Market Overview

TrustCo Announces Second Quarter 2018 Net Income of $15.4 Million

Share:

Executive Snapshot:

  • Continued solid financial results:
    • Key metrics for second quarter 2018:
      • Income before taxes of $20.2 million in the second quarter 2018, up 3.2% compared to $19.6 million in the second quarter of 2017
      • Net income of $15.4 million, up 25.9% compared to $12.2 million in the second quarter of 2017
      • Return on average assets (ROAA) of 1.26% compared to 1.00% in the second quarter of 2017
      • Return on average equity (ROAE) of 13.26% compared to 11.05% in the second quarter of 2017
      • Efficiency ratio of 53.35% compared to 53.33% in the second quarter of 2017 (Non-GAAP measure; see P. 14 for definition)
         
  • Asset quality remains solid:
    • Nonperforming assets (NPAs) fell by $1.4 million compared to June 30, 2017
    • NPAs to total assets improved to 0.54%, compared to 0.57% at June 30, 2017
    • Quarterly net chargeoffs were equal to 0.02% of average loans on an annualized basis, compared to 0.05% for the second quarter of 2017
       
  • Continued expansion of customer base:
    • Focus on capitalizing on opportunities presented by expanded branch network
    • Core (non-maturity) deposits averaged $20.9 million per branch at June 30, 2018
    • Average core deposits were down $821 thousand in the second quarter 2018 compared to the second quarter 2017, however that was driven by a decrease in relatively high cost money market deposits
      • Excluding money market deposits, core deposits were up $47.2 million or 1.9%
      • The cost of core deposits declined both including and excluding money market balances
         
  • Loan portfolio reaches all-time high:
    • Average loans were up $228 million for the second quarter 2018 compared to second quarter of 2017
    • At $3.74 billion as of June 30, 2018, loans reached an all-time high

GLENVILLE, N.Y., July 23, 2018 (GLOBE NEWSWIRE) -- TrustCo Bank Corp NY (TrustCo) (NASDAQ:TRST) today announced second quarter 2018 net income of $15.4 million compared to $12.2 million for the second quarter 2017, an increase of 25.9%.  Second quarter 2018 results include the impact of a lower tax rate resulting from the Tax Cuts and Jobs Act.  On a pre-tax basis, earnings rose from $19.6 million in the second quarter 2017 to $20.2 million in the second quarter 2018. 

Summary

Robert J. McCormick, President and Chief Executive Officer noted, "We are pleased to report a strong second quarter performance, with an increase of 25.9% in net income as compared to the second quarter of 2017.  Solid revenue growth and expense control combined with the lower tax rate to produce these results.  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 second quarter 2018 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 expansion of shareholders equity.  The continued shift toward loans helped sustain the margin despite a decline in mortgage loan yields and higher CD rates.  We note that current mortgage rates exceed the yield on our existing portfolio of mortgages, which, if sustained, will be a positive going forward.  In addition, the cost of our non-maturity deposits remained stable in the second quarter.  The Federal Reserve decision to raise the target Federal Funds rate has contributed to our results as our cash position immediately repriced upward.  Only a portion of the impact of the 25 basis point increase announced on June 13, 2018 is reflected in second quarter results.  Total average deposits were up $32.0 million in the second quarter 2018 versus the prior year.  Core deposits were down a nominal $821 thousand over that time frame, however that was essentially due to a decline of $48.0 million in money market balances.  Because money market balances are by far the highest costing core deposit type, that shift actually resulted in a small decline in the cost of core deposits.  The overall cost of funds increased 12 basis points to 0.47% from the second quarter 2017 to the second quarter 2018.   The shift towards loans in the asset mix, coupled with a 41 basis point increase in the yield on cash and securities more than offset the higher cost of funds, resulting in an 11 basis point gain in net interest margin to 3.32%.   TrustCo's strong liquidity position continues to allow it to take advantage of opportunities as they arise.

Details

Average loans were up $228.1 million or 6.6% in the second quarter 2018 over the same period in 2017. Average residential loans, our primary lending focus, were up $246.0 million or 8.3% in the second quarter 2018, over the same period in 2017.  Overall loan growth was constrained by a $22.4 million decline in average outstandings on home equity lines of credit. Average deposits were up $32.0 million or 0.8% for the second quarter 2018 over the same period a year earlier.  The growth in deposits was the result of a $56.7 million increase in average interest bearing checking balances, $16.2 million in average demand balances and $32.9 million in time deposits, partly offset by decreases of $48.0 million in money market balances and $25.6 million in savings balances.  Core deposits typically represent longer term customer relationships and are generally lower cost than time deposits.  The cost of total deposits increased to 0.42% in the second quarter 2018 from 0.31% in the second quarter 2017.  The cost of core deposits, including demand, declined by slightly less than 1 basis point to 0.13% over this same time frame.  Mr. McCormick noted that, "The year-over-year growth of our loans and our continued strong core deposit base reflect the long term strategic focus of the Company."

For the second quarter 2018, return on average assets and return on average equity were 1.26% and 13.26%, respectively, compared to 1.00% and 11.05% for the second quarter 2017.  Diluted earnings per share were $0.160 for the second quarter 2018, compared to $0.127 for the second quarter 2017.  Overall expense control remains a key area of focus.  Total operating expenses increased by $1.2 million in the second quarter 2018 as compared to the second quarter 2017, with the most significant increase coming in salaries and benefits.  The increase in expenses was more than offset by a $1.6 million increase in revenue (net interest income plus non-interest income).  The effective tax rate was 23.8% in the second quarter of 2018, compared to 37.5% in the year ago period, reflecting the Tax Cuts and Jobs Act.

For the first half of 2018, return on average assets and return on average equity were 1.24% and 13.17%, respectively, compared to 0.96% and 10.62% for the second quarter 2017.  Diluted earnings per share were $0.313 for the first half of 2018, compared to $0.241 for the first half of 2017.

"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 June 30, 2018, our average deposits per branch were $28.8 million, compared to $29.2 million at June 30, 2017.  The decline was due to the opening of 3 branches in the second quarter of 2018; excluding those openings, the average would have been up $325 thousand per branch.  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.  Nonperforming loans (NPLs) were $24.2 million at June 30, 2018, compared to $24.5 million at June 30, 2017.  NPLs were equal to 0.65% of total loans at June 30, 2018, compared to 0.70% at June 30, 2017.  The coverage ratio, or allowance for loan losses to NPLs, was 184.2% at June 30, 2018, compared to 180.0% at June 30, 2017.  Nonperforming assets (NPAs) were $26.7 million at June 30, 2018 compared to $28.1 million at June 30, 2017.  The ratio of loan loss allowance to total loans was 1.19% as of June 30, 2018, compared to 1.26% at June 30, 2017 and reflects both the improvement in asset quality and economic conditions in our lending areas.  The allowance for loan losses was $44.5 million at June 30, 2018 compared to $44.2 million at June 30, 2017.  The provision for loan losses was $300 thousand for the second quarter 2018, compared to $550 thousand in the second quarter 2017.  Net chargeoffs for the second quarter 2018 decreased versus the second quarter 2017, falling to $176 thousand from $436 thousand in the year earlier period.  The annualized net chargeoff ratio was 0.02% for the second quarter 2018, compared to 0.05% in the second quarter 2017. 

The net interest margin for the second quarter 2018 was 3.32%, up 11 basis points versus the second quarter 2017, 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 declined slightly, but higher volumes increased interest income.  During the same period, the cost of interest bearing liabilities increased 12 basis points.

At June 30, 2018 the equity to asset ratio was 9.53%, compared to 9.09% at June 30, 2017.  Book value per share at June 30, 2018 was $4.87 compared to $4.66 a year earlier.

TrustCo Bank Corp NY is a $4.9 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 148 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at June 30, 2018.

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

A conference call to discuss second quarter 2018 results will be held at 9:00 a.m. Eastern Time on July 24, 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 10122231. The call will also be audio webcast at: http://services.choruscall.com/links/trst180724.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
    06/30/18     03/31/18   06/30/17
Summary of operations              
Net interest income (TE) $ 40,119     39,319   38,553
Provision for loan losses   300     300   550
Noninterest income   4,495     4,679   4,504
Noninterest expense   24,095     24,155   22,913
Net income   15,405     14,808   12,240
               
Per common share              
Net income per share:              
- Basic $ 0.160     0.154   0.127
- Diluted   0.160     0.153   0.127
Cash dividends   0.066     0.066   0.066
Book value at period end   4.87     4.80   4.66
Market price at period end   8.90     8.45   7.75
               
At period end              
Full time equivalent employees   829     827   813
Full service banking offices   148     145   144
               
Performance ratios              
Return on average assets   1.26 %   1.23   1.00
Return on average equity   13.26     13.07   11.05
Efficiency (1)   53.35     54.05   53.33
Net interest spread (TE)   3.24     3.22   3.15
Net interest margin (TE)   3.32     3.29   3.21
Dividend payout ratio   41.08     42.70   51.48
               
Capital ratios at period end              
Consolidated tangible equity to tangible assets (2)   9.52 %   9.36   9.08
Consolidated equity to assets   9.53 %   9.37   9.09
               
Asset quality analysis at period end              
Nonperforming loans to total loans   0.65     0.68   0.70
Nonperforming assets to total assets   0.54     0.55   0.57
Allowance for loan losses to total loans   1.19     1.21   1.26
Coverage ratio (3)   1.8x     1.8x   1.8x
               
               
(1)  Non-GAAP measure; calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income.
(2)  Non-GAAP measure; calculated as total equity less $553 of intangible assets divided by total assets less $553 of intangible assets.
(3)  Calculated as allowance for loan losses divided by total nonperforming loans.
 
 
TE = Taxable equivalent


FINANCIAL HIGHLIGHTS, Continued
 
(dollars in thousands, except per share data)
(Unaudited)
    Six months ended
    06/30/18   06/30/17
Summary of operations        
Net interest income (TE) $ 79,431   75,966
Provision for loan losses   600   1,150
Noninterest income   9,174   9,231
Noninterest expense   48,250   46,932
Net income   30,213   23,187
         
Per common share        
Net income per share:        
- Basic $ 0.313   0.242
- Diluted   0.313   0.241
Cash dividends   0.131   0.131
Tangible Book value at period end   4.87   4.66
Market price at period end   8.90   7.75
         
Performance ratios        
Return on average assets   1.24 % 0.96
Return on average equity   13.17   10.62
Efficiency (1)   53.70   54.56
Net interest spread (TE)   3.23   3.11
Net interest margin (TE)   3.30   3.17
Dividend payout ratio   41.87   54.31
         
         
(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
    6/30/2018   3/31/2018   12/31/2017   9/30/2017   6/30/2017
Interest and dividend income:                    
Interest and fees on loans $ 38,956     38,091   37,914   37,513   36,662  
Interest and dividends on securities available for sale:                    
U. S. government sponsored enterprises   787     750   614   465   607  
State and political subdivisions   6     7   10   6   11  
Mortgage-backed securities and collateralized mortgage                    
obligations - residential   1,675     1,763   1,730   1,815   1,944  
Corporate bonds   150     133   148   153   154  
Small Business Administration - guaranteed                    
participation securities   333     352   358   380   394  
Mortgage-backed securities and collateralized mortgage                    
obligations - commercial   (5 )   42   43   22   21  
Other securities   4     5   4   4   4  
Total interest and dividends on securities available for sale   2,950     3,052   2,907   2,845   3,135  
                     
Interest on held to maturity securities:                    
Mortgage-backed securities and collateralized mortgage                    
obligations - residential   244     260   261   276   296  
Corporate bonds   -     -   -   102   154  
Total interest on held to maturity securities   244     260   261   378   450  
                     
Federal Reserve Bank and Federal Home Loan Bank stock   198     77   151   125   134  
                     
Interest on federal funds sold and other short-term investments   2,467     2,017   1,779   1,927   1,727  
Total interest income   44,815     43,497   43,012   42,788   42,108  
                     
Interest expense:                    
Interest on deposits:                    
Interest-bearing checking   112     106   107   113   134  
Savings   420     419   429   435   435  
Money market deposit accounts   452     439   457   469   468  
Time deposits   3,439     2,860   2,412   2,247   2,181  
Interest on short-term borrowings   283     358   359   345   349  
Total interest expense   4,706     4,182   3,764   3,609   3,567  
                     
Net interest income   40,109     39,315   39,248   39,179   38,541  
                     
Less: Provision for loan losses   300     300   300   550   550  
Net interest income after provision for loan losses   39,809     39,015   38,948   38,629   37,991  
                     
Noninterest income:                    
Trustco Financial Services income   1,596     1,815   1,457   1,844   1,425  
Fees for services to customers   2,677     2,645   2,597   2,767   2,797  
Other   222     219   234   243   282  
Total noninterest income   4,495     4,679   4,288   4,854   4,504  
                     
Noninterest expenses:                    
Salaries and employee benefits   10,741     10,422   10,536   10,360   9,559  
Net occupancy expense   4,101     4,315   4,140   4,027   4,267  
Equipment expense   1,793     1,751   1,465   1,669   1,428  
Professional services   1,814     1,430   1,325   1,679   1,963  
Outsourced services   1,825     1,925   1,760   1,650   1,500  
Advertising expense   670     630   559   699   607  
FDIC and other insurance   514     1,023   1,102   1,018   1,012  
Other real estate expense, net   294     372   401   275   (4 )
Other   2,343     2,287   2,248   2,149   2,581  
Total noninterest expenses   24,095     24,155   23,536   23,526   22,913  
                     
Income before taxes   20,209     19,539   19,700   19,957   19,582  
Income taxes   4,804     4,731   12,338   7,361   7,342  
                     
Net income $ 15,405     14,808   7,362   12,596   12,240  
                     
Net income per common share:                    
- Basic $ 0.160     0.154   0.077   0.131   0.127  
                     
- Diluted   0.160     0.153   0.076   0.131   0.127  
                     
Average basic shares (in thousands)   96,449     96,353   96,230   96,102   96,003  
Average diluted shares (in thousands)   96,580     96,490   96,393   96,205   96,073  
                     
Note:  Taxable equivalent net interest income $ 40,119     39,319   39,259   39,190   38,553  


CONSOLIDATED STATEMENTS OF INCOME, Continued
 
(dollars in thousands, except per share data)
(Unaudited)
    Six months ended
    06/30/18   06/30/17
Interest and dividend income:        
Interest and fees on loans $ 77,047   72,706
Interest and dividends on securities available for sale:        
U. S. government sponsored enterprises   1,537   1,202
State and political subdivisions   13   23
Mortgage-backed securities and collateralized mortgage        
obligations - residential   3,438   3,902
Corporate bonds   283   305
Small Business Administration - guaranteed        
participation securities   685   809
Mortgage-backed securities and collateralized mortgage        
obligations - commercial   37   44
Other securities   9   8
Total interest and dividends on securities available for sale   6,002   6,293
         
Interest on held to maturity securities:        
Mortgage-backed securities-residential   504   612
Corporate bonds   -   308
Total interest on held to maturity securities   504   920
         
Federal Reserve Bank and Federal Home Loan Bank stock   275   268
         
Interest on federal funds sold and other short-term investments   4,484   2,973
Total interest income   88,312   83,160
         
Interest expense:        
Interest on deposits:        
Interest-bearing checking   218   258
Savings   839   865
Money market deposit accounts   891   934
Time deposits   6,299   4,464
Interest on short-term borrowings   641   698
Total interest expense   8,888   7,219
         
Net interest income   79,424   75,941
         
Less: Provision for loan losses   600   1,150
Net interest income after provision for loan losses   78,824   74,791
         
Noninterest income:        
Trustco Financial Services income   3,411   3,283
Fees for services to customers   5,322   5,434
Other   441   514
Total noninterest income   9,174   9,231
         
Noninterest expenses:        
Salaries and employee benefits   21,163   19,769
Net occupancy expense   8,416   8,376
Equipment expense   3,544   2,984
Professional services   3,244   3,891
Outsourced services   3,750   3,000
Advertising expense   1,300   1,320
FDIC and other insurance   1,537   2,059
Other real estate expense, net   666   495
Other   4,630   5,038
Total noninterest expenses   48,250   46,932
         
Income before taxes   39,748   37,090
Income taxes   9,535   13,903
         
Net income $ 30,213   23,187
         
Net income per common share:        
- Basic $ 0.313   0.242
         
- Diluted   0.313   0.241
         
Average basic shares (in thousands)   96,401   95,944
Average diluted shares (in thousands)   96,535   96,034
         
Note:  Taxable equivalent net interest income $ 79,431   75,966


CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 
(dollars in thousands)
(Unaudited)
    6/30/2018   3/31/2018 12/31/2017 9/30/2017 6/30/2017
ASSETS:              
               
Cash and due from banks $ 40,567     39,373   44,125   41,598   43,783  
Federal funds sold and other short term investments   546,049     577,797   568,615   582,599   663,360  
Total cash and cash equivalents   586,616     617,170   612,740   624,197   707,143  
               
Securities available for sale:              
U. S. government sponsored enterprises   150,704     151,327   137,994   123,658   128,386  
States and political subdivisions   524     525   525   534   536  
Mortgage-backed securities and collateralized mortgage              
obligations - residential   283,252     297,633   315,840   335,530   352,591  
Small Business Administration - guaranteed              
participation securities   61,876     64,113   67,059   69,818   72,858  
Mortgage-backed securities and collateralized mortgage              
obligations - commercial   -     9,573   9,700   9,824   9,903  
Corporate bonds   29,977     35,227   40,162   40,381   40,498  
Other securities   685     685   685   685   685  
Total securities available for sale   527,018     559,083   571,965   580,430   605,457  
               
Held to maturity securities:              
Mortgage-backed securities and collateralized mortgage              
obligations-residential   24,730     26,174   27,551   29,268   31,211  
Corporate bonds   -     -   -   -   9,997  
Total held to maturity securities   24,730     26,174   27,551   29,268   41,208  
               
Federal Reserve Bank and Federal Home Loan Bank stock   8,953     8,779   8,779   8,779   9,723  
               
Loans:              
Commercial   190,904     185,129   186,207   187,281   183,035  
Residential mortgage loans   3,245,151     3,171,548   3,132,521   3,070,970   2,999,306  
Home equity line of credit   295,791     301,885   308,916   311,753   316,674  
Installment loans   9,309     8,413   8,763   8,278   8,458  
Loans, net of deferred net costs   3,741,155     3,666,975   3,636,407   3,578,282   3,507,473  
               
Less: Allowance for loan losses   44,503     44,379   44,170   44,082   44,162  
Net loans   3,696,652     3,622,596   3,592,237   3,534,200   3,463,311  
               
Bank premises and equipment, net   35,521     35,240   35,157   35,028   35,174  
Other assets   61,069     62,522   59,579   58,373   58,466  
               
Total assets $ 4,940,559     4,931,564   4,908,008   4,870,275   4,920,482  
               
LIABILITIES:              
Deposits:              
Demand $ 404,564     403,782   398,399   397,623   390,120  
Interest-bearing checking   925,295     915,163   891,052   862,067   871,004  
Savings accounts   1,257,744     1,266,852   1,260,447   1,265,229   1,285,886  
Money market deposit accounts   512,453     539,839   556,462   564,557   572,580  
Time deposits   1,155,214     1,109,444   1,066,966   1,075,886   1,088,824  
Total deposits   4,255,270     4,235,080   4,173,326   4,165,362   4,208,414  
               
Short-term borrowings   182,705     203,910   242,991   216,508   233,621  
Accrued expenses and other liabilities   31,769     30,477   33,383   33,477   31,081  
               
Total liabilities   4,469,744     4,469,467   4,449,700   4,415,347   4,473,116  
               
SHAREHOLDERS' EQUITY:              
Capital stock   100,093     100,002   99,998   99,562   99,511  
Surplus   176,243     175,674   175,651   172,712   172,603  
Undivided profits   238,342     229,267   219,436   218,401   212,112  
Accumulated other comprehensive loss, net of tax   (9,796 )   (8,490 ) (1,806 ) (3,060 ) (3,593 )
Treasury stock at cost   (34,067 )   (34,356 ) (34,971 ) (32,687 ) (33,267 )
               
Total shareholders' equity   470,815     462,097   458,308   454,928   447,366  
               
Total liabilities and shareholders' equity $ 4,940,559     4,931,564   4,908,008   4,870,275   4,920,482  
               
Outstanding shares (in thousands)   96,475     96,359   96,289   96,108   96,015  
                         


             
NONPERFORMING ASSETS            
             
(dollars in thousands)            
(Unaudited)            
    06/30/18 03/31/18 12/31/17 09/30/17 06/30/17
Nonperforming Assets            
             
New York and other states*            
Loans in nonaccrual status:            
Commercial $ 767   1,213   1,543   1,696   1,711  
Real estate mortgage - 1 to 4 family   21,209   21,424   20,350   20,926   20,639  
Installment   6   19   57   30   25  
Total non-accrual loans   21,982   22,656   21,950   22,652   22,375  
Other nonperforming real estate mortgages - 1 to 4 family   36   38   38   40   41  
Total nonperforming loans   22,018   22,694   21,988   22,692   22,416  
Other real estate owned   2,569   2,190   3,246   2,879   3,585  
Total nonperforming assets $ 24,587   24,884   25,234   25,571   26,001  
             
Florida            
Loans in nonaccrual status:            
Commercial $ -   -   -   -   -  
Real estate mortgage - 1 to 4 family   2,143   2,154   2,389   1,895   2,112  
Installment   -   4   -   -   -  
Total non-accrual loans   2,143   2,158   2,389   1,895   2,112  
Other nonperforming real estate mortgages - 1 to 4 family   -   -   -   -   -  
Total nonperforming loans   2,143   2,158   2,389   1,895   2,112  
Other real estate owned   -   -   -   -   -  
Total nonperforming assets $ 2,143   2,158   2,389   1,895   2,112  
             
Total            
Loans in nonaccrual status:            
Commercial $ 767   1,213   1,543   1,696   1,711  
Real estate mortgage - 1 to 4 family   23,352   23,578   22,739   22,821   22,751  
Installment   6   23   57   30   25  
Total non-accrual loans   24,125   24,814   24,339   24,547   24,487  
Other nonperforming real estate mortgages - 1 to 4 family   36   38   38   40   41  
Total nonperforming loans   24,161   24,852   24,377   24,587   24,528  
Other real estate owned   2,569   2,190   3,246   2,879   3,585  
Total nonperforming assets $ 26,730   27,042   27,623   27,466   28,113  
             
             
Quarterly Net Chargeoffs (Recoveries)            
             
New York and other states*            
Commercial $ (1 ) (6 ) (86 ) (2 ) -  
Real estate mortgage - 1 to 4 family   150   28   249   613   334  
Installment   27   66   50   56   37  
Total net chargeoffs $ 176   88   213   667   371  
             
Florida            
Commercial $ -   -   -   -   -  
Real estate mortgage - 1 to 4 family   -   -   (1 ) (41 ) 52  
Installment   -   2   -   4   13  
Total net chargeoffs $ -   2   (1 ) (37 ) 65  
             
Total            
Commercial $ (1 ) (6 ) (86 ) (2 ) -  
Real estate mortgage - 1 to 4 family   150   28   248   572   386  
Installment   27   68   50   60   50  
Total net chargeoffs $ 176   90   212   630   436  
             
             
Asset Quality Ratios            
             
Total nonperforming loans (1) $ 24,161   24,852   24,377   24,587   24,528  
Total nonperforming assets (1)   26,730   27,042   27,623   27,466   28,113  
Total net chargeoffs (2)   176   90   212   630   436  
             
Allowance for loan losses (1)   44,503   44,379   44,170   44,082   44,162  
             
Nonperforming loans to total loans   0.65%   0.68%   0.67%   0.69%   0.70%  
Nonperforming assets to total assets   0.54%   0.55%   0.56%   0.56%   0.57%  
Allowance for loan losses to total loans   1.19%   1.21%   1.21%   1.23%   1.26%  
Coverage ratio (1)   184.19%   178.6%   181.2%   179.3%   180.0%  
Annualized net chargeoffs to average loans (2)   0.02%   0.01%   0.02%   0.07%   0.05%  
Allowance for loan losses to annualized net chargeoffs (2)   63.2x   123.3x   52.1x   17.5x   25.3x  
             
* Includes New York, New Jersey, Vermont and Massachusetts.
(1)  At period-end
(2)  For the period ended
 


 
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY -
INTEREST RATES AND INTEREST DIFFERENTIAL
 
(dollars in thousands)                        
(Unaudited)   Three months ended     Three months ended  
    June 30, 2018     June 30, 2017  
    Average   Interest Average     Average   Interest Average  
    Balance     Rate     Balance     Rate  
Assets                        
                         
Securities available for sale:                        
U. S. government sponsored enterprises $ 154,862     787   2.03   % $ 153,552     607   1.58 %
Mortgage backed securities and collateralized mortgage                        
obligations - residential   300,706     1,675   2.23       359,085     1,944   2.17  
State and political subdivisions   515     10   7.81       816     16   7.84  
Corporate bonds   27,780     150   2.16       42,699     154   1.44  
Small Business Administration - guaranteed                        
participation securities   64,886     333   2.05       75,561     394   2.09  
Mortgage backed securities and collateralized mortgage                        
obligations - commercial   1,285     (5 ) (1.51 )     10,003     21   0.84  
Other   685     4   2.34       685     4   2.34  
                         
Total securities available for sale   550,719     2,954   2.15       642,401     3,140   1.96  
                         
Federal funds sold and other short-term Investments   549,378     2,467   1.82       643,557     1,727   1.07  
                         
Held to maturity securities:                        
Corporate bonds   -     -   -       9,996     154   6.16  
Mortgage backed securities and collateralized mortgage                        
obligations - residential   25,381     244   3.85       32,188     296   3.68  
                         
Total held to maturity securities   25,381     244   3.85       42,184     450   4.27  
                         
Federal Reserve Bank and Federal Home Loan Bank stock   8,943     198   8.86       9,709     134   5.52  
                         
Commercial loans   187,157     2,444   5.22       183,382     2,401   5.24  
Residential mortgage loans   3,205,035     32,914   4.11       2,958,994     30,943   4.18  
Home equity lines of credit   298,489     3,391   4.61       320,872     3,131   3.90  
Installment loans   8,669     213   9.98       8,029     194   9.66  
                         
Loans, net of unearned income   3,699,350     38,962   4.22       3,471,277     36,669   4.23  
                         
Total interest earning assets   4,833,771     44,825   3.72       4,809,128     42,120   3.50  
                         
Allowance for loan losses   (44,551 )           (44,429 )        
Cash & non-interest earning assets   124,099             130,998          
                         
                         
Total assets $ 4,913,319           $ 4,895,697          
                         
                         
Liabilities and shareholders' equity                        
                         
Deposits:                        
Interest bearing checking accounts $ 906,641     112   0.05   % $ 849,965     134   0.06 %
Money market accounts   529,421     452   0.35       577,464     468   0.32  
Savings   1,260,656     420   0.14       1,286,282     435   0.14  
Time deposits   1,135,630     3,439   1.23       1,102,777     2,181   0.79  
                         
Total interest bearing deposits   3,832,348     4,423   0.47       3,816,488     3,218   0.34  
Short-term borrowings   189,611     283   0.61       226,455     349   0.62  
                         
Total interest bearing liabilities   4,021,959     4,706   0.47       4,042,943     3,567   0.35  
                         
Demand deposits   396,783             380,611          
Other liabilities   28,653             28,026          
Shareholders' equity   465,924             444,117          
                         
Total liabilities and shareholders' equity $ 4,913,319           $ 4,895,697          
                         
Net interest income, tax equivalent       40,119             38,553      
                         
Net interest spread         3.24   %         3.15 %
                         
Net interest margin (net interest income to                        
total interest earning assets)         3.32   %         3.21 %
                         
Tax equivalent adjustment       (10 )           (12 )    
                         
Net interest income       40,109             38,541      
                         


DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY -
INTEREST RATES AND INTEREST DIFFERENTIAL, Continued
                         
(dollars in thousands)                        
(Unaudited)   Six months ended     Six months ended  
    June 30, 2018     June 30, 2017  
    Average   Interest Average     Average   Interest Average  
    Balance     Rate     Balance     Rate  
Assets                        
                         
Securities available for sale:                        
U. S. government sponsored enterprises $ 155,723     1,537   1.97 % $ 148,054     1,202   1.62 %
Mortgage backed securities and collateralized mortgage                        
obligations - residential   307,194     3,438   2.24     363,496     3,902   2.15  
State and political subdivisions   515     20   9.37     844     35   8.29  
Corporate bonds   30,523     283   1.85     42,143     305   1.45  
Small Business Administration - guaranteed                        
participation securities   65,990     685   2.08     77,068     809   2.10  
Mortgage backed securities and collateralized mortgage                        
obligations - commercial   5,507     37   1.34     10,046     44   0.88  
Other   685     9   2.63     685     8   2.34  
                         
Total securities available for sale   566,137     6,009   2.12     642,336     6,305   1.96  
                         
Federal funds sold and other short-term Investments   539,219     4,484   1.68     642,348     2,973   0.93  
                         
Held to maturity securities:                        
Corporate bonds   -     -   -     9,994     308   6.16  
Mortgage backed securities and collateralized mortgage                        
obligations - residential   26,086     504   3.86     33,240     612   3.68  
                         
Total held to maturity securities   26,086     504   3.86     43,234     920   4.26  
                         
Federal Reserve Bank and Federal Home Loan Bank stock   8,861     275   6.21     9,645     268   5.56  
                         
Commercial loans   186,405     4,858   6.25     185,474     4,830   5.21  
Residential mortgage loans   3,177,041     65,172   4.11     2,935,620     61,310   4.18  
Home equity lines of credit   302,368     6,601   4.40     325,579     6,216   3.82  
Installment loans   8,518     418   9.88     8,128     363   8.93  
                         
Loans, net of unearned income   3,674,332     77,049   4.20     3,454,801     72,719   4.21  
                         
Total interest earning assets   4,814,635     88,321   3.68     4,792,364     83,185   3.47  
                         
Allowance for loan losses   (44,472 )           (44,333 )        
Cash & non-interest earning assets   124,483             130,575          
                         
                         
Total assets $ 4,894,646           $ 4,878,606          
                         
                         
Liabilities and shareholders' equity                        
                         
Deposits:                        
Interest bearing checking accounts $ 892,288     218   0.05 % $ 829,615     258   0.06 %
Money market accounts   538,230     891   0.33     578,728     934   0.32  
Savings   1,260,509     839   0.13     1,280,552     865   0.14  
Time deposits   1,108,413     6,299   1.15     1,118,274     4,464   0.80  
                         
Total interest bearing deposits   3,799,440     8,247   0.44     3,807,169     6,521   0.34  
Short-term borrowings   211,874     641   0.61     228,078     698   0.61  
                         
Total interest bearing liabilities   4,011,314     8,888   0.45     4,035,247     7,219   0.36  
                         
Demand deposits   391,702             375,610          
Other liabilities   28,891             27,408          
Shareholders' equity   462,739             440,341          
                         
Total liabilities and shareholders' equity $ 4,894,646             4,878,606          
                         
Net interest income, tax equivalent       79,431             75,966      
                         
Net interest spread         3.23 %         3.11 %
                         
Net interest margin (net interest income to                        
total interest earning assets)         3.30 %         3.17 %
                         
Tax equivalent adjustment       (7 )           (25 )    
                         
Net interest income       79,424             75,941      
                         

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)                
             
Tangible Equity to Tangible Assets   06/30/18 03/31/18 06/30/17        
                 
Total Assets $ 4,940,559 4,931,564 4,920,482        
Less: Intangible assets   553 553 553        
Tangible assets   4,940,006 4,931,011 4,919,929        
                 
Equity   470,815 462,097 447,366        
Less: Intangible assets   553 553 553        
Tangible equity   470,262 461,544 446,813        
Tangible Equity to Tangible Assets   9.52% 9.36% 9.08%        
Equity to Assets   9.53% 9.37% 9.09%        
                 
    Three months ended     Six months ended
Efficiency Ratio   06/30/18 03/31/18 06/30/17     06/30/18 06/30/17
                 
Net interest income (fully taxable equivalent) $ 40,119   39,319   38,553       79,431   75,966  
Non-interest income   4,495   4,679   4,504       9,174   9,231  
Less:  Net gain on sale of nonperforming loans   -   -   84       -   84  
Revenue used for efficiency ratio   44,614   43,998   42,973       88,605   85,113  
                 
Total noninterest expense   24,095   24,155   22,913       48,250   46,932  
Less:  Other real estate expense, net   294   372   (4 )     666   495  
Expense used for efficiency ratio   23,801   23,783   22,917       47,584   46,437  
                 
Efficiency Ratio   53.35%   54.05%   53.33%       53.70%   54.56%  
                 
                 
                 

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

Primary Logo

View Comments and Join the Discussion!