TrustCo Announces Fourth Quarter Earnings Up 8.4% Over Prior Year

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| Source: TrustCo Bank Corp NY

Executive Snapshot:

-- Continued strong financial results:

- Fourth quarter 2013:

  • Net income up 8.4% from the fourth quarter of 2012
  • Diluted EPS up 7.7%
  • Return on average assets (ROA) rose 3 basis points to 0.94%
  • Return on average equity (ROE) rose 90 basis points to 11.78%
  • Efficiency ratio improved 96 basis points to 52.15%
  • Net interest margin improved 3 basis points to 3.15% versus the third quarter

  - Full year 2013:

  • Net income up 6.1% from 2012
  • Diluted EPS up 5.5%
  • ROA rose 3 basis points to 0.90%
  • ROE rose 45 basis points to 11.15%
  • Paid $24.8 million in cash dividends

-- Continued expansion of customer base:

    - Focus on capitalizing on the opportunities presented by expanded branch franchise

    - Deposits per branch grew from $27.6 million at year-end 2012 to $28.3 million at year-end 2013

    - Average core deposits grew $192 million from 2012 to 2013

-- Asset quality improvement:

    - Non-performing assets (NPAs) fell $9.3 million to $52.1 million at year-end 2013

    - NPAs to total assets improved from 1.41% to 1.15%

    - Net charge-offs (NCOs) declined to $7.2 million for 2013 from $12.8 million in 2012

    - NCOs to average loans improved from 0.50% in 2012 to 0.26% in 2013

    - The loan loss allowance coverage of annual NCOs improved from 3.7x in 2012 to 6.6x in 2013

 

TrustCo Announces Fourth Quarter Earnings Up 8.4% Over Prior Year

GLENVILLE, N.Y., Jan. 21, 2014 (GLOBE NEWSWIRE) -- TrustCo Bank Corp NY ("TrustCo") (Nasdaq:TRST) today announced that net income rose to $10.6 million in the quarter ended December 31, 2013, up 8.4% from $9.8 million for the quarter ended December 31, 2012. Full year net income rose 6.1% to $39.8 million for 2013 versus the prior year.

TrustCo saw continued strong loan growth in the fourth quarter of 2013. The gains were funded by continued expansion of retail deposits, along with a shift from lower yielding investment securities, and helped boost the average yield on earning assets and the net interest margin. Robert J. McCormick, President and Chief Executive Officer noted, "Our results for the fourth quarter of 2013 continued the progress we made in the first nine months of the year in terms of bottom line growth and in positioning our business for the future. In addition to the gain in net income, we continue to add profitable customer relationships on both the loan and deposit sides of the Bank. Our highly liquid balance sheet continues to allow us to fund our loan growth without having to overpay for deposits. Our cost of interest-bearing deposits remained at just 0.38% in the fourth quarter, flat with the third quarter and down four basis points relative to the year-earlier quarter. We look forward to 2014 with optimism, though we note that our industry continues to face challenges including an increasingly complex and burdensome regulatory environment, an economy that remains fragile and an interest rate environment that remains mixed. We will continue to take advantage of opportunities as they are presented." 

Mr. McCormick also noted "There are continued economic improvements in the markets in which we operate, particularly Florida, although unemployment and other persistent issues continue to constrain any significant economic growth. Our long-term focus on traditional lending criteria and conservative balance sheet management has enabled us to maintain a strong balance sheet and continued profitability. As a result, we have been able to focus on conducting business, which has significantly enhanced our reputation and put us in a position to take advantage of changes in market and competitive conditions."

Return on average assets and return on average equity were 0.94% and 11.78%, respectively for the fourth quarter of 2013, compared to 0.91% and 10.88% for the fourth quarter of 2012. Diluted earnings per share were $0.112 for the fourth quarter of 2013, up 7.7% from $0.104 for the fourth quarter of 2012. For the full year, TrustCo earned $39.8 million or $0.422 per diluted share, compared to $37.5 million or $0.400 per share for 2012.

On a year-over-year basis, average loans were up $227.1 million or 8.6% in the fourth quarter of 2013, over the same period in 2012. Average deposits were up $138.5 million for the fourth quarter of 2013 over the same period a year earlier. Customers continued to move some funds into certificates with slightly longer maturities, which may be helpful if rates rise, without having a material impact on the current cost of funds. For the full year, core deposits rose $192 million. Core deposits typically represent longer term customer relationships and are generally lower cost than time deposits. Mr. McCormick noted that, "The year-over-year growth of our loans and the shift in our deposit base reflects the long term strategic focus of the Company. 

While some banks have backed away from branches, a customer friendly branch franchise continues to be the key to our long term plans. During 2013 we celebrated the ten year anniversary of our expansion into Florida, and have made significant progress expanding loans and deposits through our branches. We expect that trend to continue as the new branches continue to grow. We also note we have always designed our branches to be smaller and more cost effective than those built by many of our competitors. We have utilized open floor plans that help maximize the value of our branches. We remain mindful that fully achieving our goals for our newer branches will take time and continued hard work. We believe our success in growing customer relationships provides the basic building blocks that will help drive profit growth over the coming years."

Asset quality, reserve coverage of nonperforming loans (NPLs) and reserve coverage of net charge-offs all improved from December 31, 2012 to December 31, 2013. NPLs declined to $43.4 million at December 31, 2013, compared to $52.7 million at December 31, 2012 and nonperforming assets (NPAs) declined to $52.1 million from $61.4 million over the same period.  NPLs were equal to 1.49% of total loans at year-end, compared to 1.96% a year earlier. For the fourth quarter of 2013 the allowance for loan losses covered annualized fourth quarter net charge-offs by 7.9 times, compared to an annualized 4.9 times for the fourth quarter of 2012. The coverage ratio, or allowance for loan losses to NPLs, was 110.0% at December 31, 2013, compared to 91.0% at December 31, 2012. Overall, every asset quality indicator improved during the fourth quarter of 2013 relative to the fourth quarter of 2012. The ratio of reserves to total loans was 1.64% as of December 31, 2013, compared to 1.68% at September 30, 2013. This decline was the result of loan growth as the loan loss reserve remained at $47.7 million. During the fourth quarter of 2013 approximately $1.6 million of NPAs were sold to a third party at a slight gain. 

The net interest margin for the fourth quarter of 2013 was 3.15%, compared to 3.12% in the third quarter of 2013.

At December 31, 2013 the tangible equity ratio was 7.99% compared to 7.94% at September 30, 2013 and 8.24% at December 31, 2012. Tangible book value per share ended the fourth quarter at $3.82 compared to $3.81 in the year-ago period.

TrustCo Bank Corp NY is a $4.5 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 139 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at December 31, 2013.

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 2013 results will be held at 9:00 a.m. Eastern Time on January 22, 2014. Those wishing to participate in the call may dial toll-free 1-888-317-6016. International callers must dial + 1-412-317-6016.  A replay of the call will be available thirty days by dialing 1-877-344-7529 (1-412-317-0088 for international callers), Conference Number 10039245. The call will also be audio webcast at: https://services.choruscall.com/links/trst140122.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. The "forward-looking statements" may include statements regarding future events or performance. 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: credit risk, the effects of and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System, inflation, interest rates, market and monetary fluctuations, competition, the effect of changes in financial services laws and regulations (including laws concerning taxation, banking and securities), real estate and collateral values, changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board ("FASB") or the Public Company Accounting Oversight Board; changes in local market areas and general business and economic trends and the matters described under the heading "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2012, as amended, and in our subsequent securities filings.

TRUSTCO BANK CORP NY
GLENVILLE, NY
 
FINANCIAL HIGHLIGHTS
 
(dollars in thousands, except per share data)
(Unaudited)
  Three Months Ended
  12/31/13 09/30/13 12/31/12
Summary of operations      
Net interest income (TE)  $ 34,577  34,180  33,718
Provision for loan losses  1,500  1,500  3,000
Net securities transactions  188  --   763
Noninterest income  4,660  4,414  5,398
Noninterest expense  20,891  20,688  21,150
Net income  10,629  10,252  9,806
       
Per common share      
Net income per share:      
- Basic  $ 0.113  0.109  0.104
- Diluted  0.112  0.109  0.104
Cash dividends  0.066  0.066  0.066
Tangible Book value at period end  3.82  3.75  3.81
Market price at period end  7.18  5.95  5.28
       
At period end      
Full time equivalent employees 708 708 759
Full service banking offices 139 139 138
       
Performance ratios      
Return on average assets 0.94% 0.91 0.91
Return on average equity 11.78 11.64 10.88
Efficiency (1) 52.15 51.15 53.11
Net interest spread (TE) 3.10 3.06 3.15
Net interest margin (TE) 3.15 3.12 3.21
Dividend payout ratio 58.44 60.38 63.00
       
Capital ratio at period end      
Consolidated tangible equity to tangible assets (2) 7.99 7.94 8.24
       
Asset quality analysis at period end      
Nonperforming loans to total loans 1.49 1.47 1.96
Nonperforming assets to total assets 1.15 1.16 1.41
Allowance for loan losses to total loans 1.64 1.68 1.79
Coverage ratio (3) 1.1x 1.1x 0.9x
       
       
(1) Calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income (excluding net securities transactions).
(2) The tangible equity ratio excludes $553,000 of intangibles from both equity and assets.
(3) Calculated as allowance for loan losses divided by total nonperforming loans.
       
       
TE = Taxable equivalent.      
       
       
FINANCIAL HIGHLIGHTS, Continued      
       
(dollars in thousands, except per share data)      
(Unaudited)      
  Years Ended  
  12/31/13 12/31/12  
Summary of operations      
Net interest income (TE)  $ 136,094  135,669  
Provision for loan losses  7,000  12,000  
Net securities transactions  1,622  2,161  
Noninterest income  18,148  18,803  
Noninterest expense  85,005  83,977  
Net income  39,812  37,534  
       
Per common share      
Net income per share:      
- Basic  $ 0.422  0.400  
- Diluted  0.422  0.400  
Cash dividends  0.263  0.263  
Tangible Book value at period end  3.82  3.81  
Market price at period end  7.18  5.28  
       
Performance ratios      
Return on average assets 0.90% 0.87  
Return on average equity 11.15 10.70  
Efficiency (1) 52.78 52.28  
Net interest spread (TE) 3.08 3.13  
Net interest margin (TE) 3.14 3.20  
Dividend payout ratio 62.19 65.60  
       
       
(1) Calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income (excluding net securities transactions).
TE = Taxable equivalent.      
 
 
(dollars in thousands, except per share data)
(Unaudited)          
  Three Months Ended
  12/31/2013 9/30/2013 6/30/2013 3/31/2013 12/31/2012
Interest and dividend income:          
Interest and fees on loans  $ 32,658  $ 32,166  $ 31,639  $ 31,481  $ 31,776
Interest and dividends on securities available for sale:          
U. S. government sponsored enterprises  586  571  627  816  1,191
State and political subdivisions  96  127  148  191  295
Mortgage-backed securities and collateralized mortgage obligations-residential  3,027  2,888  2,701  2,769  2,237
Corporate bonds  138  223  233  218  232
Small Business Administration-guaranteed participation securities  562  558  564  496  276
Mortgage-backed securities and collateralized mortgage obligations-commercial  38  39  38  29  --
Other securities  4  5  3  5  5
Total interest and dividends on securities available for sale  4,451  4,411  4,314  4,524  4,236
           
Interest on held to maturity securities:          
Mortgage-backed securities and collateralized mortgage obligations-residential  649  686  716  789  823
Corporate bonds  153  154  214  312  385
Total interest on held to maturity securities  802  840  930  1,101  1,208
           
Federal Reserve Bank and Federal Home Loan Bank stock  129  121  121  119  127
           
Interest on federal funds sold and other short-term investments  324  344  327  245  265
Total interest income  38,364  37,882  37,331  37,470  37,612
           
Interest expense:          
Interest on deposits:          
Interest-bearing checking  83  84  82  80  80
Savings  790  798  829  916  921
Money market deposit accounts  611  590  630  685  703
Time deposits  1,982  1,937  1,883  1,820  1,967
Interest on short-term borrowings  382  370  367  364  361
Total interest expense  3,848  3,779  3,791  3,865  4,032
           
Net interest income  34,516  34,103  33,540  33,605  33,580
           
Provision for loan losses  1,500  1,500  2,000  2,000  3,000
Net interest income after provision for loan losses  33,016  32,603  31,540  31,605  30,580
           
Noninterest income:          
Trustco Financial Services income  1,276  1,317  1,287  1,421  1,815
Fees for services to customers  2,917  2,903  2,968  2,887  3,386
Net gain on securities transactions  188  --  1,432  2  763
Other  467  194  229  282  197
Total noninterest income  4,848  4,414  5,916  4,592  6,161
           
Noninterest expenses:          
Salaries and employee benefits  8,664  7,935  7,647  8,178  8,427
Net occupancy expense  4,226  3,911  3,910  4,053  3,889
Equipment expense  1,514  1,567  1,582  1,718  1,637
Professional services  1,409  1,255  1,565  1,420  1,458
Outsourced services  1,075  1,350  1,350  1,350  1,175
Advertising expense  835  548  714  730  1,037
FDIC and other insurance  952  1,009  1,004  1,010  1,007
Other real estate expense, net  430  946  1,473  749  375
Other  1,786  2,167  2,624  2,349  2,145
Total noninterest expenses  20,891  20,688  21,869  21,557  21,150
           
Income before taxes  16,973  16,329  15,587  14,640  15,591
Income taxes  6,344  6,077  5,824  5,472  5,785
           
Net income  $ 10,629  $ 10,252  $ 9,763  $ 9,168  $ 9,806
Net income per Common Share:          
- Basic  $ 0.113  $ 0.109  $ 0.104  $ 0.097  $ 0.104
           
- Diluted 0.112 0.109 0.104 0.097 0.104
           
Average basic shares (thousands)  94,347  94,228  94,204  94,068  93,824
Average diluted shares (thousands)  94,472  94,275  94,211  94,073  93,828
           
Note: Taxable equivalent net interest income  $ 34,577  $ 34,180  $ 33,630  $ 33,707  $ 33,718
 
 
CONSOLIDATED STATEMENTS OF INCOME
     
(dollars in thousands, except per share data)
(Unaudited)    
  Years Ended
  12/31/2013 12/31/2012
     
Interest and dividend income:    
Interest and fees on loans  $ 127,944  $ 128,581
Interest and dividends on securities available for sale:    
U. S. government sponsored enterprises  2,600  8,097
State and political subdivisions  562  1,413
Mortgage-backed securities and collateralized mortgage obligations-residential  11,385  6,697
Corporate bonds  812  2,231
Small Business Administration-guaranteed participation securities  2,180  319
Mortgage-backed securities and collateralized mortgage obligations-commercial  144  --
Other securities  17  19
Total interest and dividends on securities available for sale  17,700  18,776
     
Interest on held to maturity securities:    
U. S. government sponsored enterprises  --  25
Mortgage-backed securities and collateralized mortgage obligations-residential  2,840  4,287
Corporate bonds  833  1,666
Total interest on held to maturity securities  3,673  5,978
     
Federal Reserve Bank and Federal Home Loan Bank stock  490  486
     
Interest on federal funds sold and other short-term investments  1,240  1,142
Total interest income  151,047  154,963
     
Interest expense:    
Interest on deposits:    
Interest-bearing checking  329  315
Savings  3,333  3,872
Money market deposit accounts  2,516  3,069
Time deposits  7,622  11,244
Interest on short-term borrowings  1,483  1,475
Total interest expense  15,283  19,975
     
Net interest income  135,764  134,988
     
Provision for loan losses  7,000  12,000
Net interest income after provision for loan losses  128,764  122,988
     
Noninterest income:    
Trust department income  5,301  5,761
Fees for services to customers  11,675  12,290
Net gain on securities transactions  1,622  2,161
Other  1,172  752
Total noninterest income  19,770  20,964
     
Noninterest expenses:    
Salaries and employee benefits  32,424  31,276
Net occupancy expense  16,100  15,257
Equipment expense  6,381  6,073
Professional services  5,649  6,040
Outsourced services  5,125  5,122
Advertising expense  2,827  3,841
FDIC and other insurance  3,975  3,823
Other real estate expense, net  3,598  3,216
Other  8,926  9,329
Total noninterest expenses  85,005  83,977
     
Income before taxes  63,529  59,975
Income taxes  23,717  22,441
     
Net income  $ 39,812  $ 37,534
     
Net income per Common Share:    
- Basic  $ 0.422  $ 0.400
     
- Diluted 0.422 0.400
     
Average basic shares (thousands)  94,160  93,633
Average diluted shares (thousands)  94,206  93,637
     
Note: Taxable equivalent net interest income  $ 136,094  $ 135,669
 
 
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
           
(dollars in thousands)          
(Unaudited)          
           
           
  12/31/2013 9/30/2013 6/30/2013 3/31/2013 12/31/2012
ASSETS:          
           
Cash and due from banks  $ 46,453  $ 45,088  $ 40,580  $ 39,512  $ 55,789
Federal funds sold and other short term investments 536,591 510,561 588,252 405,262 488,227
Total cash and cash equivalents 583,044 555,649 628,832 444,774 544,016
           
Securities available for sale:          
U. S. government sponsored enterprises 198,829 193,614 188,133 263,165 263,108
States and political subdivisions 7,758 11,199 12,159 15,265 26,457
Mortgage-backed securities and collateralized mortgage obligations-residential 532,449 534,301 504,793 612,555 518,776
Corporate bonds 10,471 53,094 53,053 59,239 26,529
Small Business Administration-guaranteed participation securities 103,029  104,863  108,665  115,464  76,562
Mortgage-backed securities and collateralized mortgage obligations-commercial 10,558  10,715  10,725  11,136  -- 
Other securities 660 660 660 660 660
Total securities available for sale 863,754 908,446 878,188 1,077,484 912,092
           
Held to maturity securities:          
Mortgage-backed securities and collateralized mortgage obligations-residential 76,270 81,337 88,852 98,038 108,471
Corporate bonds 9,945 9,941 9,937 19,935 34,955
Total held to maturity securities 86,215 91,278 98,789 117,973 143,426
           
Federal Reserve Bank and Federal Home Loan Bank stock 10,500 10,500 10,500 9,632 9,632
           
Loans:          
Commercial 223,481 212,833 216,977 212,637 219,577
Residential mortgage loans 2,338,944 2,279,064 2,205,334 2,154,188 2,126,668
Home equity line of credit 340,489 337,178 334,571 332,111 333,909
Installment loans 5,895 5,894 5,544 4,831 4,579
Loans, net of deferred fees and costs 2,908,809 2,834,969 2,762,426 2,703,767 2,684,733
Less:          
Allowance for loan losses 47,714 47,722 47,589 47,658 47,927
Net loans 2,861,095 2,787,247 2,714,837 2,656,109 2,636,806
           
Bank premises and equipment, net 34,414 34,559 38,301 35,787 36,239
Other assets 82,430 71,728 73,757 69,998 64,402
           
Total assets  $ 4,521,452  $ 4,459,407  $ 4,443,204  $ 4,411,757  $ 4,346,613
           
LIABILITIES:          
Deposits:          
Demand  $ 318,456  $ 314,660  $ 314,985  $ 298,243  $ 300,544
Interest-bearing checking 611,127 591,590 591,844 579,077 560,064
Savings accounts 1,218,038 1,221,791 1,228,281 1,213,226 1,198,517
Money market deposit accounts 648,402 650,688 634,804 656,577 667,589
Certificates of deposit (in denominations of $100,000 or more) 431,008 405,575 397,707 384,559 352,734
Other time accounts 700,040 710,064 725,255 725,998 724,745
Total deposits 3,927,071 3,894,368 3,892,876 3,857,680 3,804,193
           
Short-term borrowings 204,162 185,226 176,325 171,019 159,846
Accrued expenses and other liabilities 28,406 25,425 25,380 22,169 23,776
           
Total liabilities 4,159,639 4,105,019 4,094,581 4,050,868 3,987,815
           
SHAREHOLDERS' EQUITY:          
Capital stock 98,927 98,912 98,912 98,912 98,912
Surplus 173,144 173,408 173,897 174,386 174,899
Undivided profits 147,432 143,015 138,953 135,373 132,378
Accumulated other comprehensive income (loss), net of tax (13,803) (15,923) (16,831) (169) 1,558
Treasury stock at cost (43,887) (45,024) (46,308) (47,613) (48,949)
           
Total shareholders' equity 361,813 354,388 348,623 360,889 358,798
           
Total liabilities and shareholders' equity  $ 4,521,452  $ 4,459,407  $ 4,443,204  $ 4,411,757  $ 4,346,613
           
Outstanding shares (thousands)  94,463  94,334  94,204  94,071  93,935
           
           
NONPERFORMING ASSETS          
           
(dollars in thousands)          
(Unaudited)          
           
Nonperforming Assets          
  12/31/13 09/30/13 06/30/13 03/31/13 12/31/12
New York and other states*          
Loans in nonaccrual status:          
Commercial  $ 6,952  5,436  5,891  5,978  6,635
Real estate mortgage - 1 to 4 family  31,045  30,643  30,736  34,027  35,286
Installment  93  71  36  35  6
Total non-accrual loans  38,090  36,150  36,663  40,040  41,927
Other nonperforming real estate mortgages - 1 to 4 family  166  170  174  225  231
Total nonperforming loans  38,256  36,320  36,837  40,265  42,158
Other real estate owned  3,348  3,011  3,918  4,461  2,979
Total nonperforming assets  $ 41,604  39,331  40,755  44,726  45,137
           
Florida          
Loans in nonaccrual status:          
Commercial  $ --  --   583  2,595  2,698
Real estate mortgage - 1 to 4 family  5,137  5,406  6,022  7,013  7,820
Installment  --  --  --  1  1
Total non-accrual loans  5,137  5,406  6,605  9,609  10,519
Other nonperforming real estate mortgages - 1 to 4 family  --  --  --  --  --
Total nonperforming loans  5,137  5,406  6,605  9,609  10,519
Other real estate owned  5,381  6,816  6,427  5,406  5,726
Total nonperforming assets  $ 10,518  12,222  13,032  15,015  16,245
           
Total          
Loans in nonaccrual status:          
Commercial  $ 6,952  5,436  6,474  8,573  9,333
Real estate mortgage - 1 to 4 family  36,182  36,049  36,758  41,040  43,106
Installment  93  71  36  36  7
Total non-accrual loans  43,227  41,556  43,268  49,649  52,446
Other nonperforming real estate mortgages - 1 to 4 family  166  170  174  225  231
Total nonperforming loans  43,393  41,726  43,442  49,874  52,677
Other real estate owned  8,729  9,827  10,345  9,867  8,705
Total nonperforming assets  $ 52,122  51,553  53,787  59,741  61,382
           
           
Quarterly Net Chargeoffs          
  12/31/13 09/30/13 06/30/13 03/31/13 12/31/12
New York and other states*          
Commercial  $ 176  585  49  248  152
Real estate mortgage - 1 to 4 family  1,194  1,215  1,885  1,563  1,410
Installment  (2)  25  13  15  72
Total net chargeoffs  $ 1,368  1,825  1,947  1,826  1,634
           
Florida          
Commercial  $ (1)  (502)  (1)  99  (18)
Real estate mortgage - 1 to 4 family  138  41  123  344  810
Installment  3  3  --  --  12
Total net chargeoffs  $ 140  (458)  122  443  804
           
Total          
Commercial  $ 175  83  48  347  134
Real estate mortgage - 1 to 4 family  1,332  1,256  2,008  1,907  2,220
Installment  1  28  13  15  84
Total net chargeoffs  $ 1,508  1,367  2,069  2,269  2,438
           
           
Asset Quality Ratios          
  12/31/13 09/30/13 06/30/13 03/31/13 12/31/12
Total nonperforming loans(1)  $ 43,393  $ 41,726  43,442  49,874  52,677
Total nonperforming assets(1)  52,122  51,553  53,787  59,741  61,382
Total net chargeoffs(2)  1,508  1,367  2,069  2,269  2,438
           
Allowance for loan losses(1) 47,714 47,722 47,589 47,658 47,927
           
Nonperforming loans to total loans 1.49% 1.47% 1.57% 1.84% 1.96%
Nonperforming assets to total assets 1.15% 1.16% 1.21% 1.35% 1.41%
Allowance for loan losses to total loans 1.64% 1.68% 1.72% 1.76% 1.79%
Coverage ratio(1) 110.0% 114.4% 109.5% 95.6% 91.0%
Annualized net chargeoffs to average loans(2) 0.21% 0.20% 0.29% 0.34% 0.37%
Allowance for loan losses to annualized net chargeoffs(2) 7.9x 8.7x 6.0x 5.3x 4.9x
           
* Includes New York, New Jersey, Vermont and Massachusetts.
(1) At period-end          
(2) For the period ended          
 
 
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY--
INTEREST RATES AND INTEREST DIFFERENTIAL
             
(dollars in thousands) Three months ended Three months ended
(Unaudited) December 31, 2013 December 31, 2012
  Average Interest Average Average Interest Average
  Balance   Rate Balance   Rate
             
Assets            
             
Securities available for sale:            
U. S. government sponsored enterprises  $ 197,755 586 1.18%  $ 370,086 1,191 1.29%
Mortgage backed securities and collateralized mortgage obligations-residential 543,856 3,027  2.23 480,382 2,237 1.86
State and political subdivisions 8,577 149 6.96 30,619 425 5.55
Corporate bonds 28,689 138 1.92 35,640 232 2.59
Small Business Administration-guaranteed participation securities 111,859 562  2.01  54,678  276 2.02
Mortgage backed securities and collateralized mortgage obligations-commercial 11,004 38  1.39  --   --  0.00
Other 523 4  3.06 660 5  3.03
             
Total securities available for sale 902,263 4,504  2.00 972,065 4,366  1.80
             
Federal funds sold and other short-term Investments 522,461 324 0.25 427,298 265 0.25
             
Held to maturity securities:            
Corporate bonds 9,943 153 6.19 35,013 385 4.40
Mortgage backed securities and collateralized mortgage obligations-residential 78,821 649 3.29 114,647 823 2.87
             
Total held to maturity securities 88,764 802 3.62 149,660 1,208 3.23
             
Federal Reserve Bank and Federal Home Loan Bank stock 10,500 129  4.91 9,632 127  5.27
             
Commercial loans 215,124 2,766  5.14 216,787 2,917 5.38
Residential mortgage loans 2,306,591 26,771 4.64 2,087,003 25,804 4.95
Home equity lines of credit 339,281 2,954 3.45 331,441 2,905 3.49
Installment loans 5,653 175 12.26 4,274 158 14.68
             
Loans, net of unearned income 2,866,649 32,666 4.55 2,639,505 31,784 4.81
             
Total interest earning assets 4,390,637 38,425 3.50 4,198,160 37,750 3.59
             
Allowance for loan losses (48,393)     (48,312)    
Cash & non-interest earning assets 122,386     146,482    
             
             
Total assets  $ 4,464,630      $ 4,296,330    
             
             
Liabilities and shareholders' equity            
             
Deposits:            
Interest bearing checking accounts  $ 587,854 83 0.06%  $ 532,579 80 0.06%
Money market accounts 649,574 611 0.37 669,201 703 0.42
Savings 1,219,178 790 0.26 1,184,601 921 0.31
Time deposits 1,123,671 1,982 0.70 1,085,054 1,967 0.72
             
Total interest bearing deposits 3,580,277 3,466 0.38 3,471,435 3,671 0.42
Short-term borrowings 189,754 382 0.80 161,816 361 0.89
             
Total interest bearing liabilities 3,770,031 3,848 0.40 3,633,251 4,032 0.44
             
Demand deposits 313,174     283,528    
Other liabilities 23,469     21,006    
Shareholders' equity 357,956     358,545    
             
Total liabilities and shareholders' equity  $ 4,464,630      $ 4,296,330    
             
Net interest income , tax equivalent   34,577     33,718  
             
Net interest spread     3.10%     3.15%
             
Net interest margin (net interest income to total interest earning assets)     3.15%     3.21%
             
Tax equivalent adjustment   (61)     (138)  
             
             
Net interest income   34,516     33,580  
             
             
(dollars in thousands) Year ended Year ended
(Unaudited) December 31, 2013 December 31, 2012
  Average Interest Average Average Interest Average
  Balance   Rate Balance   Rate
             
Assets            
             
Securities available for sale:            
U. S. government sponsored enterprises  $ 221,028 2,600  1.18%  $ 568,425 8,097 1.42%
Mortgage backed securities and collateralized mortgage obligations-residential 545,487 11,385  2.09 334,616 6,697 2.00
State and political subdivisions 12,845 862  6.71 35,435 2,012 5.68
Corporate bonds 46,049 812  1.76 68,182 2,231 3.27
Small Business Administration-guaranteed participation securities 109,913 2,180  1.98  15,707  319 2.03
Mortgage backed securities and collateralized mortgage obligations-commercial 10,420 144  1.38  --   --  0.00
Other 625 17  2.72 660 19  2.88
             
Total securities available for sale 946,367 18,000  1.90 1,023,025 19,375  1.89
             
Federal funds sold and other short-term Investments 502,136 1,240  0.25 461,495 1,142 0.25
             
Held to maturity securities:            
U. S. government sponsored enterprises  --   -- 0.00  1,048  25 2.43
Corporate bonds 14,011 833  5.95 39,570 1,666 4.21
Mortgage backed securities and collateralized mortgage obligations-residential 90,360 2,840  3.14 131,092 4,287 3.27
             
Total held to maturity securities 104,371 3,673  3.52 171,710 5,978 3.48
             
Federal Reserve Bank and Federal Home Loan Bank stock 10,266 490  4.77 9,425 486  5.16
             
Commercial loans 214,756 11,210  5.22 230,539 12,486 5.42
Residential mortgage loans 2,216,346 104,646  4.72 2,017,230 104,028 5.16
Home equity lines of credit 335,409 11,452  3.41 321,299 11,551 3.60
Installment loans 5,152 666  12.93 3,915 598 15.28
             
Loans, net of unearned income 2,771,663 127,974  4.62 2,572,983 128,663 5.00
             
Total interest earning assets 4,334,803 151,377  3.49 4,238,638 155,644 3.67
             
Allowance for loan losses (48,452)     (49,148)    
Cash & non-interest earning assets 136,042     143,303    
             
             
Total assets  $ 4,422,393      $ 4,332,793    
             
             
Liabilities and shareholders' equity            
             
Deposits:            
Interest bearing checking accounts  $ 578,531 329  0.06%  $ 515,062 315 0.06%
Money market accounts 650,324 2,516  0.39 649,452 3,069 0.47
Savings 1,218,655 3,333  0.27 1,115,151 3,872 0.35
Time deposits 1,113,473 7,622  0.68 1,251,846 11,244 0.90
             
Total interest bearing deposits 3,560,983 13,800  0.39 3,531,511 18,500 0.52
Short-term borrowings 180,275 1,483  0.82 152,982 1,475 0.96
             
Total interest bearing liabilities 3,741,258 15,283  0.41 3,684,493 19,975 0.54
             
Demand deposits 302,437     278,179    
Other liabilities 21,719     19,441    
Shareholders' equity 356,979     350,680    
             
Total liabilities and shareholders' equity  $ 4,422,393      $ 4,332,793    
             
Net interest income , tax equivalent   136,094     135,669  
             
Net interest spread     3.08%     3.13%
             
Net interest margin (net interest income to total interest earning assets)     3.14%     3.20%
             
Tax equivalent adjustment   (330)     (681)  
             
             
Net interest income   135,764     134,988  

Non-GAAP Financial Measures Reconciliation

Tangible book value per share and tangible equity as a percentage of tangible assets at period end are non-GAAP financial measures 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 book value per share by dividing tangible equity by common shares outstanding, as compared to book value per common share, which we calculate by dividing shareholders' equity by common shares outstanding. 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 recurring revenue. We calculate the efficiency ratio by dividing total noninterest expenses as determined under GAAP, but excluding other real estate expense, net, which we refer to below as recurring expense, by net interest income (fully taxable equivalent) and total noninterest income as determined under GAAP, but excluding net gains on securities from this calculation, which we refer to below as recurring revenue. We believe that this provides one reasonable measure of core expenses relative to core revenue. 

We believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our financial position, results and ratios. Our management internally assesses our performance based, in part, on these measures. However, these non-GAAP financial measures are supplemental and are 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 and efficiency ratio to the underlying GAAP numbers is set forth below.

Non-GAAP Financial Measures Reconciliation    
               
(dollars in thousands, except per share amounts)    
(Unaudited)              
  12/31/13 09/30/13 06/30/13 03/31/13 12/31/12    
Tangible Book Value Per Share              
               
Equity  $ 361,813  354,388  348,623  360,889 358,798    
Less: Intangible assets  553  553  553  553  553    
Tangible equity  361,260  353,835  348,070  360,336  358,245    
               
Shares outstanding  94,463  94,334  94,204  94,071  93,935    
Tangible book value per share  3.82  3.75  3.69  3.83  3.81    
Book value per share  3.83  3.76  3.70  3.84  3.82    
               
Tangible Equity to Tangible Assets              
Total Assets 4,521,452 4,459,407 4,443,204 4,411,757 4,346,613    
Less: Intangible assets  553  553  553  553  553    
Tangible assets  4,520,899  4,458,854  4,442,651  4,411,204  4,346,060    
               
Tangible Equity to Tangible Assets 7.99% 7.94% 7.83% 8.17% 8.24%    
Equity to Assets 8.00% 7.95% 7.85% 8.18% 8.25%    
               
  3 Months Ended Years Ended
Efficiency Ratio 12/31/13 09/30/13 06/30/13 03/31/13 12/31/12 12/31/13 12/31/12
               
Net interest income (fully taxable equivalent)  $ 34,577  34,180  33,630  33,707 33,718  136,094  135,669
Non-interest income  4,848  4,413  5,916  4,592  6,161  19,770  20,964
Less: Net gain on securities  188  --  1,432  2  763  1,622  2,161
Recurring revenue  39,237  38,593  38,114  38,297  39,116  154,242  154,472
               
Total Noninterest expense  20,891  20,688  21,869  21,557  21,150  85,005  83,977
Less: Other real estate expense, net  430  946  1,473  749  375  3,598  3,216
Recurring expense  20,461  19,742  20,396  20,808  20,775  81,407  80,761
               
Efficiency Ratio 52.15% 51.15% 53.51% 54.33% 53.11% 52.78% 52.28%
Kevin T. Timmons
Vice President/Treasurer
(518) 381-3607