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)
  6/30/20193/31/201912/31/20189/30/20186/30/2018
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 InterestAverage  Average InterestAverage 
  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 InterestAverage  Average InterestAverage 
  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)
  6/30/20193/31/20196/30/2018    
         
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 6/30/20193/31/20196/30/2018  6/30/20196/30/2018
         
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