Market Overview

TrustCo Announces Solid Fourth Quarter 2015 Earnings; Full Year Core Earnings Rise

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Executive Snapshot:

  • Continued solid financial results:
    • Core net income for 2015 rose to $42.2 million from $41.5 million in 2014
    • Key metrics for fourth quarter of 2015 results:
      • Net income of $10.2 million in fourth quarter of 2015 compared to $10.7 million in fourth quarter of 2014
      • Operating expenses increased $868 thousand in the fourth quarter of 2015 compared to the fourth quarter of 2014
      • Return on average assets (ROA) of 0.86%
      • Return on average equity (ROE) of 9.75%
      • Efficiency ratio of 55.37%
         
  • Asset quality improvement:
    • Most asset quality measures continued to improve compared to both the fourth quarter of 2014 and the third quarter of 2015
    • Nonperforming assets (NPAs) fell by $5.7 million compared to December 31, 2014
    • NPAs to total assets improved from 0.87% to 0.73% compared to December 31, 2014
    • Quarterly net chargeoffs increased to 0.21% of average loans on an annualized basis, compared to 0.15% for the fourth quarter of 2014
       
  • Continued expansion of customer base:
    • Focus on capitalizing on opportunities presented by expanded branch network
    • Average deposits per branch grew $452 thousand from December 31, 2014 to December 31, 2015 on a same store basis
    • Average core deposits were $109 million higher in the fourth quarter of 2015 compared to the fourth quarter of 2014
       
  • Loan portfolio reaches all-time high:
    • Average loans were up $163 million for the fourth quarter of 2015 compared to fourth quarter of 2014
    • At $3.29 billion as of December 31, 2015, loans reached an all-time high

                         
Note: See non-GAAP financial measures reconciliation for information on core income

GLENVILLE, N.Y., Jan. 21, 2016 (GLOBE NEWSWIRE) -- TrustCo Bank Corp NY (TrustCo) (Nasdaq: TRST) today announced that fourth quarter of 2015 GAAP net income was $10.2 million compared to $10.7 million for the fourth quarter of 2014.  Despite added operating costs during the second half of 2015 in response to recent regulatory concerns, core net income for the full year 2015 increased to $42.2 million from $41.5 million in 2014. 

Robert J. McCormick, President and Chief Executive Officer noted, "We continue to be pleased with the ongoing improvement in our asset quality during both the fourth 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 fourth quarter 2015 results to be solid and were encouraged by the increase in pre-tax earnings from the third quarter to the fourth quarter.  As we  discussed in recent quarters, increased operating costs in response to regulatory concerns have hampered earnings.  Higher expenses were anticipated in order to fulfill operating and regulatory requirements.  We took aggressive action to meet these requirements during the second half of 2015, resulting in added costs in both the third and the fourth quarters.  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 2016 with optimism.  We will continue taking advantage of opportunities as they are presented."

TrustCo saw continued strong loan growth in the fourth quarter of 2015.  Loan portfolio expansion was funded by a combination of deposit growth and cash flow from the Bank's investment portfolio.  The continued shift toward loans helped offset the margin impact from continued comparatively low yields on cash and investments.  The growth in average deposits was led by lower cost core deposits.  TrustCo's strong liquidity position continues to allow the Company to take advantage of opportunities when interest rate conditions change.

For the fourth quarter of 2015, return on average assets and return on average equity were 0.86% and 9.75%, respectively, compared to 0.92% and 10.70% for the fourth quarter of 2014.  GAAP diluted earnings per share were $0.107 for the fourth quarter of 2015, compared to $0.112 for the fourth quarter of 2014. 

For the full year 2015, core diluted net income per share was up slightly to $0.443, compared to $0.438 for 2014.  GAAP diluted net income per share was $0.444 for 2015, compared to $0.466 for 2014.  Return on average assets and equity were 0.89% and 10.41% for 2015, compared to 0.97% and 11.54% for 2014, all on a GAAP basis.  Non-GAAP measures are discussed on pages 13 and 14.

Average loans were up $162.8 million or 5.2% in the fourth quarter of 2015, over the same period in 2014.  Average deposits were up $94.0 million or 2.4% for the fourth quarter of 2015 over the same period a year earlier.  Most of the increase in deposits came from core deposit accounts, which consist of checking, savings and money market deposits.  Average core deposits increased $108.7 million from the fourth quarter of 2014 to the fourth 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 December 31, 2015, our average branch size was $28.1 million.  On a same store basis, our average deposits per branch grew by $452 thousand from December 31, 2014 to December 31, 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 December 31, 2014 and September 30, 2015 to December 31, 2015.  NPLs declined to $28.3 million at December 31, 2015, compared to $34.0 million at December 31, 2014 and $31.9 million at September 30, 2015.  NPLs were equal to 0.86% of total loans at December 31, 2015, compared to 1.08% a year earlier and 0.97% at September 30, 2015.  The coverage ratio, or allowance for loan losses to NPLs, was 158.4% at December 31, 2015, compared to 141.4% at September 30, 2015 and 136.2% at December 31, 2014.  Nonperforming assets (NPAs) declined to $34.7 million at December 31, 2015 from $37.8 million at September 30, 2015 and $40.5 million at December 31, 2014.  Overall, virtually every asset quality indicator improved during the fourth quarter of 2015 relative to the third quarter of 2015 and the fourth quarter of 2014.  The ratio of loan loss allowance to total loans was 1.36% as of December 31, 2015, compared to 1.38% at September 30, 2015 and to 1.47% at December 31, 2014 and reflects both the improvement in asset quality and economic conditions in our lending areas.  The allowance for loan losses was $44.8 million at December 31, 2015 compared to $45.1 million at September 30, 2015 and $46.3 million at December 31, 2014.

The net interest margin for the fourth quarter of 2015 was 3.14% compared to 3.08% in the third quarter of 2015 and 3.17% in the fourth quarter of 2014. 

At December 31, 2015 the tangible equity ratio was 8.72% compared to 8.71% at September 30, 2015 and 8.46% at December 31, 2014.  The equity to asset ratio was 8.73% at December 31, 2015, compared to 8.72% at September 30, 2015 and 8.47% at December 31, 2014.  Tangible book value per share at December 31, 2015 was $4.33 compared to $4.14 a year earlier and GAAP book value per share was $4.34 and $4.15, respectively.  Non-GAAP measures are discussed 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 December 31, 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 fourth quarter 2015 results will be held at 9:00 a.m. Eastern Time on January 22, 2016.  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 10079078. The call will also be audio webcast at: http://services.choruscall.com/links/trst160122.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 2016 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 most recent annual report on Form 10-K, 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
    
  12/31/1509/30/1512/31/14   
Summary of operations       
  Net interest income (TE)$   36,278    36,069    35,693    
  Provision for loan losses    1,300    800    1,000    
  Net securities transactions    2    -     335    
  Noninterest income, excluding net securities transactions    4,428    4,365    4,417    
  Noninterest expense    23,108    23,464    22,240    
  Net income    10,180    10,616    10,660    
        
Per common share       
  Net income per share:       
    - Basic$   0.107    0.112    0.113    
    - Diluted    0.107    0.111    0.112    
  Cash dividends    0.066    0.066    0.066    
  Tangible Book value at period end    4.33    4.33    4.14    
  Market price at period end    6.14    5.84    7.26    
        
At period end       
  Full time equivalent employees  787  778  737    
  Full service banking offices  146  146  144    
        
Performance ratios       
  Return on average assets  0.86% 0.88  0.92    
  Return on average equity  9.75  10.35  10.70    
  Efficiency (1)  55.37  56.04  53.35    
  Net interest spread (TE)  3.08  3.02  3.11    
  Net interest margin (TE)  3.14  3.08  3.17    
  Dividend payout ratio  61.54  58.82  58.55    
        
Capital ratio at period end       
  Consolidated tangible equity to tangible assets (2)  8.72  8.71  8.46    
        
Asset quality analysis at period end       
  Nonperforming loans to total loans  0.86  0.97  1.08    
  Nonperforming assets to total assets  0.73  0.80  0.87    
  Allowance for loan losses to total loans  1.36  1.38  1.47    
  Coverage ratio (3) 1.6x 1.4  1.4    
        
        
(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)       
  Years Ended    
  12/31/1512/31/14    
Summary of operations       
  Net interest income (TE)$   143,222    141,583     
  Provision for loan losses    3,700    5,100     
  Net securities transactions    251    717     
  Noninterest income    17,621    19,189     
  Noninterest expense    90,560    84,670     
  Net income    42,238    44,193     
        
Per common share       
  Net income per share:       
    - Basic$   0.444    0.467     
    - Diluted    0.444    0.466     
  Cash dividends    0.263    0.263     
  Tangible Book value at period end    4.33    4.14     
  Market price at period end    6.14    7.26     
        
Performance ratios       
  Return on average assets  0.89% 0.97     
  Return on average equity  10.41  11.54     
  Efficiency (1)  55.08  52.60     
  Net interest spread (TE)  3.03  3.10     
  Net interest margin (TE)  3.09  3.16     
  Dividend payout ratio  59.13  56.30     
        
        
(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  
  12/31/20159/30/20156/30/20153/31/201512/31/2014 
Interest and dividend income:        
Interest and fees on loans$   35,930    35,631    35,343    34,983    35,051  
Interest and dividends on securities available for sale:        
 U. S. government sponsored enterprises    256    584    366    212    233  
 State and political subdivisions     16    23    23    25    29  
 Mortgage-backed securities and collateralized mortgage obligations-residential    2,233    2,230    2,276    2,393    2,733  
 Corporate bonds    -    -    -    1    2  
 Small Business Administration-guaranteed participation securities    482    497    503    522    524  
 Mortgage-backed securities and collateralized mortgage obligations-commercial    37    37    38    37    37  
 Other securities    4    4    4    4    4  
  Total interest and dividends on securities available for sale    3,028    3,375    3,210    3,194    3,562  
        
Interest on held to maturity securities:        
 Mortgage-backed securities and collateralized mortgage obligations-residential    425    461    480    478    512  
 Corporate bonds    154    153    154    154    154  
  Total interest on held to maturity securities    579    614    634    632    666  
        
 Federal Reserve Bank and Federal Home Loan Bank stock    120    113    118    116    123  
        
Interest on federal funds sold and other short-term investments    494    408    423    400    363  
  Total interest income    40,151    40,141    39,728    39,325    39,765  
        
Interest expense:        
 Interest on deposits:        
 Interest-bearing checking    115    117    111    105    98  
 Savings    608    603    599    658    663  
 Money market deposit accounts    513    537    547    617    634  
 Time deposits    2,375    2,544    2,500    2,434    2,366  
 Interest on short-term borrowings    278    290    300    346    335  
  Total interest expense    3,889    4,091    4,057    4,160    4,096  
        
  Net interest income    36,262    36,050    35,671    35,165    35,669  
        
Provision for loan losses    1,300    800    800    800    1,000  
Net interest income after provision for loan losses     34,962    35,250    34,871    34,365    34,669  
        
Noninterest income:       
 Trustco Financial Services income    1,489    1,351    1,478    1,653    1,451  
 Fees for services to customers    2,704    2,770    2,691    2,524    2,753  
 Net gain on securities transactions    2    -    -    249    335  
 Other    235    244    285    197    213  
  Total noninterest income    4,430    4,365    4,454    4,623    4,752  
        
Noninterest expenses:        
 Salaries and employee benefits    8,042    7,834    8,164    8,481    9,003  
 Net occupancy expense    3,884    3,929    3,878    4,108    3,869  
 Equipment expense    1,530    1,596    1,803    1,942    1,919  
 Professional services    2,067    2,238    2,066    1,507    1,536  
 Outsourced services    1,585    1,425    1,425    1,425    1,225  
 Advertising expense    592    668    733    600    602  
 FDIC and other insurance    2,055    2,202    1,017    1,065    949  
 Other real estate expense, net    570    806    201    424    841  
 Other    2,783    2,766    2,844    2,305    2,296  
  Total noninterest expenses    23,108    23,464    22,131    21,857    22,240  
        
Income before taxes    16,284    16,151    17,194    17,131    17,181  
Income taxes    6,104    5,535    6,467    6,416    6,521  
        
Net income$   10,180    10,616    10,727    10,715    10,660  
Net income per common share:        
  - Basic$ 0.107  0.112  0.113  0.113  0.113  
        
  - Diluted  0.107  0.111  0.113  0.113  0.112  
        
Average basic shares (in thousands)    95,256    95,149    95,056    94,947    94,681  
Average diluted shares (in thousands)    95,349    95,234    95,190    95,074    94,813  
        
Note:  Taxable equivalent net interest income$   36,278    36,069    35,690    35,185    35,693  
        
        
CONSOLIDATED STATEMENTS OF INCOME       
        
(dollars in thousands, except per share data)       
(Unaudited)       
  Years Ended    
  12/31/201512/31/2014    
        
Interest and dividend income:        
Interest and fees on loans$   141,887    135,960     
Interest and dividends on securities available for sale:        
 U. S. government sponsored enterprises    1,418    1,417     
 State and political subdivisions     87    179     
 Mortgage-backed securities and collateralized mortgage obligations-residential    9,132    12,150     
 Corporate bonds    1    65     
 Small Business Administration-guaranteed participation securities    2,004    2,154     
 Mortgage-backed securities and collateralized mortgage obligations-commercial    149    151     
 Other securities    16    16     
  Total interest and dividends on securities available for sale    12,807    16,132     
        
Interest on held to maturity securities:        
 Mortgage-backed securities-residential    1,844    2,259     
 Corporate bonds    615    615     
  Total interest on held to maturity securities    2,459    2,874     
        
 Federal Reserve Bank and Federal Home Loan Bank stock    467    511     
        
Interest on federal funds sold and other short-term investments    1,725    1,464     
  Total interest income    159,345    156,941     
        
Interest expense:        
 Interest on deposits:        
 Interest-bearing checking    448    365     
 Savings    2,468    2,662     
 Money market deposit accounts    2,214    2,499     
 Time deposits    9,853    8,565     
 Interest on short-term borrowings    1,214    1,397     
  Total interest expense    16,197    15,488     
        
  Net interest income    143,148    141,453     
        
Provision for loan losses    3,700    5,100     
Net interest income after provision for loan losses     139,448    136,353     
        
Noninterest income:       
 Trust department income    5,971    5,837     
 Fees for services to customers    10,689    10,844     
 Net gain on securities transactions    251    717     
 Other    961    2,508     
  Total noninterest income    17,872    19,906     
        
Noninterest expenses:        
 Salaries and employee benefits    32,521    32,879     
 Net occupancy expense    15,799    16,251     
 Equipment expense    6,871    7,219     
 Professional services    7,878    5,807     
 Outsourced services    5,860    5,350     
 Advertising expense    2,593    2,487     
 FDIC and other insurance    6,339    3,907     
 Other real estate expense, net    2,001    1,009     
 Other    10,698    9,761     
  Total noninterest expenses    90,560    84,670     
        
Income before taxes    66,760    71,589     
Income taxes    24,522    27,396     
        
Net income$   42,238    44,193     
        
Net income per Common Share:        
  - Basic$ 0.444  0.467     
        
  - Diluted  0.444  0.466     
        
Average basic shares (thousands)    95,103    94,628     
Average diluted shares (thousands)    95,213    94,753     
        
Note:  Taxable equivalent net interest income$   143,222    141,583     
        
        
        
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION       
        
(dollars in thousands)       
(Unaudited)       
        
        
  12/31/20159/30/20156/30/20153/31/201512/31/2014 
  ASSETS:       
        
 Cash and due from banks$ 41,698  42,560  37,574  44,853  43,505  
 Federal funds sold and other short term investments    676,458  655,512  641,011  705,273  627,943  
  Total cash and cash equivalents    718,156  698,072  678,585  750,126  671,448  
       
 Securities available for sale:      
  U. S. government sponsored enterprises    86,737  103,492  152,082  108,248  77,800  
  States and political subdivisions    1,290  1,963  1,969  1,974  2,271  
  Mortgage-backed securities and collateralized mortgage obligations-residential    411,729  413,878  429,205  445,273  483,560  
  Corporate bonds    -     -     -   1,500  1,500  
  Small Business Administration-guaranteed participation securities  90,416  94,038  95,323  98,668  100,496  
  Mortgage-backed securities and collateralized mortgage obligations-commercial    10,180  10,491  10,399  10,503  10,447  
  Other securities    685  685  685  685  685  
  Total securities available for sale    601,037  624,547  689,663  666,851  676,759  
        
 Held to maturity securities:       
  Mortgage-backed securities and collateralized mortgage obligations-residential  46,490  50,027  53,576  57,296  60,986  
  Corporate bonds  9,975  9,971  9,967  9,964  9,960  
  Total held to maturity securities  56,465  59,998  63,543  67,260  70,946  
        
 Federal Reserve Bank and Federal Home Loan Bank stock  9,480  9,480  9,480  9,228  9,228  
       
 Loans:      
  Commercial    203,415  208,794  209,399  212,145  223,382  
  Residential mortgage loans    2,721,173  2,707,944  2,669,929  2,620,925  2,575,222  
  Home equity line of credit    359,325  356,337  354,946  352,552  352,134  
  Installment loans    9,391  8,930  8,674  8,003  7,594  
 Loans, net of deferred fees and costs    3,293,304  3,282,005  3,242,948  3,193,625  3,158,332  
 Less:      
  Allowance for loan losses    44,762  45,149  45,571  45,944  46,327  
  Net loans    3,248,542  3,236,856  3,197,377  3,147,681  3,112,005  
        
 Bank premises and equipment, net    37,643  37,506  38,100  38,812  38,565  
 Other assets    63,669  59,358  64,589  60,698  65,488  
       
  Total assets$ 4,734,992  4,725,817  4,741,337  4,740,656  4,644,439  
       
  LIABILITIES:      
 Deposits:      
  Demand$ 365,081  354,162  355,783  347,315  331,425  
  Interest-bearing checking    754,347  719,071  713,001  696,137  682,210  
  Savings accounts    1,262,194  1,237,549  1,250,154  1,237,115  1,216,831  
  Money market deposit accounts    610,826  617,103  633,239  640,368  638,542  
  Time deposits    1,107,930  1,168,908  1,185,264  1,196,233  1,163,233  
  Total deposits    4,100,378  4,096,793  4,137,441  4,117,168  4,032,241  
       
 Short-term borrowings    191,226  184,405  170,750  194,738  189,116  
 Accrued expenses and other liabilities    30,078  32,327  30,687  28,274  29,638  
       
  Total liabilities    4,321,682  4,313,525  4,338,878  4,340,180  4,250,995  
       
  SHAREHOLDERS' EQUITY:      
 Capital stock    98,973  98,964  98,964  98,964  98,945  
 Surplus    171,443  171,788  171,988  172,237  172,353  
 Undivided profits    184,009  180,093  175,721  171,232  166,745  
 Accumulated other comprehensive loss, net of tax    (4,781) (1,174) (5,927) (2,687) (4,509) 
 Treasury stock at cost  (36,334) (37,379) (38,287) (39,270) (40,090) 
       
  Total shareholders' equity  413,310  412,292  402,459  400,476  393,444  
        
  Total liabilities and shareholders' equity$ 4,734,992  4,725,817  4,741,337  4,740,656  4,644,439  
        
Outstanding shares (in thousands)    95,262    95,149    95,056    94,956    94,857  

 

NONPERFORMING ASSETS       
        
(dollars in thousands)       
(Unaudited)       
        
Nonperforming Assets       
  12/31/1509/30/1506/30/1503/31/1512/31/14 
New York and other states*       
Loans in nonaccrual status:       
  Commercial$   3,024    3,699    3,263    2,489    3,835  
  Real estate mortgage - 1 to 4 family    23,273    26,059    27,366    28,215    27,221  
  Installment    90    69    79    77    77  
Total non-accrual loans    26,387    29,827    30,708    30,781    31,133  
Other nonperforming real estate mortgages - 1 to 4 family    48    50    74    75    125  
Total nonperforming loans    26,435    29,877    30,782    30,856    31,258  
Other real estate owned    6,120    5,893    5,833    6,288    5,533  
Total nonperforming assets$   32,555    35,770    36,615    37,144    36,791  
        
Florida       
Loans in nonaccrual status:       
  Commercial$   -     -     -     -     -   
  Real estate mortgage - 1 to 4 family    1,817    2,054    1,678    2,608    2,740  
  Installment    8    9    10    20    13  
Total non-accrual loans    1,825    2,063    1,688    2,628    2,753  
Other nonperforming real estate mortgages - 1 to 4 family    -     -     -     -    -  
Total nonperforming loans    1,825    2,063    1,688    2,628    2,753  
Other real estate owned    335    -     275    670    908  
Total nonperforming assets$   2,160    2,063    1,963    3,298    3,661  
        
Total       
Loans in nonaccrual status:       
  Commercial$   3,024    3,699    3,263    2,489    3,835  
  Real estate mortgage - 1 to 4 family    25,090    28,113    29,044    30,823    29,961  
  Installment    98    78    89    97    90  
Total non-accrual loans    28,212    31,890    32,396    33,409    33,886  
Other nonperforming real estate mortgages - 1 to 4 family    48    50    74    75    125  
Total nonperforming loans    28,260    31,940    32,470    33,484    34,011  
Other real estate owned    6,455    5,893    6,108    6,958    6,441  
Total nonperforming assets$   34,715    37,833    38,578    40,442    40,452  
        
        
Quarterly Net Chargeoffs (Recoveries)       
  12/31/1509/30/1506/30/1503/31/1512/31/14 
New York and other states*       
Commercial$   672    3    50    34    (16) 
Real estate mortgage - 1 to 4 family    963    1,159    933    1,004    1,591  
Installment    35    26    24    37    48  
  Total net chargeoffs$   1,670    1,188    1,007    1,075    1,623  
        
Florida       
Commercial$   (2)   (3)   (1)   (1)   (476) 
Real estate mortgage - 1 to 4 family    6    33    167    109    37  
Installment    13    4    -     -    1  
  Total net chargeoffs$   17    34    166    108    (438) 
        
Total       
Commercial$   670    -     49    33    (492) 
Real estate mortgage - 1 to 4 family    969    1,192    1,100    1,113    1,628  
Installment    48    30    24    37    49  
  Total net chargeoffs$   1,687    1,222    1,173    1,183    1,185  
        
        
Asset Quality Ratios       
  12/31/1509/30/1506/30/1503/31/1512/31/14 
        
Total nonperforming loans(1)$   28,260    31,940    32,470    33,484    34,011  
Total nonperforming assets(1)    34,715    37,833    38,578    40,442    40,452  
Total net chargeoffs(2)    1,687    1,222    1,173    1,183    1,185  
        
Allowance for loan losses(1)    44,762  45,149  45,571  45,944  46,327  
        
Nonperforming loans to total loans  0.86% 0.97% 1.00% 1.05% 1.08% 
Nonperforming assets to total assets  0.73% 0.80% 0.81% 0.85% 0.87% 
Allowance for loan losses to total loans  1.36% 1.38% 1.41% 1.44% 1.47% 
Coverage ratio(1)  158.4% 141.4% 140.3% 137.2% 136.2% 
Annualized net chargeoffs to average loans(2)  0.21% 0.15% 0.15% 0.15% 0.15% 
Allowance for loan losses to annualized net chargeoffs(2)  6.6x  9.3x 9.7x9.6x9.8x 
        
* 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) December 31, 2015  December 31, 2014  
  Average InterestAverage  Average InterestAverage  
  Balance  Rate  Balance  Rate  
              
Assets             
              
Securities available for sale:             
U. S. government sponsored enterprises$ 80,605   256 1.27%$ 80,520   233 1.16% 
Mortgage backed securities and             
  collateralized mortgage obligations-residential  412,193   2,233   2.17   517,694   2,733   2.11  
State and political subdivisions  1,280   25   7.78   2,436   45   7.32  
Corporate bonds    -      -  0.00   1,261   2 0.54  
Small Business Administration-guaranteed participation securities  93,329   482   2.07   103,846   524   2.02  
Mortgage backed securities and             
  collateralized mortgage obligations-commercial  10,464   37   1.41   10,737   37   1.40  
Other  685   4   2.34   685   4   2.34  
              
  Total securities available for sale  598,556   3,037   2.03   717,179   3,578   2.00  
              
Federal funds sold and other             
 short-term Investments  669,545   494 0.29   579,870   363 0.25  
              
Held to maturity securities:             
Corporate bonds  9,973   154 6.17   9,958   154 6.18  
Mortgage backed securities and             
  collateralized mortgage obligations-residential  48,275   425 3.52   62,720   512 3.27  
              
  Total held to maturity securities  58,248   579 3.97   72,678   666 3.67  
              
Federal Reserve Bank and Federal Home Loan Bank stock  9,480   120   5.06   9,228   123   5.33  
              
Commercial loans  202,854   2,667   5.26   220,516   2,847   5.16  
Residential mortgage loans  2,714,016   29,874 4.40   2,543,869   28,875 4.54  
Home equity lines of credit  357,990   3,204 3.55   349,984   3,161 3.58  
Installment loans  9,126   192 8.37   6,861   176 10.19  
              
Loans, net of unearned income  3,283,986   35,937 4.37   3,121,230   35,059 4.49  
              
  Total interest earning assets  4,619,815   40,167 3.47   4,500,185   39,789 3.53  
              
Allowance for loan losses  (45,467)      (46,902)     
Cash & non-interest earning assets  136,209       140,041      
              
              
Total assets$ 4,710,557     $ 4,593,324      
              
              
Liabilities and shareholders' equity             
              
Deposits:             
Interest bearing checking accounts$ 721,150   115 0.06%$ 656,694   98 0.06% 
Money market accounts  615,815   513 0.33   644,676   634 0.39  
Savings  1,250,127   608 0.19   1,214,885   663 0.22  
Time deposits  1,133,396   2,375 0.83   1,148,055   2,366 0.82  
              
  Total interest bearing deposits  3,720,488   3,611 0.39   3,664,310   3,761 0.41  
Short-term borrowings  186,462   278 0.59   185,577   335 0.72  
              
  Total interest bearing liabilities  3,906,950   3,889 0.39   3,849,887   4,096 0.42  
              
Demand deposits  360,916       323,070      
Other liabilities  28,570       25,214      
Shareholders' equity  414,121       395,153      
              
Total liabilities and shareholders' equity$ 4,710,557     $ 4,593,324      
              
Net interest income, tax equivalent    36,278       35,693    
              
Net interest spread    3.08%    3.11% 
              
Net interest margin (net interest income             
to total interest earning assets)    3.14%    3.17% 
              
Tax equivalent adjustment    (16)      (24)   
              
              
  Net interest income     36,262       35,669    
              
              
              
              
              
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY-  
INTEREST RATES AND INTEREST DIFFERENTIAL  
(dollars in thousands) Year ended  Year ended  
(Unaudited) December 31, 2015  December 31, 2014  
  Average InterestAverage  Average InterestAverage  
  Balance  Rate  Balance  Rate  
              
Assets             
              
Securities available for sale:             
U. S. government sponsored enterprises$ 107,436   1,418   1.32%$ 113,563   1,417 1.25% 
Mortgage backed securities and             
  collateralized mortgage obligations-residential  439,343   9,132   2.08   555,430   12,150   2.19  
State and political subdivisions  1,812   133   7.40   3,924   280   7.14  
Corporate bonds  613   1 0.16   3,156   65 2.04  
Small Business Administration-guaranteed participation securities  97,496   2,004   2.06   107,029   2,154   2.01  
Mortgage backed securities and             
  collateralized mortgage obligations-commercial  10,566   149   1.41   10,837   151   1.40  
Other  685   16   2.34   674   16   2.37  
              
  Total securities available for sale  657,951   12,853   1.95   794,613   16,233   2.04  
              
Federal funds sold and other             
 short-term Investments  664,516   1,725 0.26   589,873   1,464 0.25  
              
Held to maturity securities:             
Corporate bonds  9,967   615   6.17   9,952   615 6.18  
Mortgage backed securities and             
  collateralized mortgage obligations-residential  53,763   1,844   3.43   68,404   2,259 3.30  
              
  Total held to maturity securities  63,730   2,459   3.86   78,356   2,874 3.67  
              
Federal Reserve Bank and Federal Home Loan Bank stock  9,414   467   4.96   10,135   511   5.04  
              
Commercial loans  210,210   10,861   5.17   221,251   11,328   5.12  
Residential mortgage loans  2,661,421   117,820 4.43   2,443,558   111,720 4.57  
Home equity lines of credit  354,718   12,508 3.53   343,264   12,263 3.57  
Installment loans  8,457   726 8.59   6,083   678 11.14  
              
Loans, net of unearned income  3,234,806   141,915 4.39   3,014,156   135,989 4.51  
              
  Total interest earning assets  4,630,417   159,419 3.44   4,487,133   157,071 3.50  
              
Allowance for loan losses  (46,023)      (47,409)     
Cash & non-interest earning assets  136,752       135,217      
              
              
Total assets$ 4,721,146     $ 4,574,941      
              
              
Liabilities and shareholders' equity             
              
Deposits:             
Interest bearing checking accounts$ 708,331   448 0.06%$ 636,140   365 0.06% 
Money market accounts  628,096   2,214 0.35   650,779   2,499 0.38  
Savings  1,245,100   2,468 0.20   1,227,473   2,662 0.22  
Time deposits  1,173,426   9,853 0.84   1,145,118   8,565 0.75  
              
  Total interest bearing deposits  3,754,953   14,983 0.40   3,659,510   14,091 0.39  
Short-term borrowings  184,725   1,214 0.66   189,430   1,397 0.74  
              
  Total interest bearing liabilities  3,939,678   16,197 0.41   3,848,940   15,488 0.40  
              
Demand deposits  348,552       319,458      
Other liabilities  27,155       23,733      
Shareholders' equity  405,761       382,810      
              
Total liabilities and shareholders' equity$ 4,721,146     $ 4,574,941      
              
Net interest income, tax equivalent    143,222       141,583    
              
Net interest spread    3.03%    3.10% 
              
Net interest margin (net interest income             
to total interest earning assets)    3.09%    3.16% 
              
Tax equivalent adjustment    (74)      (130)   
              
              
  Net interest income     143,148       141,453    
              

 

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)       
  12/31/1509/30/1512/31/14   
Tangible Book Value Per Share       
        
Equity$   413,310    412,292    393,444    
Less: Intangible assets    553    553    553    
  Tangible equity    412,757    411,739    392,891    
        
Shares outstanding    95,262    95,149    94,857    
Tangible book value per share    4.33    4.33    4.14    
Book value per share    4.34    4.33    4.15    
        
Tangible Equity to Tangible Assets       
Total Assets  4,734,992  4,725,817  4,644,439    
Less: Intangible assets    553    553    553    
  Tangible assets    4,734,439    4,725,264    4,643,886    
        
Tangible Equity to Tangible Assets  8.72% 8.71% 8.46%   
Equity to Assets  8.73% 8.72% 8.47%   
        
  3 Months Ended Years Ended
Efficiency Ratio 12/31/1509/30/1512/31/14 12/31/1512/31/14
        
Net interest income$   36,262    36,050    35,669     143,148    141,453 
Taxable equivalent adjustment    16    19    24     74    130 
Net interest income (fully taxable equivalent)    36,278    36,069    35,693     143,222    141,583 
Non-interest income    4,430    4,365    4,752     17,872    19,906 
Less:  Net gain on sale of building and nonperforming loans    -    -    -     60    1,719 
Less:  Net gain on securities    2    -    335     251    717 
  Revenue used for efficiency ratio    40,706    40,434    40,110     160,783    159,053 
        
Total noninterest expense    23,108    23,464    22,240     90,560    84,670 
Less:  Other real estate expense, net    570    806    841     2,001    1,009 
  Expense used for efficiency ratio    22,538    22,658    21,399     88,559    83,661 
        
Efficiency Ratio  55.37% 56.04% 53.35%  55.08% 52.60%
        
        
  3 Months Ended Years Ended
Core Net Income 12/31/1509/30/1512/31/14 12/31/1512/31/14
        
Net income$   10,180    10,616    10,660     42,238    44,193 
Less:  Gain on sale of building, nonperforming loans, and significant ORE gain, net of tax   -    -    -     37    2,684 
  Core net income    10,180    10,616    10,660     42,201    41,509 
        
Average basic shares outstanding (in thousands)    95,256    95,149    94,681     95,103    94,628 
Average diluted shares outstanding (in thousands)    95,349    95,234    94,813     95,213    94,753 
        
Net income per common share:        
  - Basic$   0.107    0.112    0.113     0.444    0.467 
  - Diluted    0.107    0.111    0.112     0.444    0.466 
        
Core net income per common share:        
        
  - Basic$   0.107    0.112    0.113     0.444    0.439 
  - Diluted    0.107    0.111    0.112     0.443    0.438 

 


 

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

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