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TrustCo Announces 2012 Earnings Up 13%

GLENVILLE, N.Y., Jan. 22, 2013 (GLOBE NEWSWIRE) -- TrustCo Bank Corp NY (TrustCo) (Nasdaq:TRST) today announced that net income was up 13.4% from $33.1 million in the year ended December 31, 2011 to $37.5 million for the year ended December 31, 2012. Net income for the fourth quarter of 2012 was $9.8 million, up 12.5% over the prior-year period and equal to diluted earnings per share of $0.104, compared to net income of $8.7 million and diluted earnings per share of $0.093 for the fourth quarter of 2011.

TrustCo saw continued balance sheet growth in 2012 in both loans and deposits. Robert J. McCormick, President and Chief Executive Officer noted, "We are pleased that 2012 resulted in continued solid earnings growth. We continue to add profitable customer relationships on both the deposit and loan side, which helped our bottom line grow in 2012 and we believe will continue to do so into 2013. Our highly liquid balance sheet allows us to fund loan growth without having to overpay for deposits, which enabled us to significantly restructure our deposit mix during 2012, and should be of additional benefit when interest rates eventually begin to rise. We look forward to 2013 with optimism, though we note that our industry continues to face challenges as the economy remains fragile and interest rates remain at unprecedented levels. We will continue to take advantage of opportunities that are presented." Return on average equity and return on average assets were 10.70% and 0.87%, respectively, for 2012, compared to 11.04% and 0.81% for 2011. The efficiency ratio was 52.28% for 2012, compared to 49.95% for 2011. The ratios for both years rank TrustCo among industry leaders, a continuation of longer term trends. TrustCo's efficiency ratio and return on average equity, for example, have ranked in the top ten in its peer group in 10 of the last 15 years for the former and in 12 of the last 15 years for the latter. Results for 2012 include the full year effect of the common stock offering completed on July 6, 2011.

Mr. McCormick also noted, "We continue to see some signs of economic improvement in the markets in which we operate, although high levels of unemployment and other persistent issues continue to constrain any significant economic growth. We believe our long-term focus on traditional lending criteria and conservative balance sheet management has enabled us to maintain a strong balance sheet and continued profitability. As a result, we have been able to focus on conducting business, which has put us in a position to take advantage of changes in market and competitive conditions."

TrustCo continued to report solid growth in loans and deposits on a year-over-year basis. For the full year ended December 31, 2012, average loans were up $149.6 million or 6.2% compared to the same period in 2011, while average deposits increased $172.1 million or 4.7% over the same period. Mr. McCormick noted that, "The year-over-year growth of our loans and deposits reflects the long term strategic focus of the Bank. The growth in deposits came despite a tactical decision earlier in the year to intensify our focus on enhancing our mix of deposits and growing our core customer base, which resulted in the planned loss of higher costing certificate of deposit balances and an improvement of our net interest margin.

"Our branch franchise continues to be the key to our long term plans. We have made significant progress in expanding our loans and deposits through our branches, and expect that to continue as the new branches grow. We remain mindful that fully achieving our goals for our newer branches will take time and continued hard work. We believe our success in growing customer relationships provides the basic building blocks that will help drive profit growth over the coming years."

For the three months ended December 31, 2012 net income was $9.8 million compared to net income of $8.7 million for the fourth quarter of 2011. Return on average equity and return on average assets were 10.88% and 0.91%, respectively, for the fourth quarter of 2012 and 10.15% and 0.83% for the comparable period in 2011.

Reported credit results for the year were affected by the implementation in the third quarter of new OCC guidance which affected consumer loans where the borrower's obligation to TrustCo has been discharged in bankruptcy and the borrower has not reaffirmed the debt. Implementation of this new OCC guidance affected third quarter results as follows:

  • Net $4.0 million of performing consumer loans were reclassified to nonaccrual status, and
  • $804 thousand increase in net charge offs, which was covered by the reserve.

Nonperforming loans were $52.7 million as of December 31, 2012, compared to $48.8 million at December 31, 2011. This includes the NPLs added as a result of the OCC guidance noted above. Care should be taken in examining NPL numbers across banking institutions as not all regulators provided this guidance to the institutions they regulate. Nonperforming assets were $61.4 million at December 31, 2012, compared to $54.0 million at December 31, 2011. At December 31, 2012, nonperforming loans were equal to 1.96% of total loans, compared to 1.93% at December 31, 2011. Nonperforming assets to total assets were 1.41% at December 31, 2012, compared to 1.27% at December 31, 2011. The allowance for loan losses as a percentage of gross loans and as a multiple of net charge-offs remains strong. The allowance to total loans was 1.79% at December 31, 2012 and 1.93% at December 31, 2011. For the fourth quarter of 2012 the allowance covered annualized fourth quarter net charge-offs by 4.9 times, compared to an annualized 3.7 times for the fourth quarter of 2011. The coverage ratio, or allowance for loan losses to nonperforming loans was 91.0% at December 31, 2012, compared to 99.9% at December 31, 2011

Net interest margin for the fourth quarter of 2012 was 3.21%, equal to the third quarter level and down from 3.35% in the fourth quarter of 2011.

At December 31, 2012 the tangible equity ratio was 8.24% compared to 7.97% at December 31, 2011. Tangible book value per share ended the fourth quarter at $3.81 compared to $3.62 in the year-ago period.

TrustCo Bank Corp NY is a $4.3 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 138 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at December 31, 2012.

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 2012 results will be held at 9:00 a.m. Eastern Time on January 23, 2013. Those wishing to participate in the call may dial toll-free 1-888-317-6016. International callers must dial + 1-412-317-6016. A replay of the call will be available until April 24, 2013 by dialing 1-877-344-7529 (1-412-317-0088 for international callers), Conference Number 10023478. The call will also be audio webcast at: http://services.choruscall.com/links/trst130123.html, and will be available until January 23, 2014.

Safe Harbor Statement

All statements in this news release that are not historical are forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended. The "forward-looking statements" may include statements regarding future events or performance and statements regarding TrustCo's ability to offer and sell securities under its shelf registration statement. Such forward-looking statements are subject to factors that could cause actual results to differ materially for TrustCo from those discussed. TrustCo wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The following important factors, among others, in some cases have affected and in the future could affect TrustCo's actual results and could cause TrustCo's actual financial performance to differ materially from that expressed in any forward-looking statement: credit risk, the effects of and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System, inflation, interest rates, market and monetary fluctuations, competition, the effect of changes in financial services laws and regulations (including laws concerning taxation, banking and securities), real estate and collateral values, changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board ("FASB") or the Public Company Accounting Oversight Board; changes in local market areas and general business and economic trends and the matters described under the heading "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2011, as amended, and in our subsequent securities filings.

TRUSTCO BANK CORP NY
GLENVILLE, NY
FINANCIAL HIGHLIGHTS
(dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
12/31/12 09/30/12 12/31/11
Summary of operations
Net interest income (TE) $ 33,718 34,321 34,220
Provision for loan losses 3,000 2,900 4,200
Net securities transactions 763 666 132
Noninterest income 5,398 4,551 4,219
Noninterest expense 21,150 20,643 19,524
Net income 9,806 9,753 8,714
Per common share
Net income per share:
- Basic $ 0.104 0.104 0.093
- Diluted $ 0.104 0.104 0.093
Cash dividends 0.066 0.066 0.066
Tangible Book value at period end 3.81 3.81 3.62
Market price at period end 5.28 5.71 5.61
At period end
Full time equivalent employees 759 760 726
Full service banking offices 138 138 136
Performance ratios
Return on average assets 0.91% 0.89 0.83
Return on average equity 10.88 10.97 10.15
Efficiency (1) 53.11 49.99 47.53
Net interest spread (TE) 3.15 3.15 3.26
Net interest margin (TE) 3.21 3.21 3.35
Dividend payout ratio 63.00 63.13 70.50
Capital ratio at period end
Consolidated tangible equity to tangible assets (2) 8.24 8.27 7.97
Asset quality analysis at period end
Nonperforming loans to total loans (4) 1.96 1.92 1.93
Nonperforming assets to total assets 1.41 1.36 1.27
Allowance for loan losses to total loans 1.79 1.82 1.93
Coverage ratio (3) 0.9x 0.9 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).
(2) The tangible equity ratio excludes $553,000 of intangibles from both equity and assets.
(3) Calculated as allowance for loan losses divided by total nonperforming loans.
(4) Included in the September 30, 2012 balance of nonperforming loans is net $4.0 million of performing loans that have been reclassified to nonaccrual status as a result of recent OCC guidance.
TE = Taxable equivalent.
FINANCIAL HIGHLIGHTS, Continued
(dollars in thousands, except per share data)
(Unaudited)
Year Ended
12/31/12 12/31/11
Summary of operations
Net interest income (TE) $ 135,669 135,717
Provision for loan losses 12,000 18,750
Net securities transactions 2,161 1,428
Noninterest income 18,803 17,345
Noninterest expense 83,977 82,142
Net income 37,534 33,087
Per common share
Net income per share:
- Basic $ 0.400 0.389
- Diluted 0.400 0.389
Cash dividends 0.263 0.263
Tangible Book value at period end 3.81 3.62
Market price at period end 5.28 5.61
Performance ratios
Return on average assets 0.87% 0.81
Return on average equity 10.70 11.04
Efficiency (1) 52.28 49.95
Net interest spread (TE) 3.13 3.31
Net interest margin (TE) 3.20 3.40
Dividend payout ratio 65.60 67.71
(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
12/31/2012 9/30/2012 6/30/2012 3/31/2012 12/31/2011
Interest and dividend income:
Interest and fees on loans $ 31,776 32,103 32,277 32,425 32,711
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises 1,191 1,996 2,606 2,304 2,661
State and political subdivisions 295 340 368 410 490
Mortgage-backed securities and collateralized mortgage obligations-residential 2,237 2,003 1,364 1,093 1,083
Corporate bonds 232 529 648 822 886
Small Business Administration-guaranteed participation securities 276 43 -- -- --
Other securities 5 4 5 5 5
Total interest and dividends on securities available for sale 4,236 4,915 4,991 4,634 5,125
Interest on held to maturity securities:
U. S. government sponsored enterprises -- -- -- 25 97
Mortgage-backed securities and collateralized mortgage obligations-residential 823 976 1,198 1,290 1,151
Corporate bonds 385 385 387 509 590
Total interest on held to maturity securities 1,208 1,361 1,585 1,824 1,838
Federal Reserve Bank and Federal Home Loan Bank stock 127 120 149 90 80
Interest on federal funds sold and other short-term investments 265 258 299 320 284
Total interest income 37,612 38,757 39,301 39,293 40,038
Interest expense:
Interest on deposits:
Interest-bearing checking 80 79 78 78 76
Savings 921 870 979 1,102 1,018
Money market deposit accounts 703 673 770 923 1,030
Time deposits 1,967 2,629 3,230 3,418 3,552
Interest on short-term borrowings 361 348 378 388 401
Total interest expense 4,032 4,599 5,435 5,909 6,077
Net interest income 33,580 34,158 33,866 33,384 33,961
Provision for loan losses 3,000 2,900 3,000 3,100 4,200
Net interest income after provision for loan losses 30,580 31,258 30,866 30,284 29,761
Noninterest income:
Trust department income 1,815 1,145 1,407 1,394 1,086
Fees for services to customers 3,386 3,234 2,939 2,732 2,920
Net gain on securities transactions 763 666 55 677 132
Other 197 172 176 207 213
Total noninterest income 6,161 5,217 4,577 5,010 4,351
Noninterest expenses:
Salaries and employee benefits 8,427 7,587 7,519 7,743 7,638
Net occupancy expense 3,889 3,756 3,817 3,795 3,664
Equipment expense 1,637 1,316 1,600 1,520 1,200
Professional services 1,458 1,657 1,489 1,436 1,411
Outsourced services 1,175 1,350 1,347 1,250 1,050
Advertising expense 1,037 935 1,060 809 607
FDIC and other insurance 1,007 983 953 880 577
Other real estate expense, net 375 1,210 665 966 1,254
Other 2,145 1,849 2,599 2,737 2,123
Total noninterest expenses 21,150 20,643 21,049 21,136 19,524
Income before taxes 15,591 15,832 14,394 14,158 14,588
Income taxes 5,785 6,079 5,328 5,249 5,874
Net income $ 9,806 9,753 9,066 8,909 8,714
Net income per Common Share:
- Basic $ 0.104 0.104 0.097 0.095 0.093
- Diluted 0.104 0.104 0.097 0.095 0.093
Average basic shares (thousands) 93,824 93,692 93,561 93,546 93,308
Average diluted shares (thousands) 93,828 93,700 93,562 93,546 93,308
Note: Taxable equivalent net interest income $ 33,718 34,321 33,993 33,637 34,220
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
(Unaudited)
Year Ended
12/31/2012 12/31/2011
Interest and dividend income:
Interest and fees on loans $ 128,581 129,212
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises 8,097 12,998
State and political subdivisions 1,413 2,471
Mortgage-backed securities and collateralized mortgage obligations-residential 6,697 3,091
Corporate bonds 2,231 4,059
Small Business Administration-guaranteed participation securities 319 --
Other securities 19 20
Total interest and dividends on securities available for sale 18,776 22,639
Interest on held to maturity securities:
U. S. government sponsored enterprises 25 261
Mortgage-backed securities-residential 4,287 4,765
Corporate bonds 1,666 2,465
Total interest on held to maturity securities 5,978 7,491
Federal Reserve Bank and Federal Home Loan Bank stock 486 304
Interest on federal funds sold and other short-term investments 1,142 1,102
Total interest income 154,963 160,748
Interest expense:
Interest on deposits:
Interest-bearing checking 315 285
Savings 3,872 3,788
Money market deposit accounts 3,069 4,599
Time deposits 11,244 15,998
Interest on short-term borrowings 1,475 1,574
Total interest expense 19,975 26,244
Net interest income 134,988 134,504
Provision for loan losses 12,000 18,750
Net interest income after provision for loan losses 122,988 115,754
Noninterest income:
Trust department income 5,761 5,088
Fees for services to customers 12,290 11,305
Net gain on securities transactions 2,161 1,428
Other 752 952
Total noninterest income 20,964 18,773
Noninterest expenses:
Salaries and employee benefits 31,276 28,751
Net occupancy expense 15,257 14,687
Equipment expense 6,073 5,652
Professional services 6,040 5,729
Outsourced services 5,122 5,100
Advertising expense 3,841 2,784
FDIC and other insurance 3,823 4,655
Other real estate expense, net 3,216 5,693
Other 9,329 9,091
Total noninterest expenses 83,977 82,142
Income before taxes 59,975 52,385
Income taxes 22,441 19,298
Net income $ 37,534 33,087
Net income per Common Share:
- Basic $ 0.400 0.389
- Diluted 0.400 0.389
Average basic shares (thousands) 93,633 85,073
Average diluted shares (thousands) 93,637 85,073
Note: Taxable equivalent net interest income $ 135,669 135,717
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)
(Unaudited)
12/31/2012 9/30/2012 6/30/2012 3/31/2012 12/31/2011
ASSETS:
Cash and due from banks $ 55,789 40,354 36,589 39,426 44,395
Federal funds sold and other short term investments 488,227 402,290 486,049 486,055 488,548
Total cash and cash equivalents 544,016 442,644 522,638 525,481 532,943
Securities available for sale:
U. S. government sponsored enterprises 263,108 427,798 643,189 744,725 563,460
States and political subdivisions 26,457 33,857 36,978 38,367 43,968
Mortgage-backed securities and collateralized mortgage obligations-residential 518,776 515,879 354,285 219,301 204,022
Corporate bonds 26,529 49,296 73,311 81,654 96,608
Small Business Administration-guaranteed participation securities 76,562 25,338 -- -- --
Other securities 660 660 660 660 660
Total securities available for sale 912,092 1,052,828 1,108,423 1,084,707 908,718
Held to maturity securities:
U. S. government sponsored enterprises -- -- -- -- 15,000
Mortgage-backed securities and collateralized mortgage obligations-residential 108,471 120,877 133,562 143,629 141,857
Corporate bonds 34,955 35,074 35,193 35,312 59,431
Total held to maturity securities 143,426 155,951 168,755 178,941 216,288
Federal Reserve Bank and Federal Home Loan Bank stock 9,632 9,632 9,632 9,004 9,004
Loans:
Commercial 219,577 217,431 235,347 235,513 248,163
Residential mortgage loans 2,126,668 2,056,972 2,003,046 1,970,278 1,955,951
Home equity line of credit 333,909 327,083 317,157 314,668 313,038
Installment loans 4,579 4,455 4,071 3,855 4,151
Loans, net of deferred fees and costs 2,684,733 2,605,941 2,559,621 2,524,314 2,521,303
Less:
Allowance for loan losses 47,927 47,364 48,018 48,535 48,717
Net loans 2,636,806 2,558,577 2,511,603 2,475,779 2,472,586
Bank premises and equipment, net 36,239 37,251 37,868 37,099 37,006
Other assets 64,402 61,290 62,480 63,432 67,099
Total assets $ 4,346,613 4,318,173 4,421,399 4,374,443 4,243,644
LIABILITIES:
Deposits:
Demand $ 300,544 292,350 283,873 281,628 267,776
Interest-bearing checking 560,064 536,892 528,101 507,510 489,227
Savings accounts 1,198,517 1,167,927 1,122,208 1,068,058 978,819
Money market deposit accounts 667,589 668,064 644,627 631,761 635,434
Certificates of deposit (in denominations of $100,000 or more) 352,734 359,246 452,043 467,447 460,971
Other time accounts 724,745 751,974 867,798 894,946 903,746
Total deposits 3,804,193 3,776,453 3,898,650 3,851,350 3,735,973
Short-term borrowings 159,846 161,751 150,718 159,002 147,563
Accrued expenses and other liabilities 23,776 22,352 22,124 19,445 21,592
Total liabilities 3,987,815 3,960,556 4,071,492 4,029,797 3,905,128
SHAREHOLDERS' EQUITY:
Capital stock 98,912 98,912 98,912 98,912 98,912
Surplus 174,899 175,284 175,773 176,199 176,638
Undivided profits 132,378 128,750 125,153 122,235 119,465
Accumulated other comprehensive income (loss), net of tax 1,558 4,879 1,585 53 (2,493)
Treasury stock at cost (48,949) (50,208) (51,516) (52,753) (54,006)
Total shareholders' equity 358,798 357,617 349,907 344,646 338,516
Total liabilities and shareholders' equity $ 4,346,613 4,318,173 4,421,399 4,374,443 4,243,644
Outstanding shares (thousands) 93,935 93,807 93,674 93,549 93,315
NONPERFORMING ASSETS
(dollars in thousands)
(Unaudited)
Nonperforming Assets
12/31/12 09/30/12 06/30/12 03/31/12 12/31/11
New York and other states*
Loans in nonaccrual status:
Commercial $ 6,635 5,880 5,656 5,667 4,981
Real estate mortgage - 1 to 4 family 35,286 32,593 29,167 29,894 27,820
Installment 6 71 1 9 3
Total non-accrual loans 41,927 38,544 34,824 35,570 32,804
Other nonperforming real estate mortgages - 1 to 4 family 231 238 243 306 312
Total nonperforming loans 42,158 38,782 35,067 35,876 33,116
Other real estate owned 2,979 2,716 2,787 2,411 2,382
Total nonperforming assets $ 45,137 41,498 37,854 38,287 35,498
Florida
Loans in nonaccrual status:
Commercial $ 2,698 2,698 8,435 5,874 5,000
Real estate mortgage - 1 to 4 family 7,820 8,438 7,954 9,404 10,662
Installment 1 7 1 -- --
Total non-accrual loans 10,519 11,143 16,390 15,278 15,662
Other nonperforming real estate mortgages - 1 to 4 family -- -- -- -- --
Total nonperforming loans 10,519 11,143 16,390 15,278 15,662
Other real estate owned 5,726 5,975 1,083 1,293 2,883
Total nonperforming assets $ 16,245 17,118 17,473 16,571 18,545
Total
Loans in nonaccrual status:
Commercial $ 9,333 8,578 14,091 11,541 9,981
Real estate mortgage - 1 to 4 family 43,106 41,031 37,121 39,298 38,482
Installment 7 78 2 9 3
Total non-accrual loans 52,446 49,687 51,214 50,848 48,466
Other nonperforming real estate mortgages - 1 to 4 family 231 238 243 306 312
Total nonperforming loans 52,677 49,925 51,457 51,154 48,778
Other real estate owned 8,705 8,691 3,870 3,704 5,265
Total nonperforming assets $ 61,382 58,616 55,327 54,858 54,043
Quarterly Net Chargeoffs
12/31/12 09/30/12 06/30/12 03/31/12 12/31/11
New York and other states*
Commercial $ 152 9 713 321 99
Real estate mortgage - 1 to 4 family 1,410 2,157 1,844 1,136 1,404
Installment 72 7 7 (8) 5
Total net chargeoffs $ 1,634 2,173 2,564 1,449 1,508
Florida
Commercial $ (18) 736 288 160 400
Real estate mortgage - 1 to 4 family 810 644 665 1,673 1,359
Installment 12 1 -- -- (2)
Total net chargeoffs $ 804 1,381 953 1,833 1,757
Total
Commercial $ 134 745 1,001 481 499
Real estate mortgage - 1 to 4 family 2,220 2,801 2,509 2,809 2,763
Installment 84 8 7 (8) 3
Total net chargeoffs $ 2,438 3,554 3,517 3,282 3,265
Asset Quality Ratios
12/31/12 09/30/12 06/30/12 03/31/12 12/31/11
Total nonperforming loans(1) $ 52,677 49,925 51,457 51,154 48,778
Total nonperforming assets(1) 61,382 58,616 55,327 54,858 54,043
Total net chargeoffs(2) 2,438 3,554 3,517 3,282 3,265
Allowance for loan losses(1) 47,927 47,364 48,018 48,535 48,717
Nonperforming loans to total loans(1) 1.96% 1.92% 2.01% 2.03% 1.93%
Nonperforming assets to total assets(1) 1.41% 1.36% 1.25% 1.25% 1.27%
Allowance for loan losses to total loans(1) 1.79% 1.82% 1.88% 1.92% 1.93%
Coverage ratio(1) 91.0% 94.9% 93.3% 94.9% 99.9%
Annualized net chargeoffs to average loans(2) 0.37% 0.55% 0.55% 0.52% 0.52%
Allowance for loan losses to annualized net chargeoffs(2) 4.9x 3.3x 3.4x 3.7x 3.7x
* 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) December 31, 2012 December 31, 2011
Average Interest Average Average Interest Average
Balance Rate Balance Rate
Assets
Securities available for sale:
U. S. government sponsored enterprises $ 370,086 1,191 1.29% $ 592,488 2,661 1.80%
Mortgage backed securities and collateralized mortgage obligations-residential 480,382 2,237 1.86 199,155 1,083 2.18
State and political subdivisions 30,619 425 5.55 47,373 712 6.01
Corporate bonds 35,640 232 2.59 102,532 886 3.46
Small Business Administration-guaranteed participation securities 54,678 276 2.02 -- -- 0.00
Other 660 5 3.03 660 5 3.03
Total securities available for sale 972,065 4,366 1.80 942,208 5,347 2.27
Federal funds sold and other short-term Investments 427,298 265 0.25 444,599 284 0.25
Held to maturity securities:
U. S. government sponsored enterprises -- -- 0.00 16,413 97 2.37
Corporate bonds 35,013 385 4.40 59,491 590 3.96
Mortgage backed securities and collateralized mortgage obligations-residential 114,647 823 2.87 119,739 1,151 3.85
Total held to maturity securities 149,660 1,208 3.23 195,643 1,838 3.76
Federal Reserve Bank and Federal Home Loan Bank stock 9,632 127 5.27 6,954 80 4.60
Commercial loans 216,787 2,917 5.38 239,680 3,401 5.67
Residential mortgage loans 2,087,003 25,804 4.95 1,945,375 26,331 5.41
Home equity lines of credit 331,441 2,905 3.49 310,052 2,870 3.67
Installment loans 4,274 158 14.68 3,532 146 16.37
Loans, net of unearned income 2,639,505 31,784 4.81 2,498,639 32,748 5.24
Total interest earning assets 4,198,160 37,750 3.59 4,088,043 40,297 3.94
Allowance for loan losses (48,312) (49,250)
Cash & non-interest earning assets 146,482 143,121
Total assets $ 4,296,330 $ 4,181,914
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts $ 532,579 80 0.06% $ 467,418 76 0.07%
Money market accounts 669,201 703 0.42 639,365 1,030 0.64
Savings 1,184,601 921 0.31 951,562 1,018 0.42
Time deposits 1,085,054 1,967 0.72 1,360,979 3,552 1.04
Total interest bearing deposits 3,471,435 3,671 0.42 3,419,324 5,676 0.66
Short-term borrowings 161,816 361 0.89 142,443 401 1.12
Total interest bearing liabilities 3,633,251 4,032 0.44 3,561,767 6,077 0.68
Demand deposits 283,528 258,980
Other liabilities 21,006 20,423
Shareholders' equity 358,545 340,744
Total liabilities and shareholders' equity $ 4,296,330 $ 4,181,914
Net interest income , tax equivalent 33,718 34,220
Net interest spread 3.15% 3.26%
Net interest margin (net interest income to total interest earning assets) 3.21% 3.35%
Tax equivalent adjustment (138) (259)
Net interest income 33,580 33,961
(dollars in thousands) Year ended Year ended
(Unaudited) December 31, 2012 December 31, 2011
Average Interest Average Average Interest Average
Balance Rate Balance Rate
Assets
Securities available for sale:
U. S. government sponsored enterprises $ 568,425 8,097 1.42% $ 667,037 12,998 1.95%
Mortgage backed securities and collateralized mortgage obligations-residential 334,616 6,697 2.00 112,504 3,091 2.75
State and political subdivisions 35,435 2,012 5.68 58,725 3,625 6.17
Corporate bonds 68,182 2,231 3.27 108,513 4,059 3.74
Small Business Administration-guaranteed participation securities 15,707 319 2.03 -- -- 0.00
Other 660 19 2.88 703 20 2.84
Total securities available for sale 1,023,025 19,375 1.89 947,482 23,793 2.51
Federal funds sold and other short-term Investments 461,495 1,142 0.25 432,631 1,102 0.25
Held to maturity securities:
U. S. government sponsored enterprises 1,048 25 2.43 11,035 261 2.36
Corporate bonds 39,570 1,666 4.21 56,253 2,465 4.38
Mortgage backed securities and collateralized mortgage obligations-residential 131,092 4,287 3.27 114,296 4,765 4.17
Total held to maturity securities 171,710 5,978 3.48 181,584 7,491 4.13
Federal Reserve Bank and Federal Home Loan Bank stock 9,425 486 5.16 6,898 304 4.41
Commercial loans 230,539 12,486 5.42 247,691 14,285 5.77
Residential mortgage loans 2,017,230 104,028 5.16 1,873,028 103,281 5.51
Home equity lines of credit 321,299 11,551 3.60 298,996 11,117 3.72
Installment loans 3,915 598 15.28 3,622 588 16.23
Loans, net of unearned income 2,572,983 128,663 5.00 2,423,337 129,271 5.33
Total interest earning assets 4,238,638 155,644 3.67 3,991,932 161,961 4.06
Allowance for loan losses (49,148) (46,210)
Cash & non-interest earning assets 143,303 144,068
Total assets $ 4,332,793 $ 4,089,790
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts $ 515,062 315 0.06% $ 456,397 285 0.06%
Money market accounts 649,452 3,069 0.47 632,786 4,599 0.73
Savings 1,115,151 3,872 0.35 889,773 3,788 0.43
Time deposits 1,251,846 11,244 0.90 1,403,312 15,998 1.14
Total interest bearing deposits 3,531,511 18,500 0.52 3,382,268 24,670 0.73
Short-term borrowings 152,982 1,475 0.96 133,803 1,574 1.18
Total interest bearing liabilities 3,684,493 19,975 0.54 3,516,071 26,244 0.75
Demand deposits 278,179 255,327
Other liabilities 19,441 18,653
Shareholders' equity 350,680 299,739
Total liabilities and shareholders' equity $ 4,332,793 $ 4,089,790
Net interest income , tax equivalent 135,669 135,717
Net interest spread 3.13% 3.31%
Net interest margin (net interest income to total interest earning assets) 3.20% 3.40%
Tax equivalent adjustment (681) (1,213)
Net interest income 134,988 134,504

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)
12/31/12 09/30/12 06/30/12 03/31/12 12/31/11
Tangible Book Value Per Share
Equity $ 358,798 357,617 349,907 344,646 338,516
Less: Intangible assets 553 553 553 553 553
Tangible equity 358,245 357,064 349,354 344,093 337,963
Shares outstanding 93,935 93,807 93,674 93,549 93,315
Tangible book value per share 3.81 3.81 3.73 3.68 3.62
Book value per share 3.82 3.81 3.74 3.68 3.63
Tangible Equity to Tangible Assets
Total Assets 4,346,613 4,318,173 4,421,399 4,374,443 4,243,644
Less: Intangible assets 553 553 553 553 553
Tangible assets 4,346,060 4,317,620 4,420,846 4,373,890 4,243,091
Tangible Equity to Tangible Assets 8.24% 8.27% 7.90% 7.87% 7.97%
Equity to Assets 8.25% 8.28% 7.91% 7.88% 7.98%
3 Months Ended Year Ended
Efficiency Ratio 12/31/12 09/30/12 06/30/12 03/31/12 12/31/11 12/31/12 12/31/11
Net interest income (fully taxable equivalent) $ 33,718 34,321 33,993 33,637 34,220 135,669 135,717
Non-interest income 6,161 5,217 4,577 5,010 4,351 20,964 18,773
Less: Net gain on securities 763 666 55 677 132 2,161 1,428
Recurring revenue 39,116 38,872 38,515 37,970 38,439 154,472 153,062
Total Noninterest expense 21,150 20,643 21,049 21,136 19,524 83,977 82,142
Less: Other real estate expense, net 375 1,210 665 966 1,254 3,216 5,693
Recurring expense 20,775 19,433 20,384 20,170 18,270 80,761 76,449
Efficiency Ratio 53.11% 49.99% 52.92% 53.12% 47.53% 52.28% 49.95%

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