TRST TrustCo Bank Corporation of NY

TrustCo Bank Corp NY (TrustCo, Nasdaq: TRST) today announced full year 2019 net income of $57.8 million or $0.597 diluted earnings per share, and income of $13.9 million or $0.143 diluted earnings per share for the fourth quarter of 2019.  Average residential loan growth increased 5.6% or $187.7 million to a record $3.5 billion for the fourth quarter 2019.

Summary

Robert J. McCormick, Chairman, President and Chief Executive Officer noted, “We are pleased to report an increase in average residential loans of 5.6% or $187.7 million in the fourth quarter 2019 compared to the fourth quarter 2018.  Our focus on foundational principles of strong increasing book value, capital and asset growth, and operational efficiencies has allowed us to continue to grow our business and take advantage of changes in market and competitive conditions.  Our strong financial condition is evidenced by our continued recognition as a BauerFinancial, Inc. 5-Star Superior Bank Rating.  We continue to add core customer relationships, which ultimately drive future growth.  Loan growth and stabilizing cost of funds as a result of federal interest rate cuts have put us in a good position as we move forward.”

“TrustCo continued to invest in the community and our business and consumers throughout 2019.  Evidenced by the record levels of residential loan balances achieved in 2019, the more than 10,000 hours of community service by our employees, and thousands of dollars of direct contributions to charitable organizations throughout the regions we serve.  We are particularly pleased that we have continued our over 100 year tradition of direct capital distributions to our shareholders in the form of cash dividends which in 2019 amounted to $26.2 million.”  Loan portfolio expansion was funded by a combination of utilizing our strong cash balances and growth in our deposit base.  TrustCo’s strong liquidity position continues to allow us to take advantage of opportunities when interest rate conditions change.

Details

Average loans were up $167.8 million or 4.4% in the fourth quarter 2019 over the same period in 2018.  Average residential loans, our primary lending focus, were up $187.7 million or 5.6% in the fourth quarter 2019, over the same period in 2018.  Average deposits were up $218.8 million or 5.2% for the fourth quarter 2019 over the same period a year earlier.  The increase in deposits was the result of a $195.0 million or 15.9% increase in average time deposits in the fourth quarter 2019 over the same period last year.  Excluding time deposits, total average core deposit accounts, which consist of checking, savings and money market deposit accounts, were up $23.8 million or 0.8% for the fourth quarter 2019 compared to the fourth quarter 2018.   

The cost of interest bearing liabilities increased to 0.90% in the fourth quarter 2019 from 0.61% in the fourth quarter 2018.  The cost of savings and interest bearing checking decreased slightly by 3 basis points and by 4 basis points, respectively, in the fourth quarter 2019 over the same period in 2018.  Money market deposits increased by 32 basis points to 0.81% versus 0.49% from the fourth quarter 2018.  The net interest margin for the fourth quarter 2019 was 3.02%.  A strategy executed during 2019 included offering competitive shorter term time deposit rates, which we expect will help stabilize net interest margin in the first and second quarter of 2020 as our shorter term time deposits would be expected to 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 $47.3 million or 9.8% in the fourth quarter of 2019 compared to the same period in 2018.  On this expanded equity, return on average assets and return on average equity were 1.06% and 10.41%, respectively, compared to 1.30% and 13.18% for the fourth quarter 2018.  Diluted earnings per share were $0.143 for the fourth quarter 2019, compared to $0.166 for the fourth quarter 2018.  Total operating expenses decreased by $1.0 million in the fourth quarter 2019 as compared to the fourth quarter 2018, driven by decreases in net occupancy expense, professional services, advertising expense, FDIC and other insurance expense, other real estate expense, and other expense, partially offset by an increase primarily in salaries and employee benefits.

Asset quality and the resulting loan loss reserve measures continued to improve.  Nonperforming loans (NPLs) were $20.9 million at December 31, 2019, compared to $25.0 million at December 31, 2018.  NPLs were equal to 0.51% of total loans at December 31, 2019, compared to 0.64% at December 31, 2018.  The coverage ratio, or allowance for loan losses to NPLs, was 212.4% at December 31, 2019, compared to 179.2% at December 31, 2018.  Nonperforming assets (NPAs) were $22.4 million at December 31, 2019 compared to $26.7 million at December 31, 2018.  The ratio of allowance for loan losses to total loans was 1.09% as of December 31, 2019, compared to 1.16% at December 31, 2018 and reflects both the continued improvement in asset quality and the economic conditions in our primary markets.  The allowance for loan losses was $44.3 million at December 31, 2019 compared to $44.8 million at December 31, 2018.  The provision for loan losses for the year was $159 thousand for 2019, compared to $1.4 million in 2018.  Net chargeoffs decreased to $608 thousand for 2019 from $804 thousand for 2018.  The quarterly annualized net chargeoff ratio was 0.02% for 2019, compared to 0.05% in 2018. 

At December 31, 2019 the equity to asset ratio was 10.31%, compared to 9.88% at December 31, 2018.  Book value per share at December 31, 2019 was $5.55 compared to $5.07 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 December 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 fourth quarter 2019 results will be held at 9:00 a.m. Eastern Time on January 22, 2020.  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 10138363.  The call will also be audio webcast at https://services.choruscall.com/links/trst200122.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 2020, including our expectations for the repricing of our CD portfolio and the stabilizing of our net interest margin, 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
		12/31/19			9/30/19			12/31/18
Summary of operations
Net interest income (TE)	$	38,243			38,644			40,740
Provision for loan losses		200			-			500
Noninterest income		4,115			4,925			4,452
Noninterest expense		23,891			24,070			24,919
Net income		13,907			14,708			16,033
Per common share
Net income per share:
- Basic	$	0.143			0.152			0.166
- Diluted		0.143			0.152			0.166
Cash dividends		0.068			0.068			0.068
Tangible Book value at period end		5.55			5.42			5.06
Market price at period end		8.67			8.15			6.86
At period end
Full time equivalent employees		814			823			854
Full service banking offices		148			148			148
Performance ratios
Return on average assets		1.06		%	1.12			1.30
Return on average equity		10.41			11.19			13.18
Efficiency (1)		57.31			55.17			55.06
Net interest spread (TE)		2.86			2.88			3.27
Net interest margin (TE)		3.02			3.04			3.38
Dividend payout ratio		47.48			44.85			41.07
Capital ratios at period end
Consolidated tangible equity to tangible assets (2)		10.30		%	10.07			9.87
Consolidated equity to assets		10.31		%	10.07			9.88
Asset quality analysis at period end
Nonperforming loans to total loans		0.51			0.53			0.64
Nonperforming assets to total assets		0.43			0.45			0.54
Allowance for loan losses to total loans		1.09			1.11			1.16
Coverage ratio (3)		2.1x			2.1x			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)
		Year ended
		12/31/19			12/31/18
Summary of operations
Net interest income (TE)	$	155,812			160,698
Provision for loan losses		159			1,400
Noninterest income		18,591			18,081
Noninterest expense		97,730			97,713
Net income		57,840			61,445
Per common share
Net income per share:
- Basic	$	0.597			0.637
- Diluted		0.597			0.636
Cash dividends		0.273			0.268
Tangible Book value at period end		5.55			5.06
Market price at period end		8.67			6.86
Performance ratios
Return on average assets		1.12			1.25
Return on average equity		11.26			13.05
Efficiency (1)		56.13			53.97
Net interest spread (TE)		2.94			3.25
Net interest margin (TE)		3.10			3.33
Dividend payout ratio		45.60			42.02
(1) Calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest
income plus noninterest income (excluding net securities transactions and gain on sale of building and
nonperforming loans).
TE = Taxable equivalent.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
(Unaudited)
		Three months ended
		12/31/19			9/30/19			6/30/19			3/31/19			12/31/18
Interest and dividend income:
Interest and fees on loans	$	42,002			41,923			41,432			41,253			41,184
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises		609			996			821			783			788
State and political subdivisions		2			2			3			1			2
Mortgage-backed securities and collateralized mortgage
obligations - residential		2,334			2,178			2,152			1,555			1,554
Corporate bonds		295			321			272			208			202
Small Business Administration - guaranteed
participation securities		253			282			289			297			329
Other securities		6			6			5			5			5
Total interest and dividends on securities available for sale		3,499			3,785			3,542			2,849			2,880
Interest on held to maturity securities:
Mortgage-backed securities and collateralized mortgage
obligations - residential		184			187			209			217			226
Total interest on held to maturity securities		184			187			209			217			226
Federal Reserve Bank and Federal Home Loan Bank stock		203			81			199			85			207
Interest on federal funds sold and other short-term investments		1,635			2,552			3,282			3,009			2,367
Total interest income		47,523			48,528			48,664			47,413			46,864
Interest expense:
Interest on deposits:
Interest-bearing checking		21			52			94			121			111
Savings		271			323			367			377			401
Money market deposit accounts		1,175			1,177			1,119			826			618
Time deposits		7,468			7,974			7,512			5,976			4,643
Interest on short-term borrowings		347			359			381			381			352
Total interest expense		9,282			9,885			9,473			7,681			6,125
Net interest income		38,241			38,643			39,191			39,732			40,739
Less: (Credit) Provision for loan losses		200			-			(341	)		300			500
Net interest income after provision for loan losses		38,041			38,643			39,532			39,432			40,239
Noninterest income:
Trustco Financial Services income		1,454			1,517			1,683			1,733			1,356
Fees for services to customers		2,377			2,602			2,611			2,520			2,897
Other		284			806			620			384			199
Total noninterest income		4,115			4,925			4,914			4,637			4,452
Noninterest expenses:
Salaries and employee benefits		11,743			11,725			11,711			11,451			10,183
Net occupancy expense		4,399			4,094			4,006			4,167			4,800
Equipment expense		1,768			1,689			1,709			1,902			1,741
Professional services		1,449			1,507			1,568			1,650			1,733
Outsourced services		1,925			1,875			1,875			1,925			1,875
Advertising expense		464			494			778			785			876
FDIC and other insurance		259			282			598			648			522
Other real estate (income) expense, net		(385	)		33			210			(24	)		37
Other		2,269			2,371			2,447			2,363			3,152
Total noninterest expenses		23,891			24,070			24,902			24,867			24,919
Income before taxes		18,265			19,498			19,544			19,202			19,772
Income taxes		4,358			4,790			4,877			4,644			3,739
Net income	$	13,907			14,708			14,667			14,558			16,033
Net income per common share:
- Basic	$	0.143			0.152			0.152			0.150			0.166
- Diluted		0.143			0.152			0.151			0.150			0.166
Average basic shares (in thousands)		96,919			96,907			96,822			96,744			96,555
Average diluted shares (in thousands)		97,015			96,977			96,891			96,822			96,689
Note: Taxable equivalent net interest income	$	38,243			38,644			39,192			39,733			40,740
CONSOLIDATED STATEMENTS OF INCOME, Continued
(dollars in thousands, except per share data)
(Unaudited)
		Year ended
		12/31/19			12/31/18
Interest and dividend income:
Interest and fees on loans	$	166,610			158,304
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises		3,209			3,112
State and political subdivisions		8			22
Mortgage-backed securities and collateralized mortgage
obligations - residential		8,219			6,593
Corporate bonds		1,096			687
Small Business Administration - guaranteed
participation securities		1,121			1,339
Mortgage-backed securities and collateralized mortgage
obligations - commercial		-			37
Other securities		22			18
Total interest and dividends on securities available for sale		13,675			11,808
Interest on held to maturity securities:
Mortgage-backed securities-residential		797			962
Total interest on held to maturity securities		797			962
Federal Reserve Bank and Federal Home Loan Bank stock		568			564
Interest on federal funds sold and other short-term investments		10,478			9,276
Total interest income		192,128			180,914
Interest expense:
Interest on deposits:
Interest-bearing checking		288			442
Savings		1,338			1,657
Money market deposit accounts		4,297			2,053
Time deposits		28,930			14,806
Interest on short-term borrowings		1,468			1,270
Total interest expense		36,321			20,228
Net interest income		155,807			160,686
Less: Provision for loan losses		159			1,400
Net interest income after provision for loan losses		155,648			159,286
Noninterest income:
Trustco Financial Services income		6,387			6,283
Fees for services to customers		10,110			10,912
Other		2,094			886
Total noninterest income		18,591			18,081
Noninterest expenses:
Salaries and employee benefits		46,630			42,107
Net occupancy expense		16,666			17,213
Equipment expense		7,068			7,068
Professional services		6,174			6,555
Outsourced services		7,600			7,500
Advertising expense		2,521			3,020
FDIC and other insurance		1,787			2,741
Other real estate (income) expense, net		(166	)		1,231
Other		9,450			10,278
Total noninterest expenses		97,730			97,713
Income before taxes		76,509			79,654
Income taxes		18,669			18,209
Net income	$	57,840			61,445
Net income per common share:
- Basic	$	0.597			0.637
- Diluted		0.597			0.636
Average basic shares (in thousands)		96,849			96,505
Average diluted shares (in thousands)		96,927			96,646
Note: Taxable equivalent net interest income	$	155,812			160,698
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)
(Unaudited)
		12/31/19			9/30/19			6/30/19			3/31/19			12/31/18
ASSETS:
Cash and due from banks	$	48,198			49,526			42,471			43,064			49,260
Federal funds sold and other short term investments		408,648			401,151			517,684			576,123			454,449
Total cash and cash equivalents		456,846			450,677			560,155			619,187			503,709
Securities available for sale:
U. S. government sponsored enterprises		104,512			164,490			184,448			148,292			152,160
States and political subdivisions		162			169			170			172			173
Mortgage-backed securities and collateralized mortgage
obligations - residential		389,517			406,166			354,679			312,946			262,032
Small Business Administration - guaranteed
participation securities		48,511			50,970			53,091			54,113			56,475
Corporate bonds		30,436			40,281			40,467			30,258			29,938
Other securities		685			683			685			685			685
Total securities available for sale		573,823			662,759			633,540			546,466			501,463
Held to maturity securities:
Mortgage-backed securities and collateralized mortgage
obligations-residential		18,618			19,705			20,667			21,609			22,501
Total held to maturity securities		18,618			19,705			20,667			21,609			22,501
Federal Reserve Bank and Federal Home Loan Bank stock		9,183			9,183			9,183			8,953			8,953
Loans:
Commercial		199,499			192,443			190,507			190,347			196,146
Residential mortgage loans		3,583,774			3,508,647			3,428,829			3,376,193			3,376,708
Home equity line of credit		267,922			273,526			277,559			282,034			289,540
Installment loans		11,001			10,703			9,514			12,579			11,702
Loans, net of deferred net costs		4,062,196			3,985,319			3,906,409			3,861,153			3,874,096
Less: Allowance for loan losses		44,317			44,329			44,365			44,671			44,766
Net loans		4,017,879			3,940,990			3,862,044			3,816,482			3,829,330
Bank premises and equipment, net		34,622			34,168			34,058			34,428			34,694
Operating lease right-of-use assets		51,475			49,618			51,097			51,559			-
Other assets		58,876			55,369			56,926			57,637			58,263
Total assets	$	5,221,322			5,222,469			5,227,670			5,156,321			4,958,913
LIABILITIES:
Deposits:
Demand	$	463,858			453,439			432,780			408,417			405,069
Interest-bearing checking		875,672			869,101			888,433			895,099			904,678
Savings accounts		1,113,146			1,110,947			1,132,308			1,150,329			1,182,683
Money market deposit accounts		599,163			570,457			562,318			538,043			507,311
Time deposits		1,398,177			1,457,223			1,446,428			1,421,181			1,274,506
Total deposits		4,450,016			4,461,167			4,462,267			4,413,069			4,274,247
Short-term borrowings		148,666			151,095			166,746			159,778			161,893
Operating lease liabilities		56,553			54,731			56,237			56,723			-
Accrued expenses and other liabilities		27,830			29,313			26,790			25,033			32,902
Total liabilities		4,683,065			4,696,306			4,712,040			4,654,603			4,469,042
SHAREHOLDERS' EQUITY:
Capital stock		100,205			100,200			100,180			100,180			100,175
Surplus		176,427			176,395			176,396			176,510			176,710
Undivided profits		288,067			280,542			272,433			264,364			256,397
Accumulated other comprehensive income (loss), net of tax		4,461			(71	)		(1,774	)		(7,011	)		(10,309	)
Treasury stock at cost		(30,903	)		(30,903	)		(31,605	)		(32,325	)		(33,102	)
Total shareholders' equity		538,257			526,163			515,630			501,718			489,871
Total liabilities and shareholders' equity	$	5,221,322			5,222,469			5,227,670			5,156,321			4,958,913
Outstanding shares (in thousands)		96,922			96,917			96,822			96,746			96,659

NONPERFORMING ASSETS
(dollars in thousands)
(Unaudited)
		12/31/19		9/30/19		6/30/19		3/31/19		12/31/18
Nonperforming Assets
New York and other states*
Loans in nonaccrual status:
Commercial	$	816		888		905		701		645
Real estate mortgage - 1 to 4 family		18,407		18,275		19,633		22,343		22,373
Installment		3		13		1		26		4
Total non-accrual loans		19,226		19,176		20,539		23,070		23,022
Other nonperforming real estate mortgages - 1 to 4 family		29		30		31		33		34
Total nonperforming loans		19,255		19,206		20,570		23,103		23,056
Other real estate owned		1,579		2,409		2,625		1,262		1,675
Total nonperforming assets	$	20,834		21,615		23,195		24,365		24,731
Florida
Loans in nonaccrual status:
Commercial	$	-		-		-		-		-
Real estate mortgage - 1 to 4 family		1,614		1,809		1,564		1,644		1,915
Installment		-		-		-		-		15
Total non-accrual loans		1,614		1,809		1,564		1,644		1,930
Other nonperforming real estate mortgages - 1 to 4 family		-		-		-		-		-
Total nonperforming loans		1,614		1,809		1,564		1,644		1,930
Other real estate owned		-		-		-		-		-
Total nonperforming assets	$	1,614		1,809		1,564		1,644		1,930
Total
Loans in nonaccrual status:
Commercial	$	816		888		905		701		645
Real estate mortgage - 1 to 4 family		20,021		20,084		21,197		23,987		24,288
Installment		3		13		1		26		19
Total non-accrual loans		20,840		20,985		22,103		24,714		24,952
Other nonperforming real estate mortgages - 1 to 4 family		29		30		31		33		34
Total nonperforming loans		20,869		21,015		22,134		24,747		24,986
Other real estate owned		1,579		2,409		2,625		1,262		1,675
Total nonperforming assets	$	22,448		23,424		24,759		26,009		26,661
Quarterly Net (Recoveries) Chargeoffs
New York and other states*
Commercial	$	(1	)	(28	)	(1	)	4		99
Real estate mortgage - 1 to 4 family		146		39		(54	)	318		323
Installment		67		9		45		23		35
Total net chargeoffs (recoveries)	$	212		20		(10	)	345		457
Florida
Commercial	$	-		-		-		-		-
Real estate mortgage - 1 to 4 family		(1	)	-		(25	)	19		(3	)
Installment		1		16		-		31		16
Total net chargeoffs (recoveries)	$	-		16		(25	)	50		13
Total
Commercial	$	(1	)	(28	)	(1	)	4		99
Real estate mortgage - 1 to 4 family		145		39		(79	)	337		320
Installment		68		25		45		54		51
Total net chargeoffs (recoveries)	$	212		36		(35	)	395		470
Asset Quality Ratios
Total nonperforming loans (1)	$	20,869		21,015		22,134		24,747		24,986
Total nonperforming assets (1)		22,448		23,424		24,759		26,009		26,661
Total net chargeoffs (recoveries) (2)		212		36		(35	)	395		470
Allowance for loan losses (1)		44,317		44,329		44,365		44,671		44,766
Nonperforming loans to total loans		0.51	%	0.53	%	0.57	%	0.64	%	0.64	%
Nonperforming assets to total assets		0.43	%	0.45	%	0.47	%	0.50	%	0.54	%
Allowance for loan losses to total loans		1.09	%	1.11	%	1.14	%	1.16	%	1.16	%
Coverage ratio (1)		212.4	%	210.9	%	200.4	%	180.5	%	179.2	%
Annualized net chargeoffs to average loans (2)		0.02	%	0.00	%	0.00	%	0.04	%	0.05	%
Allowance for loan losses to annualized net chargeoffs (2)		52.3x		307.8x		N/A		28.3x		23.8x
* Includes New York, New Jersey, Vermont and Massachusetts.
(1) At period-end
(2) For the period ended

DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY -
INTEREST RATES AND INTEREST DIFFERENTIAL
(dollars in thousands)
(Unaudited)		Three months ended								Three months ended
		December 31, 2019								December 31, 2018
		Average			Interest		Average			Average			Interest		Average
		Balance					Rate			Balance					Rate
Assets
Securities available for sale:
U. S. government sponsored enterprises	$	127,284			609		1.91	%	$	154,867			788		2.03	%
Mortgage backed securities and collateralized mortgage
obligations - residential		396,335			2,334		2.36			276,747			1,554		2.25
State and political subdivisions		165			4		9.70			172			3		7.82
Corporate bonds		37,795			295		3.12			30,068			202		2.68
Small Business Administration - guaranteed
participation securities		49,787			253		2.03			59,363			329		2.21
Mortgage backed securities and collateralized mortgage
obligations - commercial		-			-		-			-			-		-
Other		685			6		3.50			684			5		2.92
Total securities available for sale		612,051			3,501		2.29			521,901			2,881		2.21
Federal funds sold and other short-term Investments		395,311			1,635		1.65			416,765			2,367		2.25
Held to maturity securities:
Mortgage backed securities and collateralized mortgage
obligations - residential		19,185			184		3.84			22,947			226		3.93
Total held to maturity securities		19,185			184		3.84			22,947			226		3.93
Federal Reserve Bank and Federal Home Loan Bank stock		9,183			203		8.84			8,953			207		9.25
Commercial loans		192,427			2,517		5.23			191,899			2,577		5.37
Residential mortgage loans		3,547,219			36,179		4.08			3,359,540			34,808		4.14
Home equity lines of credit		270,766			3,110		4.59			291,411			3,544		4.82
Installment loans		10,682			196		7.34			10,486			255		9.65
Loans, net of unearned income		4,021,094			42,002		4.18			3,853,336			41,184		4.27
Total interest earning assets		5,056,824			47,525		3.76			4,823,902			46,865		3.88
Allowance for loan losses		(44,320	)							(44,887	)
Cash & non-interest earning assets		188,605								120,646
Total assets	$	5,201,109							$	4,899,661
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts	$	864,774			21		0.01	%	$	892,241			111		0.05	%
Money market accounts		583,048			1,175		0.81			499,771			618		0.49
Savings		1,111,259			271		0.10			1,200,864			401		0.13
Time deposits		1,422,049			7,468		2.10			1,227,034			4,643		1.50
Total interest bearing deposits		3,981,130			8,935		0.90			3,819,910			5,773		0.60
Short-term borrowings		154,898			347		0.90			171,247			352		0.82
Total interest bearing liabilities		4,136,028			9,282		0.90			3,991,157			6,125		0.61
Demand deposits		454,585								396,959
Other liabilities		80,386								28,748
Shareholders' equity		530,110								482,797
Total liabilities and shareholders' equity	$	5,201,109							$	4,899,661
Net interest income, tax equivalent					38,243								40,740
Net interest spread							2.86	%							3.27	%
Net interest margin (net interest income to
total interest earning assets)							3.02	%							3.38	%
Tax equivalent adjustment					(2	)							(1	)
Net interest income					38,241								40,739
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY -
INTEREST RATES AND INTEREST DIFFERENTIAL, Continued
(dollars in thousands)
(Unaudited)		Year ended								Year ended
		December 31, 2019								December 31, 2018
		Average			Interest		Average			Average			Interest		Average
		Balance					Rate			Balance					Rate
Assets
Securities available for sale:
U. S. government sponsored enterprises	$	156,292			3,209		2.05	%	$	155,381			3,112		2.00	%
Mortgage backed securities and collateralized mortgage
obligations - residential		345,718			8,219		2.38			294,732			6,593		2.24
State and political subdivisions		167			13		7.78			414			34		8.11
Corporate bonds		34,637			1,096		3.16			30,310			687		2.27
Small Business Administration - guaranteed
participation securities		53,269			1,121		2.10			63,430			1,339		2.11
Mortgage backed securities and collateralized mortgage
obligations - commercial		-			-		-			2,769			37		1.33
Other		685			22		3.21			685			18		3.50
Total securities available for sale		590,768			13,680		2.32			547,721			11,820		2.88
Federal funds sold and other short-term Investments		477,181			10,478		2.20			495,066			9,276		1.87
Held to maturity securities:
Mortgage backed securities and collateralized mortgage
obligations - residential		20,643			797		3.86			24,801			962		3.88
Total held to maturity securities		20,643			797		3.86			24,801			962		3.88
Federal Reserve Bank and Federal Home Loan Bank stock		9,123			568		6.23			8,907			564		8.44
Commercial loans		191,636			10,243		5.35			188,362			9,913		5.26
Residential mortgage loans		3,445,940			141,964		4.12			3,250,800			133,930		4.12
Home equity lines of credit		277,905			13,551		4.88			297,678			13,562		4.56
Installment loans		10,718			852		7.95			9,242			899		9.73
Loans, net of unearned income		3,926,199			166,610		4.24			3,746,082			158,304		4.23
Total interest earning assets		5,023,914			192,133		3.82			4,822,577			180,926		3.75
Allowance for loan losses		(44,639	)							(44,651	)
Cash & non-interest earning assets		182,545								122,524
Total assets	$	5,161,820							$	4,900,450
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts	$	874,700			288		0.03	%	$	897,378			442		0.05	%
Money market accounts		555,547			4,297		0.77			521,233			2,053		0.39
Savings		1,134,050			1,338		0.12			1,241,619			1,657		0.13
Time deposits		1,417,487			28,930		2.04			1,149,980			14,806		1.29
Total interest bearing deposits		3,981,784			34,853		0.88			3,810,210			18,958		0.50
Short-term borrowings		159,220			1,468		0.92			194,810			1,270		0.65
Total interest bearing liabilities		4,141,004			36,321		0.88			4,005,020			20,228		0.51
Demand deposits		427,276								396,367
Other liabilities		80,051								28,249
Shareholders' equity		513,489								470,814
Total liabilities and shareholders' equity	$	5,161,820							$	4,900,450
Net interest income, tax equivalent					155,812								160,698
Net interest spread							2.94	%							3.25	%
Net interest margin (net interest income to
total interest earning assets)							3.10	%							3.33	%
Tax equivalent adjustment					(5	)							(12	)
Net interest income					155,807								160,686

Non-GAAP Financial Measures Reconciliation

Tangible equity as a percentage of tangible assets at period end is a non-GAAP financial measure derived from GAAP-based amounts. We calculate tangible equity and tangible assets by excluding the balance of intangible assets from shareholders’ equity and total assets, respectively. We calculate tangible equity as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end. We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios. 

The efficiency ratio is a non-GAAP measure of expense control relative to revenue from net interest income and fee income.  We calculate the efficiency ratio by dividing total noninterest expenses as determined under GAAP, but excluding other real estate expense, net, by net interest income (fully taxable equivalent) and total noninterest income as determined under GAAP, but excluding net gains on the sale of nonperforming loans and securities and other non-routine items from this calculation.  We believe that this provides a reasonable measure of primary banking expenses relative to primary banking revenue. 

We believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our financial results. Our management internally assesses our performance based, in part, on these measures.  However, these non-GAAP financial measures are supplemental and not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these measures, this presentation may not be comparable to other similarly titled measures reported by other companies. A reconciliation of the non-GAAP measures of tangible common equity, tangible book value per share, efficiency ratio, net income and net income per share to the underlying GAAP numbers is set forth below.

NON-GAAP FINANCIAL MEASURES RECONCILIATION
(dollars in thousands, except per share amounts)
(Unaudited)
Tangible Book Value Per Share		12/31/19		9/30/19		12/31/18
Equity (GAAP)	$	538,257		526,163		489,871
Less: Intangible assets		553		553		553
Tangible equity (Non-GAAP)		537,704		525,610		489,318
Shares outstanding		96,922		96,917		96,659
Tangible book value per share (Non-GAAP)		5.55		5.42		5.06
Book value per share (GAAP)		5.55		5.43		5.07
Tangible Equity to Tangible Assets
Total Assets (GAAP)	$	5,221,322		5,222,469		4,958,913
Less: Intangible assets		553		553		553
Tangible assets (Non-GAAP)		5,220,769		5,221,916		4,958,360
Tangible Equity to Tangible Assets (Non-GAAP)		10.30	%	10.07	%	9.87	%
Equity to Assets (GAAP)		10.31	%	10.07	%	9.88	%
		Three months ended								Year ended
Efficiency Ratio		12/31/19		9/30/19		12/31/18				12/31/19		12/31/18
Net interest income (GAAP)	$	38,241		38,643		40,739			$	155,807		160,686
Taxable equivalent adjustment		2		1		1				5		12
Net interest income (fully taxable equivalent) (Non-GAAP)		38,243		38,644		40,740				155,812		160,698
Non-interest income (GAAP)		4,115		4,925		4,452				18,591		18,081
Revenue used for efficiency ratio (Non-GAAP)		42,358		43,569		45,192				174,403		178,779
Total noninterest expense (GAAP)		23,891		24,070		24,919				97,730		97,713
Less: Other real estate (income) expense, net		(385	)	33		37				(166	)	1,231
Expense used for efficiency ratio (Non-GAAP)		24,276		24,037		24,882				97,896		96,482
Efficiency Ratio		57.31	%	55.17	%	55.06	%			56.13	%	53.97	%

 

Contact:        

Robert LeonardExecutive Vice President andChief Risk Officer(518) 381-3693