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TrustCo Announces Increased First Quarter 2017 Earnings

Executive Snapshot:

• Continued solid financial results:

  • Key metrics for first quarter of 2017 results:
    -- Net income of $10.9 million in the first quarter of 2017 compared to $10.4 million in the first quarter of 2016 and $10.8 in the fourth quarter of 2016
    -- Return on average assets (ROA) of 0.91% compared to 0.89% in the first quarter of 2016
    -- Return on average equity (ROE) of 10.17% compared to 9.98% in the first quarter of 2016
    -- Efficiency ratio of 55.81% compared to 56.22% in the first quarter of 2016 (Non-GAAP measure; see P. 10 for definition)

• Asset quality remains solid:

  • Asset quality measures improved compared to the first quarter of 2016
  • Nonperforming assets (NPAs) fell by $6.4 million compared to March 31, 2016
  • NPAs to total assets improved to 0.61%, compared to 0.76% at March 31, 2016
  • Quarterly net chargeoffs decreased to 0.05% of average loans on an annualized basis, compared to 0.14% for the first quarter of 2016, reaching the lowest level since 2008

• Continued expansion of customer base:

  • Focus on capitalizing on opportunities presented by expanded branch network
  • Average deposits per branch grew $587 thousand to $29.2 million from March 31, 2016 to March 31, 2017
  • Average core (non-maturity) deposits were $75 million higher in the first quarter of 2017 compared to the first quarter of 2016

• Loan portfolio reaches all-time high:

  • Average loans were up $142 million for the first quarter of 2017 compared to first quarter of 2016
  • At $3.45 billion as of March 31, 2017, loans reached an all-time high

TrustCo Announces Increased First Quarter 2017 Earnings

GLENVILLE, N.Y., April 21, 2017 (GLOBE NEWSWIRE) --

TrustCo Bank Corp NY (TrustCo) (Nasdaq:TRST) today announced first quarter of 2017 net income of $10.9 million compared to $10.4 million for the first quarter of 2016, an increase of 5.2%.

Summary

Robert J. McCormick, President and Chief Executive Officer noted, “We are pleased to be able to report an increase in earnings in the first quarter of 2017 as compared to the first quarter of 2016. Improved revenue growth provided an encouraging start to 2017. Our focus on traditional lending criteria and conservative balance sheet management has enabled us to produce consistent 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. In terms of our core business, we continue to add customer relationships, which ultimately drive future growth. We will continue to take advantage of opportunities as they are presented during the balance of 2017 and beyond.”

TrustCo saw continued solid loan growth in the first quarter of 2017 compared to the prior year, led by an increase in residential mortgages. Loan portfolio expansion was funded by a combination of utilizing a portion of our strong cash balances and by the growth of our deposit base. The continued shift toward loans helped offset the margin impact from continued comparatively low yields on cash and investments, although the recent moves by the Federal Reserve to raise short term interest rates have contributed to our results and will provide a further benefit in the second quarter of 2017 and beyond. The growth in average deposits in the first quarter of 2017 versus the prior year was led by lower cost checking and savings deposits. TrustCo’s strong liquidity position continues to allow it to take advantage of opportunities when interest rate conditions change.

Asset quality measures improved versus March 31, 2016, with nonperforming assets (NPAs) declining $6.4 million.

Details

Average loans were up $142.5 million or 4.3% in the first quarter of 2017 over the same period in 2016. Loan growth in the first quarter is typically slowed by weather conditions in our New York markets. Average residential loans, our primary lending focus, were up $185.2 million or 6.8% in the first quarter of 2017, over the same period in 2016. Overall loan growth was constrained by a $13.8 million decline in average commercial loans, which have become less attractive on a risk adjusted basis, and a $28.5 million decline in average outstandings on home equity lines of credit, as well as a small decline in installment loans. Average deposits were up $74.3 million or 1.8% for the first quarter of 2017 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, although checking and savings were entirely responsible for the growth within core deposits. Average core deposits increased $74.8 million from the first quarter of 2016 to the first quarter of 2017, while average time deposit balances were down slightly. Within core, money market balances were down $23.8 million, while checking was up $86.3 million (including interest bearing and non-interest bearing balances) and savings were up $12.3 million. Core deposits typically represent longer term customer relationships and are generally lower cost than time deposits. The cost of interest bearing deposits declined from 0.39% in the first quarter of 2016 to 0.35% in the first quarter of 2017. The shift out of money market balances was also beneficial, as that category is the most expensive type of core deposit. 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.”

For the first quarter of 2017, return on average assets and return on average equity were 0.91% and 10.17%, respectively, compared to 0.89% and 9.98% for the first quarter of 2016. Diluted earnings per share were $0.114 for the first quarter of 2017, compared to $0.109 for the first quarter of 2016. As discussed in recent quarters, increased operating costs in response to regulatory requirements have pushed overall expense levels higher. However, revenue growth exceeded the increase in costs in the first quarter of 2017 as compared to the first quarter of 2016. We anticipate being able to control expense growth effectively in 2017. Some of the costs associated with regulatory issues will be recurring, but others will diminish over time.

“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 good 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, 2017, our average deposits per branch were $29.2 million, compared to $28.6 million a year earlier. 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 improved versus March 31, 2016. Nonperforming loans (NPLs) were $26.4 million at March 31, 2017, compared to $30.4 million at March 31, 2016. NPLs were equal to 0.77% of total loans at March 31, 2017, compared to 0.92% at March 31, 2016. The coverage ratio, or allowance for loan losses to NPLs, was 166.7% at March 31, 2017, compared to 146.3% at March 31, 2016. Nonperforming assets (NPAs) were $29.6 million at March 31, 2017 compared to $36.0 million at March 31, 2016. The ratio of loan loss allowance to total loans was 1.28% as of March 31, 2017, compared to 1.34% at March 31, 2016 and reflects both the improvement in asset quality and economic conditions in our lending areas. The allowance for loan losses was $44.0 million at March 31, 2017 compared to $44.4 million at March 31, 2016. Net chargeoffs for the first quarter of 2017 decreased versus the first quarter of 2016, falling to $442 thousand from $1.2 million in the year earlier period. The annualized net chargeoff ratio was 0.05% for the first quarter of 2017, compared to 0.14% in the first quarter of 2016 and was at the lowest level since the first quarter of 2008. The provision for loan losses was $600 thousand for the first quarter of 2017, compared to $800 thousand in the first quarter of 2016.

The net interest margin for the first quarter of 2017 was 3.14%, up one basis point versus both the fourth quarter of 2016 and the first quarter of 2016.

At March 31, 2017 the equity to asset ratio was 8.98%, compared to 8.88% at March 31, 2016. Book value per share at March 31, 2017 was $4.57 compared to $4.44 a year earlier.

TrustCo Bank Corp NY is a $4.9 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 March 31, 2017.

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 2017 results will be held at 9:00 a.m. Eastern Time on April 24, 2017. 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 10105301. The call will also be audio webcast at: http://services.choruscall.com/links/trst170424.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 2017 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 supervisory monitoring or 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; adverse conditions on the securities markets that lead to impairment in the value of securities in our investment portfolio; changes in law and policy accompanying the new presidential administration and uncertainty or speculation pending the enactment of such changes; the perceived overall value of our products and services by users, including in comparison to competitors’ products and services and the willingness of current and prospective customers to substitute competitors’ products and services for our products and services; ; changes in consumer spending, borrowing and saving habits; technological changes and electronic, cyber, and physical security breaches; 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
03/31/1712/31/1603/31/16
Summary of operations
Net interest income (TE)$ 37,413 36,921 36,196
Provision for loan losses 600 600 800
Noninterest income, excluding net gain on securities transactions 4,727 4,512 4,572
Noninterest expense 24,019 23,365 23,439
Net income 10,947 10,798 10,409
Per common share
Net income per share:
- Basic$ 0.114 0.113 0.109
- Diluted 0.114 0.113 0.109
Cash dividends 0.066 0.066 0.066
Book value at period end 4.57 4.52 4.44
Market price at period end 7.85 8.75 6.06
At period end
Full time equivalent employees 802 808 784
Full service banking offices 144 145 145
Performance ratios
Return on average assets 0.91%0.89 0.89
Return on average equity 10.17 9.87 9.98
Efficiency (1) 55.81 54.65 56.22
Net interest spread (TE) 3.08 3.07 3.07
Net interest margin (TE) 3.14 3.13 3.13
Dividend payout ratio 57.47 58.20 60.13
Capital ratio at period end
Consolidated equity to assets 8.98%8.89 8.88
Consolidated tangible equity to tangible assets (2) 8.97%8.88 8.87
Asset quality analysis at period end
Nonperforming loans to total loans 0.77 0.73 0.92
Nonperforming assets to total assets 0.61 0.60 0.76
Allowance for loan losses to total loans 1.28 1.28 1.34
Coverage ratio (3) 1.7x1.8 1.5
(1) Non-GAAP measure; calculated as noninterest expense (excluding ORE income/expense)
divided by taxable equivalent net interest income plus noninterest income.
(2) Non-GAAP measure; calculated as total equity less $553 of intangible assets divided by
total assets less $553 of intangible assets.
(3) Calculated as allowance for loan losses divided by total nonperforming loans.
TE = Taxable equivalent.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
3/31/201712/31/20169/30/20166/30/20163/31/2016
Interest and dividend income:
Interest and fees on loans$ 36,044 36,251 36,171 35,652 35,605
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises 595 422 408 404 255
State and political subdivisions 12 12 13 13 14
Mortgage-backed securities and collateralized mortgage obligations-residential 1,958 1,849 1,829 2,169 2,116
Corporate bonds 151 149 97 - -
Small Business Administration-guaranteed participation securities 415 430 445 450 476
Mortgage-backed securities and collateralized mortgage obligations-commercial 23 23 36 38 36
Other securities 4 4 4 4 4
Total interest and dividends on securities available for sale 3,158 2,889 2,832 3,078 2,901
Interest on held to maturity securities:
Mortgage-backed securities and collateralized mortgage obligations-residential 316 331 347 374 402
Corporate bonds 154 153 156 154 154
Total interest on held to maturity securities 470 484 503 528 556
Federal Reserve Bank and Federal Home Loan Bank stock 134 133 131 118 120
Interest on federal funds sold and other short-term investments 1,246 865 866 832 844
Total interest income 41,052 40,622 40,503 40,208 40,026
Interest expense:
Interest on deposits:
Interest-bearing checking 124 123 120 116 114
Savings 430 436 504 604 604
Money market deposit accounts 466 459 463 467 496
Time deposits 2,283 2,406 2,468 2,460 2,373
Interest on short-term borrowings 349 291 281 262 257
Total interest expense 3,652 3,715 3,836 3,909 3,844
Net interest income 37,400 36,907 36,667 36,299 36,182
Provision for loan losses 600 600 750 800 800
Net interest income after provision for loan losses 36,800 36,307 35,917 35,499 35,382
Noninterest income:
Trustco Financial Services income 1,858 1,422 1,347 1,512 1,605
Fees for services to customers 2,637 2,795 2,664 2,737 2,661
Net gain on securities transactions - - - 668 -
Other 232 295 718 282 306
Total noninterest income 4,727 4,512 4,729 5,199 4,572
Noninterest expenses:
Salaries and employee benefits 10,210 9,576 8,995 8,934 9,003
Net occupancy expense 4,109 4,185 3,887 3,918 4,088
Equipment expense 1,556 1,370 1,596 1,840 1,514
Professional services 1,928 1,997 1,959 2,098 2,146
Outsourced services 1,500 1,775 1,465 1,425 1,551
Advertising expense 713 727 489 570 729
FDIC and other insurance 1,047 901 1,127 1,949 1,990
Other real estate expense, net 499 721 895 423 519
Other 2,457 2,113 2,636 2,817 1,899
Total noninterest expenses 24,019 23,365 23,049 23,974 23,439
Income before taxes 17,508 17,454 17,597 16,724 16,515
Income taxes 6,561 6,656 6,667 6,260 6,106
Net income$ 10,947 10,798 10,930 10,464 10,409
Net income per common share:
- Basic$0.114 0.113 0.114 0.110 0.109
- Diluted 0.114 0.113 0.114 0.109 0.109
Average basic shares (in thousands) 95,879 95,732 95,603 95,487 95,365
Average diluted shares (in thousands) 95,987 95,877 95,722 95,580 95,412
Note: Taxable equivalent net interest income$ 37,413 36,921 36,681 36,311 36,196
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)
(Unaudited)
3/31/201712/31/20169/30/20166/30/20163/31/2016
ASSETS:
Cash and due from banks$41,352 48,719 42,296 39,787 37,373
Federal funds sold and other short term investments 641,839 658,555 622,132 718,609 722,805
Total cash and cash equivalents 683,191 707,274 664,428 758,396 760,178
Securities available for sale:
U. S. government sponsored enterprises 162,341 117,266 116,327 116,595 66,920
States and political subdivisions 887 886 970 974 974
Mortgage-backed securities and collateralized mortgage obligations-residential 357,683 372,308 400,575 404,138 422,189
Small Business Administration-guaranteed participation securities 75,429 78,499 84,687 87,740 89,053
Mortgage-backed securities and collateralized mortgage obligations-commercial 9,923 10,011 10,233 10,374 10,307
Corporate bonds 40,612 40,705 41,025 - -
Other securities 685 685 685 685 685
Total securities available for sale 647,560 620,360 654,502 620,506 590,128
Held to maturity securities:
Mortgage-backed securities and collateralized mortgage obligations-residential 33,276 35,500 38,044 40,702 43,595
Corporate bonds 9,994 9,990 9,986 9,982 9,979
Total held to maturity securities 43,270 45,490 48,030 50,684 53,574
Federal Reserve Bank and Federal Home Loan Bank stock 9,579 9,579 9,579 9,579 9,480
Loans:
Commercial 184,451 191,194 189,795 195,698 198,765
Residential mortgage loans 2,929,928 2,895,733 2,845,876 2,786,951 2,737,784
Home equity line of credit 326,280 334,841 343,445 352,069 356,163
Installment loans 8,277 8,818 8,515 8,476 8,667
Loans, net of deferred net costs 3,448,936 3,430,586 3,387,631 3,343,194 3,301,379
Less:
Allowance for loan losses 44,048 43,890 43,950 44,064 44,398
Net loans 3,404,888 3,386,696 3,343,681 3,299,130 3,256,981
Bank premises and equipment, net 35,175 35,466 36,110 36,793 37,360
Other assets 63,080 63,941 56,519 55,825 55,561
Total assets$4,886,743 4,868,806 4,812,849 4,830,913 4,763,262
LIABILITIES:
Deposits:
Demand$373,930 377,755 380,090 376,669 359,060
Interest-bearing checking 838,936 815,534 785,118 766,322 746,562
Savings accounts 1,287,802 1,271,449 1,277,734 1,282,006 1,272,394
Money market deposit accounts 583,909 571,962 566,097 577,063 595,585
Time deposits 1,113,892 1,159,463 1,159,199 1,178,567 1,168,887
Total deposits 4,198,469 4,196,163 4,168,238 4,180,627 4,142,488
Short-term borrowings 220,946 209,406 179,204 190,542 169,528
Accrued expenses and other liabilities 28,628 30,551 29,799 29,479 28,221
Total liabilities 4,448,043 4,436,120 4,377,241 4,400,648 4,340,237
SHAREHOLDERS' EQUITY:
Capital stock 99,493 99,214 99,121 99,071 98,973
Surplus 172,628 171,425 171,093 171,174 171,113
Undivided profits 206,173 201,517 197,013 192,356 188,159
Accumulated other comprehensive (loss) income, net of tax (5,568)(6,251)2,328 2,395 73
Treasury stock at cost (34,026)(33,219)(33,947)(34,731)(35,293)
Total shareholders' equity 438,700 432,686 435,608 430,265 423,025
Total liabilities and shareholders' equity$4,886,743 4,868,806 4,812,849 4,830,913 4,763,262
Outstanding shares (in thousands) 95,917 95,780 95,614 95,493 95,369

NONPERFORMING ASSETS
(dollars in thousands)
(Unaudited)
Nonperforming Assets
03/31/1712/31/1609/30/1606/30/1603/31/16
New York and other states*
Loans in nonaccrual status:
Commercial$ 1,858 1,843 2,366 2,690 2,762
Real estate mortgage - 1 to 4 family 22,772 21,198 21,678 23,559 25,669
Installment 41 48 70 49 74
Total non-accrual loans 24,671 23,089 24,114 26,298 28,505
Other nonperforming real estate mortgages - 1 to 4 family 41 42 44 45 47
Total nonperforming loans 24,712 23,131 24,158 26,343 28,552
Other real estate owned 3,191 4,268 4,768 4,602 5,208
Total nonperforming assets$ 27,903 27,399 28,926 30,945 33,760
Florida
Loans in nonaccrual status:
Commercial$ - - - - -
Real estate mortgage - 1 to 4 family 1,712 1,929 1,844 1,900 1,802
Installment - - - - -
Total non-accrual loans 1,712 1,929 1,844 1,900 1,802
Other nonperforming real estate mortgages - 1 to 4 family - - - - -
Total nonperforming loans 1,712 1,929 1,844 1,900 1,802
Other real estate owned - - - - 476
Total nonperforming assets$ 1,712 1,929 1,844 1,900 2,278
Total
Loans in nonaccrual status:
Commercial$ 1,858 1,843 2,366 2,690 2,762
Real estate mortgage - 1 to 4 family 24,484 23,127 23,522 25,459 27,471
Installment 41 48 70 49 74
Total non-accrual loans 26,383 25,018 25,958 28,198 30,307
Other nonperforming real estate mortgages - 1 to 4 family 41 42 44 45 47
Total nonperforming loans 26,424 25,060 26,002 28,243 30,354
Other real estate owned 3,191 4,268 4,768 4,602 5,684
Total nonperforming assets$ 29,615 29,328 30,770 32,845 36,038
Quarterly Net Chargeoffs (Recoveries)
03/31/1712/31/1609/30/1606/30/1603/31/16
New York and other states*
Commercial$ 64 (56) 353 67 224
Real estate mortgage - 1 to 4 family 261 619 471 973 771
Installment 31 55 37 77 70
Total net chargeoffs$ 356 618 861 1,117 1,065
Florida
Commercial$ - - - - -
Real estate mortgage - 1 to 4 family 84 23 - 16 83
Installment 2 19 3 1 16
Total net chargeoffs$ 86 42 3 17 99
Total
Commercial$ 64 (56) 353 67 224
Real estate mortgage - 1 to 4 family 345 642 471 989 854
Installment 33 74 40 78 86
Total net chargeoffs$ 442 660 864 1,134 1,164
Asset Quality Ratios
03/31/1712/31/1609/30/1606/30/1603/31/16
Total nonperforming loans(1)$ 26,424 25,060 26,002 28,243 30,354
Total nonperforming assets(1) 29,615 29,328 30,770 32,845 36,038
Total net chargeoffs(2) 442 660 864 1,134 1,164
Allowance for loan losses(1) 44,048 43,890 43,950 44,064 44,398
Nonperforming loans to total loans 0.77%0.73%0.77%0.84%0.92%
Nonperforming assets to total assets 0.61%0.60%0.64%0.68%0.76%
Allowance for loan losses to total loans 1.28%1.28%1.30%1.32%1.34%
Coverage ratio(1) 166.7%175.1%169.0%156.0%146.3%
Annualized net chargeoffs to average loans(2) 0.05%0.08%0.10%0.14%0.14%
Allowance for loan losses to annualized net chargeoffs(2) 24.9x16.6x12.7x9.7x9.5x
* 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, 2017 March 31, 2016
Average InterestAverage Average InterestAverage
Balance Rate Balance Rate
Assets
Securities available for sale:
U. S. government sponsored enterprises$142,495 595 1.67%$75,031 255 1.36%
Mortgage backed securities and
collateralized mortgage obligations-residential 367,956 1,958 2.13 412,499 2,116 2.05
State and political subdivisions 873 19 8.71 1,114 22 7.90
Corporate bonds 41,580 151 1.45 - - -
Small Business Administration-guaranteed participation securities 78,591 415 2.11 90,611 476 2.10
Mortgage backed securities and
collateralized mortgage obligations-commercial 10,089 23 0.91 10,394 36 1.40
Other 685 4 2.34 685 4 2.34
Total securities available for sale 642,269 3,165 1.97 590,334 2,909 1.97
Federal funds sold and other
short-term Investments 641,126 1,246 0.78 675,586 844 0.50
Held to maturity securities:
Corporate bonds 9,992 154 6.16 9,977 154 6.17
Mortgage backed securities and
collateralized mortgage obligations-residential 34,303 316 3.68 45,112 402 3.56
Total held to maturity securities 44,295 470 4.24 55,089 556 4.03
Federal Reserve Bank and Federal Home Loan Bank stock 9,579 134 5.60 9,480 120 5.06
Commercial loans 187,590 2,429 5.18 201,367 2,617 5.20
Residential mortgage loans 2,911,987 30,367 4.17 2,726,811 29,622 4.35
Home equity lines of credit 330,338 3,085 3.74 358,817 3,179 3.56
Installment loans 8,228 169 8.22 8,659 193 8.94
Loans, net of unearned income 3,438,143 36,050 4.19 3,295,654 35,611 4.33
Total interest earning assets 4,775,412 41,065 3.44 4,626,143 40,040 3.47
Allowance for loan losses (44,236) (45,271)
Cash & non-interest earning assets 130,186 135,532
Total assets$4,861,362 $4,716,404
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts$809,039 124 0.06%$735,098 114 0.06%
Money market accounts 580,006 466 0.32 603,774 496 0.33
Savings 1,274,757 430 0.13 1,262,467 604 0.19
Time deposits 1,133,942 2,283 0.81 1,134,459 2,373 0.84
Total interest bearing deposits 3,797,744 3,303 0.35 3,735,798 3,587 0.39
Short-term borrowings 229,719 349 0.61 176,119 257 0.59
Total interest bearing liabilities 4,027,463 3,652 0.36 3,911,917 3,844 0.40
Demand deposits 370,552 358,224
Other liabilities 26,781 26,917
Shareholders' equity 436,566 419,346
Total liabilities and shareholders' equity$4,861,362 $4,716,404
Net interest income, tax equivalent 37,413 36,196
Net interest spread 3.08% 3.07%
Net interest margin (net interest income
to total interest earning assets) 3.14% 3.13%
Tax equivalent adjustment (13) (14)
Net interest income 37,400 36,182

Non-GAAP Financial Measures Reconciliation

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

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

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

NON-GAAP FINANCIAL MEASURES RECONCILIATION
(dollars in thousands, except per share amounts)
(Unaudited)
03/31/1712/31/1603/31/16
Tangible Equity to Tangible Assets
Total Assets 4,886,743 4,868,806 4,763,262
Less: Intangible assets 553 553 553
Tangible assets 4,886,190 4,868,253 4,762,709
Equity$ 438,700 432,686 423,025
Less: Intangible assets 553 553 553
Tangible equity 438,147 432,133 422,472
Tangible Equity to Tangible Assets 8.97%8.88%8.87%
Equity to Assets 8.98%8.89%8.88%
3 Months Ended
Efficiency Ratio 03/31/1712/31/1603/31/16
Net interest income$ 37,400 36,907 36,182
Taxable equivalent adjustment 13 14 14
Net interest income (fully taxable equivalent) 37,413 36,921 36,196
Non-interest income 4,727 4,512 4,572
Revenue used for efficiency ratio 42,140 41,433 40,768
Total noninterest expense 24,019 23,365 23,439
Less: Other real estate expense, net 499 721 519
Expense used for efficiency ratio 23,520 22,644 22,920
Efficiency Ratio 55.81%54.65%56.22%

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

Source: TrustCo Bank Corp NY