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TrustCo Announces First Quarter 2016 Earnings

Executive Snapshot:

  • Continued solid financial results:
    • Key metrics for first quarter of 2016 results:
      • Net income of $10.4 million in first quarter of 2016 compared to $10.2 million in fourth quarter of 2015 and $10.7 million in the first quarter of 2015
      • Operating expenses increased $1.6 million in the first quarter of 2016 compared to the first quarter of 2015
      • Return on average assets (ROA) of 0.89%
      • Return on average equity (ROE) of 9.98%
      • Efficiency ratio of 56.22%
  • Asset quality remains solid:
    • Asset quality measures improved compared to the first quarter of 2015
    • Nonperforming assets (NPAs) fell by $4.4 million compared to March 31, 2015
    • NPAs to total assets improved from 0.85% to 0.76% compared to March 31, 2015
    • Quarterly net chargeoffs decreased to 0.14% of average loans on an annualized basis, compared to 0.15% for the first quarter of 2015
  • Continued expansion of customer base:
    • Focus on capitalizing on opportunities presented by expanded branch network
    • Average deposits per branch were $28.6 million
    • Average core deposits were $86 million higher in the first quarter of 2016 compared to the first quarter of 2015
  • Loan portfolio reaches all-time high:
    • Average loans were up $122 million for the first quarter of 2016 compared to first quarter of 2015
    • At $3.30 billion as of March 31, 2016, loans reached an all-time high


GLENVILLE, N.Y., April 21, 2016 (GLOBE NEWSWIRE) -- TrustCo Bank Corp NY (TrustCo) (Nasdaq:TRST) today announced first quarter of 2016 net income of $10.4 million compared to $10.2 million for the fourth quarter of 2015 and $10.7 million for the first quarter of 2015.

Robert J. McCormick, President and Chief Executive Officer noted, “We are pleased to be able to report relatively stable earnings despite added operating costs in response to recent regulatory concerns and a difficult operating environment. Our long-term focus on traditional lending criteria and conservative balance sheet management has enabled us to produce stable earnings, maintain strong liquidity and capital and allowed us to continue to grow our business and take advantage of changes in market and competitive conditions.”

Mr. McCormick also noted, “We consider our first quarter 2016 results to be solid and are encouraged by the increase in pre-tax earnings from the fourth quarter of 2015. In terms of our core business, we continue to make solid progress, adding customer relationships which ultimately position 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 will continue taking advantage of opportunities as they are presented during the balance of 2016.”

TrustCo saw continued solid loan growth in the first quarter of 2016 compared to the prior year. Loan portfolio expansion was funded by deposit growth. The continued shift toward loans helped offset the margin impact from continued comparatively low yields on cash and investments. The growth in average deposits in the first quarter of 2016 versus the prior year was led by lower cost core deposits. TrustCo’s strong liquidity position continues to allow the Company to take advantage of opportunities when interest rate conditions change.

For the first quarter of 2016, return on average assets and return on average equity were 0.89% and 9.98%, respectively, compared to 0.93% and 10.91% for the first quarter of 2015. Diluted earnings per share were $0.109 for the first quarter of 2016, compared to $0.113 for the first quarter of 2015. As discussed in recent quarters, increased operating costs in response to regulatory concerns have hampered earnings. Higher expenses were anticipated in order to fulfill operating and regulatory requirements. We took aggressive action to meet these requirements during 2015 and those efforts continue into 2016. These efforts resulted in added costs in both 2015 and the first quarter of 2016. While some of these costs will be recurring, others will diminish over time.

Average loans were up $122.3 million or 3.9% in the first quarter of 2016, over the same period in 2015. Average deposits were up $39.9 million or 1.0% for the first quarter of 2016 over the same period a year earlier. The increase in deposits came from core deposit accounts, which consist of checking, savings and money market deposits. Average core deposits increased $85.8 million from the first quarter of 2015 to the first quarter of 2016, more than offsetting a decline in time deposit balances. 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 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, 2016, our average branch size was $28.6 million. 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 loan loss reserve measures mostly improved versus March 31, 2015, but were mixed as compared to December 31, 2015. Nonperforming loans (NPLs) were $30.4 million at March 31, 2016, compared to $33.5 million at March 31, 2015 and $28.3 million at December 31, 2015. The slight increase in NPLs was due to residential real estate nonperforming loans in the New York region. NPLs were equal to 0.92% of total loans at March 31, 2016, compared to 1.05% a year earlier and 0.86% at December 31, 2015. The coverage ratio, or allowance for loan losses to NPLs, was 146.3% at March 31, 2016, compared to 137.2% at March 31, 2015 and 158.4% at December 31, 2015. Nonperforming assets (NPAs) were at $36.0 million at March 31, 2016 compared to $40.4 million at March 31, 2015 and $34.7 million at December 31, 2015. The ratio of loan loss allowance to total loans was 1.34% as of March 31, 2016, compared to 1.44% at March 31, 2015 and to 1.36% at December 31, 2015 and reflects both the improvement in asset quality and economic conditions in our lending areas. The allowance for loan losses was $44.4 million at March 31, 2016 compared to $45.9 million at March 31, 2015 and $44.8 million at December 31, 2015. Net chargeoffs for the first quarter of 2016 decreased by $523 thousand or 31% versus the fourth quarter of 2015, which was also reflected in the reduction in the provision for loan losses of $500 thousand from the fourth quarter to the first quarter.

The net interest margin for the first quarter of 2016 was 3.13% compared to 3.14% in the fourth quarter of 2015 and 3.08% in the first quarter of 2015.

At March 31, 2016 the tangible equity ratio was 8.87% compared to 8.44% at March 31, 2015 and 8.72% at December 31, 2015. The equity to asset ratio was 8.88% at March 31, 2016, compared to 8.45% at March 31, 2015 and 8.73% at December 31, 2015. Tangible book value per share at March 31, 2016 was $4.43 compared to $4.21 a year earlier and GAAP book value per share was $4.44 and $4.22, respectively. Non-GAAP measures are discussed on page 10.

TrustCo Bank Corp NY is a $4.8 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, 2016.

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 2016 results will be held at 9:00 a.m. Eastern Time on April 22, 2016. 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 10084202. The call will also be audio webcast at: http://services.choruscall.com/links/trst160422.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 2016 and for the growth of loans and deposits throughout our branch network, our ability to capitalize on economic changes in the areas in which we operate and the extent to which higher expenses to fulfill operating and regulatory requirements recur or diminish over time. Such forward-looking statements are subject to factors that could cause actual results to differ materially for TrustCo from those discussed. TrustCo wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The following important factors, among others, in some cases have affected and in the future could affect TrustCo’s actual results and could cause TrustCo’s actual financial performance to differ materially from that expressed in any forward-looking statement: our ability to continue to originate a significant volume of one-to-four family mortgage loans in our market areas; our ability to continue to maintain noninterest expense and other overhead costs at reasonable levels relative to income; our ability to comply with the supervisory agreement entered into with Trustco Bank’s regulator and potential regulatory actions if we fail to comply; restrictions or conditions imposed by our regulators on our operations that may make it more difficult for us to achieve our goals; the future earnings and capital levels of Trustco Bank and the continued ability of Trustco Bank under regulatory rules and the supervisory agreement to distribute capital to TrustCo, which could affect our ability to pay dividends; results of examinations of Trustco Bank and TrustCo by our respective regulators; 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; 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 most recent annual report on Form 10-K, and, if any, in our subsequent quarterly reports on Form 10-Q or other securities filings.

TRUSTCO BANK CORP NY
GLENVILLE, NY
FINANCIAL HIGHLIGHTS
(dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
03/31/1612/31/1503/31/15
Summary of operations
Net interest income (TE)$ 36,196 36,278 35,185
Provision for loan losses 800 1,300 800
Net securities transactions - 2 249
Noninterest income, excluding net securities transactions 4,572 4,428 4,374
Noninterest expense 23,439 23,108 21,857
Net income 10,409 10,180 10,715
Per common share
Net income per share:
- Basic$ 0.109 0.107 0.113
- Diluted 0.109 0.107 0.113
Cash dividends 0.066 0.066 0.066
Tangible Book value at period end 4.43 4.33 4.21
Market price at period end 6.06 6.14 6.88
At period end
Full time equivalent employees 784 787 747
Full service banking offices 145 146 145
Performance ratios
Return on average assets 0.89% 0.86 0.93
Return on average equity 9.98 9.75 10.91
Efficiency (1) 56.22 55.37 54.18
Net interest spread (TE) 3.07 3.08 3.02
Net interest margin (TE) 3.13 3.14 3.08
Dividend payout ratio 60.13 61.54 58.12
Capital ratio at period end
Consolidated tangible equity to tangible assets (2) 8.87 8.72 8.44
Asset quality analysis at period end
Nonperforming loans to total loans 0.92 0.86 1.05
Nonperforming assets to total assets 0.76 0.73 0.85
Allowance for loan losses to total loans 1.34 1.36 1.44
Coverage ratio (3) 1.5x 1.6 1.4
(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 $553 of intangibles from both equity and assets.
(3) Calculated as allowance for loan losses divided by total nonperforming loans.
TE = Taxable equivalent.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
3/31/201612/31/20159/30/20156/30/20153/31/2015
Interest and dividend income:
Interest and fees on loans$ 35,605 35,930 35,631 35,343 34,983
Interest and dividends on securities available for sale:
U.S. government sponsored enterprises 255 256 584 366 212
State and political subdivisions 14 16 23 23 25
Mortgage-backed securities and collateralized mortgage obligations-residential 2,116 2,233 2,230 2,276 2,393
Corporate bonds - - - - 1
Small Business Administration-guaranteed participation securities 476 482 497 503 522
Mortgage-backed securities and collateralized mortgage obligations-commercial 36 37 37 38 37
Other securities 4 4 4 4 4
Total interest and dividends on securities available for sale 2,901 3,028 3,375 3,210 3,194
Interest on held to maturity securities:
Mortgage-backed securities and collateralized mortgage obligations-residential 402 425 461 480 478
Corporate bonds 154 154 153 154 154
Total interest on held to maturity securities 556 579 614 634 632
Federal Reserve Bank and Federal Home Loan Bank stock 120 120 113 118 116
Interest on federal funds sold and other short-term investments 844 494 408 423 400
Total interest income 40,026 40,151 40,141 39,728 39,325
Interest expense:
Interest on deposits:
Interest-bearing checking 114 115 117 111 105
Savings 604 608 603 599 658
Money market deposit accounts 496 513 537 547 617
Time deposits 2,373 2,375 2,544 2,500 2,434
Interest on short-term borrowings 257 278 290 300 346
Total interest expense 3,844 3,889 4,091 4,057 4,160
Net interest income 36,182 36,262 36,050 35,671 35,165
Provision for loan losses 800 1,300 800 800 800
Net interest income after provision for loan losses 35,382 34,962 35,250 34,871 34,365
Noninterest income:
Trustco Financial Services income 1,605 1,489 1,351 1,478 1,653
Fees for services to customers 2,661 2,704 2,770 2,691 2,524
Net gain on securities transactions - 2 - - 249
Other 306 235 244 285 197
Total noninterest income 4,572 4,430 4,365 4,454 4,623
Noninterest expenses:
Salaries and employee benefits 9,003 8,042 7,834 8,164 8,481
Net occupancy expense 4,088 3,884 3,929 3,878 4,108
Equipment expense 1,514 1,530 1,596 1,803 1,942
Professional services 2,146 2,067 2,238 2,066 1,507
Outsourced services 1,551 1,585 1,425 1,425 1,425
Advertising expense 729 592 668 733 600
FDIC and other insurance 1,990 2,055 2,202 1,017 1,065
Other real estate expense, net 519 570 806 201 424
Other 1,899 2,783 2,766 2,844 2,305
Total noninterest expenses 23,439 23,108 23,464 22,131 21,857
Income before taxes 16,515 16,284 16,151 17,194 17,131
Income taxes 6,106 6,104 5,535 6,467 6,416
Net income$ 10,409 10,180 10,616 10,727 10,715
Net income per common share:
- Basic$ 0.109 0.107 0.112 0.113 0.113
- Diluted 0.109 0.107 0.111 0.113 0.113
Average basic shares (in thousands) 95,365 95,256 95,149 95,056 94,947
Average diluted shares (in thousands) 95,412 95,349 95,234 95,190 95,074
Note: Taxable equivalent net interest income$ 36,196 36,278 36,069 35,690 35,185
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)
(Unaudited)
3/31/201612/31/20159/30/20156/30/20153/31/2015
ASSETS:
Cash and due from banks$ 37,373 41,698 42,560 37,574 44,853
Federal funds sold and other short term investments 722,805 676,458 655,512 641,011 705,273
Total cash and cash equivalents 760,178 718,156 698,072 678,585 750,126
Securities available for sale:
U.S. government sponsored enterprises 66,920 86,737 103,492 152,082 108,248
States and political subdivisions 974 1,290 1,963 1,969 1,974
Mortgage-backed securities and collateralized mortgage obligations-residential 422,189 411,729 413,878 429,205 445,273
Corporate bonds - - - - 1,500
Small Business Administration-guaranteed participation securities 89,053 90,416 94,038 95,323 98,668
Mortgage-backed securities and collateralized mortgage obligations-commercial 10,307 10,180 10,491 10,399 10,503
Other securities 685 685 685 685 685
Total securities available for sale 590,128 601,037 624,547 689,663 666,851
Held to maturity securities:
Mortgage-backed securities and collateralized mortgage obligations-residential 43,595 46,490 50,027 53,576 57,296
Corporate bonds 9,979 9,975 9,971 9,967 9,964
Total held to maturity securities 53,574 56,465 59,998 63,543 67,260
Federal Reserve Bank and Federal Home Loan Bank stock 9,480 9,480 9,480 9,480 9,228
Loans:
Commercial 198,765 203,415 208,794 209,399 212,145
Residential mortgage loans 2,737,784 2,721,173 2,707,944 2,669,929 2,620,925
Home equity line of credit 356,163 359,325 356,337 354,946 352,552
Installment loans 8,667 9,391 8,930 8,674 8,003
Loans, net of deferred fees and costs 3,301,379 3,293,304 3,282,005 3,242,948 3,193,625
Less:
Allowance for loan losses 44,398 44,762 45,149 45,571 45,944
Net loans 3,256,981 3,248,542 3,236,856 3,197,377 3,147,681
Bank premises and equipment, net 37,360 37,643 37,506 38,100 38,812
Other assets 55,561 63,669 59,358 64,589 60,698
Total assets$ 4,763,262 4,734,992 4,725,817 4,741,337 4,740,656
LIABILITIES:
Deposits:
Demand$ 359,060 365,081 354,162 355,783 347,315
Interest-bearing checking 746,562 754,347 719,071 713,001 696,137
Savings accounts 1,272,394 1,262,194 1,237,549 1,250,154 1,237,115
Money market deposit accounts 595,585 610,826 617,103 633,239 640,368
Time deposits 1,168,887 1,107,930 1,168,908 1,185,264 1,196,233
Total deposits 4,142,488 4,100,378 4,096,793 4,137,441 4,117,168
Short-term borrowings 169,528 191,226 184,405 170,750 194,738
Accrued expenses and other liabilities 28,221 30,078 32,327 30,687 28,274
Total liabilities 4,340,237 4,321,682 4,313,525 4,338,878 4,340,180
SHAREHOLDERS' EQUITY:
Capital stock 98,973 98,973 98,964 98,964 98,964
Surplus 171,113 171,443 171,788 171,988 172,237
Undivided profits 188,159 184,009 180,093 175,721 171,232
Accumulated other comprehensive income (loss), net of tax 73 (4,781) (1,174) (5,927) (2,687)
Treasury stock at cost (35,293) (36,334) (37,379) (38,287) (39,270)
Total shareholders' equity 423,025 413,310 412,292 402,459 400,476
Total liabilities and shareholders' equity$ 4,763,262 4,734,992 4,725,817 4,741,337 4,740,656
Outstanding shares (in thousands) 95,369 95,262 95,149 95,056 94,956

NONPERFORMING ASSETS
(dollars in thousands)
(Unaudited)
Nonperforming Assets
03/31/1612/31/1509/30/1506/30/1503/31/15
New York and other states*
Loans in nonaccrual status:
Commercial$ 2,762 3,024 3,699 3,263 2,489
Real estate mortgage - 1 to 4 family 25,669 23,273 26,059 27,366 28,215
Installment 74 90 69 79 77
Total non-accrual loans 28,505 26,387 29,827 30,708 30,781
Other nonperforming real estate mortgages - 1 to 4 family 47 48 50 74 75
Total nonperforming loans 28,552 26,435 29,877 30,782 30,856
Other real estate owned 5,208 6,120 5,893 5,833 6,288
Total nonperforming assets$ 33,760 32,555 35,770 36,615 37,144
Florida
Loans in nonaccrual status:
Commercial$ - - - - -
Real estate mortgage - 1 to 4 family 1,802 1,817 2,054 1,678 2,608
Installment - 8 9 10 20
Total non-accrual loans 1,802 1,825 2,063 1,688 2,628
Other nonperforming real estate mortgages - 1 to 4 family - - - - -
Total nonperforming loans 1,802 1,825 2,063 1,688 2,628
Other real estate owned 476 335 - 275 670
Total nonperforming assets$ 2,278 2,160 2,063 1,963 3,298
Total
Loans in nonaccrual status:
Commercial$ 2,762 3,024 3,699 3,263 2,489
Real estate mortgage - 1 to 4 family 27,471 25,090 28,113 29,044 30,823
Installment 74 98 78 89 97
Total non-accrual loans 30,307 28,212 31,890 32,396 33,409
Other nonperforming real estate mortgages - 1 to 4 family 47 48 50 74 75
Total nonperforming loans 30,354 28,260 31,940 32,470 33,484
Other real estate owned 5,684 6,455 5,893 6,108 6,958
Total nonperforming assets$ 36,038 34,715 37,833 38,578 40,442
Quarterly Net Chargeoffs (Recoveries)
03/31/1612/31/1509/30/1506/30/1503/31/15
New York and other states*
Commercial$ 224 672 3 50 34
Real estate mortgage - 1 to 4 family 771 963 1,159 933 1,004
Installment 70 35 26 24 37
Total net chargeoffs$ 1,065 1,670 1,188 1,007 1,075
Florida
Commercial$ - (2) (3) (1) (1)
Real estate mortgage - 1 to 4 family 83 6 33 167 109
Installment 16 13 4 - -
Total net chargeoffs$ 99 17 34 166 108
Total
Commercial$ 224 670 - 49 33
Real estate mortgage - 1 to 4 family 854 969 1,192 1,100 1,113
Installment 86 48 30 24 37
Total net chargeoffs$ 1,164 1,687 1,222 1,173 1,183
Asset Quality Ratios
03/31/1612/31/1509/30/1506/30/1503/31/15
Total nonperforming loans(1)$ 30,354 28,260 31,940 32,470 33,484
Total nonperforming assets(1) 36,038 34,715 37,833 38,578 40,442
Total net chargeoffs(2) 1,164 1,687 1,222 1,173 1,183
Allowance for loan losses(1) 44,398 44,762 45,149 45,571 45,944
Nonperforming loans to total loans 0.92% 0.86% 0.97% 1.00% 1.05%
Nonperforming assets to total assets 0.76% 0.73% 0.80% 0.81% 0.85%
Allowance for loan losses to total loans 1.34% 1.36% 1.38% 1.41% 1.44%
Coverage ratio(1) 146.3% 158.4% 141.4% 140.3% 137.2%
Annualized net chargeoffs to average loans(2) 0.14% 0.21% 0.15% 0.15% 0.15%
Allowance for loan losses to annualized net chargeoffs(2) 9.5x 6.6x 9.3x 9.7x 9.6x
* 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, 2016 March 31, 2015
Average InterestAverage Average InterestAverage
Balance Rate Balance Rate
Assets
Securities available for sale:
U.S. government sponsored enterprises$ 75,031 255 1.36%$ 77,865 212 1.09%
Mortgage backed securities and
collateralized mortgage obligations-residential 412,499 2,116 2.05 478,410 2,393 2.00
State and political subdivisions 1,114 22 7.90 2,092 38 7.26
Corporate bonds - - - 1,499 1 0.13
Small Business Administration-guaranteed participation securities 90,611 476 2.10 101,662 522 2.06
Mortgage backed securities and
collateralized mortgage obligations-commercial 10,394 36 1.40 10,669 37 1.40
Other 685 4 2.34 685 4 2.34
Total securities available for sale 590,334 2,909 1.97 672,882 3,207 1.91
Federal funds sold and other
short-term Investments 675,586 844 0.50 653,263 400 0.25
Held to maturity securities:
Corporate bonds 9,977 154 6.17 9,962 154 6.17
Mortgage backed securities and
collateralized mortgage obligations-residential 45,112 402 3.56 59,351 478 3.22
Total held to maturity securities 55,089 556 4.03 69,313 632 3.65
Federal Reserve Bank and Federal Home Loan Bank stock 9,480 120 5.06 9,228 116 5.03
Commercial loans 201,367 2,617 5.20 219,050 2,796 5.11
Residential mortgage loans 2,726,811 29,622 4.35 2,594,216 28,958 4.48
Home equity lines of credit 358,817 3,179 3.56 352,258 3,061 3.52
Installment loans 8,659 193 8.94 7,794 175 9.11
Loans, net of unearned income 3,295,654 35,611 4.33 3,173,318 34,990 4.42
Total interest earning assets 4,626,143 40,040 3.47 4,578,004 39,345 3.45
Allowance for loan losses (45,271) (46,597)
Cash & non-interest earning assets 135,532 138,560
Total assets$ 4,716,404 $ 4,669,967
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts$ 735,098 114 0.06%$ 677,963 105 0.06%
Money market accounts 603,774 496 0.33 637,858 617 0.39
Savings 1,262,467 604 0.19 1,229,498 658 0.22
Time deposits 1,134,459 2,373 0.84 1,180,436 2,434 0.84
Total interest bearing deposits 3,735,798 3,587 0.39 3,725,755 3,814 0.42
Short-term borrowings 176,119 257 0.59 192,344 346 0.73
Total interest bearing liabilities 3,911,917 3,844 0.40 3,918,099 4,160 0.43
Demand deposits 358,224 328,407
Other liabilities 26,917 25,289
Shareholders' equity 419,346 398,172
Total liabilities and shareholders' equity$ 4,716,404 $ 4,669,967
Net interest income, tax equivalent 36,196 35,185
Net interest spread 3.07% 3.02%
Net interest margin (net interest income
to total interest earning assets) 3.13% 3.08%
Tax equivalent adjustment (14) (20)
Net interest income 36,182 35,165


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

We believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our financial 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)
03/31/1612/31/1503/31/15
Tangible Book Value Per Share
Equity$ 423,025 413,310 400,476
Less: Intangible assets 553 553 553
Tangible equity 422,472 412,757 399,923
Shares outstanding 95,369 95,262 94,956
Tangible book value per share 4.43 4.33 4.21
Book value per share 4.44 4.34 4.22
Tangible Equity to Tangible Assets
Total Assets 4,763,262 4,734,992 4,740,656
Less: Intangible assets 553 553 553
Tangible assets 4,762,709 4,734,439 4,740,103
Tangible Equity to Tangible Assets 8.87% 8.72% 8.44%
Equity to Assets 8.88% 8.73% 8.45%
3 Months Ended
Efficiency Ratio 03/31/1612/31/1503/31/15
Net interest income$ 36,182 36,262 35,165
Taxable equivalent adjustment 14 16 20
Net interest income (fully taxable equivalent) 36,196 36,278 35,185
Non-interest income 4,572 4,430 4,623
Less: Net gain on securities - 2 249
Revenue used for efficiency ratio 40,768 40,706 39,559
Total noninterest expense 23,439 23,108 21,857
Less: Other real estate expense, net 519 570 424
Expense used for efficiency ratio 22,920 22,538 21,433
Efficiency Ratio 56.22% 55.37% 54.18%

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

Source:TrustCo Bank Corp NY