Market Overview

TrustCo Announces Solid Third Quarter 2015 Earnings

Share:

Executive Snapshot:

  • Continued solid financial results:
    • Net income for the third quarter of 2015 compared to the same period in 2014:
      • Net income of $10.6 million in third quarter of 2015 compared to $10.7 million in third quarter of 2014
      • Operating expenses increased $1.3 million in the third quarter of 2015 compared to the third quarter of 2014
      • Return on average assets (ROA) of 0.88%
      • Return on average equity (ROE) of 10.35%
      • Efficiency ratio of 56.04%
         
  • Asset quality improvement:
    • Asset quality measures continued to improve compared to both the third quarter of 2014 and the second quarter of 2015
    • Nonperforming assets (NPAs) fell by $5.7 million when compared to September 30, 2014.
    • NPAs to total assets improved from 0.95% to 0.80% when compared to September 30, 2014.
    • Quarterly net chargeoffs declined to 0.15% of average loans on an annualized basis, compared to 0.20% for the third quarter of 2014.
       
  • Continued expansion of customer base:
    • Focus on capitalizing on opportunities presented by expanded branch network
    • Average deposits per branch grew $751 thousand from September 30, 2014 to September 30, 2015 on a same store basis
    • Average core deposits were $103 million higher in the third quarter of 2015 compared to the third quarter of 2014
       
  • Loan portfolio reaches all-time high:
    • Average loans were up $218 million for the third quarter of 2015 compared to third quarter of 2014
    • At $3.28 billion as of September 30, 2015, loans reached an all-time high

GLENVILLE, N.Y., Oct. 21, 2015 (GLOBE NEWSWIRE) -- TrustCo Bank Corp NY (TrustCo) (Nasdaq: TRST) today announced that third quarter of 2015 net income was $10.6 million compared to $10.7 million for the third quarter of 2014.  Despite added operating costs during the third quarter in response to recent regulatory concerns, net income for the quarter was virtually unchanged. 

TrustCo saw continued strong loan growth in the third quarter of 2015.  Loan portfolio expansion was funded by utilization of a portion of the cash flow from the Bank's investment portfolio.  The rate of growth in average core deposits exceeded the growth rate of total 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.

Robert J. McCormick, President and Chief Executive Officer noted, "We are pleased with the continued improvement in our asset quality during both the third 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 allowed us to continue to grow our business and take advantage of changes in market and competitive conditions."

Mr. McCormick also noted, "We consider our third quarter 2015 results to be solid as we were able to report roughly flat net income despite increased operating costs in response to regulatory concerns.  As we noted in our second quarter earnings press release and related SEC filings, we anticipated higher expenses to fulfill operating and regulatory requirements.  We have taken aggressive action to meet these requirements, resulting in added costs in the third quarter.  While some of these costs will be recurring, others will diminish over time.  In terms of our core business, we continue to make solid progress, adding customer relationships which ultimately position 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 balance of 2015 and 2016 with optimism.  We will continue taking advantage of opportunities as they are presented."

For the third quarter of 2015, return on average assets and return on average equity were 0.88% and 10.35%, respectively, compared to 0.92% and 10.96% for the third quarter of 2014.  Reported diluted earnings per share were $0.111 for the third quarter of 2015, compared to $0.113 for the third quarter of 2014. 

For the first nine months of 2015, core diluted net income per share was $0.336, compared to $0.326 for the first nine months of 2014.  GAAP diluted net income per share was $0.337 for the first nine months of 2015, compared to $0.354 for the first nine months of 2014.  Return on average assets and equity were 0.91% and 10.64% for the first nine months of 2015, compared to 0.98% and 11.84% for the first nine months of 2014, all on a GAAP basis.  Non-GAAP measures are defined on pages 13 and 14.

Average loans were up $218.1 million or 7.2% in the third quarter of 2015, over the same period in 2014.  Average deposits were up $144.7 million or 3.6% for the third 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 $103.3 million from the third quarter of 2014 to the third 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 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 September 30, 2015, our average branch size was $28.1 million.  On a same store basis, our average deposits per branch grew by $751 thousand from September 30, 2014 to September 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 September 30, 2014 and June 30, 2015 to September 30, 2015.  NPLs declined to $31.9 million at September 30, 2015, compared to $37.1 million at September 30, 2014 and $32.5 million at June 30, 2015.  NPLs were equal to 0.97% of total loans at September 30, 2015, compared to 1.20% a year earlier and 1.00% at June 30, 2015.  The coverage ratio, or allowance for loan losses to NPLs, was 141.4% at September 30, 2015, compared to 140.3% at June 30, 2015 and 125.3% at September 30, 2014.  Nonperforming assets (NPAs) declined to $37.8 million at September 30, 2015 from $38.6 million at June 30, 2015 and $43.6 million at September 30, 2014.  Overall, virtually every asset quality indicator improved during the third quarter of 2015 relative to the second quarter of 2015 and the third quarter of 2014.  The ratio of loan loss allowance to total loans was 1.38% as of September 30, 2015, compared to 1.41% at June 30, 2015 and to 1.51% at September 30, 2014 and reflects both the improvement in asset quality and economic conditions in our lending areas.  The allowance for loan losses was $45.1 million at September 30, 2015 compared to $45.6 million at June 30, 2015 and $46.5 million at September 30, 2014.

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

At September 30, 2015 the tangible equity ratio was 8.71% compared to 8.48% at June 30, 2015 and 8.49% at September 30, 2014.  The equity to asset ratio was 8.72% at September 30, 2015, compared to 8.49% at June 30, 2015 and 8.50% at September 30, 2014.  Tangible book value per share at September 30, 2015 was $4.33 compared to $4.10 a year earlier and GAAP book value per share was $4.33 and $4.11, respectively.  Non-GAAP measures are defined on pages 13 and 14.

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 September 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 third quarter 2015 results will be held at 9:00 a.m. Eastern Time on October 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 10074396. The call will also be audio webcast at: http://services.choruscall.com/links/trst151022.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 2015 and for the growth of loans and deposits throughout our branch network, our ability to capitalize on economic changes in the areas in which we operate and the extent to which higher expenses to fulfill operating and regulatory requirements recur or diminish over time.  Such forward-looking statements are subject to factors that could cause actual results to differ materially for TrustCo from those discussed. TrustCo wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The following important factors, among others, in some cases have affected and in the future could affect TrustCo's actual results and could cause TrustCo's actual financial performance to differ materially from that expressed in any forward-looking statement:  our ability to continue to originate a significant volume of one-to-four family mortgage loans in our market areas; our ability to continue to maintain noninterest expense and other overhead costs at reasonable levels relative to income; our ability to comply with the supervisory agreement entered into with Trustco Bank's regulator and potential regulatory actions if we fail to comply; restrictions or conditions imposed by our regulators on our operations that may make it more difficult for us to achieve our goals; the future earnings and capital levels of Trustco Bank and the continued ability of Trustco Bank under regulatory rules and the supervisory agreement to distribute capital to TrustCo, which could affect our ability to pay dividends; results of 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    
  09/30/1506/30/1509/30/14   
Summary of operations       
  Net interest income (TE)$   36,069    35,690    35,676    
  Provision for loan losses    800    800    1,100    
  Net securities transactions    -     -     376    
  Noninterest income, excluding net securities transactions    4,365    4,454    4,514    
  Noninterest expense    23,464    22,131    22,192    
  Net income    10,616    10,727    10,714    
        
Per common share       
  Net income per share:       
  - Basic$   0.112    0.113    0.113    
  - Diluted    0.111    0.113    0.113    
  Cash dividends    0.066    0.066    0.066    
  Tangible Book value at period end    4.33    4.23    4.10    
  Market price at period end    5.84    7.03    6.44    
        
At period end       
  Full time equivalent employees  778  760  733    
  Full service banking offices  146  146  143    
        
Performance ratios       
  Return on average assets  0.88%   0.91  0.92    
  Return on average equity  10.35  10.66  10.96    
  Efficiency (1)  56.04  54.71  52.73    
  Net interest spread (TE)  3.02  3.01  3.11    
  Net interest margin (TE)  3.08  3.07  3.16    
  Dividend payout ratio  58.82  58.15  58.05    
        
Capital ratio at period end       
  Consolidated tangible equity to tangible assets (2)  8.71  8.48  8.49    
        
Asset quality analysis at period end       
  Nonperforming loans to total loans  0.97  1.00  1.20    
  Nonperforming assets to total assets  0.80  0.81  0.95    
  Allowance for loan losses to total loans  1.38  1.41  1.51    
  Coverage ratio (3)  1.4x  1.4  1.3    
        
        
(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)       
  Nine Months Ended    
  09/30/1509/30/14    
Summary of operations       
  Net interest income (TE)$   106,944    105,890     
  Provision for loan losses    2,400    4,100     
  Net securities transactions    249    382     
  Noninterest income    13,193    14,772     
  Noninterest expense    67,452    62,430     
  Net income    32,058    33,533     
        
Per common share       
  Net income per share:       
  - Basic$   0.337    0.354     
  - Diluted    0.337    0.354     
  Cash dividends    0.197    0.197     
  Tangible Book value at period end    4.33    4.10     
  Market price at period end    5.84    6.44     
        
Performance ratios       
  Return on average assets  0.91% 0.98     
  Return on average equity  10.64  11.84     
  Efficiency (1)  54.98  52.35     
  Net interest spread (TE)  3.01  3.09     
  Net interest margin (TE)  3.08  3.15     
  Dividend payout ratio  58.36  55.58     
        
        
(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  
  9/30/20156/30/20153/31/201512/31/20149/30/2014 
Interest and dividend income:        
Interest and fees on loans$   35,631    35,343    34,983    35,051    34,421  
Interest and dividends on securities available for sale:        
 U. S. government sponsored enterprises    584    366    212    233    297  
 State and political subdivisions     23    23    25    29    38  
 Mortgage-backed securities and collateralized mortgage obligations-residential    2,230    2,276    2,393    2,733    3,040  
 Corporate bonds    -    -    1    2    2  
 Small Business Administration-guaranteed participation securities    497    503    522    524    535  
 Mortgage-backed securities and collateralized mortgage obligations-commercial    37    38    37    37    38  
 Other securities    4    4    4    4    4  
  Total interest and dividends on securities available for sale    3,375    3,210    3,194    3,562    3,954  
        
Interest on held to maturity securities:        
 Mortgage-backed securities and collateralized mortgage obligations-residential    461    480    478    512    545  
 Corporate bonds    153    154    154    154    153  
  Total interest on held to maturity securities    614    634    632    666    698  
        
 Federal Reserve Bank and Federal Home Loan Bank stock    113    118    116    123    127  
        
Interest on federal funds sold and other short-term investments    408    423    400    363    374  
  Total interest income    40,141    39,728    39,325    39,765    39,574  
        
Interest expense:        
 Interest on deposits:        
 Interest-bearing checking    117    111    105    98    94  
 Savings    603    599    658    663    644  
 Money market deposit accounts    537    547    617    634    648  
 Time deposits    2,544    2,500    2,434    2,366    2,213  
 Interest on short-term borrowings    290    300    346    335    327  
  Total interest expense    4,091    4,057    4,160    4,096    3,926  
        
  Net interest income    36,050    35,671    35,165    35,669    35,648  
        
Provision for loan losses    800    800    800    1,000    1,100  
Net interest income after provision for loan losses     35,250    34,871    34,365    34,669    34,548  
        
Noninterest income:       
 Trustco Financial Services income    1,351    1,478    1,653    1,451    1,471  
 Fees for services to customers    2,770    2,691    2,524    2,753    2,838  
 Net gain on securities transactions    -    -    249    335    376  
 Other    244    285    197    213    205  
  Total noninterest income    4,365    4,454    4,623    4,752    4,890  
        
Noninterest expenses:        
 Salaries and employee benefits    7,834    8,164    8,481    9,003    8,272  
 Net occupancy expense    3,929    3,878    4,108    3,869    4,013  
 Equipment expense    1,596    1,803    1,942    1,919    1,725  
 Professional services    2,238    2,066    1,507    1,536    1,547  
 Outsourced services    1,425    1,425    1,425    1,225    1,375  
 Advertising expense    668    733    600    602    629  
 FDIC and other insurance    2,202    1,017    1,065    949    1,054  
 Other real estate expense, net    806    201    424    841    1,001  
 Other    2,766    2,844    2,305    2,296    2,576  
  Total noninterest expenses    23,464    22,131    21,857    22,240    22,192  
        
Income before taxes    16,151    17,194    17,131    17,181    17,246  
Income taxes    5,535    6,467    6,416    6,521    6,532  
        
Net income$   10,616    10,727    10,715    10,660    10,714  
Net income per common share:        
  - Basic$ 0.112  0.113  0.113  0.113  0.113  
        
  - Diluted  0.111  0.113  0.113  0.112  0.113  
        
Average basic shares (in thousands)    95,149    95,056    94,947    94,681    94,628  
Average diluted shares (in thousands)    95,234    95,190    95,074    94,813    94,752  
        
Note:  Taxable equivalent net interest income$   36,069    35,690    35,185    35,693    35,676  
        
        
CONSOLIDATED STATEMENTS OF INCOME       
        
(dollars in thousands, except per share data)       
(Unaudited)       
  Nine Months Ended    
  9/30/20159/30/2014    
        
Interest and dividend income:        
Interest and fees on loans$   105,957    100,909     
Interest and dividends on securities available for sale:        
 U. S. government sponsored enterprises    1,162    1,184     
 State and political subdivisions     71    150     
 Mortgage-backed securities and collateralized mortgage obligations-residential    6,899    9,417     
 Corporate bonds    1    63     
 Small Business Administration-guaranteed participation securities    1,522    1,630     
 Mortgage-backed securities and collateralized mortgage obligations-commercial    112    114     
 Other securities    12    12     
  Total interest and dividends on securities available for sale    9,779    12,570     
        
Interest on held to maturity securities:        
 Mortgage-backed securities-residential    1,419    1,747     
 Corporate bonds    461    461     
  Total interest on held to maturity securities    1,880    2,208     
        
 Federal Reserve Bank and Federal Home Loan Bank stock    347    388     
        
Interest on federal funds sold and other short-term investments    1,231    1,101     
  Total interest income    119,194    117,176     
        
Interest expense:        
 Interest on deposits:        
 Interest-bearing checking    333    267     
 Savings    1,860    1,999     
 Money market deposit accounts    1,701    1,865     
 Time deposits    7,478    6,199     
 Interest on short-term borrowings    936    1,062     
  Total interest expense    12,308    11,392     
        
  Net interest income    106,886    105,784     
        
Provision for loan losses    2,400    4,100     
Net interest income after provision for loan losses     104,486    101,684     
        
Noninterest income:       
 Trust department income    4,482    4,386     
 Fees for services to customers    7,985    8,091     
 Net gain on securities transactions    249    382     
 Other    726    2,295     
  Total noninterest income    13,442    15,154     
        
Noninterest expenses:        
 Salaries and employee benefits    24,479    23,876     
 Net occupancy expense    11,915    12,382     
 Equipment expense    5,341    5,300     
 Professional services    5,811    4,271     
 Outsourced services    4,275    4,125     
 Advertising expense    2,001    1,885     
 FDIC and other insurance    4,284    2,958     
 Other real estate expense, net    1,431    168     
 Other    7,915    7,465     
  Total noninterest expenses    67,452    62,430     
        
Income before taxes    50,476    54,408     
Income taxes    18,418    20,875     
        
Net income$   32,058    33,533     
        
Net income per Common Share:        
  - Basic$ 0.337  0.354     
        
  - Diluted  0.337  0.354     
        
Average basic shares (thousands)    95,051    94,562     
Average diluted shares (thousands)    95,167    94,685     
        
Note:  Taxable equivalent net interest income$   106,944    105,890     
        
        
        
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION       
        
(dollars in thousands)       
(Unaudited)       
        
        
  9/30/20156/30/20153/31/201512/31/20149/30/2014 
  ASSETS:       
        
 Cash and due from banks$ 42,560  37,574  44,853  43,505  43,724  
 Federal funds sold and other short term investments    655,512  641,011  705,273  627,943  586,931  
  Total cash and cash equivalents    698,072  678,585  750,126  671,448  630,655  
       
 Securities available for sale:      
  U. S. government sponsored enterprises    103,492  152,082  108,248  77,800  83,087  
  States and political subdivisions    1,963  1,969  1,974  2,271  2,769  
  Mortgage-backed securities and collateralized mortgage obligations-residential    413,878  429,205  445,273  483,560  523,779  
  Corporate bonds    -     -   1,500  1,500  1,401  
  Small Business Administration-guaranteed participation securities  94,038  95,323  98,668  100,496    100,491  
  Mortgage-backed securities and collateralized mortgage obligations-commercial    10,491  10,399  10,503  10,447    10,417  
  Other securities    685  685  685  685  679  
  Total securities available for sale    624,547  689,663  666,851  676,759  722,623  
        
 Held to maturity securities:       
  Mortgage-backed securities and collateralized mortgage obligations-residential  50,027  53,576  57,296  60,986  64,223  
  Corporate bonds  9,971  9,967  9,964  9,960  9,956  
  Total held to maturity securities  59,998  63,543  67,260  70,946  74,179  
        
 Federal Reserve Bank and Federal Home Loan Bank stock  9,480  9,480  9,228  9,228  9,228  
       
 Loans:      
  Commercial    208,794  209,399  212,145  223,382  219,825  
  Residential mortgage loans    2,707,944  2,669,929  2,620,925  2,575,222  2,510,151  
  Home equity line of credit    356,337  354,946  352,552  352,134  346,496  
  Installment loans    8,930  8,674  8,003  7,594  6,557  
  Loans, net of deferred fees and costs    3,282,005  3,242,948  3,193,625  3,158,332  3,083,029  
  Less:      
  Allowance for loan losses    45,149  45,571  45,944  46,327  46,512  
  Net loans    3,236,856  3,197,377  3,147,681  3,112,005  3,036,517  
        
  Bank premises and equipment, net    37,506  38,100  38,812  38,565  37,455  
  Other assets    59,358  64,589  60,698  65,488  71,609  
       
    Total assets$ 4,725,817  4,741,337  4,740,656  4,644,439  4,582,266  
       
  LIABILITIES:      
 Deposits:      
  Demand$ 354,162  355,783  347,315  331,425  327,527  
  Interest-bearing checking    719,071  713,001  696,137  682,210  646,862  
  Savings accounts    1,237,549  1,250,154  1,237,115  1,216,831  1,215,087  
  Money market deposit accounts    617,103  633,239  640,368  638,542  655,646  
  Time deposits    1,168,908  1,185,264  1,196,233  1,163,233  1,139,919  
  Total deposits    4,096,793  4,137,441  4,117,168  4,032,241  3,985,041  
       
 Short-term borrowings    184,405  170,750  194,738  189,116  179,957  
 Accrued expenses and other liabilities    32,327  30,687  28,274  29,638  27,781  
       
  Total liabilities    4,313,525  4,338,878  4,340,180  4,250,995  4,192,779  
       
  SHAREHOLDERS' EQUITY:      
 Capital stock    98,964  98,964  98,964  98,945  98,942  
 Surplus    171,788  171,988  172,237  172,353  172,598  
 Undivided profits    180,093  175,721  171,232  166,745  162,326  
 Accumulated other comprehensive loss, net of tax    (1,174) (5,927) (2,687) (4,509) (3,508) 
 Treasury stock at cost  (37,379) (38,287) (39,270) (40,090) (40,871) 
       
  Total shareholders' equity  412,292  402,459  400,476  393,444  389,487  
        
  Total liabilities and shareholders' equity$ 4,725,817  4,741,337  4,740,656  4,644,439  4,582,266  
        
Outstanding shares (in thousands)    95,149    95,056    94,956    94,857    94,785  

 

NONPERFORMING ASSETS       
        
(dollars in thousands)       
(Unaudited)       
        
Nonperforming Assets       
  09/30/1506/30/1503/31/1512/31/1409/30/14 
New York and other states*       
Loans in nonaccrual status:       
  Commercial$   3,699    3,263    2,489    3,835    4,226  
  Real estate mortgage - 1 to 4 family    26,059    27,366    28,215    27,221    29,736  
  Installment    69    79    77    77    95  
Total non-accrual loans    29,827    30,708    30,781    31,133    34,057  
Other nonperforming real estate mortgages - 1 to 4 family    50    74    75    125    155  
Total nonperforming loans    29,877    30,782    30,856    31,258    34,212  
Other real estate owned    5,893    5,833    6,288    5,533    5,238  
Total nonperforming assets$   35,770    36,615    37,144    36,791    39,450  
        
Florida       
Loans in nonaccrual status:       
  Commercial$   -     -     -     -     517  
  Real estate mortgage - 1 to 4 family    2,054    1,678    2,608    2,740    2,395  
  Installment    9    10    20    13    1  
Total non-accrual loans    2,063    1,688    2,628    2,753    2,913  
Other nonperforming real estate mortgages - 1 to 4 family    -     -     -    -    -  
Total nonperforming loans    2,063    1,688    2,628    2,753    2,913  
Other real estate owned    -     275    670    908    1,188  
Total nonperforming assets$   2,063    1,963    3,298    3,661    4,101  
        
Total       
Loans in nonaccrual status:       
  Commercial$   3,699    3,263    2,489    3,835    4,743  
  Real estate mortgage - 1 to 4 family    28,113    29,044    30,823    29,961    32,131  
  Installment    78    89    97    90    96  
Total non-accrual loans    31,890    32,396    33,409    33,886    36,970  
Other nonperforming real estate mortgages - 1 to 4 family    50    74    75    125    155  
Total nonperforming loans    31,940    32,470    33,484    34,011    37,125  
Other real estate owned    5,893    6,108    6,958    6,441    6,426  
Total nonperforming assets$   37,833    38,578    40,442    40,452    43,551  
        
        
Quarterly Net Chargeoffs (Recoveries)       
  09/30/1506/30/1503/31/1512/31/1409/30/14 
New York and other states*       
Commercial$   3    50    34    (16)   124  
Real estate mortgage - 1 to 4 family    1,159    933    1,004    1,591    1,105  
Installment    26    24    37    48    57  
  Total net chargeoffs$   1,188    1,007    1,075    1,623    1,286  
        
Florida       
Commercial$   (3)   (1)   (1)   (476)   (1) 
Real estate mortgage - 1 to 4 family    33    167    109    37    242  
Installment    4    -     -    1    (4) 
  Total net chargeoffs$   34    166    108    (438)   237  
        
Total       
Commercial$   -     49    33    (492)   123  
Real estate mortgage - 1 to 4 family    1,192    1,100    1,113    1,628    1,347  
Installment    30    24    37    49    53  
  Total net chargeoffs$   1,222    1,173    1,183    1,185    1,523  
        
        
Asset Quality Ratios       
  09/30/1506/30/1503/31/1512/31/1409/30/14 
        
Total nonperforming loans(1)$   31,940    32,470    33,484    34,011    37,125  
Total nonperforming assets(1)    37,833    38,578    40,442    40,452    43,551  
Total net chargeoffs(2)    1,222    1,173    1,183    1,185    1,523  
        
Allowance for loan losses(1)    45,149  45,571  45,944  46,327  46,512  
        
Nonperforming loans to total loans  0.97% 1.00% 1.05% 1.08% 1.20% 
Nonperforming assets to total assets  0.80% 0.81% 0.85% 0.87% 0.95% 
Allowance for loan losses to total loans  1.38% 1.41% 1.44% 1.47% 1.51% 
Coverage ratio(1)  141.4% 140.3% 137.2% 136.2% 125.3% 
Annualized net chargeoffs to average loans(2)  0.15% 0.15% 0.15% 0.15% 0.20% 
Allowance for loan losses to annualized net chargeoffs(2)  9.3x 9.7x9.6x9.8x7.6x 
        
* 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, 2015  September 30, 2014  
  Average InterestAverage  Average InterestAverage  
  Balance  Rate  Balance  Rate  
              
Assets             
              
Securities available for sale:             
U. S. government sponsored enterprises$ 157,454   584 1.48%$ 93,098   297 1.27% 
Mortgage backed securities and             
  collateralized mortgage obligations-residential  425,092   2,230   2.10   569,352   3,040   2.14  
State and political subdivisions  1,937   34   7.02   3,307   60   7.26  
Corporate bonds    -      -  0.00   1,403   2 0.48  
Small Business Administration-guaranteed participation securities  96,109   497   2.07   106,109   535   2.02  
Mortgage backed securities and             
  collateralized mortgage obligations-commercial  10,532   37   1.41   10,803   38   1.40  
Other  685   4   2.34   685   4   2.34  
              
  Total securities available for sale  691,809   3,386   1.96   784,757   3,976   2.03  
              
Federal funds sold and other             
 short-term Investments  652,274   408 0.25   598,318   374 0.25  
              
Held to maturity securities:             
Corporate bonds  9,969   153 6.17   9,954   153 6.18  
Mortgage backed securities and             
  collateralized mortgage obligations-residential  51,928   461 3.55   66,206   545 3.29  
              
  Total held to maturity securities  61,897   614 3.97   76,160   698 3.67  
              
Federal Reserve Bank and Federal Home Loan Bank stock  9,480   113   4.77   9,884   127   5.14  
              
Commercial loans  208,492   2,688   5.15   220,347   2,842   5.16  
Residential mortgage loans  2,689,072   29,617 4.41   2,473,857   28,315 4.58  
Home equity lines of credit  354,552   3,151 3.53   342,456   3,102 3.59  
Installment loans  8,678   183 8.33   6,048   168 11.02  
              
Loans, net of unearned income  3,260,794   35,639 4.37   3,042,708   34,427 4.52  
              
  Total interest earning assets  4,676,254   40,160 3.43   4,511,827   39,602 3.51  
              
Allowance for loan losses  (45,829)      (47,115)     
Cash & non-interest earning assets  133,241       134,110      
              
              
Total assets$ 4,763,666     $ 4,598,822      
              
              
Liabilities and shareholders' equity             
              
Deposits:             
Interest bearing checking accounts$ 727,693   117 0.06%$ 650,132   94 0.06% 
Money market accounts  623,381   537 0.34   656,935   648 0.39  
Savings  1,251,031   603 0.19   1,229,712   644 0.21  
Time deposits  1,189,763   2,544 0.85   1,148,419   2,213 0.76  
              
  Total interest bearing deposits  3,791,868   3,801 0.40   3,685,198   3,599 0.39  
Short-term borrowings  177,230   290 0.65   180,063   327 0.72  
              
  Total interest bearing liabilities  3,969,098   4,091 0.41   3,865,261   3,926 0.40  
              
Demand deposits  360,080       322,083      
Other liabilities  27,524       23,783      
Shareholders' equity  406,964       387,695      
              
Total liabilities and shareholders' equity$ 4,763,666     $ 4,598,822      
              
Net interest income, tax equivalent    36,069       35,676    
              
Net interest spread    3.02%    3.11% 
              
Net interest margin (net interest income             
to total interest earning assets)    3.08%    3.16% 
              
Tax equivalent adjustment    (19)      (28)   
              
              
  Net interest income     36,050       35,648    
              
              
              
              
              
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY-  
INTEREST RATES AND INTEREST DIFFERENTIAL  
(dollars in thousands) Nine months ended  Nine months ended  
(Unaudited) September 30, 2015  September 30, 2014  
  Average InterestAverage  Average InterestAverage  
  Balance  Rate  Balance  Rate  
              
Assets             
              
Securities available for sale:             
U. S. government sponsored enterprises$ 116,824   1,162   1.33%$ 124,133   1,184 1.27% 
Mortgage backed securities and             
  collateralized mortgage obligations-residential  448,223   6,899   2.05   568,257   9,417   2.21  
State and political subdivisions  1,989   108   7.32   4,411   235   7.10  
Corporate bonds  813   1 0.16   3,758   63 2.23  
Small Business Administration-guaranteed participation securities  98,868   1,522   2.05   108,078   1,630   2.01  
Mortgage backed securities and             
  collateralized mortgage obligations-commercial  10,600   112   1.41   10,870   114   1.40  
Other  685   12   2.34   670   12   2.39  
              
  Total securities available for sale  678,002   9,816   1.93   820,177   12,655   2.06  
              
Federal funds sold and other             
 short-term Investments  662,879   1,231 0.25   593,577   1,101 0.25  
              
Held to maturity securities:             
Corporate bonds  9,965   461   6.17   9,950   461 6.18  
Mortgage backed securities and             
  collateralized mortgage obligations-residential  55,569   1,419   3.41   70,273   1,747 3.31  
              
  Total held to maturity securities  65,534   1,880   3.83   80,223   2,208 3.67  
              
Federal Reserve Bank and Federal Home Loan Bank stock  9,392   347   4.93   10,438   388   4.96  
              
Commercial loans  212,617   8,194   5.14   221,492   8,481   5.11  
Residential mortgage loans  2,644,216   87,946 4.44   2,410,435   82,845 4.59  
Home equity lines of credit  353,630   9,304 3.52   341,014   9,102 3.57  
Installment loans  8,236   534 8.66   5,825   502 11.52  
              
Loans, net of unearned income  3,218,699   105,978 4.39   2,978,766   100,930 4.52  
              
  Total interest earning assets  4,634,506   119,252 3.43   4,483,181   117,282 3.49  
              
Allowance for loan losses  (46,203)      (47,570)     
Cash & non-interest earning assets  136,906       133,456      
              
              
Total assets$ 4,725,209     $ 4,569,067      
              
              
Liabilities and shareholders' equity             
              
Deposits:             
Interest bearing checking accounts$ 704,323   333 0.06%$ 629,542   267 0.06% 
Money market accounts  632,143   1,701 0.36   652,886   1,865 0.38  
Savings  1,243,544   1,860 0.20   1,231,761   1,999 0.22  
Time deposits  1,186,846   7,478 0.84   1,144,164   6,199 0.72  
              
  Total interest bearing deposits  3,766,856   11,372 0.40   3,658,353   10,330 0.38  
Short-term borrowings  184,079   936 0.68   190,599   1,062 0.74  
              
  Total interest bearing liabilities  3,950,935   12,308 0.42   3,848,952   11,392 0.40  
              
Demand deposits  344,606       318,306      
Other liabilities  26,689       23,074      
Shareholders' equity  402,979       378,735      
              
Total liabilities and shareholders' equity$ 4,725,209     $ 4,569,067      
              
Net interest income, tax equivalent    106,944       105,890    
              
Net interest spread    3.01%    3.09% 
              
Net interest margin (net interest income             
to total interest earning assets)    3.08%    3.15% 
              
Tax equivalent adjustment    (58)      (106)   
              
              
  Net interest income     106,886       105,784    
              

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, the net after-tax gain on a significant sale of an ORE property and net after-tax gains on the sale of non-performing loans 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)       
  09/30/1506/30/1509/30/14   
Tangible Book Value Per Share       
        
Equity$   412,292    402,459    389,487    
Less: Intangible assets    553    553    553    
  Tangible equity    411,739    401,906    388,934    
        
Shares outstanding    95,149    95,056    94,785    
Tangible book value per share    4.33    4.23    4.10    
Book value per share    4.33    4.23    4.11    
        
Tangible Equity to Tangible Assets       
Total Assets  4,725,817  4,741,337  4,582,266    
Less: Intangible assets    553    553    553    
  Tangible assets    4,725,264    4,740,784    4,581,713    
        
Tangible Equity to Tangible Assets  8.71% 8.48% 8.49%   
Equity to Assets  8.72% 8.49% 8.50%   
        
  3 Months Ended 9 Months Ended
Efficiency Ratio 09/30/1506/30/1509/30/14 09/30/1509/30/14
        
Net interest income$   36,050    35,671    35,648     106,886    105,784 
Taxable equivalent adjustment    19    19    28     58    106 
Net interest income (fully taxable equivalent)    36,069    35,690    35,676     106,944    105,890 
Non-interest income    4,365    4,454    4,890     13,442    15,154 
Less:  Net gain on sale of building and nonperforming loans    -    60    -     60    1,719 
Less:  Net gain on securities    -    -    376     249    382 
  Revenue used for efficiency ratio    40,434    40,084    40,190     120,077    118,943 
        
Total noninterest expense    23,464    22,131    22,192     67,452    62,430 
Less:  Other real estate expense, net    806    201    1,001     1,431    168 
  Expense used for efficiency ratio    22,658    21,930    21,191     66,021    62,262 
        
Efficiency Ratio  56.04% 54.71% 52.73%  54.98% 52.35%
        
        
  3 Months Ended 9 Months Ended
Core Net Income 09/30/1506/30/1509/30/14 09/30/1509/30/14
        
Net income$   10,616    10,727    10,714     32,058    33,533 
Less:  Gain on sale of building, nonperforming loans, and significant ORE gain, net of tax   -    37    -     37    2,684 
  Core net income    10,616    10,690    10,714     32,021    30,849 
        
Average basic shares outstanding (in thousands)    95,149    95,056    94,628     95,051    94,562 
Average diluted shares outstanding (in thousands)    95,234    95,190    94,752     95,167    94,685 
        
Net income per common share:        
  - Basic$   0.112    0.113    0.113     0.337    0.355 
  - Diluted    0.111    0.113    0.113     0.337    0.354 
        
Core net income per common share:        
        
  - Basic$   0.112    0.112    0.113     0.337    0.326 
  - Diluted    0.111    0.112    0.113     0.336    0.326 

 

 

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

Primary Logo

View Comments and Join the Discussion!