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TrustCo Announces Third Quarter Earnings

GLENVILLE, N.Y., Oct. 21, 2013 (GLOBE NEWSWIRE) -- TrustCo Bank Corp NY (TrustCo) (Nasdaq:TRST) today announced that net income rose to $10.3 million in the quarter ended September 30, 2013, up 5.1% from $9.8 million for the quarter ended September 30, 2012. Third quarter net income is up 11.1% over the same period two years ago and 29.6% over the same period four years ago.

TrustCo saw continued strong loan growth in the third quarter of 2013 along with an increase in the average yield on loans for the first time since the third quarter of 2008. Loan growth was funded by continued growth of low cost retail deposits along with a shift from lower yielding investment securities, helping to boost the average yield on earning assets. Robert J. McCormick, President and Chief Executive Officer, noted, "Our results for the third quarter of 2013 continued the progress we made in the first half of the year in terms of bottom line growth and in positioning our business for the balance of the year and beyond. 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 allowed us to fund much of our loan growth without having to overpay for deposits. In fact, our cost of interest-bearing deposits continued to decline in the third quarter relative to the second quarter. We look forward to the final quarter of 2013 and to 2014 with optimism, though we note that our industry continues to face challenges as the economy remains fragile and interest rate environment remains mixed. We will continue to take advantage of opportunities as they are presented."

Mr. McCormick also noted, "We continue to see signs of economic improvement in the markets in which we operate, particularly Florida, although unemployment and other persistent issues continue to constrain any significant economic growth. We believe 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 0.91% and 11.64%, respectively for the third quarter of 2013, compared to 0.89% and 10.97% for the third quarter of 2012. Earnings per share were $0.109 for the third quarter of 2013, up 4.8% from $0.104 for the third quarter of 2012. For the first nine months of 2013, TrustCo earned $29.2 million or $0.310 per share, compared to $27.7 million or $0.296 per share in the first nine months of 2012.

On a year-over-year basis, average loans were up $213.7 million or 8.3% in the third quarter of 2013, over the same period in 2012. Average deposits were up $48.2 million over the same period. Management took action to incent customers to move some funds into certificates with slightly longer maturities, which will be helpful as rates rise without having a material impact on the current cost of funds. Core deposits typically represent longer term customer relationships and are generally lower cost than time deposits. 71.2% of average third quarter deposits were core. 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. We opened one office, in Ormond Beach, Florida, during the third quarter. We recently celebrated the ten year anniversary of our expansion program, 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 September 30, 2013. NPLs declined to $41.7 million at September 30, 2013, compared to $52.7 million at December 31, 2012 and nonperforming assets (NPAs) declined to $51.6 million from $61.4 million over the same period. NPLs were equal to 1.47% of total loans at quarter-end, compared to 1.96% at year-end. For the third quarter of 2013 the allowance covered annualized third quarter net charge-offs by 8.7 times, compared to an annualized 3.3 times for the third quarter of 2012. The coverage ratio, or allowance for loan losses to NPLs, was 114.4% at September 30, 2013, compared to 91.0% at December 31, 2012. Overall, every asset quality indicator improved during the third quarter of 2013.

The net interest margin for the third quarter of 2013 was 3.12%, compared to 3.21% in the third quarter of 2012 and 3.10% in the second quarter of 2013.

At September 30, 2013 the tangible equity ratio was 7.94% compared to 8.27% at September 30, 2012 and 7.83% at June 30, 2013. Tangible book value per share ended the third quarter at $3.75 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 September 30, 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 third quarter 2013 results will be held at 9:00 a.m. Eastern Time on October 23, 2013. 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 10035171. The call will also be audio webcast at: http://services.choruscall.com/links/trst131022.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 and statements regarding TrustCo's ability to offer and sell securities under its shelf registration statement. 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
09/30/13 06/30/13 09/30/12
Summary of operations
Net interest income (TE) $ 34,180 33,630 34,321
Provision for loan losses 1,500 2,000 2,900
Net securities transactions -- 1,432 666
Noninterest income 4,414 4,484 4,551
Noninterest expense 20,688 21,869 20,643
Net income 10,252 9,763 9,753
Per common share
Net income per share:
- Basic $ 0.109 0.104 0.104
- Diluted 0.109 0.104 0.104
Cash dividends 0.066 0.066 0.066
Tangible Book value at period end 3.75 3.69 3.81
Market price at period end 5.95 5.44 5.71
At period end
Full time equivalent employees 708 710 760
Full service banking offices 139 138 138
Performance ratios
Return on average assets 0.91% 0.88 0.89
Return on average equity 11.64 10.83 10.97
Efficiency (1) 51.15 53.51 49.99
Net interest spread (TE) 3.06 3.04 3.15
Net interest margin (TE) 3.12 3.10 3.21
Dividend payout ratio 60.38 63.33 63.13
Capital ratio at period end
Consolidated tangible equity to tangible assets (2) 7.94 7.83 8.27
Asset quality analysis at period end
Nonperforming loans to total loans 1.47 1.57 1.92
Nonperforming assets to total assets 1.16 1.21 1.36
Allowance for loan losses to total loans 1.68 1.72 1.82
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)
Nine Months Ended
09/30/13 09/30/12
Summary of operations
Net interest income (TE) $ 101,517 101,951
Provision for loan losses 5,500 9,000
Net securities transactions 1,434 1,398
Noninterest income 13,488 13,405
Noninterest expense 64,114 62,827
Net income 29,183 27,728
Per common share
Net income per share:
- Basic $ 0.310 0.296
- Diluted 0.310 0.296
Cash dividends 0.197 0.197
Tangible Book value at period end 3.75 3.81
Market price at period end 5.95 5.71
Performance ratios
Return on average assets 0.89% 0.85
Return on average equity 10.94 10.64
Efficiency (1) 52.99 52.00
Net interest spread (TE) 3.08 3.12
Net interest margin (TE) 3.14 3.20
Dividend payout ratio 63.55 66.51
(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
9/30/2013 6/30/2013 3/31/2013 12/31/2012 9/30/2012
Interest and dividend income:
Interest and fees on loans $ 32,166 31,639 31,481 31,776 32,103
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises 571 627 816 1,191 1,996
State and political subdivisions 127 148 191 295 340
Mortgage-backed securities and collateralized mortgage obligations-residential 2,888 2,701 2,769 2,237 2,003
Corporate bonds 223 233 218 232 529
Small Business Administration-guaranteed participation securities 558 564 496 276 43
Mortgage-backed securities and collateralized mortgage obligations-commercial 39 38 29 -- --
Other securities 5 3 5 5 4
Total interest and dividends on securities available for sale 4,411 4,314 4,524 4,236 4,915
Interest on held to maturity securities:
Mortgage-backed securities and collateralized mortgage obligations-residential 686 716 789 823 976
Corporate bonds 154 214 312 385 385
Total interest on held to maturity securities 840 930 1,101 1,208 1,361
Federal Reserve Bank and Federal Home Loan Bank stock 121 121 119 127 120
Interest on federal funds sold and other short-term investments 344 327 245 265 258
Total interest income 37,882 37,331 37,470 37,612 38,757
Interest expense:
Interest on deposits:
Interest-bearing checking 84 82 80 80 79
Savings 798 829 916 921 870
Money market deposit accounts 590 630 685 703 673
Time deposits 1,937 1,883 1,820 1,967 2,629
Interest on short-term borrowings 370 367 364 361 348
Total interest expense 3,779 3,791 3,865 4,032 4,599
Net interest income 34,103 33,540 33,605 33,580 34,158
Provision for loan losses 1,500 2,000 2,000 3,000 2,900
Net interest income after provision for loan losses 32,603 31,540 31,605 30,580 31,258
Noninterest income:
Trustco Financial Services income 1,317 1,287 1,421 1,815 1,145
Fees for services to customers 2,903 2,968 2,887 3,386 3,234
Net gain on securities transactions -- 1,432 2 763 666
Other 194 229 282 197 172
Total noninterest income 4,414 5,916 4,592 6,161 5,217
Noninterest expenses:
Salaries and employee benefits 7,935 7,647 8,178 8,427 7,587
Net occupancy expense 3,911 3,910 4,053 3,889 3,756
Equipment expense 1,567 1,582 1,718 1,637 1,316
Professional services 1,255 1,565 1,420 1,458 1,657
Outsourced services 1,350 1,350 1,350 1,175 1,350
Advertising expense 548 714 730 1,037 935
FDIC and other insurance 1,009 1,004 1,010 1,007 983
Other real estate expense, net 946 1,473 749 375 1,210
Other 2,167 2,624 2,349 2,145 1,849
Total noninterest expenses 20,688 21,869 21,557 21,150 20,643
Income before taxes 16,329 15,587 14,640 15,591 15,832
Income taxes 6,077 5,824 5,472 5,785 6,079
Net income $ 10,252 9,763 9,168 9,806 9,753
Net income per Common Share:
- Basic $ 0.109 0.104 0.097 0.104 0.104
- Diluted 0.109 0.104 0.097 0.104 0.104
Average basic shares (thousands) 94,228 94,204 94,068 93,824 93,692
Average diluted shares (thousands) 94,275 94,211 94,073 93,828 93,700
Note: Taxable equivalent net interest income $ 34,180 33,630 33,707 33,718 34,321
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
(Unaudited)
Nine Months Ended
9/30/2013 9/30/2012
Interest and dividend income:
Interest and fees on loans $ 95,286 96,805
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises 2,014 6,906
State and political subdivisions 466 1,118
Mortgage-backed securities and collateralized mortgage obligations-residential 8,358 4,460
Corporate bonds 674 1,999
Small Business Administration-guaranteed participation securities 1,618 43
Mortgage-backed securities and collateralized mortgage obligations-commercial 106 --
Other securities 13 14
Total interest and dividends on securities available for sale 13,249 14,540
Interest on held to maturity securities:
U. S. government sponsored enterprises -- 25
Mortgage-backed securities and collateralized mortgage obligations-residential 2,191 3,464
Corporate bonds 680 1,281
Total interest on held to maturity securities 2,871 4,770
Federal Reserve Bank and Federal Home Loan Bank stock 361 359
Interest on federal funds sold and other short-term investments 916 877
Total interest income 112,683 117,351
Interest expense:
Interest on deposits:
Interest-bearing checking 246 235
Savings 2,543 2,951
Money market deposit accounts 1,905 2,366
Time deposits 5,640 9,277
Interest on short-term borrowings 1,101 1,114
Total interest expense 11,435 15,943
Net interest income 101,248 101,408
Provision for loan losses 5,500 9,000
Net interest income after provision for loan losses 95,748 92,408
Noninterest income:
Trust department income 4,025 3,946
Fees for services to customers 8,758 8,904
Net gain on securities transactions 1,434 1,398
Other 705 555
Total noninterest income 14,922 14,803
Noninterest expenses:
Salaries and employee benefits 23,760 22,849
Net occupancy expense 11,874 11,368
Equipment expense 4,867 4,436
Professional services 4,240 4,582
Outsourced services 4,050 3,947
Advertising expense 1,992 2,804
FDIC and other insurance 3,023 2,816
Other real estate expense, net 3,168 2,841
Other 7,140 7,184
Total noninterest expenses 64,114 62,827
Income before taxes 46,556 44,384
Income taxes 17,373 16,656
Net income $ 29,183 27,728
Net income per Common Share:
- Basic $ 0.310 0.296
- Diluted 0.310 0.296
Average basic shares (thousands) 94,096 93,568
Average diluted shares (thousands) 94,115 93,572
Note: Taxable equivalent net interest income $ 101,517 101,951
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)
(Unaudited)
9/30/2013 6/30/2013 3/31/2013 12/31/2012 9/30/2012
ASSETS:
Cash and due from banks $ 45,088 40,580 39,512 55,789 40,354
Federal funds sold and other short term investments 510,561 588,252 405,262 488,227 402,290
Total cash and cash equivalents 555,649 628,832 444,774 544,016 442,644
Securities available for sale:
U. S. government sponsored enterprises 193,614 188,133 263,165 263,108 427,798
States and political subdivisions 11,199 12,159 15,265 26,457 33,857
Mortgage-backed securities and collateralized mortgage obligations-residential 534,301 504,793 612,555 518,776 515,879
Corporate bonds 53,094 53,053 59,239 26,529 49,296
Small Business Administration-guaranteed participation securities 104,863 108,665 115,464 76,562 25,338
Mortgage-backed securities and collateralized mortgage obligations-commercial 10,715 10,725 11,136 -- --
Other securities 660 660 660 660 660
Total securities available for sale 908,446 878,188 1,077,484 912,092 1,052,828
Held to maturity securities:
Mortgage-backed securities and collateralized mortgage obligations-residential 81,337 88,852 98,038 108,471 120,877
Corporate bonds 9,941 9,937 19,935 34,955 35,074
Total held to maturity securities 91,278 98,789 117,973 143,426 155,951
Federal Reserve Bank and Federal Home Loan Bank stock 10,500 10,500 9,632 9,632 9,632
Loans:
Commercial 212,833 216,977 212,637 219,577 217,431
Residential mortgage loans 2,279,064 2,205,334 2,154,188 2,126,668 2,056,972
Home equity line of credit 337,178 334,571 332,111 333,909 327,083
Installment loans 5,894 5,544 4,831 4,579 4,455
Loans, net of deferred fees and costs 2,834,969 2,762,426 2,703,767 2,684,733 2,605,941
Less:
Allowance for loan losses 47,722 47,589 47,658 47,927 47,364
Net loans 2,787,247 2,714,837 2,656,109 2,636,806 2,558,577
Bank premises and equipment, net 34,559 38,301 35,787 36,239 37,251
Other assets 71,728 73,757 69,998 64,402 61,290
Total assets $ 4,459,407 4,443,204 4,411,757 4,346,613 4,318,173
LIABILITIES:
Deposits:
Demand $ 314,660 314,985 298,243 300,544 292,350
Interest-bearing checking 591,590 591,844 579,077 560,064 536,892
Savings accounts 1,221,791 1,228,281 1,213,226 1,198,517 1,167,927
Money market deposit accounts 650,688 634,804 656,577 667,589 668,064
Certificates of deposit (in denominations of $100,000 or more) 405,575 397,707 384,559 352,734 359,246
Other time accounts 710,064 725,255 725,998 724,745 751,974
Total deposits 3,894,368 3,892,876 3,857,680 3,804,193 3,776,453
Short-term borrowings 185,226 176,325 171,019 159,846 161,751
Accrued expenses and other liabilities 25,425 25,380 22,169 23,776 22,352
Total liabilities 4,105,019 4,094,581 4,050,868 3,987,815 3,960,556
SHAREHOLDERS' EQUITY:
Capital stock 98,912 98,912 98,912 98,912 98,912
Surplus 173,408 173,897 174,386 174,899 175,284
Undivided profits 143,015 138,953 135,373 132,378 128,750
Accumulated other comprehensive income (loss), net of tax (15,923) (16,831) (169) 1,558 4,879
Treasury stock at cost (45,024) (46,308) (47,613) (48,949) (50,208)
Total shareholders' equity 354,388 348,623 360,889 358,798 357,617
Total liabilities and shareholders' equity $ 4,459,407 4,443,204 4,411,757 4,346,613 4,318,173
Outstanding shares (thousands) 94,334 94,204 94,071 93,935 93,807
NONPERFORMING ASSETS
(dollars in thousands)
(Unaudited)
Nonperforming Assets
09/30/13 06/30/13 03/31/13 12/31/12 09/30/12
New York and other states*
Loans in nonaccrual status:
Commercial $ 5,436 5,891 5,978 6,635 5,880
Real estate mortgage - 1 to 4 family 30,643 30,736 34,027 35,286 32,593
Installment 71 36 35 6 71
Total non-accrual loans 36,150 36,663 40,040 41,927 38,544
Other nonperforming real estate mortgages - 1 to 4 family 170 174 225 231 238
Total nonperforming loans 36,320 36,837 40,265 42,158 38,782
Other real estate owned 3,011 3,918 4,461 2,979 2,716
Total nonperforming assets $ 39,331 40,755 44,726 45,137 41,498
Florida
Loans in nonaccrual status:
Commercial $ -- 583 2,595 2,698 2,698
Real estate mortgage - 1 to 4 family 5,406 6,022 7,013 7,820 8,438
Installment -- -- 1 1 7
Total non-accrual loans 5,406 6,605 9,609 10,519 11,143
Other nonperforming real estate mortgages - 1 to 4 family -- -- -- -- --
Total nonperforming loans 5,406 6,605 9,609 10,519 11,143
Other real estate owned 6,816 6,427 5,406 5,726 5,975
Total nonperforming assets $ 12,222 13,032 15,015 16,245 17,118
Total
Loans in nonaccrual status:
Commercial $ 5,436 6,474 8,573 9,333 8,578
Real estate mortgage - 1 to 4 family 36,049 36,758 41,040 43,106 41,031
Installment 71 36 36 7 78
Total non-accrual loans 41,556 43,268 49,649 52,446 49,687
Other nonperforming real estate mortgages - 1 to 4 family 170 174 225 231 238
Total nonperforming loans 41,726 43,442 49,874 52,677 49,925
Other real estate owned 9,827 10,345 9,867 8,705 8,691
Total nonperforming assets $ 51,553 53,787 59,741 61,382 58,616
Quarterly Net Chargeoffs
09/30/13 06/30/13 03/31/13 12/31/12 09/30/12
New York and other states*
Commercial $ 585 49 248 152 9
Real estate mortgage - 1 to 4 family 1,215 1,885 1,563 1,410 2,157
Installment 25 13 15 72 7
Total net chargeoffs $ 1,825 1,947 1,826 1,634 2,173
Florida
Commercial $ (502) (1) 99 (18) 736
Real estate mortgage - 1 to 4 family 41 123 344 810 644
Installment 3 -- -- 12 1
Total net chargeoffs $ (458) 122 443 804 1,381
Total
Commercial $ 83 48 347 134 745
Real estate mortgage - 1 to 4 family 1,256 2,008 1,907 2,220 2,801
Installment 28 13 15 84 8
Total net chargeoffs $ 1,367 2,069 2,269 2,438 3,554
Asset Quality Ratios
09/30/13 06/30/13 03/31/13 12/31/12 09/30/12
Total nonperforming loans(1) $ 41,726 43,442 49,874 52,677 49,925
Total nonperforming assets(1) 51,553 53,787 59,741 61,382 58,616
Total net chargeoffs(2) 1,367 2,069 2,269 2,438 3,554
Allowance for loan losses(1) 47,722 47,589 47,658 47,927 47,364
Nonperforming loans to total loans(1) 1.47% 1.57% 1.84% 1.96% 1.92%
Nonperforming assets to total assets(1) 1.16% 1.21% 1.35% 1.41% 1.36%
Allowance for loan losses to total loans(1) 1.68% 1.72% 1.76% 1.79% 1.82%
Coverage ratio(1) 114.4% 109.5% 95.6% 91.0% 94.9%
Annualized net chargeoffs to average loans(2) 0.20% 0.29% 0.34% 0.37% 0.55%
Allowance for loan losses to annualized net chargeoffs(2) 8.7x 6.0x 5.3x 4.9x 3.3x
* Includes New York, New Jersey, Vermont and Massachusetts.
(1) At period-end
(2) For the period ended
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY--
INTEREST RATES AND INTEREST DIFFERENTIAL
(dollars in thousands)
(Unaudited)
Three months ended
September 30, 2013
Three months ended
September 30, 2012
Average
Balance
Interest
Average
Rate
Average
Balance
Interest
Average
Rate
Assets
Securities available for sale:
U. S. government sponsored enterprises $ 197,336 571 1.16% $ 594,814 1,996 1.34%
Mortgage backed securities and collateralized mortgage obligations-residential 534,773 2,888 2.16 397,935 2,003 2.01
State and political subdivisions 11,272 197 7.01 34,383 495 5.76
Corporate bonds 53,238 223 1.68 66,940 529 3.16
Small Business Administration-guaranteed participation securities 113,298 558 1.97 8,024 43 2.14
Mortgage backed securities and collateralized mortgage obligations-commercial 11,070 39 1.41 -- -- 0.00
Other 660 5 3.03 660 4 2.42
Total securities available for sale 921,647 4,481 1.94 1,102,756 5,070 1.84
Federal funds sold and other short-term Investments 551,409 344 0.25 416,971 258 0.25
Held to maturity securities:
Corporate bonds 9,939 154 6.19 35,132 385 4.39
Mortgage backed securities and collateralized mortgage obligations-residential 85,388 686 3.21 128,188 976 3.04
Total held to maturity securities 95,327 840 3.52 163,320 1,361 3.33
Federal Reserve Bank and Federal Home Loan Bank stock 10,500 121 4.61 9,632 120 4.98
Commercial loans 213,541 2,785 5.22 228,537 3,068 5.36
Residential mortgage loans 2,245,284 26,325 4.69 2,031,080 25,988 5.12
Home equity lines of credit 335,391 2,892 3.42 322,405 2,906 3.59
Installment loans 5,494 171 12.33 4,007 149 14.82
Loans, net of unearned income 2,799,710 32,173 4.59 2,586,029 32,111 4.96
Total interest earning assets 4,378,593 37,959 3.46 4,278,708 38,920 3.64
Allowance for loan losses (48,649) (49,039)
Cash & non-interest earning assets 122,130 144,099
Total assets $ 4,452,074 $ 4,373,768
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts $ 592,264 84 0.06% $ 531,216 79 0.06%
Money market accounts 641,597 590 0.36 660,464 673 0.40
Savings 1,233,284 798 0.26 1,151,910 870 0.30
Time deposits 1,121,737 1,937 0.69 1,217,080 2,629 0.86
Total interest bearing deposits 3,588,882 3,409 0.38 3,560,670 4,251 0.48
Short-term borrowings 183,414 370 0.80 151,535 348 0.91
Total interest bearing liabilities 3,772,296 3,779 0.40 3,712,205 4,599 0.49
Demand deposits 307,910 287,915
Other liabilities 22,435 20,084
Shareholders' equity 349,433 353,564
Total liabilities and shareholders' equity $ 4,452,074 $ 4,373,768
Net interest income , tax equivalent 34,180 34,321
Net interest spread 3.06% 3.15%
Net interest margin (net interest income to total interest earning assets) 3.12% 3.21%
Tax equivalent adjustment (77) (163)
Net interest income 34,103 34,158
(dollars in thousands)
(Unaudited)
Nine months ended
September 30, 2013
Nine months ended
September 30, 2012
Average
Balance
Interest
Average
Rate
Average
Balance
Interest
Average
Rate
Assets
Securities available for sale:
U. S. government sponsored enterprises $ 228,560 2,014 1.17% $ 634,903 6,906 1.45%
Mortgage backed securities and collateralized mortgage obligations-residential 545,974 8,358 2.04 286,287 4,460 2.08
State and political subdivisions 14,282 713 6.66 37,032 1,587 5.71
Corporate bonds 51,795 674 1.74 78,999 1,999 3.38
Small Business Administration-guaranteed participation securities 109,297 1,618 1.97 2,694 43 2.13
Mortgage backed securities and collateralized mortgage obligations-commercial 10,204 106 1.39 -- -- 0.00
Other 660 13 2.63 660 14 2.83
Total securities available for sale 960,772 13,496 1.87 1,040,575 15,009 1.92
Federal funds sold and other short-term Investments 496,211 916 0.25 473,196 877 0.25
Held to maturity securities:
U. S. government sponsored enterprises -- -- 0.00 1,423 25 2.38
Corporate bonds 15,340 680 5.91 41,071 1,281 4.16
Mortgage backed securities and collateralized mortgage obligations-residential 94,146 2,191 3.10 136,554 3,464 3.38
Total held to maturity securities 109,486 2,871 3.50 179,048 4,770 3.55
Federal Reserve Bank and Federal Home Loan Bank stock 10,192 361 4.72 9,357 359 5.12
Commercial loans 214,626 8,444 5.25 235,128 9,569 5.43
Residential mortgage loans 2,186,574 77,875 4.75 1,994,051 78,224 5.23
Home equity lines of credit 334,119 8,498 3.40 317,914 8,646 3.63
Installment loans 4,988 491 13.16 3,795 440 15.50
Loans, net of unearned income 2,740,307 95,308 4.64 2,550,888 96,879 5.06
Total interest earning assets 4,316,968 112,952 3.49 4,253,064 117,894 3.70
Allowance for loan losses (48,469) (49,420)
Cash & non-interest earning assets 140,432 141,725
Total assets $ 4,408,931 $ 4,345,369
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts $ 575,687 246 0.06% $ 509,346 235 0.06%
Money market accounts 650,501 1,905 0.39 642,907 2,366 0.49
Savings 1,218,625 2,543 0.28 1,092,195 2,951 0.36
Time deposits 1,110,229 5,640 0.68 1,307,411 9,277 0.95
Total interest bearing deposits 3,555,042 10,334 0.39 3,551,859 14,829 0.56
Short-term borrowings 177,173 1,101 0.83 150,039 1,114 0.99
Total interest bearing liabilities 3,732,215 11,435 0.41 3,701,898 15,943 0.58
Demand deposits 298,986 276,484
Other liabilities 21,087 18,922
Shareholders' equity 356,643 348,065
Total liabilities and shareholders' equity $ 4,408,931 $ 4,345,369
Net interest income , tax equivalent 101,517 101,951
Net interest spread 3.08% 3.12%
Net interest margin (net interest income to total interest earning assets) 3.14% 3.20%
Tax equivalent adjustment (269) (543)
Net interest income 101,248 101,408

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)
09/30/13 06/30/13 03/31/13 12/31/12 09/30/12
Tangible Book Value Per Share
Equity $ 354,388 348,623 360,889 358,798 357,617
Less: Intangible assets 553 553 553 553 553
Tangible equity 353,835 348,070 360,336 358,245 357,064
Shares outstanding 94,334 94,204 94,071 93,935 93,807
Tangible book value per share 3.75 3.69 3.83 3.81 3.81
Book value per share 3.76 3.70 3.84 3.82 3.81
Tangible Equity to Tangible Assets
Total Assets 4,459,407 4,443,204 4,411,757 4,346,613 4,318,173
Less: Intangible assets 553 553 553 553 553
Tangible assets 4,458,854 4,442,651 4,411,204 4,346,060 4,317,620
Tangible Equity to Tangible Assets 7.94% 7.83% 8.17% 8.24% 8.27%
Equity to Assets 7.95% 7.85% 8.18% 8.25% 8.28%
3 Months Ended 9 Months Ended
Efficiency Ratio 09/30/13 06/30/13 03/31/13 12/31/12 09/30/12 09/30/13 09/30/12
Net interest income (fully taxable equivalent) $ 34,180 33,630 33,707 33,718 34,321 101,517 101,951
Non-interest income 4,413 5,916 4,592 6,161 5,217 14,921 14,803
Less: Net gain on securities -- 1,432 2 763 666 1,434 1,398
Recurring revenue 38,593 38,114 38,297 39,116 38,872 115,004 115,356
Total Noninterest expense 20,688 21,869 21,557 21,150 20,643 64,114 62,827
Less: Other real estate expense, net 946 1,473 749 375 1,210 3,168 2,841
Recurring expense 19,742 20,396 20,808 20,775 19,433 60,946 59,986
Efficiency Ratio 51.15% 53.51% 54.33% 53.11% 49.99% 52.99% 52.00%

CONTACT: Kevin T. Timmons Vice President/Treasurer (518) 381-3607Source:TrustCo Bank Corp NY

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