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CST: 18/11/2019 17:55:27   

TrustCo is Pleased to Report First Quarter 2019 Results; Net Income of $14.6 Million and 6.0% Average Loan Growth Year over Year

210 Days ago

GLENVILLE, N.Y., April 22, 2019 (GLOBE NEWSWIRE) -- TrustCo Bank Corp NY (TrustCo, NASDAQ: TRST) today announced first quarter 2019 net income of $14.6 million or $0.150 diluted earnings per share compared to $14.8 million or $0.153 diluted earnings per share in the first quarter of 2018.   

Summary

Robert J. McCormick, Chairman, President and Chief Executive Officer noted, “We are pleased to start 2019 off with continued strong net income for the first quarter 2019 as compared to the first quarter 2018.  Our focus on traditional lending criteria and conservative balance sheet management has enabled us to produce consistent earnings, maintain strong liquidity and capital.  This approach has allowed us to continue to grow our business to a new total asset record surpassing the $5 billion milestone and take advantage of changes in market and competitive conditions.  The increased earnings during 2018 has provided TrustCo the opportunity in early 2019 to invest in future earning assets and build additional liquidity.  As we enter our busiest season for residential lending the Bank is well positioned to take advantage of our cash position and deploy this existing liquidity into our residential loan portfolio.  Using this approach we will continue to seize opportunities as they arise during the coming year and beyond.” 

TrustCo saw average loans grow 6.0% in the first quarter of 2019 compared to the first quarter of 2018.  Year over year, loan portfolio expansion was funded by a combination of utilizing a portion of our strong cash balances, cash flow from investments, and the  growth in funding from customer deposits.  The continued shift in earning assets toward higher yielding loans has helped to manage margin compression driven by the higher cost of funds.  Total average deposits are up $156.6 million or 3.8% in the first quarter 2019 compared to the prior year.  Nationally, including the markets we serve, customers have looked to move funds to higher yielding time deposits.  We chose to offer competitive shorter term rates which allowed the Bank to gain market share as well as retain our existing time deposits.  This strategy drove growth at a relatively low cost that will sustain TrustCo’s strong liquidity position and continue to allow us to cross sell new relationships and take advantage of opportunities as they arise.

Details

Average loans were up $217.8 million or 6.0% in the first quarter 2019 over the same period in 2018.  Average residential loans, our primary lending focus, were up $226.3 million or 7.2% in the first quarter 2019, over the same period in 2018.  Average deposits are up $156.6 million or 3.8% for the first quarter 2019 over the same period a year earlier.  The increase in deposits was the result of a $272.3 million or 25.2% increase in average time deposits versus prior year.  Excluding time deposits, total average core deposit accounts, which consist of checking, savings and money market deposits, were down $115.7 million or 3.8% for the first quarter 2019 compared to the first quarter 2018.  Within core, checking balances were up $13.7 million (including interest bearing and non‑interest bearing balances). 

The Federal Open Market Committee (FOMC) increased short term rates 100 basis points from March 2018 to March 2019 while the cost of our interest bearing liabilities increased only 35 basis points over the same period.  The cost of interest bearing liabilities increased to 0.77% in the first quarter 2019 from 0.42% in the first quarter 2018.  The cost of core deposits remained relatively flat over the same time frame. A significant portion of our CD portfolio repriced during the first quarter of 2019 with some additional still to reprice in second quarter.  The net interest margin for the first quarter 2019 was 3.24%, down only 5 basis points from 3.29% in the first quarter of 2018.  However, net interest income (TE) still increased by 1.05% or $414 thousand versus the same period last year.  Our growth in deposits came at a comparably low cost and continue to be offset by higher earnings on cash reserves, increased loan yields and returns in the investment portfolio.  Because we offered competitive shorter term rates, we would expect margin to begin to stabilize in the later 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 $35.4 million or 7.7% in the first 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 first quarter 2019 were 1.17% and 11.93%, respectively, compared to 1.23% and 13.07% for the first quarter 2018.  Overall expense control remains a key area of focus.  Total operating expenses increased by $712 thousand or 2.9% in the first quarter 2019 as compared to the first quarter 2018, driven by salaries and employee benefits, largely offset by declines in FDIC Insurance and ORE Expenses, net.  The growth in salaries and benefit expense was the result of our targeted effort to hire and expand certain functions which has now been largely completed.

Asset quality and loan loss reserve measures continued to improve.  Nonperforming loans (NPLs) were $24.7 million at March 31, 2019, compared to $24.9 million at March 31, 2018.  NPLs were equal to 0.64% of total loans at March 31, 2019, compared to 0.68% at March 31, 2018.  The coverage ratio, or allowance for loan losses to NPLs, was 180.5% at March 31, 2019, compared to 178.6% at March 31, 2018.  Nonperforming assets (NPAs) were $26.0 million at March 31, 2019 compared to $27.0 million at March 31, 2018.  The ratio of allowance for loan losses to total loans was 1.16% as of March 31, 2019, compared to 1.21% at March 31, 2018 which reflects both the improvement in asset quality and economic conditions in our lending areas.  The allowance for loan losses was $44.7 million at March 31, 2019 compared to $44.4 million at March 31, 2018.  The provision for loan losses remained nominal which continued to reflect the strong credit performance within the loan portfolio.   Net chargeoffs for the first quarter 2019 increased versus the first quarter 2018, at $395 thousand from $90 thousand in the year earlier period driven by a non performing loan sale.  The annualized net chargeoff ratio was 0.04% for the first quarter 2019, compared to 0.01% in the first quarter 2018. 

At March 31, 2019 the equity to asset ratio was 9.73%, compared to 9.37% at March 31, 2018. As mentioned earlier the Bank is proud of its ability to grow shareholder value. Book value per share at March 31, 2019 was $5.18 up 7.92% compared to $4.80 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 March 31, 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 first quarter 2019 results will be held at 9:00 a.m. Eastern Time on April 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 10130170.  The call will also be audio webcast at: https://services.choruscall.com/links/trst190429.html, and will be available for one year. 

Safe Harbor Statement 
All statements in this news release that are not historical are forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended.  Forward-looking statements can be identified by words such as "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding our expectations for our performance during 2018, the impact of Federal Reserve actions regarding interest rates and the growth of loans and deposits throughout our branch network, our ability to capitalize on economic changes in the areas in which we operate and the extent to which higher expenses to fulfill operating and regulatory requirements recur or diminish over time.  Such forward-looking statements are subject to factors that could cause actual results to differ materially for TrustCo from those discussed. TrustCo wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The following important factors, among others, in some cases have affected and in the future could affect TrustCo’s actual results and could cause TrustCo’s actual financial performance to differ materially from that expressed in any forward-looking statement:  our ability to continue to originate a significant volume of one-to-four family mortgage loans in our market areas; our ability to continue to maintain noninterest expense and other overhead costs at reasonable levels relative to income; our ability to comply with the supervisory agreement entered into with Trustco Bank’s regulator and potential regulatory actions if we fail to comply; restrictions or conditions imposed by our regulators on our operations that may make it more difficult for us to achieve our goals; the future earnings and capital levels of Trustco Bank and the continued ability of Trustco Bank under regulatory rules and the supervisory agreement to distribute capital to TrustCo, which could affect our ability to pay dividends; results of supervisory monitoring or examinations of Trustco Bank and TrustCo by our respective regulators; our ability to make accurate assumptions and judgments regarding the credit risks associated with lending and investing activities; the effect of changes in financial services laws and regulations and the impact of other governmental initiatives affecting the financial services industry; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board, inflation, interest rates, market and monetary fluctuations; adverse conditions on the securities markets that lead to impairment in the value of securities in our investment portfolio; changes in law and policy accompanying the new presidential administration and uncertainty or speculation pending the enactment of such changes; the perceived overall value of our products and services by users, including in comparison to competitors’ products and services and the willingness of current and prospective customers to substitute competitors’ products and services for our products and services; changes in consumer spending, borrowing and saving habits; technological changes and electronic, cyber, and physical security breaches; real estate and collateral values; changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the FASB or PCAOB; changes in local market areas and general business and economic trends, as well as changes in consumer spending and saving habits; our success at managing the risks involved in the foregoing and managing our business; and other risks and uncertainties under the heading “Risk Factors” in our most recent annual report on Form 10-K and, if any, in our subsequent quarterly reports on Form 10-Q or other securities filings.

TRUSTCO BANK CORP NY  
GLENVILLE, NY  
   
FINANCIAL HIGHLIGHTS  
   
(dollars in thousands, except per share data)  
(Unaudited)  
    Three months ended  
    3/31/2019   12/31/2018   3/31/2018  
Summary of operations              
Net interest income (TE) $ 39,733   40,740   39,319  
Provision for loan losses   300   500   300  
Noninterest income   4,637   4,452   4,679  
Noninterest expense   24,867   24,919   24,155  
Net income   14,558   16,033   14,808  
               
Per common share              
Net income per share:              
- Basic $ 0.150   0.166   0.154  
- Diluted   0.150   0.166   0.153  
Cash dividends   0.068   0.068   0.066  
Book value at period end   5.18   5.06   4.80  
Market price at period end   7.76   6.86   8.45  
               
At period end              
Full time equivalent employees   899   854   827  
Full service banking offices   148   148   145  
               
Performance ratios              
Return on average assets   1.17 % 1.30   1.23  
Return on average equity   11.93   13.18   13.07  
Efficiency (1)   56.10   55.06   54.05  
Net interest spread (TE)   3.11   3.27   3.22  
Net interest margin (TE)   3.24   3.38   3.29  
Dividend payout ratio   45.23   41.07   42.70  
               
Capital ratios at period end              
Consolidated tangible equity to tangible assets (2)   9.72 % 9.87   9.37  
Consolidated equity to assets   9.73 % 9.88   9.36  
               
Asset quality analysis at period end              
Nonperforming loans to total loans   0.64   0.64   0.68  
Nonperforming assets to total assets   0.50   0.54   0.55  
Allowance for loan losses to total loans   1.16   1.16   1.21  
Coverage ratio (3)   1.8x   1.8x   1.8x  
               
               
(1)  Non-GAAP measure; calculated as noninterest expense (excluding ORE income/expense) divided by taxable
equivalent net interest income plus noninterest income.
(2)  Non-GAAP measure; calculated as total equity less $553 of intangible assets divided by total assets less
$553 of intangible assets.
(3)  Calculated as allowance for loan losses divided by total nonperforming loans.
 
TE = Taxable equivalent


CONSOLIDATED STATEMENTS OF INCOME
                     
(dollars in thousands, except per share data)                    
(Unaudited)                    
    Three months ended
    3/31/2019     12/31/2018   9/30/2018   6/30/2018   3/31/2018
Interest and dividend income:                    
Interest and fees on loans $ 41,253     41,184   40,073   38,956     38,091
Interest and dividends on securities available for sale:                    
U. S. government sponsored enterprises   783     788   787   787     750
State and political subdivisions   1     2   7   6     7
Mortgage-backed securities and collateralized mortgage                    
obligations - residential   1,555     1,554   1,601   1,675     1,763
Corporate bonds   208     202   202   150     133
Small Business Administration - guaranteed                    
participation securities   297     329   325   333     352
Mortgage-backed securities and collateralized mortgage                    
obligations - commercial   -     -   -   (5 )   42
Other securities   5     5   4   4     5
Total interest and dividends on securities available for sale   2,849     2,880   2,926   2,950     3,052
                     
Interest on held to maturity securities:                    
Mortgage-backed securities and collateralized mortgage                    
obligations - residential   217     226   232   244     260
Total interest on held to maturity securities   217     226   232   244     260
                     
Federal Reserve Bank and Federal Home Loan Bank stock   85     207   82   198     77
                     
Interest on federal funds sold and other short-term investments   3,009     2,367   2,425   2,467     2,017
Total interest income   47,413     46,864   45,738   44,815     43,497
                     
Interest expense:                    
Interest on deposits:                    
Interest-bearing checking   121     111   113   112     106
Savings   377     401   417   420     419
Money market deposit accounts   826     618   544   452     439
Time deposits   5,976     4,643   3,864   3,439     2,860
Interest on short-term borrowings   381     352   277   283     358
Total interest expense   7,681     6,125   5,215   4,706     4,182
                     
Net interest income   39,732     40,739   40,523   40,109     39,315
                     
Less: Provision for loan losses   300     500   300   300     300
Net interest income after provision for loan losses   39,432     40,239   40,223   39,809     39,015
                     
Noninterest income:                    
Trustco Financial Services income   1,733     1,356   1,516   1,596     1,815
Fees for services to customers   2,520     2,897   2,693   2,677     2,645
Other   384     199   246   222     219
Total noninterest income   4,637     4,452   4,455   4,495     4,679
                     
Noninterest expenses:                    
Salaries and employee benefits   11,451     10,183   10,761   10,741     10,422
Net occupancy expense   4,167     4,800   3,997   4,101     4,315
Equipment expense   1,902     1,741   1,783   1,793     1,751
Professional services   1,650     1,733   1,578   1,814     1,430
Outsourced services   1,925     1,875   1,875   1,825     1,925
Advertising expense   785     876   844   670     630
FDIC and other insurance   648     522   682   514     1,023
Other real estate (income) expense, net   (24 )   37   528   294     372
Other   2,363     3,152   2,496   2,343     2,287
Total noninterest expenses   24,867     24,919   24,544   24,095     24,155
                     
Income before taxes   19,202     19,772   20,134   20,209     19,539
Income taxes   4,644     3,739   4,935   4,804     4,731
                     
Net income $ 14,558     16,033   15,199   15,405     14,808
                     
Net income per common share:                    
- Basic $ 0.150     0.166   0.157   0.160     0.154
                     
- Diluted   0.150     0.166   0.157   0.160     0.153
                     
Average basic shares (in thousands)   96,744     96,555   96,555   96,449     96,353
Average diluted shares (in thousands)   96,822     96,689   96,689   96,580     96,490
                     
Note:  Taxable equivalent net interest income $ 39,733     40,740   40,526   40,119     39,319
                     


CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 
(dollars in thousands)
(Unaudited)
    3/31/2019     12/31/2018     9/30/2018     6/30/2018     3/31/2018  
ASSETS:                    
                     
Cash and due from banks $ 43,064     49,260     42,195     40,567     39,373  
Federal funds sold and other short term investments   576,123     454,449     423,254     546,049     577,797  
Total cash and cash equivalents   619,187     503,709     465,449     586,616     617,170  
                     
Securities available for sale:                    
U. S. government sponsored enterprises   148,292     152,160     150,053     150,704     151,327  
States and political subdivisions   172     173     180     524     525  
Mortgage-backed securities and collateralized mortgage                    
obligations - residential   312,946     262,032     269,093     283,252     297,633  
Small Business Administration - guaranteed                    
participation securities   54,113     56,475     57,894     61,876     64,113  
Mortgage-backed securities and collateralized mortgage                    
obligations - commercial   -     -     -     -     9,573  
Corporate bonds   30,258     29,938     29,977     29,977     35,227  
Other securities   685     685     685     685     685  
Total securities available for sale   546,466     501,463     507,882     527,018     559,083  
                     
Held to maturity securities:                    
Mortgage-backed securities and collateralized mortgage                    
obligations-residential   21,609     22,501     23,462     24,730     26,174  
Total held to maturity securities   21,609     22,501     23,462     24,730     26,174  
                     
Federal Reserve Bank and Federal Home Loan Bank stock   8,953     8,953     8,953     8,953     8,779  
                     
Loans:                    
Commercial   190,347     196,146     190,987     190,904     185,129  
Residential mortgage loans   3,376,193     3,376,708     3,331,212     3,245,151     3,171,548  
Home equity line of credit   282,034     289,540     293,750     295,791     301,885  
Installment loans   12,579     11,702     9,967     9,309     8,413  
Loans, net of deferred net costs   3,861,153     3,874,096     3,825,916     3,741,155     3,666,975  
                     
Less: Allowance for loan losses   44,671     44,766     44,736     44,503     44,379  
Net loans   3,816,482     3,829,330     3,781,180     3,696,652     3,622,596  
                     
Bank premises and equipment, net   34,428     34,694     35,214     35,521     35,240  
Operating lease right-of-use assets   51,559     -     -     -     -  
Other assets   57,637     58,263     63,211     61,069     62,522  
                     
Total assets $ 5,156,321     4,958,913     4,885,351     4,940,559     4,931,564  
                     
LIABILITIES:                    
Deposits:                    
Demand $ 408,417     405,069     403,047     404,564     403,782  
Interest-bearing checking   895,099     904,678     918,486     925,295     915,163  
Savings accounts   1,150,329     1,182,683     1,221,127     1,257,744     1,266,852  
Money market deposit accounts   538,043     507,311     501,270     512,453     539,839  
Time deposits   1,421,181     1,274,506     1,155,994     1,155,214     1,109,444  
Total deposits   4,413,069     4,274,247     4,199,924     4,255,270     4,235,080  
                     
Short-term borrowings   159,778     161,893     176,377     182,705     203,910  
Operating lease liabilities   56,723     -     -     -     -  
Accrued expenses and other liabilities   25,033     32,902     31,932     31,769     30,477  
                     
Total liabilities   4,654,603     4,469,042     4,408,233     4,469,744     4,469,467  
                     
SHAREHOLDERS' EQUITY:                    
Capital stock   100,180     100,175     100,175     100,093     100,002  
Surplus   176,510     176,710     176,764     176,243     175,674  
Undivided profits   264,364     256,397     246,965     238,342     229,267  
Accumulated other comprehensive loss, net of tax   (7,011 )   (10,309 )   (13,000 )   (9,796 )   (8,490 )
Treasury stock at cost   (32,325 )   (33,102 )   (33,786 )   (34,067 )   (34,356 )
                     
Total shareholders' equity   501,718     489,871     477,118     470,815     462,097  
                     
Total liabilities and shareholders' equity $ 5,156,321     4,958,913     4,885,351     4,940,559     4,931,564  
                     
Outstanding shares (in thousands)   96,746     96,659     96,586     96,475     96,359  
                     


NONPERFORMING ASSETS
             
(dollars in thousands)
(Unaudited)
    3/31/2019   12/31/2018   9/30/2018   6/30/2018   3/31/2018  
Nonperforming Assets            
             
New York and other states*            
Loans in nonaccrual status:            
Commercial $ 701   645   928   767   1,213  
Real estate mortgage - 1 to 4 family   22,343   22,373   20,750   21,209   21,424  
Installment   26   4   13   6   19  
Total non-accrual loans   23,070   23,022   21,691   21,982   22,656  
Other nonperforming real estate mortgages - 1 to 4 family   33   34   35   36   38  
Total nonperforming loans   23,103   23,056   21,726   22,018   22,694  
Other real estate owned   1,262   1,675   2,306   2,569   2,190  
Total nonperforming assets $ 24,365   24,731   24,032   24,587   24,884  
             
Florida            
Loans in nonaccrual status:            
Commercial $ -   -   -   -   -  
Real estate mortgage - 1 to 4 family   1,644   1,915   2,054   2,143   2,154  
Installment   -   15   13   -   4  
Total non-accrual loans   1,644   1,930   2,067   2,143   2,158  
Other nonperforming real estate mortgages - 1 to 4 family   -   -   -   -   -  
Total nonperforming loans   1,644   1,930   2,067   2,143   2,158  
Other real estate owned   -   -   -   -   -  
Total nonperforming assets $ 1,644   1,930   2,067   2,143   2,158  
             
Total            
Loans in nonaccrual status:            
Commercial $ 701   645   928   767   1,213  
Real estate mortgage - 1 to 4 family   23,987   24,288   22,804   23,352   23,578  
Installment   26   19   26   6   23  
Total non-accrual loans   24,714   24,952   23,758   24,125   24,814  
Other nonperforming real estate mortgages - 1 to 4 family   33   34   35   36   38  
Total nonperforming loans   24,747   24,986   23,793   24,161   24,852  
Other real estate owned   1,262   1,675   2,306   2,569   2,190  
Total nonperforming assets $ 26,009   26,661   26,099   26,730   27,042  
             
             
Quarterly Net Chargeoffs (Recoveries)            
             
New York and other states*            
Commercial $ 4   99   (2 ) (1 ) (6 )
Real estate mortgage - 1 to 4 family   318   323   (3 ) 150   28  
Installment   23   35   64   27   66  
Total net chargeoffs $ 345   457   59   176   88  
             
Florida            
Commercial $ -   -   -   -   -  
Real estate mortgage - 1 to 4 family   19   (3 ) -   -   -  
Installment   31   16   8   -   2  
Total net chargeoffs $ 50   13   8   -   2  
             
Total            
Commercial $ 4   99   (2 ) (1 ) (6 )
Real estate mortgage - 1 to 4 family   337   320   (3 ) 150   28  
Installment   54   51   72   27   68  
Total net chargeoffs $ 395   470   67   176   90  
             
             
Asset Quality Ratios            
             
Total nonperforming loans (1) $ 24,747   24,986   23,793   24,161   24,852  
Total nonperforming assets (1)   26,009   26,661   26,099   26,730   27,042  
Total net chargeoffs (2)   395   470   67   176   90  
             
Allowance for loan losses (1)   44,671   44,766   44,736   44,503   44,379  
             
Nonperforming loans to total loans   0.64%   0.64%   0.62%   0.65%   0.68%  
Nonperforming assets to total assets   0.50%   0.54%   0.53%   0.54%   0.55%  
Allowance for loan losses to total loans   1.16%   1.16%   1.17%   1.19%   1.21%  
Coverage ratio (1)   180.5%   179.2%   188.0%   184.2%   178.6%  
Annualized net chargeoffs to average loans (2)   0.04%   0.05%   0.01%   0.02%   0.01%  
Allowance for loan losses to annualized net chargeoffs (2)   28.3x   23.8x   166.9x   63.2x   123.3x  
 
* Includes New York, New Jersey, Vermont and Massachusetts.
(1)  At period-end
(2)  For the period ended


DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY -
INTEREST RATES AND INTEREST DIFFERENTIAL
 
(dollars in thousands)                        
(Unaudited)   Three months ended     Three months ended  
    March 31, 2019     March 31, 2018  
    Average     Interest   Average     Average     Interest   Average  
    Balance         Rate     Balance         Rate  
Assets                        
                         
Securities available for sale:                        
U. S. government sponsored enterprises $ 154,258     783   2.03 % $ 156,593     750   1.92 %
Mortgage backed securities and collateralized mortgage                        
obligations - residential   273,004     1,555   2.28     313,753     1,763   2.25  
State and political subdivisions   168     2   7.85     515     10   7.81  
Corporate bonds   26,862     208   3.09     33,297     133   1.60  
Small Business Administration - guaranteed                        
participation securities   57,057     297   2.08     67,106     352   2.10  
Mortgage backed securities and collateralized mortgage                        
obligations - commercial   -     -   -     9,775     42   1.71  
Other   685     5   2.92     685     5   2.52  
                         
Total securities available for sale   512,034     2,850   2.23     581,724     3,055   2.12  
                         
Federal funds sold and other short-term Investments   502,976     3,009   2.43     528,947     2,017   1.55  
                         
Held to maturity securities:                        
Mortgage backed securities and collateralized mortgage                        
obligations - residential   22,037     217   3.94     26,799     260   3.88  
                         
Total held to maturity securities   22,037     217   3.94     26,799     260   3.88  
                         
Federal Reserve Bank and Federal Home Loan Bank stock   8,953     85   3.80     8,779     77   3.51  
                         
Commercial loans   193,738     2,583   5.33     185,646     2,420   5.21  
Residential mortgage loans   3,374,990     34,864   4.14     3,148,735     32,257   4.11  
Home equity lines of credit   286,199     3,537   5.01     306,290     3,210   4.25  
Installment loans   11,897     269   9.17     8,365     205   9.90  
                         
Loans, net of unearned income   3,866,824     41,253   4.28     3,649,036     38,092   4.19  
                         
Total interest earning assets   4,912,824     47,414   3.87     4,795,285     43,501   3.64  
                         
Allowance for loan losses   (44,947 )           (44,393 )        
Cash & non-interest earning assets   176,009             124,867          
                         
                         
Total assets $ 5,043,886           $ 4,875,759          
                         
                         
Liabilities and shareholders' equity                        
                         
Deposits:                        
Interest bearing checking accounts $ 880,474     121   0.06 % $ 877,776     106   0.05 %
Money market accounts   517,995     826   0.65     547,136     439   0.33  
Savings   1,160,142     377   0.13     1,260,360     419   0.13  
Time deposits   1,353,160     5,976   1.79     1,080,893     2,860   1.07  
                         
Total interest bearing deposits   3,911,771     7,300   0.76     3,766,165     3,824   0.41  
Short-term borrowings   159,076     381   0.97     234,384     358   0.62  
                         
Total interest bearing liabilities   4,070,847     7,681   0.77     4,000,549     4,182   0.42  
                         
Demand deposits   397,522             386,563          
Other liabilities   80,579             29,129          
Shareholders' equity   494,938             459,519          
                         
Total liabilities and shareholders' equity $ 5,043,886           $ 4,875,760          
                         
Net interest income, tax equivalent       39,733             39,319      
                         
Net interest spread         3.11 %         3.22 %
                         
                         
Net interest margin (net interest income to                        
total interest earning assets)         3.24 %         3.29 %
                         
Tax equivalent adjustment       (1 )           (4 )    
                         
                         
Net interest income       39,732             39,315      
                         
                         

Non-GAAP Financial Measures Reconciliation

Tangible equity as a percentage of tangible assets at period end is anon-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)
    3/31/2019   12/31/2018   3/31/2018      
             
Tangible Equity to Tangible Assets            
Total Assets $ 5,156,321   4,958,913   4,931,564      
Less: Intangible assets   553   553   553      
Tangible assets   5,155,768   4,958,360   4,931,011      
             
Equity   501,718   489,871   462,097      
Less: Intangible assets   553   553   553      
Tangible equity   501,165   489,318   461,544      
Tangible Equity to Tangible Assets   9.72%   9.87%   9.36%      
Equity to Assets   9.73%   9.88%   9.37%      
             
    Three months ended    
Efficiency Ratio   3/31/2019   12/31/2018   3/31/2018      
             
Net interest income (fully taxable equivalent)   39,733   40,740   39,319      
Non-interest income   4,637   4,452   4,679      
Revenue used for efficiency ratio   44,370   45,192   43,998      
             
Total noninterest expense   24,867   24,919   24,155      
Less:  Other real estate (income) expense, net   (24 ) 37   372      
Expense used for efficiency ratio   24,891   24,882   23,783      
             
Efficiency Ratio   56.10%   55.06%   54.05%      
             

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

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