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CST: 19/06/2019 11:48:24   

TrustCo Announces Fourth Quarter and Full Year 2018 Results; Net Income Up 42.4% Over Prior Year to $61.4 Million

147 Days ago

Executive Snapshot:

  • Continued solid financial results:
    - Key metrics for fourth quarter 2018:
    -- Net income of $16.0 million in the fourth quarter 2018 up 118% compared to $7.4 million in the fourth quarter 2017
    -- Return on average assets (ROAA) of 1.30% compared to 0.60% in the fourth quarter of 2017
    -- Return on average equity (ROAE) of 13.18% compared to 6.38% in the fourth quarter of 2017
    -- Efficiency ratio of 55.06% compared to 53.13% in the fourth quarter of 2017 (Non-GAAP measure)
     
  • Asset quality remains strong:
    - Nonperforming assets (NPAs) fell by $962 thousand compared to December 31, 2017
    - NPAs to total assets improved to 0.54% at December 31, 2018
    - Quarterly net chargeoffs were $470 thousand in the fourth quarter 2018, compared to $212 thousand in the fourth quarter 2017
  • Loan portfolio reaches all-time high:
    - Average loans were up $244 million for the fourth quarter 2018 compared to fourth quarter of 2017
    - At $3.9 billion as of December 31, 2018, loans continue to set new all-time highs
     
  • Year over year deposit growth:
    - Average Deposits balances reached $4.2 billion in fourth quarter 2018 up $77.1 million or 1.9% from fourth quarter 2017
    - Time deposits increased $153.1 million or 14.3% compared to the fourth quarter 2017
    - Average interest bearing checking and demand deposits are up $42.8 million or 3.4% in the fourth quarter 2018 compared to fourth quarter 2017

GLENVILLE, N.Y., Jan. 22, 2019 (GLOBE NEWSWIRE) -- TrustCo Bank Corp NY (TrustCo, Nasdaq: TRST) today announced fourth quarter 2018 net income of $16.0 million compared to $7.4 million for the fourth quarter 2017, an increase of 118%.  For the full year 2018, net income rose from $43.1 million to $61.4 million or 42.4% driven by strong performance and the lower tax rate from the Tax Cuts and Jobs Act during 2018.  Income before taxes increased $2.9 million over prior year or 3.8%.

Summary

Robert J. McCormick, Chairman, President and Chief Executive Officer, noted, “We are pleased to be reporting strong 2018 performance, with an increase of over 40% in net income as compared to 2017.  Our focus on traditional lending criteria and conservative balance sheet management has enabled us to produce consistent earnings, maintain solid liquidity and grow capital.  Our strong financial condition is evidenced by our continued recognition as a BauerFinancial, Inc. 5-Star Superior Bank rating.  These strategies have allowed us to continue to grow our business and take advantage of changes in market and competitive conditions.  We continue to achieve new records in residential loan balances through our customer relationships, driving our growth.  Our Board’s decision to increase our quarterly cash dividend by 3.8% to $0.2725 per share reinforces our financial strength.  A meaningful and growing dividend is part of our commitment to provide consistent and favorable long-term shareholder return.  We will continue to take advantage of opportunities as they are presented during the coming year and beyond.”

TrustCo continued to see solid loan growth throughout 2018 compared to the prior year, led by an increase in residential mortgages.  Loan portfolio expansion was funded by a combination of utilizing portions of our strong cash balances and cash flow from our loan and investment portfolios.  The continued shift toward loans helped expand the margin despite higher deposit rates.  We note that current mortgage rates exceed the yield on our existing portfolio of mortgages, which, if sustained, will be a positive factor for net interest margin going forward.  The Federal Reserve decision to raise the target Federal Funds rate throughout the course of the year has contributed to our results as our cash position immediately repriced upward. 

Total average deposits were up $77.1 million in the fourth quarter 2018 versus the fourth quarter 2017.  Interest bearing checking accounts and demand deposits increased $42.8 million in the fourth quarter 2018 versus 2017.  The overall cost of funds increased 23 basis points to 0.61% from the fourth quarter 2017 to the fourth quarter 2018.  The shift towards loans in the asset mix, coupled with a 93 basis-point increase in the yield on Federal Funds more than offset the higher cost of funds, resulting in a 9 basis-point gain in net interest margin to 3.38%.

Details

Average loans were up $244 million or 6.8% in the fourth quarter 2018 over the same period in 2017.  Average residential loans, our primary lending focus, were up $256 million or 8.2% in the fourth quarter 2018, over the same period in 2017.  Total loan growth was offset by a $19.2 million decline in average outstanding home equity lines of credit over the same period.  Mr. McCormick noted, “The growth of our loans and our focus to strengthen the core deposit base reflect the long term strategic focus of our Company.”

Average deposits were up $77.1 million or 1.9% for the fourth quarter 2018 over the same period a year earlier.  Average Core deposits excluding money market deposit accounts declined by $16 million or 0.6%, in fourth quarter 2018 verses 2017.  Money market deposits, our highest costing core deposit declined $59.7 million.  The cost of total deposits increased to 0.60% in the fourth quarter 2018 from 0.36% in the fourth quarter 2017. 

For the fourth quarter 2018, return on average assets and return on average equity were 1.30% and 13.18%, respectively, compared to 0.60% and 6.38% for the fourth quarter 2017.  Diluted earnings per share were $0.166 for the fourth quarter 2018, compared to $0.076 for the fourth quarter 2017.  Total operating expenses increased by $1.4 million in the fourth quarter 2018 as compared to the fourth quarter 2017, with the most significant increases coming in infrastructure investment and professional services.  The increase in expenses was offset with a $1.7 million increase in revenue (net interest income plus non-interest income).  The effective tax rate was 18.9% in the fourth quarter of 2018, compared to 62.6% in the same period a year ago.  This was partially driven by implementation of a tax planning strategy that reduced taxes on a one time basis of $880 thousand.

For 2018, return on average assets and return on average equity were 1.25% and 13.05%, respectively, compared to 0.88% and 9.64% for the year ended 2017.  Diluted earnings per share were $0.636 through December of 2018, compared to $0.448 for the same time period in 2017.

“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.”

Nonperforming loans (NPLs) were $25.0 million at December 31, 2018, compared to $24.4 million at December 31, 2017.  NPLs were equal to 0.64% of total loans at December 31, 2018, compared to 0.67% at December 31, 2017.  The coverage ratio, or allowance for loan losses to NPLs, was 179.2% at December 31, 2018, compared to 181.2% at December 31, 2017.  Nonperforming assets (NPAs) were $26.7 million at December 31, 2018 compared to $27.6 million at December 31, 2017.  The ratio of allowance for loan losses to total loans was 1.16% as of December 31, 2018, compared to 1.21% at December 31, 2017 and reflects both the continued improvement in asset quality and the economic conditions in our primary markets.  The allowance for loan losses was $44.8 million at December 31, 2018 compared to $44.2 million at December 31, 2017.  The provision for loan losses was $1.4 million for 2018, compared to $2.0 million in 2017.  Net chargeoffs decreased to $803 thousand for 2018 from $1.7 million for 2017.  The annualized net chargeoff ratio was 0.05% for 2018, compared to 0.02% in 2017. 

The net interest margin for the fourth quarter 2018 was 3.38%, up 9 basis points versus the fourth quarter 2017, as increases in short term interest rates led to significantly higher earnings on Federal Funds, while slightly better returns were also achieved in the loan and investment portfolios.  Higher loan volumes also increased interest income.  During the same period, the cost of interest bearing liabilities increased 23 basis points.

At December 31, 2018 the equity to asset ratio was 9.88%, compared to 9.34% at December 31, 2017.  Book value per share at December 31, 2018 was $5.06 compared to $4.75 a year earlier.

TrustCo Bank Corp NY is a $5.0 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 December 31, 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 fourth quarter 2018 results will be held at 9:00 a.m. Eastern Time on January 23, 2019.  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 10127907.  The call will also be audio webcast at https://services.choruscall.com/links/trst190123.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.

         
FINANCIAL HIGHLIGHTS        
         
(dollars in thousands, except per share data)        
(Unaudited)        
    Three months ended        
    12/31/2018   9/30/2018   12/31/2017        
Summary of operations                    
Net interest income (TE) $ 40,740   40,526   39,259        
Provision for loan losses   500   300   300        
Noninterest income   4,452   4,455   4,288        
Noninterest expense   24,919   24,544   23,536        
Net income   16,033   15,199   7,362        
                     
Per common share                    
Net income per share:                    
- Basic $ 0.166   0.157   0.077        
- Diluted   0.166   0.157   0.076        
Cash dividends   0.068   0.068   0.066        
Book value at period end   5.06   4.93   4.75        
Market price at period end   6.86   8.50   9.20        
                     
At period end                    
Full time equivalent employees   854   807   846        
Full service banking offices   148   148   145        
                     
Performance ratios                    
Return on average assets   1.30 % 1.24   0.60        
Return on average equity   13.18   12.84   6.38        
Efficiency (1)   55.06   53.39   53.13        
Net interest spread (TE)   3.27   3.26   3.22        
Net interest margin (TE)   3.38   3.35   3.29        
Dividend payout ratio   41.07   43.29   85.81        
                     
Capital ratios at period end                    
Consolidated tangible equity to tangible assets (2)   9.87 % 9.76   9.33        
Consolidated equity to assets   9.88 % 9.77   9.34        
                     
Asset quality analysis at period end                    
Nonperforming loans to total loans   0.64   0.62   0.67        
Nonperforming assets to total assets   0.54   0.53   0.56        
Allowance for loan losses to total loans   1.16   1.17   1.21        
Coverage ratio (3)   1.8x   1.9x   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)        
    Years ended            
    12/31/2018   12/31/2017            
Summary of operations                    
Net interest income (TE) $ 160,698   154,413            
Provision for loan losses   1,400   2,000            
Noninterest income   18,081   18,373            
Noninterest expense   97,713   93,994            
Net income   61,445   43,145            
                     
Per common share                    
Net income per share:                    
- Basic $ 0.637   0.449            
- Diluted   0.636   0.448            
Cash dividends   0.268   0.263            
Tangible Book value at period end   5.06   4.75            
Market price at period end   6.86   9.20            
                     
Performance ratios                    
Return on average assets   1.25 % 0.88            
Return on average equity   13.05   9.64            
Efficiency (1)   53.97   53.75            
Net interest spread (TE)   3.25   3.16            
Net interest margin (TE)   3.33   3.22            
Dividend payout ratio   42.02   58.44            
                     
                     
(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
    12/31/2018   9/30/2018   6/30/2018   3/31/2018   12/31/2017
Interest and dividend income:                    
Interest and fees on loans $ 41,184   40,073   38,956   38,091     37,914  
Interest and dividends on securities available for sale:                    
U. S. government sponsored enterprises   788   787   787   750     614  
State and political subdivisions   2   7   6   7     10  
Mortgage-backed securities and collateralized mortgage                    
obligations - residential   1,554   1,601   1,675   1,763     1,730  
Corporate bonds   202   202   150   133     148  
Small Business Administration - guaranteed                    
participation securities   329   325   333   352     358  
Mortgage-backed securities and collateralized mortgage                    
obligations - commercial   -   -   (5 ) 42     43  
Other securities   5   4   4   5     4  
Total interest and dividends on securities available for sale   2,880   2,926   2,950   3,052     2,907  
                     
Interest on held to maturity securities:                    
Mortgage-backed securities and collateralized mortgage                    
obligations - residential   226   232   244   260     261  
Total interest on held to maturity securities   226   232   244   260     261  
                     
Federal Reserve Bank and Federal Home Loan Bank stock   207   82   198   77     151  
                     
Interest on federal funds sold and other short-term investments   2,367   2,425   2,467   2,017     1,779  
Total interest income   46,864   45,738   44,815   43,497     43,012  
                     
Interest expense:                    
Interest on deposits:                    
Interest-bearing checking   111   113   112   106     107  
Savings   401   417   420   419     429  
Money market deposit accounts   618   544   452   439     457  
Time deposits   4,643   3,864   3,439   2,860     2,412  
Interest on short-term borrowings   352   277   283   358     359  
Total interest expense   6,125   5,215   4,706   4,182     3,764  
                     
Net interest income   40,739   40,523   40,109   39,315     39,248  
                     
Less: Provision for loan losses   500   300   300   300     300  
Net interest income after provision for loan losses   40,239   40,223   39,809   39,015     38,948  
                     
Noninterest income:                    
Trustco Financial Services income   1,356   1,516   1,596   1,815     1,457  
Fees for services to customers   2,897   2,693   2,677   2,645     2,597  
Other   199   246   222   219     234  
Total noninterest income   4,452   4,455   4,495   4,679     4,288  
                     
Noninterest expenses:                    
Salaries and employee benefits   10,183   10,761   10,741   10,422     10,536  
Net occupancy expense   4,800   3,997   4,101   4,315     4,140  
Equipment expense   1,741   1,783   1,793   1,751     1,465  
Professional services   1,733   1,578   1,814   1,430     1,325  
Outsourced services   1,875   1,875   1,825   1,925     1,760  
Advertising expense   876   844   670   630     559  
FDIC and other insurance   522   682   514   1,023     1,102  
Other real estate expense, net   37   528   294   372     401  
Other   3,152   2,496   2,343   2,287     2,248  
Total noninterest expenses   24,919   24,544   24,095   24,155     23,536  
                     
Income before taxes   19,772   20,134   20,209   19,539     19,700  
Income taxes   3,739   4,935   4,804   4,731     12,338  
                     
Net income $ 16,033   15,199   15,405   14,808     7,362  
                     
Net income per common share:                    
- Basic $ 0.166   0.157   0.160   0.154     0.077  
                     
- Diluted   0.166   0.157   0.160   0.153     0.076  
                     
Average basic shares (in thousands)   96,555   96,555   96,449   96,353     96,230  
Average diluted shares (in thousands)   96,689   96,689   96,580   96,490     96,393  
                     
Note: Taxable equivalent net interest income  $  40,740   40,526   40,119   39,319     39,259  
                     
CONSOLIDATED STATEMENTS OF INCOME, Continued          
           
(dollars in thousands, except per share data)          
(Unaudited)          
    Years ended            
    12/31/2018   12/31/2017            
Interest and dividend income:                    
Interest and fees on loans $ 158,304   148,133            
Interest and dividends on securities available for sale:                    
U. S. government sponsored enterprises   3,112   2,281            
State and political subdivisions   22   39            
Mortgage-backed securities and collateralized mortgage                    
obligations - residential   6,593   7,447            
Corporate bonds   687   606            
Small Business Administration - guaranteed                    
participation securities   1,339   1,547            
Mortgage-backed securities and collateralized mortgage                    
obligations - commercial   37   109            
Other securities   18   16            
Total interest and dividends on securities available for sale   11,808   12,045            
                     
Interest on held to maturity securities:                    
Mortgage-backed securities-residential   962   1,149            
Corporate bonds   -   410            
Total interest on held to maturity securities   962   1,559            
                     
Federal Reserve Bank and Federal Home Loan Bank stock   564   544            
                     
Interest on federal funds sold and other short-term investments   9,276   6,679            
Total interest income   180,914   168,960            
                     
Interest expense:                    
Interest on deposits:                    
Interest-bearing checking   442   478            
Savings   1,657   1,729            
Money market deposit accounts   2,053   1,860            
Time deposits   14,806   9,123            
Interest on short-term borrowings   1,270   1,402            
Total interest expense   20,228   14,592            
                     
Net interest income   160,686   154,368            
                     
Less: Provision for loan losses   1,400   2,000            
Net interest income after provision for loan losses   159,286   152,368            
                     
Noninterest income:                    
Trustco Financial Services income   6,283   6,584            
Fees for services to customers   10,912   10,798            
Other   886   991            
Total noninterest income   18,081   18,373            
                     
Noninterest expenses:                    
Salaries and employee benefits   42,107   40,665            
Net occupancy expense   17,213   16,543            
Equipment expense   7,068   6,118            
Professional services   6,555   6,895            
Outsourced services   7,500   6,410            
Advertising expense   3,020   2,578            
FDIC and other insurance   2,741   4,179            
Other real estate expense, net   1,231   1,171            
Other   10,278   9,435            
Total noninterest expenses   97,713   93,994            
                     
Income before taxes   79,654   76,747            
Income taxes   18,209   33,602            
                     
Net income $ 61,445   43,145            
                     
Net income per common share:                    
- Basic $ 0.637   0.449            
                     
- Diluted   0.636   0.448            
                     
Average basic shares (in thousands)   96,505   96,112            
Average diluted shares (in thousands)   96,646   96,222            
                     
Note: Taxable equivalent net interest income $ 160,698   154,413            
                     
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 
(dollars in thousands)
(Unaudited)
    12/31/2018   9/30/2018   6/30/2018   3/31/2018   12/31/2017
ASSETS:                    
                     
Cash and due from banks $ 49,260   42,195   40,567   39,373     44,125  
Federal funds sold and other short term investments   454,449   423,254   546,049   577,797     568,615  
Total cash and cash equivalents   503,709   465,449   586,616   617,170     612,740  
                     
Securities available for sale:                    
U. S. government sponsored enterprises   152,160   150,053   150,704   151,327     137,994  
States and political subdivisions   173   180   524   525     525  
Mortgage-backed securities and collateralized mortgage                    
obligations - residential   262,032   269,093   283,252   297,633     315,840  
Small Business Administration - guaranteed                    
participation securities   56,475   57,894   61,876   64,113     67,059  
Mortgage-backed securities and collateralized mortgage                    
obligations - commercial   -   -   -   9,573     9,700  
Corporate bonds   29,938   29,977   29,977   35,227     40,162  
Other securities   685   685   685   685     685  
Total securities available for sale   501,463   507,882   527,018   559,083     571,965  
                     
Held to maturity securities:                    
Mortgage-backed securities and collateralized mortgage                    
obligations - residential   22,501   23,462   24,730   26,174     27,551  
Total held to maturity securities   22,501   23,462   24,730   26,174     27,551  
                     
Federal Reserve Bank and Federal Home Loan Bank stock   8,953   8,953   8,953   8,779     8,779  
                     
Loans:                    
Commercial   196,146   190,987   190,904   185,129     186,207  
Residential mortgage loans   3,376,708   3,331,212   3,245,151   3,171,548     3,132,521  
Home equity line of credit   289,540   293,750   295,791   301,885     308,916  
Installment loans   11,702   9,967   9,309   8,413     8,763  
Loans, net of deferred net costs   3,874,096   3,825,916   3,741,155   3,666,975     3,636,407  
                     
Less: Allowance for loan losses   44,766   44,736   44,503   44,379     44,170  
Net loans   3,829,330   3,781,180   3,696,652   3,622,596     3,592,237  
                     
Bank premises and equipment, net   34,694   35,214   35,521   35,240     35,157  
Other assets   58,263   63,211   61,069   62,522     59,579  
                     
Total assets $ 4,958,913   4,885,351   4,940,559   4,931,564     4,908,008  
                     
LIABILITIES:                    
Deposits:                    
Demand $ 405,069   403,047   404,564   403,782     398,399  
Interest-bearing checking   904,678   918,486   925,295   915,163     891,052  
Savings accounts   1,182,683   1,221,127   1,257,744   1,266,852     1,260,447  
Money market deposit accounts   507,311   501,270   512,453   539,839     556,462  
Time deposits   1,274,506   1,155,994   1,155,214   1,109,444     1,066,966  
Total deposits   4,274,247   4,199,924   4,255,270   4,235,080     4,173,326  
                     
Short-term borrowings   161,893   176,377   182,705   203,910     242,991  
Accrued expenses and other liabilities   32,902   31,932   31,769   30,477     33,383  
                     
Total liabilities   4,469,042   4,408,233   4,469,744   4,469,467     4,449,700  
                     
SHAREHOLDERS' EQUITY:                    
Capital stock   100,175   100,175   100,093   100,002     99,998  
Surplus   176,710   176,764   176,243   175,674     175,651  
Undivided profits   256,397   246,965   238,342   229,267     219,436  
Accumulated other comprehensive loss, net of tax   (10,309 (13,000 (9,796 ) (8,490 )   (1,806 )
Treasury stock at cost   (33,102 (33,786 ) (34,067 ) (34,356 )   (34,971 )
                     
Total shareholders' equity   489,871   477,118   470,815   462,097     458,308  
                     
Total liabilities and shareholders' equity $ 4,958,913   4,885,351   4,940,559   4,931,564     4,908,008  
                     
Outstanding shares (in thousands)   96,659   96,586   96,475   96,359     96,289  
                     
                     


 
NONPERFORMING ASSETS
             
(dollars in thousands)
(Unaudited)
    12/31/2018 9/30/2018 6/30/2018 3/31/2018 12/31/2017
Nonperforming Assets            
             
New York and other states*            
Loans in nonaccrual status:            
Commercial $ 645   928   767   1,213   1,543  
Real estate mortgage - 1 to 4 family   22,373   20,750   21,209   21,424   20,350  
Installment   4   13   6   19   57  
Total non-accrual loans   23,022   21,691   21,982   22,656   21,950  
Other nonperforming real estate mortgages - 1 to 4 family   34   35   36   38   38  
Total nonperforming loans   23,056   21,726   22,018   22,694   21,988  
Other real estate owned   1,675   2,306   2,569   2,190   3,246  
Total nonperforming assets $ 24,731   24,032   24,587   24,884   25,234  
             
Florida            
Loans in nonaccrual status:            
Commercial $ -   -   -   -   -  
Real estate mortgage - 1 to 4 family   1,915   2,054   2,143   2,154   2,389  
Installment   15   13   -   4   -  
Total non-accrual loans   1,930   2,067   2,143   2,158   2,389  
Other nonperforming real estate mortgages - 1 to 4 family   -   -   -   -   -  
Total nonperforming loans   1,930   2,067   2,143   2,158   2,389  
Other real estate owned   -   -   -   -   -  
Total nonperforming assets $ 1,930   2,067   2,143   2,158   2,389  
             
Total            
Loans in nonaccrual status:            
Commercial $ 645   928   767   1,213   1,543  
Real estate mortgage - 1 to 4 family   24,288   22,804   23,352   23,578   22,739  
Installment   19   26   6   23   57  
Total non-accrual loans   24,952   23,758   24,125   24,814   24,339  
Other nonperforming real estate mortgages - 1 to 4 family   34   35   36   38   38  
Total nonperforming loans   24,986   23,793   24,161   24,852   24,377  
Other real estate owned   1,675   2,306   2,569   2,190   3,246  
Total nonperforming assets $ 26,661   26,099   26,730   27,042   27,623  
             
             
Quarterly Net Chargeoffs (Recoveries)            
             
New York and other states*            
Commercial $ 99   (2 ) (1 ) (6 ) (86 )
Real estate mortgage - 1 to 4 family   323   (3 ) 150   28   249  
Installment   35   64   27   66   50  
Total net chargeoffs $ 457   59   176   88   213  
             
Florida            
Commercial $ -   -   -   -   -  
Real estate mortgage - 1 to 4 family   (3 ) -   -   -   (1 )
Installment   16   8   -   2   -  
Total net chargeoffs $ 13   8   -   2   (1 )
             
Total            
Commercial $ 99   (2 ) (1 ) (6 ) (86 )
Real estate mortgage - 1 to 4 family   320   (3 ) 150   28   248  
Installment   51   72   27   68   50  
Total net chargeoffs $ 470   67   176   90   212  
             
             
Asset Quality Ratios            
             
Total nonperforming loans (1) $ 24,986   23,793   24,161   24,852   24,377  
Total nonperforming assets (1)   26,661   26,099   26,730   27,042   27,623  
Total net chargeoffs (2)   470   67   176   90   212  
             
Allowance for loan losses (1)   44,766   44,736   44,503   44,379   44,170  
             
Nonperforming loans to total loans   0.64 % 0.62 % 0.65 % 0.68 % 0.67 %
Nonperforming assets to total assets   0.54 % 0.53 % 0.54 % 0.55 % 0.56 %
Allowance for loan losses to total loans   1.16 % 1.17 % 1.19 % 1.21 % 1.21 %
Coverage ratio (1)   179.2 % 188.0 % 184.2 % 178.6 % 181.2 %
Annualized net chargeoffs to average loans (2)   0.05 % 0.01 % 0.02 % 0.01 % 0.02 %
Allowance for loan losses to annualized net chargeoffs (2)   23.8x   166.9x   63.2x   123.3x   52.1x  
 
* 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  
    December 31, 2018     December 31, 2017  
    Average   Interest Average     Average   Interest Average  
    Balance     Rate     Balance     Rate  
Assets                        
                         
Securities available for sale:                        
U. S. government sponsored enterprises $ 154,867     788   2.03 % $ 139,565     614   1.76 %
Mortgage backed securities and collateralized mortgage                        
obligations - residential   276,747     1,554   2.25     328,826     1,730   2.10  
State and political subdivisions   172     3   7.82     519     10   7.71  
Corporate bonds   30,068     202   2.68     41,006     148   1.44  
Small Business Administration - guaranteed                        
participation securities   59,363     329   2.21     69,643     358   2.06  
Mortgage backed securities and collateralized mortgage                        
obligations - commercial   -     -   -     9,843     43   1.75  
Other   684     5   2.92     685     4   2.34  
                         
Total securities available for sale   521,901     2,881   2.21     590,087     2,907   1.97  
                         
Federal funds sold and other short-term Investments   416,765     2,367   2.25     539,700     1,779   1.32  
                         
Held to maturity securities:                        
Corporate bonds   -     -   -     -     -   -  
Mortgage backed securities and collateralized mortgage                        
obligations - residential   22,947     226   3.93     28,418     261   3.67  
                         
Total held to maturity securities   22,947     226   3.93     28,418     261   3.67  
                         
Federal Reserve Bank and Federal Home Loan Bank stock   8,953     207   9.25     8,779     151   6.88  
                         
Commercial loans   191,899     2,577   5.37     186,655     2,429   5.21  
Residential mortgage loans   3,359,540     34,808   4.14     3,103,792     32,051   4.13  
Home equity lines of credit   291,411     3,544   4.82     310,626     3,240   4.17  
Installment loans   10,486     255   9.65     8,276     205   9.91  
                         
Loans, net of unearned income   3,853,336     41,184   4.27     3,609,349     37,925   4.20  
                         
Total interest earning assets   4,823,902     46,865   3.88     4,776,333     43,023   3.60  
                         
Allowance for loan losses   (44,887 )           (44,322 )        
Cash & non-interest earning assets   120,646             128,340          
                         
                         
Total assets $ 4,899,661           $ 4,860,351          
                         
                         
Liabilities and shareholders' equity                        
                         
Deposits:                        
Interest bearing checking accounts $ 892,241     111   0.05 % $ 856,031     107   0.05 %
Money market accounts   499,771     618   0.49     559,463     457   0.33  
Savings   1,200,864     401   0.13     1,259,938     429   0.14  
Time deposits   1,227,034     4,643   1.50     1,073,956     2,412   0.90  
                         
Total interest bearing deposits   3,819,910     5,773   0.60     3,749,388     3,405   0.36  
Short-term borrowings   171,247     352   0.82     232,207     359   0.62  
                         
Total interest bearing liabilities   3,991,157     6,125   0.61     3,981,595     3,764   0.38  
                         
Demand deposits   396,959             390,343          
Other liabilities   28,748             30,392          
Shareholders' equity   482,797             458,021          
                         
Total liabilities and shareholders' equity $ 4,899,661           $ 4,860,351          
                         
Net interest income, tax equivalent       40,740             39,259      
                         
Net interest spread         3.27 %         3.22 %
                         
Net interest margin (net interest income to                        
total interest earning assets)         3.38 %         3.29 %
                         
Tax equivalent adjustment       (1 )           (11 )    
                         
Net interest income       40,739             39,248      
                         
                         
                         
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY -
INTEREST RATES AND INTEREST DIFFERENTIAL, Continued
                         
(dollars in thousands)                        
(Unaudited)   Year ended     Year ended  
    December 31, 2018     December 31, 2017  
    Average   Interest Average     Average   Interest Average  
    Balance     Rate     Balance     Rate  
Assets                        
                         
Securities available for sale:                        
U. S. government sponsored enterprises $ 155,381     3,112   2.00 % $ 139,652     2,281   1.63 %
Mortgage backed securities and collateralized mortgage                        
obligations - residential   294,732     6,593   2.24     350,256     7,447   2.13  
State and political subdivisions   414     34   8.11     682     55   8.06  
Corporate bonds   30,310     687   2.27     41,946     606   1.44  
Small Business Administration - guaranteed                        
participation securities   63,430     1,339   2.11     73,996     1,547   2.09  
Mortgage backed securities and collateralized mortgage                        
obligations - commercial   2,769     37   1.33     9,963     109   1.09  
Other   685     18   3.50     685     16   2.34  
                         
Total securities available for sale   547,721     11,820   2.88     617,180     12,061   1.95  
                         
Federal funds sold and other short-term Investments   495,066     9,276   1.87     611,586     6,679   1.09  
                         
Held to maturity securities:                        
Corporate bonds   -     -   -     6,663     410   6.15  
Mortgage backed securities and collateralized mortgage                        
obligations - residential   24,801     962   3.88     31,266     1,149   3.67  
                         
Total held to maturity securities   24,801     962   3.88     37,929     1,559   4.11  
                         
Federal Reserve Bank and Federal Home Loan Bank stock   8,907     564   8.44     9,295     544   5.85  
                         
Commercial loans   188,362     9,913   5.26     185,376     9,741   5.25  
Residential mortgage loans   3,250,800     133,930   4.12     3,002,706     124,961   4.16  
Home equity lines of credit   297,678     13,562   4.56     318,660     12,692   3.98  
Installment loans   9,242     899   9.73     8,158     768   9.41  
                         
Loans, net of unearned income   3,746,082     158,304   4.23     3,514,900     148,162   4.22  
                         
Total interest earning assets   4,822,577     180,926   3.75     4,790,890     169,005   3.53  
                         
Allowance for loan losses   (44,651 )           (44,319 )        
Cash & non-interest earning assets   122,524             129,097          
                         
                         
Total assets $ 4,900,450           $ 4,875,668          
                         
                         
Liabilities and shareholders' equity                        
                         
Deposits:                        
Interest bearing checking accounts $ 897,378     442   0.05 % $ 844,010     478   0.06 %
Money market accounts   521,233     2,053   0.39     572,270     1,860   0.33  
Savings   1,241,619     1,657   0.13     1,275,268     1,729   0.14  
Time deposits   1,149,980     14,806   1.29     1,097,190     9,123   0.83  
                         
Total interest bearing deposits   3,810,210     18,958   0.50     3,788,738     13,190   0.35  
Short-term borrowings   194,810     1,270   0.65     228,086     1,402   0.61  
                         
Total interest bearing liabilities   4,005,020     20,228   0.51     4,016,824     14,592   0.36  
                         
Demand deposits   396,367             382,658          
Other liabilities   28,249             28,506          
Shareholders' equity   470,814             447,680          
                         
Total liabilities and shareholders' equity $ 4,900,450             4,875,668          
                         
Net interest income, tax equivalent       160,698             154,413      
                         
Net interest spread         3.25 %         3.16 %
                         
Net interest margin (net interest income to                        
total interest earning assets)         3.33 %         3.22 %
                         
Tax equivalent adjustment       (12 )           (45 )    
                         
Net interest income       160,686             154,368      
                         

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 Book Value Per Share   12/31/2018 9/30/2018 12/31/2017          
                   
Equity   489,871   477,118   458,308            
Less: Intangible assets   553   553   553            
Tangible equity   489,318   476,565   457,755            
                   
Shares outstanding   96,659   96,586   96,289            
Tangible book value per share   5.06   4.93   4.75            
Book value per share   5.07   4.94   4.76            
                   
Tangible Equity to Tangible Assets                  
                   
Total Assets $ 4,958,913   4,885,351   4,908,008            
Less: Intangible assets   553   553   553            
Tangible assets   4,958,360   4,884,798   4,907,455            
                   
Tangible Equity to Tangible Assets   9.87 % 9.76 % 9.33 %          
Equity to Assets   9.88 % 9.77 % 9.34 %          
                   
    Three months ended     Years ended  
Efficiency Ratio   12/31/2018 9/30/2018 12/31/2017     12/31/2018 12/31/2017  
                   
Net interest income $ 40,739   40,523   39,248       160,686   154,368    
Taxable equivalent adjustment   1   3   11       12   45    
Net interest income (fully taxable equivalent)   40,740   40,526   39,259       160,698   154,413    
Non-interest income   4,452   4,455   4,288       18,081   18,373    
Less:  Net gain on sale of nonperforming loans   -   -   -       -   84    
Revenue used for efficiency ratio   45,192   44,981   43,547       178,779   172,702    
                   
Total noninterest expense   24,919   24,544   23,536       97,713   93,994    
Less:  Other real estate expense, net   37   528   401       1,231   1,171    
Expense used for efficiency ratio   24,882   24,016   23,135       96,482   92,823    
                   
Efficiency Ratio   55.06 % 53.39 % 53.13 %     53.97 % 53.75 %  
                   
                   
                   

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