Market Overview

TrustCo Announces Fourth Quarter and Full Year 2017 Results; Net Income Before Taxes Up 12.9% Over Prior Year Quarter

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Executive Snapshot:

  • Continued solid financial results:
    • Key metrics for fourth quarter and full year 2017:
      • Income before taxes of $19.7 million in the fourth quarter of 2017, up 12.9% compared to $17.5 million in the fourth quarter of 2016
      • Income before taxes of $76.7 million for the full year 2017, up 12.4% compared to $68.3 million for 2016
      • Net income rose for the full year 2017 over 2016 despite a $5.1 million charge related to the recently enacted federal tax legislation
      • Return on average assets (ROAA) of 0.60% compared to 0.89% in the fourth quarter of 2016
      • Return on average equity (ROAE) of 6.38% compared to 9.87% in the fourth quarter of 2016
      • Efficiency ratio of 53.13% compared to 54.65% in the fourth quarter of 2016 (Non-GAAP measure; see P. 14 for definition)
         
  • Asset quality remains solid:
    • Nonperforming assets (NPAs) fell by $1.7 million compared to December 31, 2016
    • NPAs to total assets improved to 0.56%, compared to 0.60% at December 31, 2016
    • Quarterly net chargeoffs were equal to 0.02% of average loans on an annualized basis, compared to 0.08% for the fourth quarter of 2016
       
  • Continued expansion of customer base:
    • Focus on capitalizing on opportunities presented by expanded branch network
    • Average core (non-maturity) deposits per branch grew $480 thousand to $21.4 million from December 31, 2016 to December 31, 2017
    • Average core deposits were $77.1 million higher in the fourth quarter of 2017 compared to the fourth quarter of 2016, an increase of 2.6%
       
  • Loan portfolio reaches all-time high:
    • Average loans were up $203 million for the fourth quarter of 2017 compared to fourth quarter of 2016
    • At $3.64 billion as of December 31, 2017, loans reached an all-time high

TrustCo Announces Fourth Quarter and Full Year 2017 Results; Net Income Before Taxes Up 12.9% Over Prior Year Quarter

GLENVILLE, N.Y., Jan. 22, 2018 (GLOBE NEWSWIRE) -- TrustCo Bank Corp NY (TrustCo) (NASDAQ:TRST) today announced fourth quarter of 2017 net income of $7.4 million compared to $10.8 million for the fourth quarter of 2016.  Fourth quarter and full year 2017 results include the impact of the revaluation of the Company's deferred tax assets resulting from the recently enacted tax legislation, as detailed below.  On a pre-tax basis, earnings rose from $17.5 million in the fourth quarter of 2016 to $19.7 million in the fourth quarter of 2017, an increase of 12.9%.  For the full year 2016, net income rose from $42.6 million to $43.1 million in 2017 while pre-tax earnings rose from $68.3 million to $76.7 million, an increase of 12.4%.

Summary

Robert J. McCormick, President and Chief Executive Officer noted, "We are pleased to be able to report a 13% increase in pre-tax earnings in the fourth quarter of 2017 as compared to the fourth quarter of 2016.  Solid revenue growth and expense control combined to produce a strong quarter and 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 the coming year and beyond." 

TrustCo saw continued solid loan growth in the fourth quarter of 2017 compared to the prior year, led by an increase in residential mortgages.  Loan portfolio expansion was funded by a combination of utilizing a portion of our strong cash balances and cash flow from investments, as well as growth in funding from customers and expansion of shareholders equity.  The continued shift toward loans helped offset the margin impact from continued comparatively low yields on cash and investments and the continued decline in loan yields.  The Federal Reserve decision to raise the target Federal Funds rate has contributed to our results during 2017 as our cash position immediately repriced upward, and is likely to continue to do so in 2018 to the extent there are additional rate increases.  While total average deposits were down slightly in the fourth quarter of 2017 versus the prior year, core deposits were up $77.1 million over that time frame.  The shift towards increased core deposits contributed to our cost of funds remaining flat from the fourth quarter of 2016 to the fourth quarter of 2017.   The gain in core deposits was led by demand deposits and low cost interest bearing checking deposits.  TrustCo's strong liquidity position continues to allow it to take advantage of opportunities as they arise.

On December 22, 2017 the Tax Cuts and Jobs Act (the "Act") was signed into law, which includes a reduction of the statutory corporate tax rate from 35% to 21%.  The lower tax rate will have a significant beneficial impact on results going forward, but also resulted in the revaluation of net deferred tax assets, as noted, based on the lower tax rate. Deferred income taxes result from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in years in which those temporary differences are expected to be recovered or settled. Deferred tax assets and liabilities are adjusted through income tax expense as changes in tax laws are enacted.  The rate reduction is effective January 1, 2018. Included in results for the fourth quarter and full year 2017 is a reduction in the value of net deferred tax assets of $5.1 million, which is recorded as additional income tax expense for the quarter ended December 31, 2017. This charge had a negative impact on our reported net income, earnings per share, return on average equity and return on average assets.

Details

Average loans were up $202.6 million or 5.9% in the fourth quarter of 2017 over the same period in 2016. Average residential loans, our primary lending focus, were up $234.0 million or 8.2% in the fourth quarter of 2017, over the same period in 2016.  Overall loan growth was constrained by a $29.0 million decline in average outstandings on home equity lines of credit and a $2.4 million decline in average commercial loans. Average deposits were down $12.8 million or 0.3% for the fourth quarter of 2017 over the same period a year earlier.  The decrease in deposits was the result of a $89.9 million decline in average time deposits as the company focused on less costly non-maturity deposits.  Excluding time deposits, core deposit accounts, which consist of checking, savings and money market deposits, were up $77.1 million from the fourth quarter of 2016 to the fourth quarter of 2017.  Within core, money market balances were down $5.9 million, checking balances were up $90.6 million (including interest bearing and non-interest bearing balances) and savings were down $7.6 million.  Core deposits typically represent longer term customer relationships and are generally lower cost than time deposits.  The cost of interest bearing deposits remained flat at 0.36% in the fourth quarter of 2017 relative to the fourth quarter of 2016.  The cost of core deposits, including demand, declined one basis point to 0.13% over this same time frame.  Mr. McCormick noted that, "The year-over-year growth of our loans and core deposit base reflect the long term strategic focus of the Company."

For the fourth quarter of 2017, return on average assets and return on average equity were 0.60% and 6.38%, respectively, compared to 0.89% and 9.87% for the fourth quarter of 2016.  Diluted earnings per share were $0.076 for the fourth quarter of 2017, compared to $0.113 for the fourth quarter of 2016.  Overall expense control remains a key area of focus.  Total operating expenses increased by $171 thousand in the fourth quarter of 2017 as compared to the fourth quarter of 2016, with increases in compensation and several other categories partly offset by declines in professional services expenses, ORE costs and several other categories.  The modest increase in expenses was more than offset by a $2.1 million increase in revenue (net interest income plus non-interest income).  As noted, the revaluation of the net deferred tax assets is included in income taxes, creating an unusually high effective tax rate for the fourth quarter of 2017.  As noted, this reduced fourth quarter net income, which led to lower earnings per share, ROAA and ROAE.  For 2018 the Company is expecting its combined effective tax rate to be approximately 23.5%, based on currently known information.  The actual effective tax rate could be impacted by currently unknown aspects of how the tax law changes will be implemented and/or by management decisions to adapt to the new law. 

"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, 2017, our average deposits per branch were $28.8 million, compared to $28.9 million a year earlier, while average core deposits per branch were $21.4 million compared to $20.9 million over the same time period.  While total deposit growth is important, TrustCo strives to maximize customer relationships through attracting and increasing core deposit balances.  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 continued to improve versus December 31, 2016.  Nonperforming loans (NPLs) were $24.4 million at December 31, 2017, compared to $25.1 million at December 31, 2016.  NPLs were equal to 0.67% of total loans at December 31, 2017, compared to 0.73% at December 31, 2016.  The coverage ratio, or allowance for loan losses to NPLs, was 181.2% at December 31, 2017, compared to 175.1% at December 31, 2016.  Nonperforming assets (NPAs) were $27.6 million at December 31, 2017 compared to $29.3 million at December 31, 2016.  The ratio of loan loss allowance to total loans was 1.21% as of December 31, 2017, compared to 1.28% at December 31, 2016 and reflects both the improvement in asset quality and economic conditions in our lending areas.  The allowance for loan losses was $44.2 million at December 31, 2017 compared to $43.9 million at December 31, 2016.  The provision for loan losses was $300 thousand for the fourth quarter of 2017, compared to $600 thousand in the fourth quarter of 2016.  Net chargeoffs for the fourth quarter of 2017 decreased versus the fourth quarter of 2016, falling to $212 thousand from $660 thousand in the year earlier period.  The annualized net chargeoff ratio was 0.02% for the fourth quarter of 2017, compared to 0.08% in the fourth quarter of 2016. 

The net interest margin for the fourth quarter of 2017 was 3.29%, up 16 basis points versus the fourth quarter of 2016, as increases in short term interest rates led to significantly higher earnings on cash, while slightly better returns were also achieved in the investment portfolio.  Loan yields did decline, but that was more than offset by higher volumes in terms of income.  During the same period, the cost of interest bearing liabilities increased one basis point, reflecting TrustCo's strong funding base.

For the full year 2017, net income was $43.1 million, up 1.2% as compared to $42.6 million in the full year 2016, or $0.448 and $0.445, respectively, per diluted share.  As noted, the revaluation of the net deferred tax asset reduced net income by $5.1 million in the fourth quarter and full year 2017.  On a pre-tax basis, income was $76.7 million for 2017, up 12.4% as compared to the $68.3 million reported for 2016.

At December 31, 2017 the equity to asset ratio was 9.34%, compared to 8.89% at December 31, 2016.  Book value per share at December 31, 2017 was $4.76 compared to $4.52 a year earlier.

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, 2017.

In addition, the Bank's Financial Services Department offers a full range of investment services, retirement planning and trust and estate administration services. The common shares of TrustCo are traded on the NASDAQ Global Select Market under the symbol TRST.

A conference call to discuss fourth quarter 2017 results will be held at 9:00 a.m. Eastern Time on January 23, 2018.  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 10116075. The call will also be audio webcast at: http://services.choruscall.com/links/trst180123.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 2018, the impact of Federal Reserve actions regarding interest rates and the growth of loans and deposits throughout our branch network, our ability to capitalize on economic changes in the areas in which we operate and the extent to which higher expenses to fulfill operating and regulatory requirements recur or diminish over time.  Such forward-looking statements are subject to factors that could cause actual results to differ materially for TrustCo from those discussed. TrustCo wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The following important factors, among others, in some cases have affected and in the future could affect TrustCo's actual results and could cause TrustCo's actual financial performance to differ materially from that expressed in any forward-looking statement:  our ability to continue to originate a significant volume of one-to-four family mortgage loans in our market areas; our ability to continue to maintain noninterest expense and other overhead costs at reasonable levels relative to income; our ability to comply with the supervisory agreement entered into with Trustco Bank's regulator and potential regulatory actions if we fail to comply; restrictions or conditions imposed by our regulators on our operations that may make it more difficult for us to achieve our goals; the future earnings and capital levels of Trustco Bank and the continued ability of Trustco Bank under regulatory rules and the supervisory agreement to distribute capital to TrustCo, which could affect our ability to pay dividends; results of supervisory monitoring or examinations of Trustco Bank and TrustCo by our respective regulators; our ability to make accurate assumptions and judgments regarding the credit risks associated with lending and investing activities; the effect of changes in financial services laws and regulations and the impact of other governmental initiatives affecting the financial services industry; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board, inflation, interest rates, market and monetary fluctuations; adverse conditions on the securities markets that lead to impairment in the value of securities in our investment portfolio; changes in law and policy accompanying the new presidential administration and uncertainty or speculation pending the enactment of such changes; the perceived overall value of our products and services by users, including in comparison to competitors' products and services and the willingness of current and prospective customers to substitute competitors' products and services for our products and services; changes in consumer spending, borrowing and saving habits; technological changes and electronic, cyber, and physical security breaches; real estate and collateral values; changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the FASB or PCAOB; changes in local market areas and general business and economic trends, as well as changes in consumer spending and saving habits; our success at managing the risks involved in the foregoing and managing our business; and other risks and uncertainties under the heading "Risk Factors" in our most recent annual report on Form 10-K and, if any, in our subsequent quarterly reports on Form 10-Q or other securities filings.

 

               
TRUSTCO BANK CORP NY              
GLENVILLE, NY              
               
FINANCIAL HIGHLIGHTS              
               
(dollars in thousands, except per share data)              
(Unaudited)              
      Three Months Ended        
    12/31/17 09/30/17 12/31/16      
Summary of operations              
  Net interest income (TE) $   39,259     39,190     36,921        
  Provision for loan losses     300     550     600        
  Net gain on securities transactions     -      -      -         
  Noninterest income, excluding net gain on securities transactions     4,288     4,854     4,512        
  Noninterest expense     23,536     23,526     23,365        
  Net income     7,362     12,596     10,798        
               
Per common share              
  Net income per share:              
   - Basic $   0.077     0.131     0.113        
   - Diluted     0.076     0.131     0.113        
  Cash dividends     0.066     0.066     0.066        
  Tangible Book value at period end     4.75     4.73     4.51        
  Market price at period end     9.20     8.90     8.75        
               
At period end              
  Full time equivalent employees   846   815   808        
  Full service banking offices   145   144   145        
               
Performance ratios              
  Return on average assets   0.60 % 1.02   0.89        
  Return on average equity   6.38   11.06   9.87        
  Efficiency (1)   53.13   52.79   54.65        
  Net interest spread (TE)   3.22   3.21   3.07        
  Net interest margin (TE)   3.29   3.26   3.13        
  Dividend payout ratio   85.81   50.07   58.20        
               
Capital ratio at period end              
  Consolidated tangible equity to tangible assets (2)   9.33   9.33   8.88        
               
Asset quality analysis at period end              
  Nonperforming loans to total loans   0.67   0.69   0.73        
  Nonperforming assets to total assets   0.56   0.56   0.60        
  Allowance for loan losses to total loans   1.21   1.23   1.28        
  Coverage ratio (3)   1.8x   1.8x   1.8x        
               
               
(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        
    12/31/17 12/31/16        
Summary of operations              
  Net interest income (TE) $   154,413     146,109          
  Provision for loan losses     2,000     2,950          
  Net gain on securities transactions     -      668          
  Noninterest income, excluding net gain on securities transactions     18,373     18,344          
  Noninterest expense     93,994     93,827          
  Net income     43,145     42,601          
               
Per common share              
  Net income per share:              
   - Basic $   0.449     0.446          
   - Diluted     0.448     0.445          
  Cash dividends     0.263     0.263          
  Tangible Book value at period end     4.75     4.51          
  Market price at period end     9.20     8.75          
               
Performance ratios              
  Return on average assets   0.88 % 0.89          
  Return on average equity   9.64   9.94          
  Efficiency (1)   53.75   55.67          
  Net interest spread (TE)   3.16   3.05          
  Net interest margin (TE)   3.22   3.11          
  Dividend payout ratio   58.44   58.88          
               
               
(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    
    12/31/2017 9/30/2017 6/30/2017 3/31/2017 12/31/2016  
Interest and dividend income:               
Interest and fees on loans $   37,914     37,513     36,662     36,044     36,251    
Interest and dividends on securities available for sale:               
 U. S. government sponsored enterprises     614     465     607     595     422    
 State and political subdivisions      10     6     11     12     12    
 Mortgage-backed securities and collateralized mortgage obligations-residential     1,730     1,815     1,944     1,958     1,849    
 Corporate bonds     148     153     154     151     149    
 Small Business Administration-guaranteed participation securities     358     380     394     415     430    
 Mortgage-backed securities and collateralized mortgage obligations-commercial     43     22     21     23     23    
 Other securities     4     4     4     4     4    
  Total interest and dividends on securities available for sale     2,907     2,845     3,135     3,158     2,889    
               
Interest on held to maturity securities:               
 Mortgage-backed securities and collateralized mortgage obligations-residential     261     276     296     316     331    
 Corporate bonds     -     102     154     154     153    
  Total interest on held to maturity securities     261     378     450     470     484    
               
 Federal Reserve Bank and Federal Home Loan Bank stock     151     125     134     134     133    
               
Interest on federal funds sold and other short-term investments     1,779     1,927     1,727     1,246     865    
  Total interest income     43,012     42,788     42,108     41,052     40,622    
               
Interest expense:               
 Interest on deposits:               
 Interest-bearing checking     107     113     134     124     123    
 Savings     429     435     435     430     436    
 Money market deposit accounts     457     469     468     466     459    
 Time deposits     2,412     2,247     2,181     2,283     2,406    
 Interest on short-term borrowings     359     345     349     349     291    
  Total interest expense     3,764     3,609     3,567     3,652     3,715    
               
    Net interest income     39,248     39,179     38,541     37,400     36,907    
               
Provision for loan losses     300     550     550     600     600    
Net interest income after provision for loan losses      38,948     38,629     37,991     36,800     36,307    
               
Noninterest income:              
 Trustco Financial Services income     1,457     1,844     1,425     1,858     1,422    
 Fees for services to customers     2,597     2,767     2,797     2,637     2,795    
 Net gain on securities transactions     -     -     -     -     -    
 Other     234     243     282     232     295    
  Total noninterest income     4,288     4,854     4,504     4,727     4,512    
               
Noninterest expenses:               
 Salaries and employee benefits     10,536     10,360     9,559     10,210     9,576    
 Net occupancy expense     4,140     4,027     4,267     4,109     4,185    
 Equipment expense     1,465     1,669     1,428     1,556     1,370    
 Professional services     1,325     1,679     1,963     1,928     1,997    
 Outsourced services     1,760     1,650     1,500     1,500     1,775    
 Advertising expense     559     699     607     713     727    
 FDIC and other insurance     1,102     1,018     1,012     1,047     901    
 Other real estate expense, net     401     275     (4 )   499     721    
 Other     2,248     2,149     2,581     2,457     2,113    
  Total noninterest expenses     23,536     23,526     22,913     24,019     23,365    
               
Income before taxes     19,700     19,957     19,582     17,508     17,454    
Income taxes     12,338     7,361     7,342     6,561     6,656    
               
Net income $   7,362     12,596     12,240     10,947     10,798    
Net income per common share:               
  - Basic $ 0.077   0.131   0.127   0.114   0.113    
               
  - Diluted   0.076   0.131   0.127   0.114   0.113    
               
Average basic shares (in thousands)     96,230     96,102     96,003     95,879     95,732    
Average diluted shares (in thousands)     96,393     96,205     96,073     95,987     95,877    
               
Note:  Taxable equivalent net interest income $   39,259     39,190     38,553     37,413     36,921    
               
               
CONSOLIDATED STATEMENTS OF INCOME              
               
(dollars in thousands, except per share data)              
(Unaudited)              
    Years Ended        
    12/31/2017 12/31/2016        
               
Interest and dividend income:               
Interest and fees on loans $   148,133     143,679          
Interest and dividends on securities available for sale:               
 U. S. government sponsored enterprises     2,281     1,489          
 State and political subdivisions      39     52          
 Mortgage-backed securities and collateralized mortgage obligations-residential     7,447     7,963          
 Corporate bonds     606     246          
 Small Business Administration-guaranteed participation securities     1,547     1,801          
 Mortgage-backed securities and collateralized mortgage obligations-commercial     109     133          
 Other securities     16     16          
  Total interest and dividends on securities available for sale     12,045     11,700          
               
Interest on held to maturity securities:               
 Mortgage-backed securities-residential     1,149     1,454          
 Corporate bonds     410     617          
  Total interest on held to maturity securities     1,559     2,071          
               
 Federal Reserve Bank and Federal Home Loan Bank stock     544     502          
               
Interest on federal funds sold and other short-term investments     6,679     3,407          
  Total interest income     168,960     161,359          
               
Interest expense:               
 Interest on deposits:               
 Interest-bearing checking     478     473          
 Savings     1,729     2,148          
 Money market deposit accounts     1,860     1,885          
 Time deposits     9,123     9,707          
 Interest on short-term borrowings     1,402     1,091          
  Total interest expense     14,592     15,304          
               
    Net interest income     154,368     146,055          
               
Provision for loan losses     2,000     2,950          
Net interest income after provision for loan losses      152,368     143,105          
               
Noninterest income:              
 Trust department income     6,584     5,886          
 Fees for services to customers     10,798     10,857          
 Net gain on securities transactions     -     668          
 Other     991     1,601          
  Total noninterest income     18,373     19,012          
               
Noninterest expenses:               
 Salaries and employee benefits     40,665     36,508          
 Net occupancy expense     16,543     16,078          
 Equipment expense     6,118     6,320          
 Professional services     6,895     8,200          
 Outsourced services     6,410     6,216          
 Advertising expense     2,578     2,515          
 FDIC and other insurance     4,179     5,967          
 Other real estate (income) expense, net     1,171     2,558          
 Other     9,435     9,465          
  Total noninterest expenses     93,994     93,827          
               
Income before taxes     76,747     68,290          
Income taxes     33,602     25,689          
               
Net income $   43,145     42,601          
               
Net income per Common Share:               
  - Basic $ 0.449   0.446          
               
  - Diluted   0.448   0.445          
               
Average basic shares (thousands)     96,112     95,548          
Average diluted shares (thousands)     96,222     95,648          
               
Note:  Taxable equivalent net interest income $   154,413     146,109          
               
               
               
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION              
               
(dollars in thousands)              
(Unaudited)              
               
               
    12/31/2017 9/30/2017 6/30/2017 3/31/2017 12/31/2016  
  ASSETS:              
               
 Cash and due from banks $ 44,125   41,598   43,783   41,352   48,719    
 Federal funds sold and other short term investments     568,615   582,599   663,360   641,839   658,555    
  Total cash and cash equivalents     612,740   624,197   707,143   683,191   707,274    
             
 Securities available for sale:            
  U. S. government sponsored enterprises     137,994   123,658   128,386   162,341   117,266    
  States and political subdivisions     525   534   536   887   886    
  Mortgage-backed securities and collateralized mortgage obligations-residential     315,840   335,530   352,591   357,683   372,308    
  Small Business Administration-guaranteed participation securities   67,059   69,818   72,858   75,429   78,499    
  Mortgage-backed securities and collateralized mortgage obligations-commercial     9,700   9,824   9,903   9,923   10,011    
  Corporate bonds   40,162     40,381     40,498   40,612   40,705    
  Other securities     685   685   685   685   685    
  Total securities available for sale     571,965   580,430   605,457   647,560   620,360    
               
 Held to maturity securities:              
  Mortgage-backed securities and collateralized mortgage obligations-residential   27,551   29,268   31,211   33,276   35,500    
  Corporate bonds   0   0   9,997   9,994   9,990    
  Total held to maturity securities   27,551   29,268   41,208   43,270   45,490    
               
 Federal Reserve Bank and Federal Home Loan Bank stock   8,779   8,779   9,723   9,579   9,579    
             
 Loans:            
  Commercial     186,207   187,281   183,035   184,451   191,194    
  Residential mortgage loans     3,132,521   3,070,970   2,999,306   2,929,928   2,895,733    
  Home equity line of credit     308,916   311,753   316,674   326,280   334,841    
  Installment loans     8,763   8,278   8,458   8,277   8,818    
 Loans, net of deferred fees and costs     3,636,407   3,578,282   3,507,473   3,448,936   3,430,586    
 Less:            
  Allowance for loan losses     44,170   44,082   44,162   44,048   43,890    
  Net loans     3,592,237   3,534,200   3,463,311   3,404,888   3,386,696    
               
 Bank premises and equipment, net     35,157   35,028   35,174   35,175   35,466    
 Other assets     59,579   58,373   58,466   63,080   63,941    
             
  Total assets $ 4,908,008   4,870,275   4,920,482   4,886,743   4,868,806    
             
  LIABILITIES:            
 Deposits:            
  Demand $ 398,399   397,623   390,120   373,930   377,755    
  Interest-bearing checking     891,052   862,067   871,004   838,936   815,534    
  Savings accounts     1,260,447   1,265,229   1,285,886   1,287,802   1,271,449    
  Money market deposit accounts     556,462   564,557   572,580   583,909   571,962    
  Time deposits     1,066,966   1,075,886   1,088,824   1,113,892   1,159,463    
   Total deposits     4,173,326   4,165,362   4,208,414   4,198,469   4,196,163    
             
 Short-term borrowings     242,991   216,508   233,621   220,946   209,406    
 Accrued expenses and other liabilities     33,383   33,477   31,081   28,628   30,551    
             
  Total liabilities     4,449,700   4,415,347   4,473,116   4,448,043   4,436,120    
             
  SHAREHOLDERS' EQUITY:            
 Capital stock     99,998   99,562   99,511   99,493   99,214    
 Surplus     175,651   172,712   172,603   172,628   171,425    
 Undivided profits     219,436   218,401   212,112   206,173   201,517    
 Accumulated other comprehensive loss, net of tax     (1,806 ) (3,060 ) (3,593 ) (5,568 ) (6,251 )  
 Treasury stock at cost   (34,971 ) (32,687 ) (33,267 ) (34,026 ) (33,219 )  
             
  Total shareholders' equity   458,308   454,928   447,366   438,700   432,686    
               
  Total liabilities and shareholders' equity $ 4,908,008   4,870,275   4,920,482   4,886,743   4,868,806    
               
Outstanding shares (in thousands)     96,289     96,108     96,015     95,917     95,780    
               

 

NONPERFORMING ASSETS              
               
(dollars in thousands)              
(Unaudited)              
               
Nonperforming Assets              
    12/31/17 09/30/17 06/30/17 03/31/17 12/31/16  
New York and other states*              
Loans in nonaccrual status:              
  Commercial $   1,543     1,696     1,711     1,858     1,843    
  Real estate mortgage - 1 to 4 family     20,350     20,926     20,639     22,772     21,198    
  Installment     57     30     25     41     48    
Total non-accrual loans     21,950     22,652     22,375     24,671     23,089    
Other nonperforming real estate mortgages - 1 to 4 family     38     40     41     41     42    
Total nonperforming loans     21,988     22,692     22,416     24,712     23,131    
Other real estate owned     3,246     2,879     3,585     3,191     4,268    
Total nonperforming assets $   25,234     25,571     26,001     27,903     27,399    
               
Florida              
Loans in nonaccrual status:              
  Commercial $   -      -      -      -      -     
  Real estate mortgage - 1 to 4 family     2,389     1,895     2,112     1,712     1,929    
  Installment     -      -      -      -     -    
Total non-accrual loans     2,389     1,895     2,112     1,712     1,929    
Other nonperforming real estate mortgages - 1 to 4 family     -      -      -      -     -    
Total nonperforming loans     2,389     1,895     2,112     1,712     1,929    
Other real estate owned     -      -      -      -     -    
Total nonperforming assets $   2,389     1,895     2,112     1,712     1,929    
               
Total              
Loans in nonaccrual status:              
  Commercial $   1,543     1,696     1,711     1,858     1,843    
  Real estate mortgage - 1 to 4 family     22,739     22,821     22,751     24,484     23,127    
  Installment     57     30     25     41     48    
Total non-accrual loans     24,339     24,547     24,487     26,383     25,018    
Other nonperforming real estate mortgages - 1 to 4 family     38     40     41     41     42    
Total nonperforming loans     24,377     24,587     24,528     26,424     25,060    
Other real estate owned     3,246     2,879     3,585     3,191     4,268    
Total nonperforming assets $   27,623     27,466     28,113     29,615     29,328    
               
               
Quarterly Net Chargeoffs (Recoveries)              
    12/31/17 09/30/17 06/30/17 03/31/17 12/31/16  
New York and other states*              
Commercial $   (86 )   (2 )   -      64     (56 )  
Real estate mortgage - 1 to 4 family     249     613     334     261     619    
Installment     50     56     37     31     55    
  Total net chargeoffs $   213     667     371     356     618    
               
Florida              
Commercial $   -      -      -      -      -     
Real estate mortgage - 1 to 4 family     (1 )   (41 )   52     84     23    
Installment     -      4     13     2     19    
  Total net chargeoffs $   (1 )   (37 )   65     86     42    
               
Total              
Commercial $   (86 )   (2 )   -      64     (56 )  
Real estate mortgage - 1 to 4 family     248     572     386     345     642    
Installment     50     60     50     33     74    
  Total net chargeoffs $   212     630     436     442     660    
               
               
Asset Quality Ratios              
    12/31/17 09/30/17 06/30/17 03/31/17 12/31/16  
               
Total nonperforming loans(1) $   24,377     24,587     24,528     26,424     25,060    
Total nonperforming assets(1)     27,623     27,466     28,113     29,615     29,328    
Total net chargeoffs(2)     212     630     436     442     660    
               
Allowance for loan losses(1)     44,170   44,082   44,162   44,048   43,890    
               
Nonperforming loans to total loans   0.67 % 0.69 % 0.70 % 0.77 % 0.73 %  
Nonperforming assets to total assets   0.56 % 0.56 % 0.57 % 0.61 % 0.60 %  
Allowance for loan losses to total loans   1.21 % 1.23 % 1.26 % 1.28 % 1.28 %  
Coverage ratio(1)   181.2 % 179.3 % 180.0 % 166.7 % 175.1 %  
Annualized net chargeoffs to average loans(2)   0.02 % 0.07 % 0.05 % 0.05 % 0.08 %  
Allowance for loan losses to annualized net chargeoffs(2)   52.1x   17.5x   25.3x   24.9x   16.6x    
               
* 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, 2017     December 31, 2016    
    Average   Interest Average     Average   Interest Average    
    Balance     Rate     Balance     Rate    
                           
Assets                          
                           
Securities available for sale:                          
U. S. government sponsored enterprises $ 139,565     614     1.76 % $ 113,158     422   1.49 %  
Mortgage backed securities and                          
  collateralized mortgage obligations-residential   328,826     1,730     2.10     384,973     1,849     1.92    
State and political subdivisions   519     10     7.71     943     19     8.06    
Corporate bonds     41,006       148     1.44     41,039     149     1.45    
Small Business Administration-guaranteed participation securities   69,643     358     2.06     81,922     430     2.10    
Mortgage backed securities and                          
  collateralized mortgage obligations-commercial   9,843     43     1.75     10,173     23     0.90    
Other   685     4     2.34     685     4     2.34    
                           
  Total securities available for sale   590,087     2,907     1.97     632,893     2,896     1.83    
                           
Federal funds sold and other                          
 short-term Investments   539,700     1,779     1.32     622,578     865   0.50    
                           
Held to maturity securities:                          
Corporate bonds     -        -      -      9,988     153   6.13    
Mortgage backed securities and                          
  collateralized mortgage obligations-residential   28,418     261     3.67     36,723     331   3.61    
                           
  Total held to maturity securities   28,418     261     3.67     46,711     484     4.14    
                           
Federal Reserve Bank and Federal Home Loan Bank stock   8,779     151     6.88     9,579     133     5.55    
                           
Commercial loans   186,655     2,429     5.21     189,058     2,557     5.41    
Residential mortgage loans   3,103,792     32,051     4.13     2,869,757     30,294   4.22    
Home equity lines of credit   310,626     3,240     4.17     339,591     3,209   3.78    
Installment loans   8,276     205     9.91     8,391     198   9.44    
                           
Loans, net of unearned income   3,609,349     37,925   4.20     3,406,797     36,258     4.26    
                           
  Total interest earning assets   4,776,333     43,023   3.60     4,718,558     40,636     3.44    
                           
Allowance for loan losses   (44,322 )           (44,368 )          
Cash & non-interest earning assets   128,340             137,372            
                           
                           
Total assets $ 4,860,351           $ 4,811,562            
                           
                           
Liabilities and shareholders' equity                          
                           
Deposits:                          
Interest bearing checking accounts $ 856,031     107   0.05 % $ 782,979     123   0.06 %  
Money market accounts   559,463     457   0.33     565,335     459   0.32    
Savings   1,259,938     429   0.14     1,267,551     436   0.14    
Time deposits   1,073,956     2,412   0.90     1,163,820     2,406   0.83    
                           
  Total interest bearing deposits   3,749,388     3,405   0.36     3,779,685     3,424   0.36    
Short-term borrowings   232,207     359   0.62     195,526     291   0.60    
                           
     Total interest bearing liabilities   3,981,595     3,764   0.38     3,975,211     3,715   0.37    
                           
Demand deposits   390,343             372,801            
Other liabilities   30,392             28,198            
Shareholders' equity   458,021             435,352            
                           
Total liabilities and shareholders' equity $ 4,860,351           $ 4,811,562            
                           
Net interest income, tax equivalent       39,259             36,921        
                           
Net interest spread         3.22 %         3.07 %  
                           
Net interest margin (net interest income                          
to total interest earning assets)         3.29 %         3.13 %  
                           
Tax equivalent adjustment       (11 )           (14 )      
                           
                           
  Net interest income        39,248             36,907        
                           
                           
                           
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY-    
INTEREST RATES AND INTEREST DIFFERENTIAL    
(dollars in thousands)   Year ended     Year ended    
(Unaudited)   December 31, 2017     December 31, 2016    
    Average   Interest Average     Average   Interest Average    
    Balance     Rate     Balance     Rate    
                           
Assets                          
                           
Securities available for sale:                          
U. S. government sponsored enterprises $ 139,652     2,281   1.63 % $ 101,242     1,489   1.47 %  
Mortgage backed securities and                          
  collateralized mortgage obligations-residential   350,256     7,447     2.13     410,646     7,963     1.94    
State and political subdivisions   682     55     8.06     991     80     8.07    
Corporate bonds     41,946       606     1.44     17,088     246   1.44    
Small Business Administration-guaranteed participation securities   73,996     1,547     2.09     86,407     1,801     2.08    
Mortgage backed securities and                          
  collateralized mortgage obligations-commercial   9,963     109     1.09     10,284     133     1.29    
Other   685     16     2.34     683     16     2.34    
                           
  Total securities available for sale   617,180     12,061     1.95     627,341     11,728     1.87    
                           
Federal funds sold and other                          
 short-term Investments   611,586     6,679   1.09     662,436     3,407   0.50    
                           
Held to maturity securities:                          
Corporate bonds   6,663     410   6.15     10,145     617   6.08    
Mortgage backed securities and                          
  collateralized mortgage obligations-residential   31,266     1,149   3.67     40,830     1,454   3.56    
                           
    Total held to maturity securities   37,929     1,559   4.11     50,975     2,071   4.06    
                           
Federal Reserve Bank and Federal Home Loan Bank stock   9,295     544     5.85     9,554     502     5.25    
                           
Commercial loans   185,376     9,741     5.25     196,116     10,331     5.27    
Residential mortgage loans   3,002,706     124,961   4.16     2,793,780     119,817   4.29    
Home equity lines of credit   318,660     12,692   3.98     350,004     12,779   3.65    
Installment loans   8,158     768   9.41     8,424     778   9.24    
                           
Loans, net of unearned income   3,514,900     148,162   4.22     3,348,324     143,705   4.29    
                           
  Total interest earning assets   4,790,890     169,005   3.53     4,698,630     161,413   3.44    
                           
Allowance for loan losses   (44,319 )           (44,718 )          
Cash & non-interest earning assets   129,097             136,789            
                           
                           
Total assets $ 4,875,668           $ 4,790,701            
                           
                           
Liabilities and shareholders' equity                          
                           
Deposits:                          
Interest bearing checking accounts $ 844,010     478   0.06 % $ 764,399     473   0.06 %  
Money market accounts   572,270     1,860   0.33     580,125     1,885   0.32    
Savings   1,275,268     1,729   0.14     1,272,015     2,148   0.17    
Time deposits   1,097,190     9,123   0.83     1,162,842     9,707   0.83    
                           
  Total interest bearing deposits   3,788,738     13,190   0.35     3,779,381     14,213   0.38    
Short-term borrowings   228,086     1,402   0.61     185,672     1,091   0.59    
                           
  Total interest bearing liabilities   4,016,824     14,592   0.36     3,965,053     15,304   0.39    
                           
Demand deposits   382,658             369,820            
Other liabilities   28,506             27,439            
Shareholders' equity   447,680             428,389            
                           
Total liabilities and shareholders' equity $ 4,875,668           $ 4,790,701            
                           
Net interest income, tax equivalent       154,413             146,109        
                           
Net interest spread         3.16 %         3.05 %  
                           
Net interest margin (net interest income                          
to total interest earning assets)         3.22 %         3.11 %  
                           
Tax equivalent adjustment       (45 )           (54 )      
                           
                           
  Net interest income        154,368             146,055        
                           

Non-GAAP Financial Measures Reconciliation

Tangible equity as a percentage of tangible assets at period end is a non-GAAP financial measure derived from GAAP-based amounts. We calculate tangible equity and tangible assets by excluding the balance of intangible assets from shareholders' equity and total assets, respectively. We calculate tangible equity as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end. We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios. 

The efficiency ratio is a non-GAAP measure of expense control relative to revenue from net interest income and fee income.  We calculate the efficiency ratio by dividing total noninterest expenses as determined under GAAP, but excluding other real estate expense, net, by net interest income (fully taxable equivalent) and total noninterest income as determined under GAAP, but excluding net gains on the sale of nonperforming loans and securities and other non-routine items from this calculation.  We believe that this provides a reasonable measure of primary banking expenses relative to primary banking revenue. 

We believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our financial results. Our management internally assesses our performance based, in part, on these measures.  However, these non-GAAP financial measures are supplemental and not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these measures, this presentation may not be comparable to other similarly titled measures reported by other companies. A reconciliation of the non-GAAP measures of tangible common equity, tangible book value per share, efficiency ratio, net income and net income per share to the underlying GAAP numbers is set forth below.

                 
NON-GAAP FINANCIAL MEASURES RECONCILIATION                
                 
(dollars in thousands, except per share amounts)                
(Unaudited)                
    12/31/17 09/30/17 12/31/16        
Tangible Book Value Per Share                
                 
Equity $   458,308     454,928     432,686          
Less: Intangible assets     553     553     553          
  Tangible equity     457,755     454,375     432,133          
                 
Shares outstanding     96,289     96,108     95,780          
Tangible book value per share     4.75     4.73     4.51          
Book value per share     4.76     4.73     4.52          
                 
Tangible Equity to Tangible Assets                
Total Assets   4,908,008   4,870,275   4,868,806          
Less: Intangible assets     553     553     553          
  Tangible assets     4,907,455     4,869,722     4,868,253          
                 
Tangible Equity to Tangible Assets   9.33 % 9.33 % 8.88 %        
Equity to Assets   9.34 % 9.34 % 8.89 %        
                 
    3 Months Ended   Years Ended  
Efficiency Ratio   12/31/17 09/30/17 12/31/16   12/31/17 12/31/16  
                 
Net interest income $   39,248     39,179     36,907       154,368     146,055    
Taxable equivalent adjustment     11     11     14       45     54    
Net interest income (fully taxable equivalent)     39,259     39,190     36,921       154,413     146,109    
Non-interest income     4,288     4,854     4,512       18,373     19,012    
Less:  Net gain on sale of building     -     -     -       -     469    
Less:  Net gain on sale of nonperforming loans     -     -     -       84     24    
Less:  Net gain on securities     -     -     -       -     668    
  Revenue used for efficiency ratio     43,547     44,044     41,433       172,702     163,960    
                 
Total noninterest expense     23,536     23,526     23,365       93,994     93,827    
Less:  Other real estate expense, net     401     275     721       1,171     2,558    
  Expense used for efficiency ratio     23,135     23,251     22,644       92,823     91,269    
                 
Efficiency Ratio   53.13 % 52.79 % 54.65 %   53.75 % 55.67 %  
                 
                 

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

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