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TrustCo Announces Full Year and Fourth Quarter Earnings; 2014 Net Income Up 11% Over 2013

Executive Snapshot:

  • Continued strong financial results:
    • Full year 2014 compared to the same period in 2013:
      • Net income up 11.0%
      • Diluted EPS up 10.4%
      • Return on average assets (ROA) rose 7 basis points to 0.97%
      • Return on average equity (ROE) rose 39 basis points to 11.54%
      • Improvement in the efficiency ratio from 52.78% in 2013 to 52.60% in 2014
  • Asset quality improvement:
    • Virtually every measure of asset quality improved for both the full year 2014 and for the fourth quarter of 2014
    • Nonperforming assets (NPAs) fell $3.1 million during the quarter and $11.7 million during the year
    • NPAs to total assets improved from 1.15% to 0.87% over last year
    • Quarterly net chargeoffs at lowest level since the fourth quarter of 2008
  • Continued expansion of customer base:
    • Focus on capitalizing on opportunities presented by expanded branch network
    • Deposits per branch grew $715 thousand from December 31, 2013 to December 31, 2014 on a same store basis
    • Average core deposits grew $84 million for the full year 2014 compared to 2013
  • Loan portfolio reaches all-time high:
    • Average loans were up $242 million for full year 2014 compared to 2013
    • At $3.16 billion at December 30, 2014, loans reached an all-time historic high

TrustCo Announces Full Year and Fourth Quarter Earnings;
2014 Net Income Up 11% Over 2013

GLENVILLE, N.Y., Jan. 21, 2015 (GLOBE NEWSWIRE) -- TrustCo Bank Corp NY (TrustCo) (Nasdaq:TRST) today announced that 2014 net income rose 11% to $44.2 million compared to $39.8 million for 2013. For the fourth quarter of 2014 net income was $10.7 million compared to $10.6 million for the fourth quarter of 2013.

Robert J. McCormick, President and Chief Executive Officer noted, "Our results for 2014 represented another solid year of profit growth coupled with continued growth of core customer relationships which ultimately position our business well for the future. We continued to add profitable customer relationships on both the loan and deposit sides of the Bank despite the difficult interest rate environment. Our highly liquid balance sheet continues to allow us to fund our loan growth without having to overpay for deposits. We look forward to 2015 with optimism. We will continue taking advantage of opportunities as they are presented."

TrustCo saw continued strong loan growth in the fourth quarter of 2014. The gains continue to be primarily funded by expansion of retail deposits as well as proceeds from cash flow from the lower yielding investment securities portfolios. The shift toward loans helped offset part of the impact from continued comparatively low yields on cash and investment securities and contributed to an improvement in net interest margin for the full year to 3.16% in 2014 from 3.14% in 2013. TrustCo's strong liquidity position continues to allow the Company to take advantage of opportunities when interest rate conditions change. The increase in margin enabled the Company to achieve bottom line objectives without having to deploy liquidity into the current low interest rate investment environment.

Mr. McCormick also noted, "We are encouraged by the continued economic improvements where we operate, particularly in Florida, and believe we are well positioned to capitalize on these changes. We are pleased with the significant improvement in our asset quality during both the fourth quarter and for the full year 2014. Our long-term focus on traditional lending criteria and conservative balance sheet management has enabled us to maintain strong liquidity and capital and report continued profit improvements. 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."

For the full year 2014, return on average assets and return on average equity were 0.97% and 11.54%, respectively, compared to 0.90% and 11.15% for the full year 2013. Diluted earnings per share were $0.466 for 2014, up 10.4% from $0.422 over 2013 results.

On a year-over-year basis, average loans were up $254.6 million or 8.9% in the fourth quarter of 2014, over the same period in 2013. Average deposits were up $93.9 million for the fourth quarter of 2014 over the same period a year earlier. Most of the gain in deposits came from core deposit accounts although some customers also continued to move funds into certificates. Average core deposits increased $69.5 million from the fourth quarter of 2013 to the fourth quarter of 2014. Core deposits typically represent longer term customer relationships and are generally lower cost than time deposits. Mr. McCormick noted that, "The year-over-year growth of our loans and core deposit base reflect 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 new office during the fourth quarter, in Sarasota, Florida. 2015 will represent the 12th year since we began our branch expansion program. During that time we have made significant progress expanding loans and deposits throughout our entire branch network. We expect that trend to continue as the new branches continue to mature. At December 31, 2014, our average branch size was $28.0 million. On a same store basis, our average branch size grew by $715 thousand from December 31, 2013 to December 31, 2014. We have always designed our branches to be smaller and more cost effective than those built by many of our competitors. We use open floor plans that help maximize the value of our branches. We remain mindful that fully achieving our goals for the newer branches will take time and continued work. We believe success in growing customer relationships provides the basic building blocks that help drive profit growth for the coming years."

Asset quality and the allowance for loan losses coverage of nonperforming loans (NPLs) improved from December 31, 2013 to December 31, 2014. NPLs declined to $34.0 million at December 31, 2014, compared to $43.4 million at December 31, 2013 and NPLs were equal to 1.08% of total loans at December 31, 2014, compared to 1.49% a year earlier. The coverage ratio, or allowance for loan losses to NPLs, was 136.2% at December 31, 2014, compared to 110.0% at December 31, 2013. Nonperforming assets (NPAs) declined to $40.5 million from $52.1 million over the same period. Overall, virtually every asset quality indicator improved during the fourth quarter of 2014 relative to the fourth quarter of 2013. The ratio of loan loss allowance to total loans was 1.47% as of December 31, 2014, compared to 1.64% at December 31, 2013 and reflects both the improvement in asset quality as well as overall loan growth. The allowance for loan losses ended 2014 at $46.3 million compared to $47.7 million at the end of 2013.

The net interest margin for the fourth quarter of 2014 was 3.17%, compared to 3.15% in the fourth quarter of 2013, as previously noted. For the full year 2014, the margin was 3.16% compared to 3.14% for 2013.

At December 31, 2014 the tangible equity ratio was 8.46% compared to 7.99% at December 31, 2013. Tangible book value per share ended the fourth quarter at $4.14 compared to $3.82 a year earlier.

TrustCo Bank Corp NY is a $4.6 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 144 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at December 31, 2014.

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 2014 results will be held at 9:00 a.m. Eastern Time on January 22, 2015. 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 10058636. The call will also be audio webcast at: https://services.choruscall.com/links/trst150122.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 2015 and for the growth of loans and deposits throughout our branch network and our ability to capitalize on economic changes in the areas in which we operate. 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; the future earnings and capital levels of Trustco Bank and the continued ability of Trustco Bank under regulatory rules to distribute capital to TrustCo, which could affect our ability to pay dividends; our ability to make accurate assumptions and judgments regarding the credit risks associated with lending and investing activities; the effect of changes in financial services laws and regulations and the impact of other governmental initiatives affecting the financial services industry; results of examinations of Trustco Bank and TrustCo by our respective regulators; 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; 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; real estate and collateral values; changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the FASB or PCAOB; changes in local market areas and general business and economic trends, as well as changes in consumer spending and saving habits; our success at managing the risks involved in the foregoing and managing our business; and other risks and uncertainties under the heading "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2013, as amended, 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
12/31/14 09/30/14 12/31/13
Summary of operations
Net interest income (TE) $ 35,693 35,676 34,577
Provision for loan losses 1,000 1,100 1,500
Net securities transactions 335 376 188
Noninterest income, excluding net securities transactions 4,417 4,514 4,660
Noninterest expense 22,240 22,192 20,891
Net income 10,660 10,714 10,629
Per common share
Net income per share:
- Basic $ 0.113 0.113 0.113
- Diluted 0.112 0.113 0.112
Cash dividends 0.066 0.066 0.066
Tangible Book value at period end 4.14 4.10 3.82
Market price at period end 7.26 6.44 7.18
At period end
Full time equivalent employees 737 733 708
Full service banking offices 144 143 139
Performance ratios
Return on average assets 0.92% 0.92 0.94
Return on average equity 10.70 10.96 11.78
Efficiency (1) 53.35 52.73 52.15
Net interest spread (TE) 3.11 3.11 3.10
Net interest margin (TE) 3.17 3.16 3.15
Dividend payout ratio 58.55 58.05 58.44
Capital ratio at period end
Consolidated tangible equity to tangible assets (2) 8.46 8.49 7.99
Asset quality analysis at period end
Nonperforming loans to total loans 1.08 1.20 1.49
Nonperforming assets to total assets 0.87 0.95 1.15
Allowance for loan losses to total loans 1.47 1.51 1.64
Coverage ratio (3) 1.4x 1.3 1.1
(1) Calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income (excluding net securities transactions and the net gain on sale of building).
(2) The tangible equity ratio excludes $553 of intangibles from both equity and assets.
(3) Calculated as allowance for loan losses divided by total nonperforming loans.
TE = Taxable equivalent.
FINANCIAL HIGHLIGHTS, Continued
(dollars in thousands, except per share data)
(Unaudited)
Years Ended
12/31/14 12/31/13
Summary of operations
Net interest income (TE) $ 141,583 136,094
Provision for loan losses 5,100 7,000
Net securities transactions 717 1,622
Noninterest income, excluding net securities transactions 19,189 18,148
Noninterest expense 84,670 85,005
Net income 44,193 39,812
Per common share
Net income per share:
- Basic $ 0.467 0.422
- Diluted 0.466 0.422
Cash dividends 0.263 0.263
Tangible Book value at period end 4.14 3.82
Market price at period end 7.26 7.18
Performance ratios
Return on average assets 0.97% 0.90
Return on average equity 11.54 11.15
Efficiency (1) 52.60 52.78
Net interest spread (TE) 3.10 3.08
Net interest margin (TE) 3.16 3.14
Dividend payout ratio 56.30 62.19
(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.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
12/31/2014 9/30/2014 6/30/2014 3/31/2014 12/31/2013
Interest and dividend income:
Interest and fees on loans $ 35,051 34,421 33,614 32,874 32,658
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises 233 297 381 506 586
State and political subdivisions 29 38 44 68 96
Mortgage-backed securities and collateralized mortgage obligations-residential 2,733 3,040 3,299 3,078 3,027
Corporate bonds 2 2 2 59 138
Small Business Administration-guaranteed participation securities 524 535 539 556 562
Mortgage-backed securities and collateralized mortgage obligations-commercial 37 38 38 38 38
Other securities 4 4 4 4 4
Total interest and dividends on securities available for sale 3,562 3,954 4,307 4,309 4,451
Interest on held to maturity securities:
Mortgage-backed securities and collateralized mortgage obligations-residential 512 545 577 625 649
Corporate bonds 154 153 154 154 153
Total interest on held to maturity securities 666 698 731 779 802
Federal Reserve Bank and Federal Home Loan Bank stock 123 127 128 133 129
Interest on federal funds sold and other short-term investments 363 374 376 351 324
Total interest income 39,765 39,574 39,156 38,446 38,364
Interest expense:
Interest on deposits:
Interest-bearing checking 98 94 89 84 83
Savings 663 644 592 763 790
Money market deposit accounts 634 648 618 599 611
Time deposits 2,366 2,213 2,035 1,951 1,982
Interest on short-term borrowings 335 327 342 393 382
Total interest expense 4,096 3,926 3,676 3,790 3,848
Net interest income 35,669 35,648 35,480 34,656 34,516
Provision for loan losses 1,000 1,100 1,500 1,500 1,500
Net interest income after provision for loan losses 34,669 34,548 33,980 33,156 33,016
Noninterest income:
Trustco Financial Services income 1,451 1,471 1,405 1,510 1,276
Fees for services to customers 2,753 2,838 2,732 2,521 2,917
Net gain on securities transactions 335 376 -- 6 188
Other 213 205 368 1,722 467
Total noninterest income 4,752 4,890 4,505 5,759 4,848
Noninterest expenses:
Salaries and employee benefits 9,003 8,272 8,012 7,592 8,664
Net occupancy expense 3,869 4,013 4,110 4,259 4,226
Equipment expense 1,919 1,725 1,823 1,752 1,514
Professional services 1,536 1,547 1,438 1,286 1,409
Outsourced services 1,225 1,375 1,425 1,325 1,075
Advertising expense 602 629 657 599 835
FDIC and other insurance 949 1,054 1,000 904 952
Other real estate expense (income), net 841 1,001 (1,688) 855 430
Other 2,296 2,576 2,660 2,229 1,786
Total noninterest expenses 22,240 22,192 19,437 20,801 20,891
Income before taxes 17,181 17,246 19,048 18,114 16,973
Income taxes 6,521 6,532 7,240 7,103 6,344
Net income $ 10,660 10,714 11,808 11,011 10,629
Net income per Common Share:
- Basic $ 0.113 0.113 0.125 0.116 0.113
- Diluted 0.112 0.113 0.125 0.116 0.112
Average basic shares (thousands) 94,681 94,628 94,559 94,452 94,347
Average diluted shares (thousands) 94,813 94,752 94,675 94,581 94,472
Note: Taxable equivalent net interest income $ 35,693 35,676 35,513 34,701 34,577
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
(Unaudited)
Years Ended
12/31/2014 12/31/2013
Interest and dividend income:
Interest and fees on loans $ 135,960 127,944
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises 1,417 2,600
State and political subdivisions 179 562
Mortgage-backed securities and collateralized mortgage obligations-residential 12,150 11,385
Corporate bonds 65 812
Small Business Administration-guaranteed participation securities 2,154 2,180
Mortgage-backed securities and collateralized mortgage obligations-commercial 151 144
Other securities 16 17
Total interest and dividends on securities available for sale 16,132 17,700
Interest on held to maturity securities:
Mortgage-backed securities-residential 2,259 2,840
Corporate bonds 615 833
Total interest on held to maturity securities 2,874 3,673
Federal Reserve Bank and Federal Home Loan Bank stock 511 490
Interest on federal funds sold and other short-term investments 1,464 1,240
Total interest income 156,941 151,047
Interest expense:
Interest on deposits:
Interest-bearing checking 365 329
Savings 2,662 3,333
Money market deposit accounts 2,499 2,516
Time deposits 8,565 7,622
Interest on short-term borrowings 1,397 1,483
Total interest expense 15,488 15,283
Net interest income 141,453 135,764
Provision for loan losses 5,100 7,000
Net interest income after provision for loan losses 136,353 128,764
Noninterest income:
Trust department income 5,837 5,301
Fees for services to customers 10,844 11,675
Net gain on securities transactions 717 1,622
Other 2,508 1,172
Total noninterest income 19,906 19,770
Noninterest expenses:
Salaries and employee benefits 32,879 32,424
Net occupancy expense 16,251 16,100
Equipment expense 7,219 6,381
Professional services 5,807 5,649
Outsourced services 5,350 5,125
Advertising expense 2,487 2,827
FDIC and other insurance 3,907 3,975
Other real estate expense, net 1,009 3,598
Other 9,761 8,926
Total noninterest expenses 84,670 85,005
Income before taxes 71,589 63,529
Income taxes 27,396 23,717
Net income $ 44,193 39,812
Net income per Common Share:
- Basic $ 0.467 0.422
- Diluted 0.466 0.422
Average basic shares (thousands) 94,628 94,160
Average diluted shares (thousands) 94,753 94,206
Note: Taxable equivalent net interest income $ 141,583 136,094
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)
(Unaudited)
12/31/2014 9/30/2014 6/30/2014 3/31/2014 12/31/2013
ASSETS:
Cash and due from banks $ 43,505 43,724 48,034 46,127 46,453
Federal funds sold and other short term investments 627,943 586,931 573,514 687,003 536,591
Total cash and cash equivalents 671,448 630,655 621,548 733,130 583,044
Securities available for sale:
U. S. government sponsored enterprises 77,800 83,087 103,340 92,708 198,829
States and political subdivisions 2,271 2,769 3,921 4,968 7,758
Mortgage-backed securities and collateralized mortgage obligations-residential 483,560 523,779 589,517 524,197 532,449
Corporate bonds 1,500 1,401 1,402 6,402 10,471
Small Business Administration-guaranteed participation securities 100,496 100,491 102,367 101,821 103,029
Mortgage-backed securities and collateralized mortgage obligations-commercial 10,447 10,417 10,544 10,543 10,558
Other securities 685 679 679 653 660
Total securities available for sale 676,759 722,623 811,770 741,292 863,754
Held to maturity securities:
Mortgage-backed securities and collateralized mortgage obligations-residential 60,986 64,223 67,974 72,188 76,270
Corporate bonds 9,960 9,956 9,952 9,948 9,945
Total held to maturity securities 70,946 74,179 77,926 82,136 86,215
Federal Reserve Bank and Federal Home Loan Bank stock 9,228 9,228 10,951 10,500 10,500
Loans:
Commercial 223,382 219,825 222,655 220,443 223,481
Residential mortgage loans 2,575,222 2,510,151 2,437,500 2,374,874 2,338,944
Home equity line of credit 352,134 346,496 339,897 339,971 340,489
Installment loans 7,594 6,557 6,098 5,714 5,895
Loans, net of deferred fees and costs 3,158,332 3,083,029 3,006,150 2,941,002 2,908,809
Less:
Allowance for loan losses 46,327 46,512 46,935 47,035 47,714
Net loans 3,112,005 3,036,517 2,959,215 2,893,967 2,861,095
Bank premises and equipment, net 38,565 37,455 36,658 35,267 34,414
Other assets 65,488 71,609 71,061 82,445 82,430
Total assets $ 4,644,439 4,582,266 4,589,129 4,578,737 4,521,452
LIABILITIES:
Deposits:
Demand $ 331,425 327,527 324,277 327,779 318,456
Interest-bearing checking 682,210 646,862 643,473 628,752 611,127
Savings accounts 1,216,831 1,215,087 1,233,347 1,236,331 1,218,038
Money market deposit accounts 638,542 655,646 651,367 648,244 648,402
Certificates of deposit (in denominations of $100,000 or more) 466,260 449,832 436,785 432,168 419,301
Other time accounts 696,973 690,087 705,938 713,944 711,747
Total deposits 4,032,241 3,985,041 3,995,187 3,987,218 3,927,071
Short-term borrowings 189,116 179,957 181,516 195,411 204,162
Accrued expenses and other liabilities 29,638 27,781 27,409 24,329 28,406
Total liabilities 4,250,995 4,192,779 4,204,112 4,206,958 4,159,639
SHAREHOLDERS' EQUITY:
Capital stock 98,945 98,942 98,927 98,927 98,927
Surplus 172,353 172,598 172,769 172,964 173,144
Undivided profits 166,745 162,326 157,832 152,237 147,432
Accumulated other comprehensive loss, net of tax (4,509) (3,508) (2,611) (9,452) (13,803)
Treasury stock at cost (40,090) (40,871) (41,900) (42,897) (43,887)
Total shareholders' equity 393,444 389,487 385,017 371,779 361,813
Total liabilities and shareholders' equity $ 4,644,439 4,582,266 4,589,129 4,578,737 4,521,452
Outstanding shares (thousands) 94,857 94,785 94,665 94,564 94,463
NONPERFORMING ASSETS
(dollars in thousands)
(Unaudited)
Nonperforming Assets
12/31/14 09/30/14 06/30/14 03/31/14 12/31/13
New York and other states*
Loans in nonaccrual status:
Commercial $ 3,835 4,226 5,132 4,853 6,952
Real estate mortgage - 1 to 4 family 27,221 29,736 31,433 34,597 31,045
Installment 77 95 87 103 93
Total non-accrual loans 31,133 34,057 36,652 39,553 38,090
Other nonperforming real estate mortgages - 1 to 4 family 125 155 159 162 166
Total nonperforming loans 31,258 34,212 36,811 39,715 38,256
Other real estate owned 5,533 5,238 3,930 4,707 3,348
Total nonperforming assets $ 36,791 39,450 40,741 44,422 41,604
Florida
Loans in nonaccrual status:
Commercial $ -- 517 517 517 --
Real estate mortgage - 1 to 4 family 2,740 2,395 3,578 4,668 5,137
Installment 13 1 1 7 --
Total non-accrual loans 2,753 2,913 4,096 5,192 5,137
Other nonperforming real estate mortgages - 1 to 4 family -- -- -- -- --
Total nonperforming loans 2,753 2,913 4,096 5,192 5,137
Other real estate owned 908 1,188 4,365 4,300 5,381
Total nonperforming assets $ 3,661 4,101 8,461 9,492 10,518
Total
Loans in nonaccrual status:
Commercial $ 3,835 4,743 5,649 5,370 6,952
Real estate mortgage - 1 to 4 family 29,961 32,131 35,011 39,265 36,182
Installment 90 96 88 110 93
Total non-accrual loans 33,886 36,970 40,748 44,745 43,227
Other nonperforming real estate mortgages - 1 to 4 family 125 155 159 162 166
Total nonperforming loans 34,011 37,125 40,907 44,907 43,393
Other real estate owned 6,441 6,426 8,295 9,007 8,729
Total nonperforming assets $ 40,452 43,551 49,202 53,914 52,122
Quarterly Net Chargeoffs (Recoveries)
12/31/14 09/30/14 06/30/14 03/31/14 12/31/13
New York and other states*
Commercial $ (16) 124 13 242 176
Real estate mortgage - 1 to 4 family 1,591 1,105 1,496 851 1,194
Installment 48 57 24 44 (2)
Total net chargeoffs $ 1,623 1,286 1,533 1,137 1,368
Florida
Commercial $ (476) (1) (2) 612 (1)
Real estate mortgage - 1 to 4 family 37 242 59 428 138
Installment 1 (4) 10 2 3
Total net chargeoffs $ (438) 237 67 1,042 140
Total
Commercial $ (492) 123 11 854 175
Real estate mortgage - 1 to 4 family 1,628 1,347 1,555 1,279 1,332
Installment 49 53 34 46 1
Total net chargeoffs $ 1,185 1,523 1,600 2,179 1,508
Asset Quality Ratios
12/31/14 09/30/14 06/30/14 03/31/14 12/31/13
Total nonperforming loans(1) $ 34,011 37,125 40,907 44,907 43,393
Total nonperforming assets(1) 40,452 43,551 49,202 53,914 52,122
Total net chargeoffs(2) 1,185 2,179 1,600 2,179 1,508
Allowance for loan losses(1) 46,327 46,512 46,935 47,035 47,714
Nonperforming loans to total loans 1.08% 1.20% 1.36% 1.53% 1.49%
Nonperforming assets to total assets 0.87% 0.95% 1.07% 1.18% 1.15%
Allowance for loan losses to total loans 1.47% 1.51% 1.56% 1.60% 1.64%
Coverage ratio(1) 136.2% 125.3% 114.7% 104.7% 110.0%
Annualized net chargeoffs to average loans(2) 0.15% 0.29% 0.22% 0.30% 0.21%
Allowance for loan losses to annualized net chargeoffs(2) 9.8x 5.3x 7.3x 5.4x 7.9x
* Includes New York, New Jersey, Vermont and Massachusetts.
(1) At period-end
(2) For the period ended
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY--
INTEREST RATES AND INTEREST DIFFERENTIAL
(dollars in thousands)
(Unaudited)
Three months ended
December 31, 2014
Three months ended
December 31, 2013
Average
Balance
Interest
Average
Rate
Average
Balance
Interest
Average
Rate
Assets
Securities available for sale:
U. S. government sponsored enterprises $ 80,520 233 1.16% $ 197,755 586 1.18%
Mortgage backed securities and collateralized mortgage obligations-residential 517,694 2,733 2.11 543,856 3,027 2.23
State and political subdivisions 2,436 45 7.32 8,577 149 6.96
Corporate bonds 1,261 2 0.54 28,689 138 1.92
Small Business Administration-guaranteed participation securities 103,846 524 2.02 111,859 562 2.01
Mortgage backed securities and collateralized mortgage obligations-commercial 10,737 37 1.40 11,004 38 1.39
Other 685 4 2.34 523 4 3.06
Total securities available for sale 717,179 3,578 2.00 902,263 4,504 2.00
Federal funds sold and other short-term Investments 579,870 363 0.25 522,461 324 0.25
Held to maturity securities:
Corporate bonds 9,958 154 6.18 9,943 153 6.19
Mortgage backed securities and collateralized mortgage obligations-residential 62,720 512 3.27 78,821 649 3.29
Total held to maturity securities 72,678 666 3.67 88,764 802 3.62
Federal Reserve Bank and Federal Home Loan Bank stock 9,228 123 5.33 10,500 129 4.91
Commercial loans 220,516 2,847 5.16 215,124 2,766 5.14
Residential mortgage loans 2,543,869 28,875 4.54 2,306,591 26,771 4.64
Home equity lines of credit 349,984 3,161 3.58 339,281 2,954 3.45
Installment loans 6,861 176 10.19 5,653 175 12.26
Loans, net of unearned income 3,121,230 35,059 4.49 2,866,649 32,666 4.55
Total interest earning assets 4,500,185 39,789 3.53 4,390,637 38,425 3.50
Allowance for loan losses (46,902) (48,393)
Cash & non-interest earning assets 140,041 122,386
Total assets $ 4,593,324 $ 4,464,630
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts $ 656,694 98 0.06% $ 587,854 83 0.06%
Money market accounts 644,676 634 0.39 649,574 611 0.37
Savings 1,214,885 663 0.22 1,219,178 790 0.26
Time deposits 1,148,055 2,366 0.82 1,123,671 1,982 0.70
Total interest bearing deposits 3,664,310 3,761 0.41 3,580,277 3,466 0.38
Short-term borrowings 185,577 335 0.72 189,754 382 0.80
Total interest bearing liabilities 3,849,887 4,096 0.42 3,770,031 3,848 0.40
Demand deposits 323,070 313,174
Other liabilities 25,214 23,469
Shareholders' equity 395,153 357,956
Total liabilities and shareholders' equity $ 4,593,324 $ 4,464,630
Net interest income, tax equivalent 35,693 34,577
Net interest spread 3.11% 3.10%
Net interest margin (net interest income to total interest earning assets) 3.17% 3.15%
Tax equivalent adjustment (24) (61)
Net interest income 35,669 34,516
(dollars in thousands)
(Unaudited)
Year ended
December 31, 2014
Year ended
December 31, 2013
Average
Balance
Interest
Average
Rate
Average
Balance
Interest
Average
Rate
Assets
Securities available for sale:
U. S. government sponsored enterprises $ 113,563 1,417 1.25% $ 221,028 2,600 1.18%
Mortgage backed securities and collateralized mortgage obligations-residential 555,430 12,150 2.19 545,487 11,385 2.09
State and political subdivisions 3,924 280 7.14 12,845 862 6.71
Corporate bonds 3,156 65 2.04 46,049 812 1.76
Small Business Administration-guaranteed participation securities 107,029 2,154 2.01 109,913 2,180 1.98
Mortgage backed securities and collateralized mortgage obligations-commercial 10,837 151 1.40 10,420 144 1.38
Other 674 16 2.37 625 17 2.72
Total securities available for sale 794,613 16,233 2.04 946,367 18,000 1.90
Federal funds sold and other short-term Investments 589,873 1,464 0.25 502,136 1,240 0.25
Held to maturity securities:
Corporate bonds 9,952 615 6.18 14,011 833 5.95
Mortgage backed securities and collateralized mortgage obligations-residential 68,404 2,259 3.30 90,360 2,840 3.14
Total held to maturity securities 78,356 2,874 3.67 104,371 3,673 3.52
Federal Reserve Bank and Federal Home Loan Bank stock 10,135 511 5.04 10,266 490 4.77
Commercial loans 221,251 11,328 5.12 214,756 11,210 5.22
Residential mortgage loans 2,443,558 111,720 4.57 2,216,346 104,646 4.72
Home equity lines of credit 343,264 12,263 3.57 335,409 11,452 3.41
Installment loans 6,083 678 11.14 5,152 666 12.93
Loans, net of unearned income 3,014,156 135,989 4.51 2,771,663 127,974 4.62
Total interest earning assets 4,487,133 157,071 3.50 4,334,803 151,377 3.49
Allowance for loan losses (47,409) (48,452)
Cash & non-interest earning assets 135,217 136,042
Total assets $ 4,574,941 $ 4,422,393
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts $ 636,140 365 0.06% $ 578,531 329 0.06%
Money market accounts 650,779 2,499 0.38 650,324 2,516 0.39
Savings 1,227,473 2,662 0.22 1,218,655 3,333 0.27
Time deposits 1,145,118 8,565 0.75 1,113,473 7,622 0.68
Total interest bearing deposits 3,659,510 14,091 0.39 3,560,983 13,800 0.39
Short-term borrowings 189,430 1,397 0.74 180,275 1,483 0.82
Total interest bearing liabilities 3,848,940 15,488 0.40 3,741,258 15,283 0.41
Demand deposits 319,458 302,437
Other liabilities 23,733 21,719
Shareholders' equity 382,810 356,979
Total liabilities and shareholders' equity $ 4,574,941 $ 4,422,393
Net interest income, tax equivalent 141,583 136,094
Net interest spread 3.10% 3.08%
Net interest margin (net interest income to total interest earning assets) 3.16% 3.14%
Tax equivalent adjustment (130) (330)
Net interest income 141,453 135,764

Non-GAAP Financial Measures Reconciliation

Tangible book value per share and tangible equity as a percentage of tangible assets at period end are non-GAAP financial measures derived from GAAP-based amounts. We calculate tangible equity and tangible assets by excluding the balance of intangible assets from shareholders' equity and total assets, respectively. We calculate tangible book value per share by dividing tangible equity by common shares outstanding, as compared to book value per common share, which we calculate by dividing shareholders' equity by common shares outstanding. We calculate tangible equity as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end. We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios.

The efficiency ratio is a non-GAAP measure of expense control relative to recurring revenue. We calculate the efficiency ratio by dividing total noninterest expenses as determined under GAAP, but excluding other real estate expense, net, which we refer to below as recurring expense, by net interest income (fully taxable equivalent) and total noninterest income as determined under GAAP, but excluding net gains on securities from this calculation, which we refer to below as recurring revenue. We believe that this provides one reasonable measure of core expenses relative to core revenue.

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

NON-GAAP FINANCIAL MEASURES RECONCILIATION
(dollars in thousands, except per share amounts)
(Unaudited)
12/31/14 09/30/14 12/31/13
Tangible Book Value Per Share
Equity $ 393,444 389,487 361,813
Less: Intangible assets 553 553 553
Tangible equity 392,891 388,934 361,260
Shares outstanding 94,857 94,785 94,463
Tangible book value per share 4.14 4.10 3.82
Book value per share 4.15 4.11 3.83
Tangible Equity to Tangible Assets
Total Assets 4,644,439 4,582,266 4,521,452
Less: Intangible assets 553 553 553
Tangible assets 4,643,886 4,581,713 4,520,899
Tangible Equity to Tangible Assets 8.46% 8.49% 7.99%
Equity to Assets 8.47% 8.50% 8.00%
3 Months Ended Years Ended
Efficiency Ratio 12/31/14 09/30/14 12/31/13 12/31/14 12/31/13
Net interest income (fully taxable equivalent) $ 35,693 35,676 34,577 141,583 136,094
Non-interest income 4,752 4,890 4,848 19,906 19,770
Less: Net gain on sale of building and net gain on sale of nonperforming loans -- -- -- 1,719 --
Less: Net gain on securities 335 376 188 717 1,622
Recurring revenue 40,110 40,190 39,237 159,053 154,242
Total Noninterest expense 22,240 22,192 20,891 84,670 85,005
Less: Other real estate expense, net 841 1,001 430 1,009 3,598
Recurring expense 21,399 21,191 20,461 83,661 81,407
Efficiency Ratio 53.35% 52.73% 52.15% 52.60% 52.78%

CONTACT: Kevin T. Timmons Vice President/Treasurer (518) 381-3607

Source:TrustCo Bank Corp NY