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TrustCo Announces First Quarter 2015 Earnings; Core Net Income Up 7%

Executive Snapshot:

  • Continued strong financial results:
    • Core net income for first quarter 2015 compared to the same period in 2014:
      • Core net income up 6.7%;
      • Core diluted EPS up 6.1%;
    • GAAP earnings for the first quarter of 2015 compared to the same period in 2014:
      • Net income down 2.7%
      • Diluted EPS down 2.6%
      • Return on average assets (ROA) of 0.93%
      • Return on average equity (ROE) of 10.91%
      • Efficiency ratio of 54.18%
  • Asset quality improvement:
    • Asset quality measures continued to improve or remain stable as compared to both the first quarter of 2014 and for the fourth quarter of 2014
    • Nonperforming assets (NPAs) fell by $13.5 million versus the prior year
    • NPAs to total assets improved from 1.18% to 0.85% 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
    • Average deposits per branch grew $868 thousand from March 31, 2014 to March 31, 2015 on a same store basis
    • Average core deposits grew $80 million for the first quarter of 2015 compared to the first quarter of 2014
  • Loan portfolio reaches all-time high:
    • Average loans were up $250 million for the first quarter of 2015 compared to first quarter of 2014
    • At $3.19 billion at March 31, 2015, loans reached an all-time historic high

Note: See non-GAAP financial measures reconciliation on pages 10-11 for information on core income and earnings per share

TrustCo Announces First Quarter 2015 Earnings;
Core Net Income Up 7%

GLENVILLE, N.Y., April 21, 2015 (GLOBE NEWSWIRE) --

TrustCo Bank Corp NY (TrustCo) (Nasdaq:TRST) today announced that first quarter of 2015 core net income rose 7% to $10.7 million compared to $10.0 million for the first quarter of 2014. First quarter 2014 results included the sale of a property that added $965 thousand to reported after-tax earnings. Including this sale, first quarter 2014 reported net income was $11.0 million compared to $10.7 million in 2015.

Robert J. McCormick, President and Chief Executive Officer noted, "Our core results for the first quarter of 2015 represent a solid start to the new year. In addition to core net income growth, we continued to add customer relationships which ultimately positions our business well for the future. Our highly liquid balance sheet continues to allow us to fund our loan growth without having to overpay for deposits. We look forward to the balance of 2015 with optimism. We will continue taking advantage of opportunities as they are presented."

TrustCo saw continued strong loan growth in the first quarter of 2015. 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 margin impact from continued comparatively low yields on cash and investments. TrustCo's strong liquidity position continues to allow the Company to take advantage of opportunities when interest rate conditions change.

Mr. McCormick also noted, "We are encouraged by the continued economic improvements in our market areas. We are pleased with the continued improvement in our asset quality during both the first quarter and over the last year. 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 first quarter of 2015, return on average assets and return on average equity were 0.93% and 10.91%, respectively, compared to 0.99% and 12.09% for the first quarter of 2014, all on a reported GAAP basis. Higher levels of shareholders equity as well as the one-time gain of $965 thousand noted earlier contributed to the decline in return on average equity. Core diluted net income per share were $0.113 for the first quarter of 2015, up 6.1% from $0.106 for the first quarter of 2014. Reported GAAP earnings per share were $0.113 for the first quarter of 2015, compared to $0.116 for the first quarter of 2014.

Average loans were up $249.6 million or 8.5% in the first quarter of 2015, over the same period in 2014. Average deposits were up $120.6 million or 3.1% for the first quarter of 2015 over the same period a year earlier. Most of the gain in deposits came from core deposit accounts. Average core deposits increased $80.0 million from the first quarter of 2014 to the first quarter of 2015. 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 first quarter, in Orlando, Florida. We continue to make significant progress expanding loans and deposits throughout our entire branch network. We expect that trend to continue as the newer branches continue to mature.

At March 31, 2015, our average branch size was $28.4 million. On a same store basis, our average deposits per branch grew by $868 thousand from March 31, 2014 to March 31, 2015. 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 newer branches will take time and continued work. We believe success in growing customer relationships provides basic building blocks that will help drive profit growth for the coming years."

Asset quality and the allowance for loan losses coverage of nonperforming loans (NPLs) improved from both March 31, 2014 and December 31, 2014 to March 31, 2015. NPLs declined to $33.5 million at March 31, 2015, compared to $44.9 million at March 31, 2014 and to $34.0 million at December 31, 2014. NPLs were equal to 1.05% of total loans at March 31, 2015, compared to 1.53% a year earlier and 1.08% at year-end. The coverage ratio, or allowance for loan losses to NPLs, was 137.2% at March 31, 2015, compared to 136.2% at December 31, 2014 and to 104.7% at March 31, 2014. Nonperforming assets (NPAs) declined to $40.4 million from $40.5 million at December 31, 2014 and from $53.9 million at March 31, 2014. Overall, virtually every asset quality indicator improved during the first quarter of 2015 relative to the fourth quarter of 2014 and to the first quarter of 2014. The ratio of loan loss allowance to total loans was 1.44% as of March 31, 2015, compared to 1.47% at December 31, 2014 and to 1.60% at March 31, 2014 and reflects both the improvement in asset quality and economic conditions. The allowance for loan losses was $45.9 million at March 31, 2015 compared to $46.3 million at the end of 2014 and $47.0 million at March 31, 2014.

The net interest margin for the first quarter of 2015 was 3.08%, compared to 3.13% in the first quarter of 2014.

At March 31, 2015 the tangible equity ratio was 8.44% compared to 8.46% at December 31, 2014. Tangible book value per share at March 31, 2015 was $4.21 compared to $3.93 a year earlier.

TrustCo Bank Corp NY is a $4.7 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 145 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at March 31, 2015.

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 first quarter 2015 results will be held at 9:00 a.m. Eastern Time on April 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 10063957. The call will also be audio webcast at: http://services.choruscall.com/links/trst150422.html, and will be available for one year.

Note: See non-GAAP financial measures reconciliation on pages 10-11 for information on core income and earnings per share

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, 2014, 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
03/31/15 12/31/14 03/31/14
Summary of operations
Net interest income (TE) $ 35,185 35,693 34,701
Provision for loan losses 800 1,000 1,500
Net securities transactions 249 335 6
Noninterest income, excluding net securities transactions 4,374 4,417 5,753
Noninterest expense 21,857 22,240 20,801
Net income 10,715 10,660 11,011
Per common share
Net income per share:
- Basic $ 0.113 0.113 0.116
- Diluted 0.113 0.112 0.116
Cash dividends 0.066 0.066 0.066
Tangible Book value at period end 4.21 4.14 3.93
Market price at period end 6.88 7.26 7.04
At period end
Full time equivalent employees 747 737 709
Full service banking offices 145 144 139
Performance ratios
Return on average assets 0.93% 0.92 0.99
Return on average equity 10.91 10.70 12.09
Efficiency (1) 54.18 53.35 51.28
Net interest spread (TE) 3.02 3.11 3.08
Net interest margin (TE) 3.08 3.17 3.13
Dividend payout ratio 58.12 58.55 56.36
Capital ratio at period end
Consolidated tangible equity to tangible assets (2) 8.44 8.46 8.11
Asset quality analysis at period end
Nonperforming loans to total loans 1.05 1.08 1.53
Nonperforming assets to total assets 0.85 0.87 1.18
Allowance for loan losses to total loans 1.44 1.47 1.60
Coverage ratio (3) 1.4x 1.4 1.0
(1) Calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income (excluding net securities transactions, the net gain on sale of building, and the net sale of nonperforming loans).
(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.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
3/31/2015 12/31/2014 9/30/2014 6/30/2014 3/31/2014
Interest and dividend income:
Interest and fees on loans $ 34,983 35,051 34,421 33,614 32,874
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises 212 233 297 381 506
State and political subdivisions 25 29 38 44 68
Mortgage-backed securities and collateralized mortgage obligations-residential 2,393 2,733 3,040 3,299 3,078
Corporate bonds 1 2 2 2 59
Small Business Administration-guaranteed participation securities 522 524 535 539 556
Mortgage-backed securities and collateralized mortgage obligations-commercial 37 37 38 38 38
Other securities 4 4 4 4 4
Total interest and dividends on securities available for sale 3,194 3,562 3,954 4,307 4,309
Interest on held to maturity securities:
Mortgage-backed securities and collateralized mortgage obligations-residential 478 512 545 577 625
Corporate bonds 154 154 153 154 154
Total interest on held to maturity securities 632 666 698 731 779
Federal Reserve Bank and Federal Home Loan Bank stock 116 123 127 128 133
Interest on federal funds sold and other short-term investments 400 363 374 376 351
Total interest income 39,325 39,765 39,574 39,156 38,446
Interest expense:
Interest on deposits:
Interest-bearing checking 105 98 94 89 84
Savings 658 663 644 592 763
Money market deposit accounts 617 634 648 618 599
Time deposits 2,434 2,366 2,213 2,035 1,951
Interest on short-term borrowings 346 335 327 342 393
Total interest expense 4,160 4,096 3,926 3,676 3,790
Net interest income 35,165 35,669 35,648 35,480 34,656
Provision for loan losses 800 1,000 1,100 1,500 1,500
Net interest income after provision for loan losses 34,365 34,669 34,548 33,980 33,156
Noninterest income:
Trustco Financial Services income 1,653 1,451 1,471 1,405 1,510
Fees for services to customers 2,524 2,753 2,838 2,732 2,521
Net gain on securities transactions 249 335 376 -- 6
Other 197 213 205 368 1,722
Total noninterest income 4,623 4,752 4,890 4,505 5,759
Noninterest expenses:
Salaries and employee benefits 8,481 9,003 8,272 8,012 7,592
Net occupancy expense 4,108 3,869 4,013 4,110 4,259
Equipment expense 1,942 1,919 1,725 1,823 1,752
Professional services 1,507 1,536 1,547 1,438 1,286
Outsourced services 1,425 1,225 1,375 1,425 1,325
Advertising expense 600 602 629 657 599
FDIC and other insurance 1,065 949 1,054 1,000 904
Other real estate expense (income), net 424 841 1,001 (1,688) 855
Other 2,305 2,296 2,576 2,660 2,229
Total noninterest expenses 21,857 22,240 22,192 19,437 20,801
Income before taxes 17,131 17,181 17,246 19,048 18,114
Income taxes 6,416 6,521 6,532 7,240 7,103
Net income $ 10,715 10,660 10,714 11,808 11,011
Net income per common share:
- Basic $ 0.113 0.113 0.113 0.125 0.116
- Diluted 0.113 0.112 0.113 0.125 0.116
Average basic shares (in thousands) 94,947 94,681 94,628 94,559 94,452
Average diluted shares (in thousands) 95,074 94,813 94,752 94,675 94,581
Note: Taxable equivalent net interest income $ 35,185 35,693 35,676 35,513 34,701
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)
(Unaudited)
3/31/2015 12/31/2014 9/30/2014 6/30/2014 3/31/2014
ASSETS:
Cash and due from banks $ 44,853 43,505 43,724 48,034 46,127
Federal funds sold and other short term investments 705,273 627,943 586,931 573,514 687,003
Total cash and cash equivalents 750,126 671,448 630,655 621,548 733,130
Securities available for sale:
U. S. government sponsored enterprises 108,248 77,800 83,087 103,340 92,708
States and political subdivisions 1,974 2,271 2,769 3,921 4,968
Mortgage-backed securities and collateralized mortgage obligations-residential 445,273 483,560 523,779 589,517 524,197
Corporate bonds 1,500 1,500 1,401 1,402 6,402
Small Business Administration-guaranteed participation securities 98,668 100,496 100,491 102,367 101,821
Mortgage-backed securities and collateralized mortgage obligations-commercial 10,503 10,447 10,417 10,544 10,543
Other securities 685 685 679 679 653
Total securities available for sale 666,851 676,759 722,623 811,770 741,292
Held to maturity securities:
Mortgage-backed securities and collateralized mortgage obligations-residential 57,296 60,986 64,223 67,974 72,188
Corporate bonds 9,964 9,960 9,956 9,952 9,948
Total held to maturity securities 67,260 70,946 74,179 77,926 82,136
Federal Reserve Bank and Federal Home Loan Bank stock 9,228 9,228 9,228 10,951 10,500
Loans:
Commercial 212,145 223,382 219,825 222,655 220,443
Residential mortgage loans 2,620,925 2,575,222 2,510,151 2,437,500 2,374,874
Home equity line of credit 352,552 352,134 346,496 339,897 339,971
Installment loans 8,003 7,594 6,557 6,098 5,714
Loans, net of deferred fees and costs 3,193,625 3,158,332 3,083,029 3,006,150 2,941,002
Less:
Allowance for loan losses 45,944 46,327 46,512 46,935 47,035
Net loans 3,147,681 3,112,005 3,036,517 2,959,215 2,893,967
Bank premises and equipment, net 38,812 38,565 37,455 36,658 35,267
Other assets 60,698 65,488 71,609 71,061 82,445
Total assets $ 4,740,656 4,644,439 4,582,266 4,589,129 4,578,737
LIABILITIES:
Deposits:
Demand $ 347,315 331,425 327,527 324,277 327,779
Interest-bearing checking 696,137 682,210 646,862 643,473 628,752
Savings accounts 1,237,115 1,216,831 1,215,087 1,233,347 1,236,331
Money market deposit accounts 640,368 638,542 655,646 651,367 648,244
Time deposits 1,196,233 1,163,233 1,139,919 1,142,723 1,146,112
Total deposits 4,117,168 4,032,241 3,985,041 3,995,187 3,987,218
Short-term borrowings 194,738 189,116 179,957 181,516 195,411
Accrued expenses and other liabilities 28,274 29,638 27,781 27,409 24,329
Total liabilities 4,340,180 4,250,995 4,192,779 4,204,112 4,206,958
SHAREHOLDERS' EQUITY:
Capital stock 98,964 98,945 98,942 98,927 98,927
Surplus 172,237 172,353 172,598 172,769 172,964
Undivided profits 171,232 166,745 162,326 157,832 152,237
Accumulated other comprehensive loss, net of tax (2,687) (4,509) (3,508) (2,611) (9,452)
Treasury stock at cost (39,270) (40,090) (40,871) (41,900) (42,897)
Total shareholders' equity 400,476 393,444 389,487 385,017 371,779
Total liabilities and shareholders' equity $ 4,740,656 4,644,439 4,582,266 4,589,129 4,578,737
Outstanding shares (in thousands) 94,956 94,857 94,785 94,665 94,564
NONPERFORMING ASSETS
(dollars in thousands)
(Unaudited)
Nonperforming Assets
03/31/15 12/31/14 09/30/14 06/30/14 03/31/14
New York and other states*
Loans in nonaccrual status:
Commercial $ 2,489 3,835 4,226 5,132 4,853
Real estate mortgage - 1 to 4 family 28,215 27,221 29,736 31,433 34,597
Installment 77 77 95 87 103
Total non-accrual loans 30,781 31,133 34,057 36,652 39,553
Other nonperforming real estate mortgages - 1 to 4 family 75 125 155 159 162
Total nonperforming loans 30,856 31,258 34,212 36,811 39,715
Other real estate owned 6,288 5,533 5,238 3,930 4,707
Total nonperforming assets $ 37,144 36,791 39,450 40,741 44,422
Florida
Loans in nonaccrual status:
Commercial $ -- -- 517 517 517
Real estate mortgage - 1 to 4 family 2,608 2,740 2,395 3,578 4,668
Installment 20 13 1 1 7
Total non-accrual loans 2,628 2,753 2,913 4,096 5,192
Other nonperforming real estate mortgages - 1 to 4 family -- -- -- -- --
Total nonperforming loans 2,628 2,753 2,913 4,096 5,192
Other real estate owned 670 908 1,188 4,365 4,300
Total nonperforming assets $ 3,298 3,661 4,101 8,461 9,492
Total
Loans in nonaccrual status:
Commercial $ 2,489 3,835 4,743 5,649 5,370
Real estate mortgage - 1 to 4 family 30,823 29,961 32,131 35,011 39,265
Installment 97 90 96 88 110
Total non-accrual loans 33,409 33,886 36,970 40,748 44,745
Other nonperforming real estate mortgages - 1 to 4 family 75 125 155 159 162
Total nonperforming loans 33,484 34,011 37,125 40,907 44,907
Other real estate owned 6,958 6,441 6,426 8,295 9,007
Total nonperforming assets $ 40,442 40,452 43,551 49,202 53,914
Quarterly Net Chargeoffs (Recoveries)
03/31/15 12/31/14 09/30/14 06/30/14 03/31/14
New York and other states*
Commercial $ 34 (16) 124 13 242
Real estate mortgage - 1 to 4 family 1,004 1,591 1,105 1,496 851
Installment 37 48 57 24 44
Total net chargeoffs $ 1,075 1,623 1,286 1,533 1,137
Florida
Commercial $ (1) (476) (1) (2) 612
Real estate mortgage - 1 to 4 family 109 37 242 59 428
Installment -- 1 (4) 10 2
Total net chargeoffs $ 108 (438) 237 67 1,042
Total
Commercial $ 33 (492) 123 11 854
Real estate mortgage - 1 to 4 family 1,113 1,628 1,347 1,555 1,279
Installment 37 49 53 34 46
Total net chargeoffs $ 1,183 1,185 1,523 1,600 2,179
Asset Quality Ratios
03/31/15 12/31/14 09/30/14 06/30/14 03/31/14
Total nonperforming loans(1) $ 33,484 34,011 37,125 40,907 44,907
Total nonperforming assets(1) 40,442 40,452 43,551 49,202 53,914
Total net chargeoffs(2) 1,183 1,185 2,179 1,600 2,179
Allowance for loan losses(1) 45,944 46,327 46,512 46,935 47,035
Nonperforming loans to total loans 1.05% 1.08% 1.20% 1.36% 1.53%
Nonperforming assets to total assets 0.85% 0.87% 0.95% 1.07% 1.18%
Allowance for loan losses to total loans 1.44% 1.47% 1.51% 1.56% 1.60%
Coverage ratio(1) 137.2% 136.2% 125.3% 114.7% 104.7%
Annualized net chargeoffs to average loans(2) 0.15% 0.15% 0.29% 0.22% 0.30%
Allowance for loan losses to annualized net chargeoffs(2) 9.6x 9.8x 5.3x 7.3x 5.4x
* Includes New York, New Jersey, Vermont and Massachusetts.
(1) At period-end
(2) For the period ended
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY-
INTEREST RATES AND INTEREST DIFFERENTIAL
(dollars in thousands) Three months ended Three months ended
(Unaudited) March 31, 2015 March 31, 2014
Average Interest Average Average Interest Average
Balance Rate Balance Rate
Assets
Securities available for sale:
U. S. government sponsored enterprises $ 77,865 212 1.09% $ 169,355 506 1.19%
Mortgage backed securities and collateralized mortgage obligations-residential 478,410 2,393 2.00 545,823 3,078 2.26
State and political subdivisions 2,092 38 7.26 6,133 105 6.85
Corporate bonds 1,499 1 0.13 8,548 59 2.78
Small Business Administration-guaranteed participation securities 101,662 522 2.06 110,098 556 2.02
Mortgage backed securities and collateralized mortgage obligations-commercial 10,669 37 1.40 10,939 38 1.39
Other 685 4 2.34 660 4 2.42
Total securities available for sale 672,882 3,207 1.91 851,556 4,346 2.04
Federal funds sold and other short-term Investments 653,263 400 0.25 575,352 351 0.25
Held to maturity securities:
Corporate bonds 9,962 154 6.17 9,947 154 6.18
Mortgage backed securities and collateralized mortgage obligations-residential 59,351 478 3.22 74,324 625 3.36
Total held to maturity securities 69,313 632 3.65 84,271 779 3.70
Federal Reserve Bank and Federal Home Loan Bank stock 9,228 116 5.03 10,500 133 5.07
Commercial loans 219,050 2,796 5.11 222,332 2,797 5.03
Residential mortgage loans 2,594,216 28,958 4.48 2,355,125 26,982 4.60
Home equity lines of credit 352,258 3,061 3.52 340,681 2,936 3.49
Installment loans 7,794 175 9.11 5,596 167 12.11
Loans, net of unearned income 3,173,318 34,990 4.42 2,923,734 32,882 4.52
Total interest earning assets 4,578,004 39,345 3.45 4,445,413 38,491 3.48
Allowance for loan losses (46,597) (48,219)
Cash & non-interest earning assets 138,560 130,091
Total assets $ 4,669,967 $ 4,527,285
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts $ 677,963 105 0.06% $ 605,741 84 0.06%
Money market accounts 637,858 617 0.39 646,601 599 0.38
Savings 1,229,498 658 0.22 1,225,364 763 0.25
Time deposits 1,180,436 2,434 0.84 1,139,811 1,951 0.69
Total interest bearing deposits 3,725,755 3,814 0.42 3,617,517 3,397 0.38
Short-term borrowings 192,344 346 0.73 202,175 393 0.79
Total interest bearing liabilities 3,918,099 4,160 0.43 3,819,692 3,790 0.40
Demand deposits 328,407 316,009
Other liabilities 25,289 22,311
Shareholders' equity 398,172 369,273
Total liabilities and shareholders' equity $ 4,669,967 $ 4,527,285
Net interest income, tax equivalent 35,185 34,701
Net interest spread 3.02% 3.08%
Net interest margin (net interest income to total interest earning assets) 3.08% 3.13%
Tax equivalent adjustment (20) (45)
Net interest income 35,165 34,656

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 in the table below as recurring revenue. We believe that this provides a reasonable measure of recurring expenses relative to recurring revenue.

Core net income ("core earnings") and core net income ("core earnings") per share are non-GAAP financial measures derived from GAAP-based amounts. We calculate core earnings by excluding the net after-tax gain on the sale of the proposed Florida operations building during the first quarter of 2014 from net income and from net income per share. We believe that this provides a reasonable measure of core net income (earnings).

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, 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)
03/31/15 12/31/14 03/31/14
Tangible Book Value Per Share
Equity $ 400,476 393,444 371,779
Less: Intangible assets 553 553 553
Tangible equity 399,923 392,891 371,226
Shares outstanding 94,956 94,857 94,564
Tangible book value per share 4.21 4.14 3.93
Book value per share 4.22 4.15 3.93
Tangible Equity to Tangible Assets
Total Assets 4,740,656 4,644,439 4,578,737
Less: Intangible assets 553 553 553
Tangible assets 4,740,103 4,643,886 4,578,184
Tangible Equity to Tangible Assets 8.44% 8.46% 8.11%
Equity to Assets 8.45% 8.47% 8.12%
3 Months Ended
Efficiency Ratio 03/31/15 12/31/14 03/31/14
Net interest income (fully taxable equivalent) $ 35,185 35,693 34,701
Non-interest income 4,623 4,752 5,759
Less: Net gain on sale of building -- -- 1,556
Less: Net gain on securities 249 335 6
Recurring revenue 39,559 40,110 38,898
Total noninterest expense 21,857 22,240 20,801
Less: Other real estate expense, net 424 841 855
Recurring expense 21,433 21,399 19,946
Efficiency Ratio 54.18% 53.35% 51.28%
3 Months Ended
Core Net Income 03/31/15 12/31/14 03/31/14
Net income $ 10,715 10,660 11,011
Less: Gain on sale of building, net of tax -- -- 965
Core net income 10,715 10,660 10,046
Average basic shares outstanding (in thousands) 94,947 94,681 94,452
Average diluted shares outstanding (in thousands) 95,074 94,813 94,581
Net income per common share:
- Basic $ 0.113 0.113 0.116
- Diluted 0.113 0.112 0.116
Core net income per common share:
- Basic $ 0.113 0.113 0.106
- Diluted 0.113 0.112 0.106

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

Source:TrustCo Bank Corp NY