   7,571 0.41   3,644,708   6,731 0.37  
Short-term borrowings  187,560   646 0.69   195,954   735 0.76  
              
Total interest bearing liabilities  3,941,701   8,217 0.42   3,840,662   7,466 0.39  
              
Demand deposits  336,741       316,386      
Other liabilities  25,817       22,499      
Shareholders' equity  400,953       374,177      
              
Total liabilities and shareholders' equity$ 4,705,212     $ 4,553,724      
              
Net interest income, tax equivalent    70,875       70,214    
              
Net interest spread    3.02%    3.09% 
              
Net interest margin (net interest income             
to total interest earning assets)    3.08%    3.15% 
              
Tax equivalent adjustment    (39)      (78)   
              
              
Net interest income     70,836       70,136    
              

Non-GAAP Financial Measures Reconciliation

Tangible book value per share and tangible equity as a percentage of tangible assets at period end are non-GAAP financial measures 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 book value per share by dividing tangible equity by common shares outstanding, as compared to book value per common share, which we calculate by dividing shareholders' equity by common shares outstanding. 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 a building, nonperforming loans and securities from this calculation. We believe that this provides a reasonable measure of primary banking expenses relative to primary banking revenue. 

Core net income ("core earnings") and core net income ("core earnings") per share are non-GAAP financial measures derived from GAAP-based amounts. We calculate core earnings by excluding the net after-tax gain on the sale of the proposed Florida operations building during the first quarter of 2014, the net after-tax gain on an significant sale of an ORE property in the second quarter of 2014 and net after-tax gains on the sale of non-performing loans in both the second quarter of 2014 and the second quarter of 2015 from net income and from net income per share. We believe that this provides a reasonable measure of core net income (earnings).

We believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our financial position, results and ratios. Our management internally assesses our performance based, in part, on these measures. However, these non-GAAP financial measures are supplemental and are 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)       
  06/30/1503/31/1506/30/14   
Tangible Book Value Per Share       
        
Equity$   402,459    400,476    385,017    
Less: Intangible assets    553    553    553    
Tangible equity    401,906    399,923    384,464    
        
Shares outstanding    95,056    94,956    94,665    
Tangible book value per share    4.23    4.21    4.06    
Book value per share    4.23    4.22    4.07    
        
Tangible Equity to Tangible Assets       
Total Assets  4,741,337  4,740,656  4,589,129    
Less: Intangible assets    553    553    553    
Tangible assets    4,740,784    4,740,103    4,588,576    
        
Tangible Equity to Tangible Assets  8.48% 8.44% 8.38%   
Equity to Assets  8.49% 8.45% 8.39%   
        
  3 Months Ended 6 Months Ended
Efficiency Ratio 06/30/1503/31/1506/30/14 06/30/1506/30/14
        
Net interest income$   35,671    35,165    35,480     70,836    70,136 
Taxable equivalent adjustment    19    20    33     39    78 
Net interest income (fully taxable equivalent)    35,690    35,185    35,513     70,875    70,214 
Non-interest income    4,454    4,623    4,505     9,077    10,264 
Less:  Net gain on sale of building and nonperforming loans    60    -    163     60    1,719 
Less:  Net gain on securities    -    249    -     249    6 
Revenue used for efficiency ratio    40,084    39,559    39,855     79,643    78,753 
        
Total noninterest expense    22,131    21,857    19,437     43,988    40,238 
Less:  Other real estate expense, net    201    424    (1,688)    625    (833)
Expense used for efficiency ratio    21,930    21,433    21,125     43,363    41,071 
        
Efficiency Ratio  54.71% 54.18% 53.00%  54.45% 52.15%
        
        
  3 Months Ended 6 Months Ended
Core Net Income 06/30/1503/31/1506/30/14 06/30/1506/30/14
        
Net income$   10,727    10,715    11,808     21,442    22,819 
Less:  Gain on sale of building, nonperforming loans, and significant ORE gain, net of tax    37    -    1,618     37    2,684 
Core net income    10,690    10,715    10,190     21,405    20,135 
        
Average basic shares outstanding (in thousands)    95,056    94,947    94,559     95,002    94,536 
Average diluted shares outstanding (in thousands)    95,190    95,074    94,675     95,132    94,658 
        
Net income per common share:        
 - Basic$   0.113    0.113    0.125     0.226    0.241 
 - Diluted    0.113    0.113    0.125     0.225    0.241 
        
Core net income per common share:        
        
 - Basic$   0.112    0.113    0.108     0.225    0.213 
 - Diluted    0.112    0.113    0.108     0.225    0.213 

 

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

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