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CST: 21/08/2019 12:45:57   

TrustCo Announces Second Quarter 2019 Results; Net Income of $14.7 Million and 6.0% Average Residential Loan Growth Year over Year

29 Days ago

GLENVILLE, N.Y., July 22, 2019 (GLOBE NEWSWIRE) -- TrustCo Bank Corp NY (TrustCo, NASDAQ: TRST) · TrustCo Bank Corp NY today announced second quarter 2019 net income of $14.7 million or $0.151 diluted earnings per share compared to $15.4 million or $0.160 diluted earnings per share in the second quarter of 2018 despite an increase of $4.8 million in interest expense during the same time period. Similar results were noted during the six month period wherein net income was $29.2 million for the six months ended June 30, 2019 versus $30.2 million for the same period in 2018 while total interest expense increased by $8.3 million.

Summary

Robert J. McCormick, Chairman, President and Chief Executive Officer noted, “Balanced growth of loans and deposits during the second quarter helped preserve our strong liquidity position while at the same time mitigated the impact of margin compression.” Average loans grew by 4.8% and average deposits increased 4.7% for the second quarter of 2019 compared to the second quarter 2018.  Commenting on this growth Mr. McCormick noted “Flexible balance sheet management and our strong liquidity position allows us to invest in our traditional market leading real estate products while retaining our core deposit centered base.  I am pleased with these results and I believe this positions us well for the remainder of this year and beyond.”

The quarter also reflected the sale of the Company’s remaining credit card portfolio which resulted in a gain of approximately $176 thousand and reduced the required loan loss reserve allocated to this portfolio by approximately $540 thousand. The negative second quarter 2019 provision for loan losses of $341 thousand includes a reduction in the allocated reserve and the normal quarterly provision for loan losses of approximately $200 thousand.

Details

Average loans were up $176.6 million or 4.8% in the second quarter 2019 over the same period in 2018.  Average residential loans, our primary lending focus, were up $191.1 million or 6.0% in the second quarter 2019, over the same period in 2018.  Average deposits are up $197.7 million or 4.7% for the second quarter 2019 over the same period a year earlier.  The increase in deposits was the result of a $301.5 million or 26.5% increase in average time deposits versus the same period last year.  Excluding time deposits, total average core deposit accounts, which consist of checking, savings and money market deposits, were down $103.7 million or 3.4% for the second quarter 2019 compared to the second quarter 2018. 

The Federal Open Market Committee (FOMC) increased short term rates 100 basis points from June 2018 to June 2019 while the cost of our interest bearing liabilities increased only 44 basis points over the same period.  The cost of interest bearing liabilities increased to 0.91% in the second quarter 2019 from 0.47% in the second quarter 2018.  The cost of savings and interest bearing checking remained relatively flat over the same time frame.  Money market deposits increased 46 basis points to 0.81% versus 0.35% from the second quarter 2018. A significant portion of our CD portfolio is expected to reprice during the third and fourth quarter at which point current market rates may be lower. The net interest spread for the second quarter 2019 was 2.95%, down 29 basis points from 3.24% in the second quarter of 2018.  Net interest income (TE) decreased by 2.3% or $927 thousand versus the same period last year.  Because we offered competitive shorter term rates, we would expect margin to begin to stabilize in the latter part of 2019 particularly in third and fourth quarter as our shorter term time deposits could reprice lower and provide opportunity for increased margin expansion.

The Bank continued to demonstrate its ability to grow shareholders’ equity as average equity was up $41.4 million or 8.9% in the second quarter of 2019 compared to the same period in 2018.  On this expanded equity, return on average assets and return on average equity for the second quarter 2019 were 1.14% and 11.60%, respectively, compared to 1.26% and 13.26% for the second quarter 2018.  Improving efficiencies to reduce costs continues to remain a key area of focus.  Total operating expenses increased by $807 thousand or 3.3% in the second quarter 2019 as compared to the second quarter 2018, driven by an increase in salaries and employee benefits, partially offset by a 13.6% decline in professional services costs.  The growth in salaries and benefit expense was the result of our targeted effort to hire and retain talent.

Asset quality and loan loss reserve measures continued to improve.  Nonperforming loans (NPLs) were $22.1 million at June 30, 2019, compared to $24.2 million at June 30, 2018.  NPLs were 0.57% of total loans at June 30, 2019, compared to 0.65% at June 30, 2018.  The coverage ratio, or allowance for loan losses to NPLs, was 200.4% at June 30, 2019, compared to 184.2% at June 30, 2018.  Nonperforming assets (NPAs) were $24.8 million at June 30, 2019 compared to $26.7 million at June 30, 2018.  The ratio of allowance for loan losses to total loans was 1.14% as of June 30, 2019, compared to 1.19% at June 30, 2018 which reflects both the improvement in asset quality and economic conditions in our lending areas.  The allowance for loan losses was $44.4 million at June 30, 2019 compared to $44.5 million at June 30, 2018.  The provision for loan losses decreased reflecting continued strong credit performance within the loan portfolio and the sale of the credit card portfolio which yielded $541 thousand or 1.2% decrease in the reserve.  Net recoveries for the second quarter 2019 were $35 thousand versus a net chargeoffs in the second quarter 2018 of $176 thousand driven by the settlement of the non performing loan sale.  The annualized net chargeoffs ratio was 0.00% for the second quarter 2019, compared to 0.02% in the second quarter 2018. 

At June 30, 2019 the tangible equity to tangible asset ratio was 9.85%, compared to 9.52% at June 30, 2018.  As mentioned earlier, the Bank is proud of its ability to grow shareholder equity.  Book value per share at June 30, 2019 was $5.32, up 9.24% compared to $4.87 a year earlier.

TrustCo Bank Corp NY is a $5.2 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, 2019.

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 2019 results will be held at 9:00 a.m. Eastern Time on July 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 10133313.  The call will also be audio webcast at: https://services.choruscall.com/links/trst190723.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 make accurate assumptions and judgments regarding the credit risks associated with lending and investing activities; 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; 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 us and Trustco Bank and the continued receipt of approvals from our primary federal banking regulators under regulatory rules 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; adverse conditions in the securities markets that lead to impairment in the value of securities in our investment portfolio; unanticipated effects from the Tax Cut and Jobs Act that may limit its benefits or adversely impact our business;  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; the effect of changes in financial services laws and regulations and the impact of other governmental initiatives affecting the financial services industry; changes in management personnel; real estate and collateral values; changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the FASB or PCAOB; disruptions, security breaches, or other adverse events affecting the third-party vendors who perform several of our critical processing functions; technological changes and electronic, cyber and physical security breaches; 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        
    6/30/2019   3/31/2019   6/30/2018        
Summary of operations                    
Net interest income (TE) $ 39,192     39,733     40,119          
(Credit) Provision for loan losses   (341 )   300     300          
Noninterest income   4,914     4,637     4,495          
Noninterest expense   24,902     24,867     24,095          
Net income   14,667     14,558     15,405          
                     
Per common share                    
Net income per share:                    
- Basic $ 0.152     0.150     0.160          
- Diluted   0.151     0.150     0.160          
Cash dividends   0.068     0.068     0.066          
Book value at period end   5.32     5.18     4.87          
Market price at period end   7.92     7.76     8.90          
                     
At period end                    
Full time equivalent employees   858     899     829          
Full service banking offices   148     148     148          
                     
Performance ratios                    
Return on average assets   1.14   % 1.17     1.26          
Return on average equity   11.60     11.93     13.26          
Efficiency (1)   55.98     56.10     53.35          
Net interest spread (TE)   2.95     3.11     3.24          
Net interest margin (TE)   3.11     3.24     3.32          
Dividend payout ratio   44.94     45.23     41.08          
                     
Capital ratios at period end                    
Consolidated tangible equity to tangible assets (2)   9.85   % 9.72     9.52          
Consolidated equity to assets   9.86   % 9.73     9.53          
                     
Asset quality analysis at period end                    
Nonperforming loans to total loans   0.57     0.64     0.65          
Nonperforming assets to total assets   0.47     0.50     0.54          
Allowance for loan losses to total loans   1.14     1.16     1.19          
Coverage ratio (3)   2.0x   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            
    06/30/19   06/30/18            
Summary of operations                    
Net interest income (TE) $ 78,925     79,431              
(Credit) Provision for loan losses   (41 )   600              
Noninterest income   9,551     9,174              
Noninterest expense   49,769     48,250              
Net income   29,225     30,213              
                     
Per common share                    
Net income per share:                    
- Basic $ 0.302     0.313              
- Diluted   0.302     0.313              
Cash dividends   0.136     0.131              
Tangible Book value at period end   5.32     4.87              
Market price at period end   7.92     8.90              
                     
Performance ratios                    
Return on average assets   1.15     1.24              
Return on average equity   11.76     13.17              
Efficiency (1)   56.04     53.70              
Net interest spread (TE)   3.03     3.23              
Net interest margin (TE)   3.17     3.30              
Dividend payout ratio   45.08     41.87              
                     
(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
    6/30/2019   3/31/2019   12/31/2018   9/30/2018   6/30/2018
Interest and dividend income:                    
Interest and fees on loans $ 41,432     41,253     41,184     40,073     38,956  
Interest and dividends on securities available for sale:                  
U. S. government sponsored enterprises   821     783     788     787     787  
State and political subdivisions   3     1     2     7     6  
Mortgage-backed securities and collateralized mortgage                    
obligations - residential   2,152     1,555     1,554     1,601     1,675  
Corporate bonds   272     208     202     202     150  
Small Business Administration - guaranteed                    
participation securities   289     297     329     325     333  
Mortgage-backed securities and collateralized mortgage                    
obligations - commercial   -     -     -     -     (5 )
Other securities   5     5     5     4     4  
Total interest and dividends on securities available for sale   3,542     2,849     2,880     2,926     2,950  
                     
Interest on held to maturity securities:                    
Mortgage-backed securities and collateralized mortgage                    
obligations - residential   209     217     226     232     244  
Total interest on held to maturity securities   209     217     226     232     244  
                     
Federal Reserve Bank and Federal Home Loan Bank stock   199     85     207     82     198  
                     
Interest on federal funds sold and other short-term investments   3,282     3,009     2,367     2,425     2,467  
Total interest income   48,664     47,413     46,864     45,738     44,815  
                     
Interest expense:                    
Interest on deposits:                    
Interest-bearing checking   94     121     111     113     112  
Savings   367     377     401     417     420  
Money market deposit accounts   1,119     826     618     544     452  
Time deposits   7,512     5,976     4,643     3,864     3,439  
Interest on short-term borrowings   381     381     352     277     283  
Total interest expense   9,473     7,681     6,125     5,215     4,706  
                     
Net interest income   39,191     39,732     40,739     40,523     40,109  
                     
Less: (Credit) Provision for loan losses   (341 )   300     500     300     300  
Net interest income after provision for loan losses   39,532     39,432     40,239     40,223     39,809  
                     
Noninterest income:                    
Trustco Financial Services income   1,683     1,733     1,356     1,516     1,596  
Fees for services to customers   2,611     2,520     2,897     2,693     2,677  
Other   620     384     199     246     222  
Total noninterest income   4,914     4,637     4,452     4,455     4,495  
                     
Noninterest expenses:                    
Salaries and employee benefits   11,711     11,451     10,183     10,761     10,741  
Net occupancy expense   4,006     4,167     4,800     3,997     4,101  
Equipment expense   1,709     1,902     1,741     1,783     1,793  
Professional services   1,568     1,650     1,733     1,578     1,814  
Outsourced services   1,875     1,925     1,875     1,875     1,825  
Advertising expense   778     785     876     844     670  
FDIC and other insurance   598     648     522     682     514  
Other real estate (income) expense, net   210     (24 )   37     528     294  
Other   2,447     2,363     3,152     2,496     2,343  
Total noninterest expenses   24,902     24,867     24,919     24,544     24,095  
                     
Income before taxes   19,544     19,202     19,772     20,134     20,209  
Income taxes   4,877     4,644     3,739     4,935     4,804  
                     
Net income $ 14,667     14,558     16,033     15,199     15,405  
                     
Net income per common share:                    
- Basic $ 0.152     0.150     0.166     0.157     0.160  
                     
- Diluted   0.151     0.150     0.166     0.157     0.160  
                     
Average basic shares (in thousands)   96,822     96,744     96,555     96,555     96,449  
Average diluted shares (in thousands)   96,891     96,822     96,689     96,689     96,580  
                     
Note:  Taxable equivalent net interest income $ 39,192     39,733     40,740     40,526     40,119  
                     
                     
CONSOLIDATED STATEMENTS OF INCOME, Continued          
           
(dollars in thousands, except per share data)          
(Unaudited)          
    Six months ended            
    06/30/19   06/30/18            
Interest and dividend income:                    
Interest and fees on loans $ 82,685     77,047                
Interest and dividends on securities available for sale:                  
U. S. government sponsored enterprises   1,604     1,537                
State and political subdivisions   4     13                
Mortgage-backed securities and collateralized mortgage                    
obligations - residential   3,707     3,438                
Corporate bonds   480     283                
Small Business Administration - guaranteed                    
participation securities   586     685                
Mortgage-backed securities and collateralized mortgage                    
obligations - commercial   -     37                
Other securities   10     9                
Total interest and dividends on securities available for sale   6,391     6,002                
                     
Interest on held to maturity securities:                    
Mortgage-backed securities-residential   426     504                
Total interest on held to maturity securities   426     504                
                     
Federal Reserve Bank and Federal Home Loan Bank stock   284     275                
                     
Interest on federal funds sold and other short-term investments   6,291     4,484                
Total interest income   96,077     88,312                
                     
Interest expense:                    
Interest on deposits:                    
Interest-bearing checking   215     218                
Savings   744     839                
Money market deposit accounts   1,945     891                
Time deposits   13,488     6,299                
Interest on short-term borrowings   762     641                
Total interest expense   17,154     8,888                
                     
Net interest income   78,923     79,424                
                     
Less: (Credit) Provision for loan losses   (41 )   600                
Net interest income after provision for loan losses   78,964     78,824                
                     
Noninterest income:                    
Trustco Financial Services income   3,416     3,411                
Fees for services to customers   5,131     5,322                
Other   1,004     441                
Total noninterest income   9,551     9,174                
                     
Noninterest expenses:                    
Salaries and employee benefits   23,162     21,163                
Net occupancy expense   8,173     8,416                
Equipment expense   3,611     3,544                
Professional services   3,218     3,244                
Outsourced services   3,800     3,750                
Advertising expense   1,563     1,300                
FDIC and other insurance   1,246     1,537                
Other real estate expense, net   186     666                
Other   4,810     4,630                
Total noninterest expenses   49,769     48,250                
                     
Income before taxes   38,746     39,748                
Income taxes   9,521     9,535                
                     
Net income $ 29,225     30,213                
                     
Net income per common share:                    
- Basic $ 0.302     0.313              
                     
- Diluted   0.302     0.313              
                     
Average basic shares (in thousands)   96,784     96,401              
Average diluted shares (in thousands)   96,857     96,535              
                     
Note:  Taxable equivalent net interest income $ 78,925     79,431              
                     
                     
                     
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 
(dollars in thousands)
(Unaudited)
    6/30/2019   3/31/2019   12/31/2018   9/30/2018   6/30/2018
ASSETS:                    
                     
Cash and due from banks $ 42,471     43,064     49,260     42,195     40,567  
Federal funds sold and other short term investments   517,684     576,123     454,449     423,254     546,049  
Total cash and cash equivalents   560,155     619,187     503,709     465,449     586,616  
                     
Securities available for sale:                    
U. S. government sponsored enterprises   184,448     148,292     152,160     150,053     150,704  
States and political subdivisions   170     172     173     180     524  
Mortgage-backed securities and collateralized mortgage                    
obligations - residential   354,679     312,946     262,032     269,093     283,252  
Small Business Administration - guaranteed                    
participation securities   53,091     54,113     56,475     57,894     61,876  
Corporate bonds   40,467     30,258     29,938     29,977     29,977  
Other securities   685     685     685     685     685  
Total securities available for sale   633,540     546,466     501,463     507,882     527,018  
                     
Held to maturity securities:                    
Mortgage-backed securities and collateralized mortgage                    
obligations-residential   20,667     21,609     22,501     23,462     24,730  
Total held to maturity securities   20,667     21,609     22,501     23,462     24,730  
                     
Federal Reserve Bank and Federal Home Loan Bank stock   9,183     8,953     8,953     8,953     8,953  
                     
Loans:                    
Commercial   190,507     190,347     196,146     190,987     190,904  
Residential mortgage loans   3,428,829     3,376,193     3,376,708     3,331,212     3,245,151  
Home equity line of credit   277,559     282,034     289,540     293,750     295,791  
Installment loans   9,514     12,579     11,702     9,967     9,309  
Loans, net of deferred net costs   3,906,409     3,861,153     3,874,096     3,825,916     3,741,155  
                     
Less: Allowance for loan losses   44,365     44,671     44,766     44,736     44,503  
Net loans   3,862,044     3,816,482     3,829,330     3,781,180     3,696,652  
                     
Bank premises and equipment, net   34,058     34,428     34,694     35,214     35,521  
Operating lease right-of-use assets   51,097     51,559     -     -     -  
Other assets   56,926     57,637     58,263     63,211     61,069  
                     
Total assets $ 5,227,670     5,156,321     4,958,913     4,885,351     4,940,559  
                     
LIABILITIES:                    
Deposits:                    
Demand $ 432,780     408,417     405,069     403,047     404,564  
Interest-bearing checking   888,433     895,099     904,678     918,486     925,295  
Savings accounts   1,132,308     1,150,329     1,182,683     1,221,127     1,257,744  
Money market deposit accounts   562,318     538,043     507,311     501,270     512,453  
Time deposits   1,446,428     1,421,181     1,274,506     1,155,994     1,155,214  
Total deposits   4,462,267     4,413,069     4,274,247     4,199,924     4,255,270  
                     
Short-term borrowings   166,746     159,778     161,893     176,377     182,705  
Operating lease liabilities   56,237     56,723     -     -     -  
Accrued expenses and other liabilities   26,790     25,033     32,902     31,932     31,769  
                     
Total liabilities   4,712,040     4,654,603     4,469,042     4,408,233     4,469,744  
                     
SHAREHOLDERS' EQUITY:                    
Capital stock   100,180     100,180     100,175     100,175     100,093  
Surplus   176,396     176,510     176,710     176,764     176,243  
Undivided profits   272,433     264,364     256,397     246,965     238,342  
Accumulated other comprehensive loss, net of tax   (1,774 )   (7,011 )   (10,309 )   (13,000 )   (9,796 )
Treasury stock at cost   (31,605 )   (32,325 )   (33,102 )   (33,786 )   (34,067 )
                     
Total shareholders' equity   515,630     501,718     489,871     477,118     470,815  
                     
Total liabilities and shareholders' equity $ 5,227,670     5,156,321     4,958,913     4,885,351     4,940,559  
                     
Outstanding shares (in thousands)   96,822     96,746     96,659     96,586     96,475  
                     
                     


NONPERFORMING ASSETS
             
(dollars in thousands)
(Unaudited)
    6/30/2019 3/31/2019 12/31/2018 9/30/2018 6/30/2018
Nonperforming Assets            
             
New York and other states*            
Loans in nonaccrual status:            
Commercial $ 905   701   645   928   767  
Real estate mortgage - 1 to 4 family   19,633   22,343   22,373   20,750   21,209  
Installment   1   26   4   13   6  
Total non-accrual loans   20,539   23,070   23,022   21,691   21,982  
Other nonperforming real estate mortgages - 1 to 4 family   31   33   34   35   36  
Total nonperforming loans   20,570   23,103   23,056   21,726   22,018  
Other real estate owned   2,625   1,262   1,675   2,306   2,569  
Total nonperforming assets $ 23,195   24,365   24,731   24,032   24,587  
             
Florida            
Loans in nonaccrual status:            
Commercial $ -   -   -   -   -  
Real estate mortgage - 1 to 4 family   1,564   1,644   1,915   2,054   2,143  
Installment   -   -   15   13   -  
Total non-accrual loans   1,564   1,644   1,930   2,067   2,143  
Other nonperforming real estate mortgages - 1 to 4 family   -   -   -   -   -  
Total nonperforming loans   1,564   1,644   1,930   2,067   2,143  
Other real estate owned   -   -   -   -   -  
Total nonperforming assets $ 1,564   1,644   1,930   2,067   2,143  
             
Total            
Loans in nonaccrual status:            
Commercial $ 905   701   645   928   767  
Real estate mortgage - 1 to 4 family   21,197   23,987   24,288   22,804   23,352  
Installment   1   26   19   26   6  
Total non-accrual loans   22,103   24,714   24,952   23,758   24,125  
Other nonperforming real estate mortgages - 1 to 4 family   31   33   34   35   36  
Total nonperforming loans   22,134   24,747   24,986   23,793   24,161  
Other real estate owned   2,625   1,262   1,675   2,306   2,569  
Total nonperforming assets $ 24,759   26,009   26,661   26,099   26,730  
             
             
Quarterly Net (Recoveries) Chargeoffs            
             
New York and other states*            
Commercial $ (1 ) 4   99   (2 ) (1 )
Real estate mortgage - 1 to 4 family   (54 ) 318   323   (3 ) 150  
Installment   45   23   35   64   27  
Total net (recoveries) chargeoffs $ (10 ) 345   457   59   176  
             
Florida            
Commercial $ -   -   -   -   -  
Real estate mortgage - 1 to 4 family   (25 ) 19   (3 ) -   -  
Installment   -   31   16   8   -  
Total net (recoveries) chargeoffs $ (25 ) 50   13   8   -  
             
Total            
Commercial $ (1 ) 4   99   (2 ) (1 )
Real estate mortgage - 1 to 4 family   (79 ) 337   320   (3 ) 150  
Installment   45   54   51   72   27  
Total net (recoveries) chargeoffs $ (35 ) 395   470   67   176  
             
             
Asset Quality Ratios            
             
Total nonperforming loans (1) $ 22,134   24,747   24,986   23,793   24,161  
Total nonperforming assets (1)   24,759   26,009   26,661   26,099   26,730  
Total net (recoveries) chargeoffs (2)   (35 ) 395   470   67   176  
             
Allowance for loan losses (1)   44,365   44,671   44,766   44,736   44,503  
             
Nonperforming loans to total loans   0.57 % 0.64 % 0.64 % 0.62 % 0.65 %
Nonperforming assets to total assets   0.47 % 0.50 % 0.54 % 0.53 % 0.54 %
Allowance for loan losses to total loans   1.14 % 1.16 % 1.16 % 1.17 % 1.19 %
Coverage ratio (1)   200.4 % 180.5 % 179.2 % 188.0 % 184.2 %
Annualized net chargeoffs to average loans (2)   0.00 % 0.04 % 0.05 % 0.01 % 0.02 %
Allowance for loan losses to annualized net chargeoffs (2)   -316.9x  28.3x  23.8x  166.9x  63.2x 
 
* 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, 2019     June 30, 2018  
    Average   Interest Average     Average   Interest Average  
    Balance     Rate     Balance     Rate  
Assets                        
                         
Securities available for sale:                        
U. S. government sponsored enterprises $ 160,197     821   2.05 % $ 154,862     787   2.03   %
Mortgage backed securities and collateralized mortgage                        
obligations - residential   342,678     2,152   2.51     300,706     1,675   2.23    
State and political subdivisions   168     4   9.52     515     10   7.81    
Corporate bonds   33,793     272   3.22     27,780     150   2.16    
Small Business Administration - guaranteed                        
participation securities   54,254     289   2.13     64,886     333   2.05    
Mortgage backed securities and collateralized mortgage                        
obligations - commercial   -     -   -     1,285     (5 ) (1.51 )  
Other   686     5   2.92     685     4   2.34    
                         
Total securities available for sale   591,776     3,543   2.39     550,719     2,954   2.15    
                         
Federal funds sold and other short-term Investments   545,724     3,282   2.41     549,378     2,467   1.82    
                         
Held to maturity securities:                        
Mortgage backed securities and collateralized mortgage                        
obligations - residential   21,155     209   3.95     25,381     244   3.85    
                         
Total held to maturity securities   21,155     209   3.95     25,381     244   3.85    
                         
Federal Reserve Bank and Federal Home Loan Bank stock   9,173     199   8.68     8,943     198   8.86    
                         
Commercial loans   189,870     2,546   5.36     187,157     2,444   5.22    
Residential mortgage loans   3,396,149     35,179   4.14     3,205,035     32,914   4.11    
Home equity lines of credit   279,622     3,503   5.01     298,489     3,391   4.61    
Installment loans   10,310     204   7.91     8,669     213   9.98    
                         
Loans, net of unearned income   3,875,951     41,432   4.28     3,699,350     38,962   4.22    
                         
Total interest earning assets   5,043,779     48,665   3.86     4,833,771     44,825   3.72    
                         
Allowance for loan losses   (44,841 )           (44,551 )        
Cash & non-interest earning assets   177,019             124,099          
                         
                         
Total assets $ 5,175,957           $ 4,913,319          
                         
                         
Liabilities and shareholders' equity                        
                         
Deposits:                        
Interest bearing checking accounts $ 879,732     94   0.04 % $ 906,641     112   0.05   %
Money market accounts   553,708     1,119   0.81     529,421     452   0.35    
Savings   1,138,107     367   0.13     1,260,656     420   0.14    
Time deposits   1,437,097     7,512   2.09     1,135,630     3,439   1.23    
                         
Total interest bearing deposits   4,008,644     9,092   0.91     3,832,348     4,423   0.47    
Short-term borrowings   162,690     381   0.94     189,611     283   0.61    
                         
Total interest bearing liabilities   4,171,334     9,473   0.91     4,021,959     4,706   0.47    
                         
Demand deposits   418,215             396,783          
Other liabilities   79,056             28,653          
Shareholders' equity   507,352             465,924          
                         
Total liabilities and shareholders' equity $ 5,175,957           $ 4,913,319          
                         
Net interest income, tax equivalent       39,192             40,119      
                         
Net interest spread         2.95 %         3.24   %
                         
                         
Net interest margin (net interest income to                        
total interest earning assets)         3.11 %         3.32   %
                         
Tax equivalent adjustment       (1 )           (10 )    
                         
                         
Net interest income       39,191             40,109      
                         
                         
                         
                         
                         
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, 2019     June 30, 2018  
    Average   Interest Average     Average   Interest Average  
    Balance     Rate     Balance     Rate  
Assets                        
                         
Securities available for sale:                        
U. S. government sponsored enterprises $ 157,244     1,604   2.04 % $ 155,723     1,537   1.97   %
Mortgage backed securities and collateralized mortgage                        
obligations - residential   308,034     3,707   2.41     307,194     3,438   2.24    
State and political subdivisions   168     6   7.14     515     20   9.37    
Corporate bonds   30,347     480   3.16     30,523     283   1.85    
Small Business Administration - guaranteed                        
participation securities   55,648     586   2.11     65,990     685   2.08    
Mortgage backed securities and collateralized mortgage                        
obligations - commercial   -     -   -     5,507     37   1.34    
Other   685     10   2.92     685     9   2.63    
                         
Total securities available for sale   552,126     6,393   2.32     566,137     6,009   2.12    
                         
Federal funds sold and other short-term Investments   524,468     6,291   2.40     539,219     4,484   1.68    
                         
Held to maturity securities:                        
Mortgage backed securities and collateralized mortgage                        
obligations - residential   21,594     426   3.95     26,086     504   3.86    
                         
Total held to maturity securities   21,594     426   3.95     26,086     504   3.86    
                         
Federal Reserve Bank and Federal Home Loan Bank stock   9,064     284   6.27     8,861     275   6.21    
                         
Commercial loans   191,793     5,129   5.35     186,405     4,858   6.25    
Residential mortgage loans   3,385,628     70,043   4.14     3,177,041     65,172   4.11    
Home equity lines of credit   282,892     7,040   4.98     302,368     6,601   4.40    
Installment loans   11,099     473   8.52     8,518     418   9.88    
                         
Loans, net of unearned income   3,871,412     82,685   4.27     3,674,332     77,049   4.20    
                         
Total interest earning assets   4,978,664     96,079   3.86     4,814,635     88,321   3.68    
                         
Allowance for loan losses   (44,894 )           (44,472 )        
Cash & non-interest earning assets   176,518             124,483          
                         
                         
Total assets $ 5,110,288           $ 4,894,646          
                         
                         
Liabilities and shareholders' equity                        
                         
Deposits:                        
Interest bearing checking accounts $ 880,101     215   0.05 % $ 892,288     218   0.05   %
Money market accounts   535,950     1,945   0.73     538,230     891   0.33    
Savings   1,149,064     744   0.13     1,260,509     839   0.13    
Time deposits   1,395,361     13,488   1.93     1,108,413     6,299   1.15    
                         
Total interest bearing deposits   3,960,476     16,392   0.83     3,799,440     8,247   0.44    
Short-term borrowings   160,893     762   0.95     211,874     641   0.61    
                         
Total interest bearing liabilities   4,121,369     17,154   0.83     4,011,314     8,888   0.45    
                         
Demand deposits   407,926             391,702          
Other liabilities   79,814             28,891          
Shareholders' equity   501,179             462,739          
                         
Total liabilities and shareholders' equity $ 5,110,288           $ 4,894,646          
                         
Net interest income, tax equivalent       78,925             79,431      
                         
Net interest spread         3.03 %         3.23   %
                         
                         
Net interest margin (net interest income to                        
total interest earning assets)         3.17 %         3.30   %
                         
Tax equivalent adjustment       (2 )           (7 )    
                         
                         
Net interest income       78,923             79,424      
                         
                         

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)
    6/30/2019 3/31/2019 6/30/2018        
                 
Tangible Equity to Tangible Assets                
Total Assets $ 5,227,670   5,156,321   4,940,559          
Less: Intangible assets   553   553   553          
Tangible assets   5,227,117   5,155,768   4,940,006          
                 
Equity   515,630   501,718   470,815          
Less: Intangible assets   553   553   553          
Tangible equity   515,077   501,165   470,262          
Tangible Equity to Tangible Assets   9.85 % 9.72 % 9.52 %        
Equity to Assets   9.86 % 9.73 % 9.53 %        
                 
    Three months ended     Six months ended
Efficiency Ratio   6/30/2019 3/31/2019 6/30/2018     6/30/2019 6/30/2018
                 
Net interest income (fully taxable equivalent) $ 39,192   39,733   40,119     $ 78,925   79,431  
Non-interest income   4,914   4,637   4,495       9,551   9,174  
Revenue used for efficiency ratio   44,106   44,370   44,614       88,476   88,605  
                 
Total noninterest expense   24,902   24,867   24,095       49,769   48,250  
Less:  Other real estate (income) expense, net   210   (24 ) 294       186   666  
Expense used for efficiency ratio   24,692   24,891   23,801       49,583   47,584  
                 
Efficiency Ratio   55.98 % 56.10 % 53.35 %     56.04 % 53.70 %
                 

Contact:
Robert Leonard
Executive Vice President and
Chief Risk Officer
(518) 381-3693

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