Market Overview

TrustCo Announces Increased Fourth Quarter and Full Year 2016 Earnings

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Executive Snapshot:

  • Continued solid financial results:
    -Key metrics for fourth quarter of 2016 results:
        -Net income of $10.8 million in the fourth quarter of 2016 compared to $10.2 million in the fourth quarter of 2015
        -Return on average assets (ROA) of 0.89% compared to 0.86% in Q4/2015
        -Return on average equity (ROE) of 9.87% compared to 9.75% in Q4/2015
        -Efficiency ratio of 54.65% compared to 55.37% in Q4/2015 (Non-GAAP measure; see Non-GAAP Financial Measures Reconciliation for definition)
  • Asset quality remains solid:
    -Asset quality measures improved compared to the fourth quarter of 2015
    -Nonperforming assets (NPAs) fell by $5.4 million compared to December 31, 2015
    -NPAs to total assets improved to 0.60%, compared to 0.73% at December 31, 2015
    -Quarterly net chargeoffs decreased to 0.08% of average loans on an annualized basis, compared to 0.21% for the fourth quarter of 2015, the lowest level since 2008
  • Continued expansion of customer base:
    -Focus on capitalizing on opportunities presented by expanded branch network
    -Average deposits per branch grew $661 thousand from December 31, 2015 to December 31, 2016 on a same store basis
    -Average deposits per branch were $28.9 million at December 31, 2016
    -Average core deposits were $41 million higher in the fourth quarter of 2016 compared to the fourth quarter of 2015
  • Loan portfolio reaches all-time high:
    -Average loans were up $123 million for the fourth quarter of 2016 compared to fourth quarter of 2015
    -At $3.43 billion as of December 31, 2016, loans reached an all-time high

GLENVILLE, N.Y., Jan. 23, 2017 (GLOBE NEWSWIRE) -- TrustCo Bank Corp NY (TrustCo) (Nasdaq: TRST) today announced fourth quarter of 2016 net income of $10.8 million compared to $10.2 million for the fourth quarter of 2015, an increase of 6.1%.

Robert J. McCormick, President and Chief Executive Officer noted, "We are pleased to be able to report an increase in earnings in the fourth quarter of 2016 as compared to the fourth quarter of 2015.  Continued revenue growth coupled with moderating expense increases provided an encouraging end to the year.  Our focus on traditional lending criteria and conservative balance sheet management has enabled us to produce consistent earnings, maintain strong liquidity and capital and allowed us to continue to grow our business and take advantage of changes in market and competitive conditions.  In terms of our core business, we continue to add customer relationships which ultimately drive future growth.  We will continue to take advantage of opportunities as they are presented during 2017 and beyond.  Recent merger activity between our competitors, primarily the Key – First Niagara merger, provided us additional opportunities to add customers."

TrustCo saw continued solid loan growth in the fourth quarter of 2016 compared to the prior year, led by an increase in residential mortgages.  Loan portfolio expansion was funded primarily by growth of our deposit base.  The continued shift toward loans helped offset the margin impact from continued comparatively low yields on cash and investments, although the recent move by the Federal Reserve to raise rates late in the fourth quarter will provide a benefit in the first quarter of 2017.  The growth in average deposits in the fourth quarter of 2016 versus the prior year was led by lower cost checking and savings 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 2016, return on average assets and return on average equity were 0.89% and 9.87%, respectively, compared to 0.86% and 9.75% for the fourth quarter of 2015.  Diluted earnings per share were $0.113 for the fourth quarter of 2016, compared to $0.107 for the fourth quarter of 2015.  As discussed in recent quarters, increased operating costs in response to regulatory concerns have pushed overall expense levels higher.  However costs actually declined modestly in the second half of 2016 as compared to the first half and we anticipate being able to control expense growth effectively in 2017.  Some of the costs associated with regulatory issues will be recurring, but others will diminish over time.

For the full year 2016, diluted net income per share was $0.445, compared to $0.444 for the full year 2015.  Return on average assets and equity were 0.89% and 9.94% for 2016, compared to 0.89% and 10.41% for 2015.  The decline in return on equity was attributable to the 4.7% increase in shareholders' equity from December 31, 2015 to December 31, 2016.

Average loans were up $122.8 million or 3.7% in the fourth quarter of 2016, over the same period in 2015.  Average residential loans, our primary lending focus, were up $155.7 million or 5.7% in the fourth quarter of 2016, over the same period in 2015.  Overall loan growth was constrained by a $13.8 million decline in commercial loans, which have become less attractive on a risk adjusted basis, and an $18.4 million decline in outstandings on home equity lines of credit, as well as a small decline in installment loans.  Average deposits were up $71.1 million or 1.7% for the fourth quarter of 2016 over the same period a year earlier.  The increase in deposits came from core deposit accounts, which consist of checking, savings and money market deposits, although checking and savings were entirely responsible for the growth within core deposits.  Average core deposits increased $40.7 million from the fourth quarter of 2015 to the fourth quarter of 2016, while average time deposit balances contributed $30.4 million of growth.  Within core, money market balances were actually down $50.5 million, while checking was up $73.7 million (including interest bearing and non-interest bearing balances) and savings were up $17.4 million.  Core deposits typically represent longer term customer relationships and are generally lower cost than time deposits.  The shift out of money market balances was also beneficial, as that category is the most expensive type of core deposit.  Mr. McCormick noted that, "The year-over-year growth of our loans and core deposit base reflect the long term strategic focus of the Company."

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

"At December 31, 2016, our average deposits per branch were $28.9 million, compared to $28.1 million a year earlier.  We have always designed our branches to be smaller and more cost effective than those built by many of our competitors.  We use open floor plans that help maximize the value of our branches.  We remain mindful that fully achieving our goals for newer branches will take time and continued work.  We believe success in growing customer relationships provides basic building blocks that will help drive profit growth for the coming years."

Asset quality and loan loss reserve measures improved versus December 31, 2015.  Nonperforming loans (NPLs) were $25.1 million at December 31, 2016, compared to $28.3 million at December 31, 2015.  NPLs were equal to 0.73% of total loans at December 31, 2016, compared to 0.86% at December 31, 2015.  The coverage ratio, or allowance for loan losses to NPLs, was 175.1% at December 31, 2016, compared to 158.4% at December 31, 2015.  Nonperforming assets (NPAs) were $29.3 million at December 31, 2016 compared to $34.7 million at December 31, 2015.  The ratio of loan loss allowance to total loans was 1.28% as of December 31, 2016, compared to 1.36% at December 31, 2015 and reflects both the improvement in asset quality and economic conditions in our lending areas.  The allowance for loan losses was $43.9 million at December 31, 2016 compared to $44.8 million at December 31, 2015.  Net chargeoffs for the fourth quarter of 2016 decreased versus the fourth quarter of 2015, falling to $660 thousand from $1.7 million in the year earlier period.  The annualized net chargeoff ratio was 0.08% for the fourth quarter of 2016, compared to 0.21% in the fourth quarter of 2015 and was at the lowest level since the first quarter of 2008.  The provision for loan losses was $600 thousand, compared to $1.3 million in the fourth quarter of 2015.

The net interest margin for the fourth quarter of 2016 was 3.13%, up four basis points from the third quarter of 2016 and down a basis point versus the fourth quarter of 2015. 

At December 31, 2016 the equity to asset ratio was 8.89%, compared to 8.73% at December 31, 2015.  The tangible equity ratio was 8.88% compared to 8.72% at December 31, 2015.  GAAP book value per share at December 31, 2016 was $4.52 compared to $4.34 a year earlier and tangible book value per share was $4.51 and $4.33, respectively.  Tangible equity ratio and tangible book value per share are non-GAAP measures and are discussed in the Non-GAAP Financial Measures Reconciliation.

TrustCo Bank Corp NY is a $4.9 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 145 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at December 31, 2016.

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 2016 results will be held at 9:00 a.m. Eastern Time on January 24, 2017.  Those wishing to participate in the call may dial toll-free 1-888-339-0764 .  International callers must dial 1-412-902-4195 Please ask to be joined into the TrustCo Bank Corp NY / TRST call.  A replay of the call will be available for thirty days by dialing 1-877-344-7529 (1-412-317-0088 for international callers), Conference Number 10099604. The call will also be audio webcast at: http://services.choruscall.com/links/trst170124.html, and will be available for one year.

Safe Harbor Statement 
All statements in this news release that are not historical are forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended.  Forward-looking statements can be identified by words such as "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding our expectations for our performance during 2017 and for the growth of loans and deposits throughout our branch network, our ability to capitalize on economic changes in the areas in which we operate and the extent to which higher expenses to fulfill operating and regulatory requirements recur or diminish over time.  Such forward-looking statements are subject to factors that could cause actual results to differ materially for TrustCo from those discussed. TrustCo wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The following important factors, among others, in some cases have affected and in the future could affect TrustCo's actual results and could cause TrustCo's actual financial performance to differ materially from that expressed in any forward-looking statement:  our ability to continue to originate a significant volume of one-to-four family mortgage loans in our market areas; our ability to continue to maintain noninterest expense and other overhead costs at reasonable levels relative to income; our ability to comply with the supervisory agreement entered into with Trustco Bank's regulator and potential regulatory actions if we fail to comply; restrictions or conditions imposed by our regulators on our operations that may make it more difficult for us to achieve our goals; the future earnings and capital levels of Trustco Bank and the continued ability of Trustco Bank under regulatory rules and the supervisory agreement to distribute capital to TrustCo, which could affect our ability to pay dividends; results of 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 and 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    
  12/31/1609/30/1612/31/15   
Summary of operations       
  Net interest income (TE)$  36,921   36,681   36,278    
  Provision for loan losses   600   750   1,300    
  Net gain on securities transactions - -   2    
  Noninterest income, excluding net gain on securities transactions   4,512   4,729   4,428    
  Noninterest expense   23,365   23,049   23,108    
  Net income   10,798   10,930   10,180    
        
Per common share       
  Net income per share:       
  - Basic$  0.113   0.114   0.107    
  - Diluted   0.113   0.114   0.107    
  Cash dividends   0.066   0.066   0.066    
  Tangible Book value at period end   4.51   4.55   4.33    
  Market price at period end   8.75   7.09   6.14    
        
At period end       
  Full time equivalent employees 808 790 787    
  Full service banking offices 145 145 146    
        
Performance ratios       
  Return on average assets 0.89%0.90 0.86    
  Return on average equity 9.87 10.05 9.75    
  Efficiency (1) 54.65 54.11 55.37    
  Net interest spread (TE) 3.07 3.03 3.08    
  Net interest margin (TE) 3.13 3.09 3.14    
  Dividend payout ratio 58.20 57.40 61.54    
        
Capital ratio at period end       
  Consolidated tangible equity to tangible assets (2) 8.88 9.04 8.72    
        
Asset quality analysis at period end       
  Nonperforming loans to total loans 0.73 0.77 0.86    
  Nonperforming assets to total assets 0.60 0.64 0.73    
  Allowance for loan losses to total loans 1.28 1.30 1.36    
  Coverage ratio (3) 1.8x 1.6 1.6    
        
        
(1)  Calculated as noninterest expense (excluding ORE income/expense) divided by        
  taxable equivalent net interest income plus noninterest income (excluding        
  net securities transactions and gain on sale of building and 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    
  12/31/1612/31/15    
Summary of operations       
  Net interest income (TE)$  146,109   143,222     
  Provision for loan losses   2,950   3,700     
  Net gain on securities transactions   668   251     
  Noninterest income, excluding net gain on securities transactions   18,344   17,621     
  Noninterest expense   93,827   90,560     
  Net income   42,601   42,238     
        
Per common share       
  Net income per share:       
  - Basic$  0.446   0.444     
  - Diluted   0.445   0.444     
  Cash dividends   0.263   0.263     
  Tangible Book value at period end   4.51   4.33     
  Market price at period end   8.75   6.14     
        
Performance ratios       
  Return on average assets 0.89%0.89     
  Return on average equity 9.94 10.41     
  Efficiency (1) 55.67 55.08     
  Net interest spread (TE) 3.05 3.03     
  Net interest margin (TE) 3.11 3.09     
  Dividend payout ratio 58.88 59.13     
        
        
(1)  Calculated as noninterest expense (excluding ORE income/expense) divided by        
  taxable equivalent net interest income plus noninterest income (excluding        
  net securities transactions and gain on sale of building and nonperforming loans).       
TE = Taxable equivalent.       
        
        
CONSOLIDATED STATEMENTS OF INCOME       
        
(dollars in thousands, except per share data)       
(Unaudited)       
  Three Months Ended  
  12/31/20169/30/20166/30/20163/31/201612/31/2015 
Interest and dividend income:        
Interest and fees on loans$  36,251   36,171   35,652   35,605   35,930  
Interest and dividends on securities available for sale:        
 U. S. government sponsored enterprises   422   408   404   255   256  
 State and political subdivisions    12   13   13   14   16  
 Mortgage-backed securities and collateralized mortgage obligations-residential   1,849   1,829   2,169   2,116   2,233  
 Corporate bonds   149   97   -   -   -  
 Small Business Administration-guaranteed participation securities   430   445   450   476   482  
 Mortgage-backed securities and collateralized mortgage obligations-commercial   23   36   38   36   37  
 Other securities   4   4   4   4   4  
  Total interest and dividends on securities available for sale   2,889   2,832   3,078   2,901   3,028  
        
Interest on held to maturity securities:        
 Mortgage-backed securities and collateralized mortgage obligations-residential   331   347   374   402   425  
 Corporate bonds   153   156   154   154   154  
  Total interest on held to maturity securities   484   503   528   556   579  
        
 Federal Reserve Bank and Federal Home Loan Bank stock   133   131   118   120   120  
        
Interest on federal funds sold and other short-term investments   865   866   832   844   494  
  Total interest income   40,622   40,503   40,208   40,026   40,151  
        
Interest expense:        
 Interest on deposits:        
 Interest-bearing checking   123   120   116   114   115  
 Savings   436   504   604   604   608  
 Money market deposit accounts   459   463   467   496   513  
 Time deposits   2,406   2,468   2,460   2,373   2,375  
 Interest on short-term borrowings   291   281   262   257   278  
  Total interest expense   3,715   3,836   3,909   3,844   3,889  
        
  Net interest income   36,907   36,667   36,299   36,182   36,262  
        
Provision for loan losses   600   750   800   800   1,300  
Net interest income after provision for loan losses    36,307   35,917   35,499   35,382   34,962  
        
Noninterest income:       
 Trustco Financial Services income   1,422   1,347   1,512   1,605   1,489  
 Fees for services to customers   2,795   2,664   2,737   2,661   2,704  
 Net gain on securities transactions   -   -   668   -   2  
 Other   295   718   282   306   235  
  Total noninterest income   4,512   4,729   5,199   4,572   4,430  
        
Noninterest expenses:        
 Salaries and employee benefits   9,576   8,995   8,934   9,003   8,042  
 Net occupancy expense   4,185   3,887   3,918   4,088   3,884  
 Equipment expense   1,370   1,596   1,840   1,514   1,530  
 Professional services   1,997   1,959   2,098   2,146   2,067  
 Outsourced services   1,775   1,465   1,425   1,551   1,585  
 Advertising expense   727   489   570   729   592  
 FDIC and other insurance   901   1,127   1,949   1,990   2,055  
 Other real estate expense, net   721   895   423   519   570  
 Other   2,113   2,636   2,817   1,899   2,783  
  Total noninterest expenses   23,365   23,049   23,974   23,439   23,108  
        
Income before taxes   17,454   17,597   16,724   16,515   16,284  
Income taxes   6,656   6,667   6,260   6,106   6,104  
        
Net income$  10,798   10,930   10,464   10,409   10,180  
Net income per common share:        
  - Basic$0.113 0.114 0.110 0.109 0.107  
        
  - Diluted 0.113 0.114 0.109 0.109 0.107  
        
Average basic shares (in thousands)   95,732   95,603   95,487   95,365   95,256  
Average diluted shares (in thousands)   95,877   95,722   95,580   95,412   95,349  
        
Note:  Taxable equivalent net interest income$  36,921   36,681   36,311   36,196   36,278  
        
        
CONSOLIDATED STATEMENTS OF INCOME       
        
(dollars in thousands, except per share data)       
(Unaudited)       
  Years Ended    
  12/31/201612/31/2015    
        
Interest and dividend income:        
Interest and fees on loans$  143,679   141,887     
Interest and dividends on securities available for sale:        
 U. S. government sponsored enterprises   1,489   1,418     
 State and political subdivisions    52   87     
 Mortgage-backed securities and collateralized mortgage obligations-residential   7,963   9,132     
 Corporate bonds   246   1     
 Small Business Administration-guaranteed participation securities   1,801   2,004     
 Mortgage-backed securities and collateralized mortgage obligations-commercial   133   149     
 Other securities   16   16     
  Total interest and dividends on securities available for sale   11,700   12,807     
        
Interest on held to maturity securities:        
 Mortgage-backed securities-residential   1,454   1,844     
 Corporate bonds   617   615     
  Total interest on held to maturity securities   2,071   2,459     
        
 Federal Reserve Bank and Federal Home Loan Bank stock   502   467     
        
Interest on federal funds sold and other short-term investments   3,407   1,725     
  Total interest income   161,359   159,345     
        
Interest expense:        
 Interest on deposits:        
 Interest-bearing checking   473   448     
 Savings   2,148   2,468     
 Money market deposit accounts   1,885   2,214     
 Time deposits   9,707   9,853     
 Interest on short-term borrowings   1,091   1,214     
  Total interest expense   15,304   16,197     
        
  Net interest income   146,055   143,148     
        
Provision for loan losses   2,950   3,700     
Net interest income after provision for loan losses    143,105   139,448     
        
Noninterest income:       
 Trust department income   5,886   5,971     
 Fees for services to customers   10,857   10,689     
 Net gain on securities transactions   668   251     
 Other   1,601   961     
  Total noninterest income   19,012   17,872     
        
Noninterest expenses:        
 Salaries and employee benefits   36,508   32,521     
 Net occupancy expense   16,078   15,799     
 Equipment expense   6,320   6,871     
 Professional services   8,200   7,878     
 Outsourced services   6,216   5,860     
 Advertising expense   2,515   2,593     
 FDIC and other insurance   5,967   6,339     
 Other real estate (income) expense, net   2,558   2,001     
 Other   9,465   10,698     
  Total noninterest expenses   93,827   90,560     
        
Income before taxes   68,290   66,760     
Income taxes   25,689   24,522     
        
Net income$  42,601   42,238     
        
Net income per Common Share:        
  - Basic$0.446 0.444     
        
  - Diluted 0.445 0.444     
        
Average basic shares (thousands)   95,548   95,103     
Average diluted shares (thousands)   95,648   95,213     
        
Note:  Taxable equivalent net interest income$  146,109   143,222     
        
        
        
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION       
        
(dollars in thousands)       
(Unaudited)       
        
        
  12/31/20169/30/20166/30/20163/31/201612/31/2015 
  ASSETS:       
        
 Cash and due from banks$48,719 42,296 39,787 37,373 41,698  
 Federal funds sold and other short term investments   658,555 622,132 718,609 722,805 676,458  
  Total cash and cash equivalents   707,274 664,428 758,396 760,178 718,156  
       
 Securities available for sale:      
  U. S. government sponsored enterprises   117,266 116,327 116,595 66,920 86,737  
  States and political subdivisions   886 970 974 974 1,290  
  Mortgage-backed securities and collateralized mortgage obligations-residential   372,308 400,575 404,138 422,189 411,729  
  Small Business Administration-guaranteed participation securities 78,499 84,687 87,740 89,053 90,416  
  Mortgage-backed securities and collateralized mortgage obligations-commercial   10,011 10,233 10,374 10,307 10,180  
  Corporate bonds 40,705 41,025 - - -  
  Other securities   685 685 685 685 685  
  Total securities available for sale   620,360 654,502 620,506 590,128 601,037  
        
 Held to maturity securities:       
  Mortgage-backed securities and collateralized mortgage obligations-residential 35,500 38,044 40,702 43,595 46,490  
  Corporate bonds 9,990 9,986 9,982 9,979 9,975  
  Total held to maturity securities 45,490 48,030 50,684 53,574 56,465  
        
 Federal Reserve Bank and Federal Home Loan Bank stock 9,579 9,579 9,579 9,480 9,480  
       
 Loans:      
  Commercial   191,194 189,795 195,698 198,765 203,415  
  Residential mortgage loans   2,895,733 2,845,876 2,786,951 2,737,784 2,721,173  
  Home equity line of credit   334,841 343,445 352,069 356,163 359,325  
  Installment loans   8,818 8,515 8,476 8,667 9,391  
 Loans, net of deferred fees and costs   3,430,586 3,387,631 3,343,194 3,301,379 3,293,304  
 Less:      
  Allowance for loan losses   43,890 43,950 44,064 44,398 44,762  
  Net loans   3,386,696 3,343,681 3,299,130 3,256,981 3,248,542  
        
 Bank premises and equipment, net   35,466 36,110 36,793 37,360 37,643  
 Other assets   63,941 56,519 55,825 55,561 63,669  
       
  Total assets$4,868,806 4,812,849 4,830,913 4,763,262 4,734,992  
       
  LIABILITIES:      
 Deposits:      
  Demand$377,755 380,090 376,669 359,060 365,081  
  Interest-bearing checking   815,534 785,118 766,322 746,562 754,347  
  Savings accounts   1,271,449 1,277,734 1,282,006 1,272,394 1,262,194  
  Money market deposit accounts   571,962 566,097 577,063 595,585 610,826  
  Time deposits   1,159,463 1,159,199 1,178,567 1,168,887 1,107,930  
  Total deposits   4,196,163 4,168,238 4,180,627 4,142,488 4,100,378  
       
 Short-term borrowings   209,406 179,204 190,542 169,528 191,226  
 Accrued expenses and other liabilities   30,551 29,799 29,479 28,221 30,078  
       
  Total liabilities   4,436,120 4,377,241 4,400,648 4,340,237 4,321,682  
       
  SHAREHOLDERS' EQUITY:      
 Capital stock   99,214 99,121 99,071 98,973 98,973  
 Surplus   171,425 171,093 171,174 171,113 171,443  
 Undivided profits   201,517 197,013 192,356 188,159 184,009  
 Accumulated other comprehensive income (loss), net of tax   (6,251)2,328 2,395 73 (4,781) 
 Treasury stock at cost (33,219)(33,947)(34,731)(35,293)(36,334) 
       
  Total shareholders' equity 432,686 435,608 430,265 423,025 413,310  
        
  Total liabilities and shareholders' equity$4,868,806 4,812,849 4,830,913 4,763,262 4,734,992  
        
Outstanding shares (in thousands)   95,780 95,614   95,493   95,369   95,262  
        

 

NONPERFORMING ASSETS       
        
(dollars in thousands)       
(Unaudited)       
        
Nonperforming Assets       
  12/31/16 09/30/16 06/30/16 03/31/16 12/31/15  
New York and other states*       
Loans in nonaccrual status:       
  Commercial$  1,843   2,366   2,690   2,762   3,024  
  Real estate mortgage - 1 to 4 family   21,198   21,678   23,559   25,669   23,273  
  Installment   48   70   49   74   90  
Total non-accrual loans   23,089   24,114   26,298   28,505   26,387  
Other nonperforming real estate mortgages - 1 to 4 family   42   44   45   47   48  
Total nonperforming loans   23,131   24,158   26,343   28,552   26,435  
Other real estate owned   4,268   4,768   4,602   5,208   6,120  
Total nonperforming assets$  27,399   28,926   30,945   33,760   32,555  
        
Florida       
Loans in nonaccrual status:       
  Commercial$- - - - -  
  Real estate mortgage - 1 to 4 family   1,929   1,844   1,900   1,802   1,817  
  Installment - - - -   8  
Total non-accrual loans   1,929   1,844   1,900   1,802   1,825  
Other nonperforming real estate mortgages - 1 to 4 family - - - - -  
Total nonperforming loans   1,929   1,844   1,900   1,802   1,825  
Other real estate owned - - -   476   335  
Total nonperforming assets$  1,929   1,844   1,900   2,278   2,160  
        
Total       
Loans in nonaccrual status:       
  Commercial$  1,843   2,366   2,690   2,762   3,024  
  Real estate mortgage - 1 to 4 family   23,127   23,522   25,459   27,471   25,090  
  Installment   48   70   49   74   98  
Total non-accrual loans   25,018   25,958   28,198   30,307   28,212  
Other nonperforming real estate mortgages - 1 to 4 family   42   44   45   47   48  
Total nonperforming loans   25,060   26,002   28,243   30,354   28,260  
Other real estate owned   4,268   4,768   4,602   5,684   6,455  
Total nonperforming assets$  29,328   30,770   32,845   36,038   34,715  
        
        
Quarterly Net Chargeoffs (Recoveries)       
  12/31/16 09/30/16 06/30/16 03/31/16 12/31/15  
New York and other states*       
Commercial$  (56)  353   67   224   672  
Real estate mortgage - 1 to 4 family   619   471   973   771   963  
Installment   55   37   77   70   35  
  Total net chargeoffs$  618   861   1,117   1,065   1,670  
        
Florida       
Commercial$- - - -   (2) 
Real estate mortgage - 1 to 4 family   23 -   16   83   6  
Installment   19   3   1   16   13  
  Total net chargeoffs$  42   3   17   99   17  
        
Total       
Commercial$  (56)  353   67   224   670  
Real estate mortgage - 1 to 4 family   642   471   989   854   969  
Installment   74   40   78   86   48  
  Total net chargeoffs$  660   864   1,134   1,164   1,687  
        
        
Asset Quality Ratios       
  12/31/16 09/30/16 06/30/16 03/31/16 12/31/15  
        
Total nonperforming loans(1)$  25,060   26,002   28,243   30,354   28,260  
Total nonperforming assets(1)   29,328   30,770   32,845   36,038   34,715  
Total net chargeoffs(2)   660   864   1,134   1,164   1,687  
        
Allowance for loan losses(1)   43,890 43,950 44,064 44,398 44,762  
        
Nonperforming loans to total loans 0.73%0.77%0.84%0.92%0.86% 
Nonperforming assets to total assets 0.60%0.64%0.68%0.76%0.73% 
Allowance for loan losses to total loans 1.28%1.30%1.32%1.34%1.36% 
Coverage ratio(1) 175.1%169.0%156.0%146.3%158.4% 
Annualized net chargeoffs to average loans(2) 0.08%0.10%0.14%0.14%0.21% 
Allowance for loan losses to annualized net chargeoffs(2) 16.6x 12.7x 9.7x 9.5x 6.6x  
        
* 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) December 31, 2016   December 31, 2015  
  Average InterestAverage   Average InterestAverage  
  Balance  Rate   Balance  Rate  
               
Assets              
               
Securities available for sale:              
U. S. government sponsored enterprises$113,158  422   1.49% $80,605  256 1.27% 
Mortgage backed securities and              
  collateralized mortgage obligations-residential 384,973  1,849   1.92   412,193  2,233   2.17  
State and political subdivisions 943  19   8.06   1,280  25   7.78  
Corporate bonds   41,039    149   1.45   -  - -  
Small Business Administration-guaranteed participation securities 81,922  430   2.10   93,329  482   2.07  
Mortgage backed securities and              
  collateralized mortgage obligations-commercial 10,173  23   0.90   10,464  37   1.41  
Other 685  4   2.34   685  4   2.34  
               
  Total securities available for sale 632,893  2,896   1.83   598,556  3,037   2.03  
               
Federal funds sold and other              
 short-term Investments 622,578  865   0.50   669,545  494 0.29  
               
Held to maturity securities:              
Corporate bonds 9,988  153   6.13   9,973  154 6.17  
Mortgage backed securities and              
  collateralized mortgage obligations-residential 36,723  331   3.61   48,275  425 3.52  
               
  Total held to maturity securities 46,711  484   4.14   58,248  579   3.97  
               
Federal Reserve Bank and Federal Home Loan Bank stock 9,579  133   5.55   9,480  120   5.06  
               
Commercial loans 189,058  2,557   5.41   202,854  2,667   5.26  
Residential mortgage loans 2,869,757  30,294   4.22   2,714,016  29,874 4.40  
Home equity lines of credit 339,591  3,209   3.78   357,990  3,204 3.55  
Installment loans 8,391  198   9.44   9,126  192 8.37  
               
Loans, net of unearned income 3,406,797  36,258 4.26   3,283,986  35,937   4.37  
               
  Total interest earning assets 4,718,558  40,636 3.44   4,619,815  40,167   3.47  
               
Allowance for loan losses (44,368)      (45,467)     
Cash & non-interest earning assets 137,372       136,209      
               
               
Total assets$4,811,562      $4,710,557      
               
               
Liabilities and shareholders' equity              
               
Deposits:              
Interest bearing checking accounts$782,979  123 0.06% $721,150  115 0.06% 
Money market accounts 565,335  459 0.32   615,815  513 0.33  
Savings 1,267,551  436 0.14   1,250,127  608 0.19  
Time deposits 1,163,820  2,406 0.83   1,133,396  2,375 0.83  
               
  Total interest bearing deposits 3,779,685  3,424 0.36   3,720,488  3,611 0.39  
Short-term borrowings 195,526  291 0.60   186,462  278 0.59  
               
  Total interest bearing liabilities 3,975,211  3,715 0.37   3,906,950  3,889 0.39  
               
Demand deposits 372,801       360,916      
Other liabilities 28,198       28,570      
Shareholders' equity 435,352       414,121      
               
Total liabilities and shareholders' equity$4,811,562      $4,710,557      
               
Net interest income, tax equivalent   36,921       36,278    
               
Net interest spread    3.07%     3.08% 
               
Net interest margin (net interest income              
to total interest earning assets)    3.13%     3.14% 
               
Tax equivalent adjustment   (14)      (16)   
               
               
  Net interest income    36,907       36,262    
               
               
               
               
               
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY-  
INTEREST RATES AND INTEREST DIFFERENTIAL  
(dollars in thousands) Year ended   Year ended  
(Unaudited) December 31, 2016   December 31, 2015  
  Average InterestAverage   Average InterestAverage  
  Balance  Rate   Balance  Rate  
               
Assets              
               
Securities available for sale:              
U. S. government sponsored enterprises$101,242  1,489 1.47% $107,436  1,418 1.32% 
Mortgage backed securities and              
  collateralized mortgage obligations-residential 410,646  7,963   1.94   439,343  9,132   2.08  
State and political subdivisions 991  80   8.07   1,812  133   7.40  
Corporate bonds   17,088    246   1.44   613  1 0.16  
Small Business Administration-guaranteed participation securities 86,407  1,801   2.08   97,496  2,004   2.06  
Mortgage backed securities and              
  collateralized mortgage obligations-commercial 10,284  133   1.29   10,566  149   1.41  
Other 683  16   2.34   685  16   2.34  
               
  Total securities available for sale 627,341  11,728   1.87   657,951  12,853   1.95  
               
Federal funds sold and other              
 short-term Investments 662,436  3,407 0.50   664,516  1,725 0.26  
               
Held to maturity securities:              
Corporate bonds 10,145  617 6.08   9,967  615 6.17  
Mortgage backed securities and              
  collateralized mortgage obligations-residential 40,830  1,454 3.56   53,763  1,844 3.43  
               
  Total held to maturity securities 50,975  2,071 4.06   63,730  2,459 3.86  
               
Federal Reserve Bank and Federal Home Loan Bank stock 9,554  502   5.25   9,414  467   4.96  
               
Commercial loans 196,116  10,331   5.27   210,210  10,861   5.17  
Residential mortgage loans 2,793,780  119,817 4.29   2,661,421  117,820 4.43  
Home equity lines of credit 350,004  12,779 3.65   354,718  12,508 3.53  
Installment loans 8,424  778 9.24   8,457  726 8.59  
               
Loans, net of unearned income 3,348,324  143,705 4.29   3,234,806  141,915 4.39  
               
  Total interest earning assets 4,698,630  161,413 3.44   4,630,417  159,419 3.44  
               
Allowance for loan losses (44,718)      (46,023)     
Cash & non-interest earning assets 136,789       136,752      
               
               
Total assets$4,790,701      $4,721,146      
               
               
Liabilities and shareholders' equity              
               
Deposits:              
Interest bearing checking accounts$764,399  473 0.06% $708,331  448 0.06% 
Money market accounts 580,125  1,885 0.32   628,096  2,214 0.35  
Savings 1,272,015  2,148 0.17   1,245,100  2,468 0.20  
Time deposits 1,162,842  9,707 0.83   1,173,426  9,853 0.84  
               
  Total interest bearing deposits 3,779,381  14,213 0.38   3,754,953  14,983 0.40  
Short-term borrowings 185,672  1,091 0.59   184,725  1,214 0.66  
               
  Total interest bearing liabilities 3,965,053  15,304 0.39   3,939,678  16,197 0.41  
               
Demand deposits 369,820       348,552      
Other liabilities 27,439       27,155      
Shareholders' equity 428,389       405,761      
               
Total liabilities and shareholders' equity$4,790,701      $4,721,146      
               
Net interest income, tax equivalent   146,109       143,222    
               
Net interest spread    3.05%     3.03% 
               
Net interest margin (net interest income              
to total interest earning assets)    3.11%     3.09% 
               
Tax equivalent adjustment   (54)      (74)   
               
               
  Net interest income    146,055       143,148    
               

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 nonperforming loans and securities from this calculation.  We believe that this provides a reasonable measure of primary banking expenses relative to primary banking revenue.

We believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our financial 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)        
  12/31/16 09/30/16 12/31/15     
Tangible Book Value Per Share        
         
Equity$  432,686   435,608   413,310     
Less: Intangible assets   553   553   553     
  Tangible equity   432,133   435,055   412,757     
         
Shares outstanding   95,780   95,614   95,262     
Tangible book value per share   4.51   4.55   4.33     
Book value per share   4.52   4.56   4.34     
         
Tangible Equity to Tangible Assets        
Total Assets 4,868,806 4,812,849 4,734,992     
Less: Intangible assets   553   553   553     
  Tangible assets   4,868,253   4,812,296   4,734,439     
         
Tangible Equity to Tangible Assets 8.88%9.04%8.72%    
Equity to Assets 8.89%9.05%8.73%    
         
  3 Months Ended Years Ended 
Efficiency Ratio 12/31/16 09/30/16 12/31/15  12/31/16 12/31/15  
         
Net interest income$  36,907   36,667   36,262    146,055   143,148  
Taxable equivalent adjustment   14   14   16    54   74  
Net interest income (fully taxable equivalent)   36,921   36,681   36,278    146,109   143,222  
Non-interest income   4,512   4,729   4,430    19,012   17,872  
Less:  Net gain on sale of building   -   469   -    469   -  
Less:  Net gain on sale of nonperforming loans   -   -   -    24   60  
Less:  Net gain on securities   -   -   2    668   251  
  Revenue used for efficiency ratio   41,433   40,941   40,706    163,960   160,783  
         
Total noninterest expense   23,365   23,049   23,108    93,827   90,560  
Less:  Other real estate expense, net   721   895   570    2,558   2,001  
  Expense used for efficiency ratio   22,644   22,154   22,538    91,269   88,559  
         
Efficiency Ratio 54.65%54.11%55.37% 55.67%55.08% 
         
         

 

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

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