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TrustCo Announces Second Quarter Earnings

GLENVILLE, N.Y., July 22, 2013 (GLOBE NEWSWIRE) -- TrustCo Bank Corp NY (TrustCo) (Nasdaq:TRST) today announced that net income rose to $9.8 million in the quarter ended June 30, 2013, up 7.7% from $9.1 million for the quarter ended June 30, 2012. Second quarter net income is up 25.7% over the same period two years ago and 81.5% over the same period four years ago.

TrustCo saw continued strong loan growth in the second quarter of 2013 along with an encouraging shift toward core deposits. Robert J. McCormick, President and Chief Executive Officer noted, "Our results for the first half of 2013 were solid both in terms of bottom line growth and in positioning our business for the balance of the year and beyond. In addition to the gain in net income, we continue to add profitable customer relationships on both the loan and deposit sides of the Bank. As we have noted, our highly liquid balance sheet allows us to fund loan growth without having to overpay for deposits. This enables us to manage our deposit mix during the last year; this should be a benefit going forward. We look forward to the second half of 2013 with optimism, though we note that our industry continues to face challenges as the economy remains fragile and interest rate environment remains mixed. We will continue to take advantage of opportunities as they are presented."

Mr. McCormick also noted, "We continue to see signs of economic improvement in the markets in which we operate, particularly Florida, although 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 significantly enhanced our reputation and put us in a position to take advantage of changes in market and competitive conditions."

Return on average assets and return on average equity were 0.88% and 10.83%, respectively for the second quarter of 2013, compared to 0.83% and 10.49% for the second quarter of 2012. Earnings per share were $0.104 for the second quarter of 2013, up 7.1% from $0.097 for the second quarter of 2012. For the first half of 2013, TrustCo earned $18.9 million or $0.201 per share, compared to $18.0 million or $0.192 per share in the first half of 2012.

On a year-over-year basis, average loans were up $186.1 million in the second quarter of 2013, over the same period in 2012. Average deposits were actually down a nominal $3.4 million over the same period, but the deposit mix changed in a favorable way. Average core deposits were up $217.9 million, offset by a $221.3 million decline in time deposits. 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 the shift in our deposit base reflects 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 recently celebrated the ten year anniversary of our expansion program, and have made significant progress expanding loans and deposits through our branches. We expect that trend to continue as the new branches continue to grow. We also note we have always designed our branches to be smaller, more cost effective than those built by many of our competitors, we have utilized open floor plans that help maximize the value of our branches. 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."

Asset quality, reserve coverage of nonperforming loans (NPLs) and reserve coverage of net charge-offs all improved from December 31, 2012 to June 30, 2013. NPLs declined to $43.4 million at June 30, 2013, compared to $52.7 million at December 31, 2012 and nonperforming assets (NPAs) declined to $53.8 million from $61.4 million over the same period. NPLs were equal to 1.57% of total loans at quarter-end, compared to 1.96% at year-end. For the second quarter of 2013 the allowance covered annualized second quarter net charge-offs by 5.8 times, compared to an annualized 3.4 times for the second quarter of 2012. The coverage ratio, or allowance for loan losses to NPLs, was 109.5% at June 30, 2013, compared to 91.0% at December 31, 2012. Overall, every asset quality indicator improved during the second quarter of 2013. Contributing to these improvements was the sale of 17 nonperforming residential loans with total net principal balances of $855 thousand for a gain of $50 thousand.

The net interest margin for the second quarter of 2013 was 3.10%, compared to 3.16% in the second quarter of 2012.

At June 30, 2013 the tangible equity ratio was 7.83% compared to 7.90% at June 30, 2012 and 8.17% at March 31, 2013. Tangible book value per share ended the second quarter at $3.69 compared to $3.73 in the year-ago period.

TrustCo Bank Corp NY is a $4.4 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 June 30, 2013.

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 second quarter 2013 results will be held at 9:00 a.m. Eastern Time on July 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 October 23, 2013 by dialing 1-877-344-7529 (1-412-317-0088 for international callers), Conference Number 10031252. The call will also be audio webcast at: http://services.choruscall.com/links/trst130723.html, and will be available until July 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, 2012, 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
06/30/13 03/31/13 06/30/12
Summary of operations
Net interest income (TE) $ 33,630 33,707 33,993
Provision for loan losses 2,000 2,000 3,000
Net securities transactions 1,432 2 55
Noninterest income 4,484 4,590 4,522
Noninterest expense 21,869 21,557 21,049
Net income 9,763 9,168 9,066
Per common share
Net income per share:
- Basic $ 0.104 0.097 0.097
- Diluted $ 0.104 0.097 0.097
Cash dividends 0.066 0.066 0.066
Tangible Book value at period end 3.69 3.83 3.73
Market price at period end 5.44 5.58 5.46
At period end
Full time equivalent employees 710 761 742
Full service banking offices 138 138 137
Performance ratios
Return on average assets 0.88% 0.86 0.83
Return on average equity 10.83 10.35 10.49
Efficiency (1) 53.51 54.33 52.92
Net interest spread (TE) 3.04 3.13 3.09
Net interest margin (TE) 3.10 3.19 3.16
Dividend payout ratio 63.33 67.33 67.80
Capital ratio at period end
Consolidated tangible equity to tangible assets (2) 7.83 8.17 7.90
Asset quality analysis at period end
Nonperforming loans to total loans 1.57 1.84 2.01
Nonperforming assets to total assets 1.21 1.35 1.25
Allowance for loan losses to total loans 1.72 1.76 1.88
Coverage ratio (3) 1.1x 1.0x 0.9X
(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.
TE = Taxable equivalent.
FINANCIAL HIGHLIGHTS, Continued
(dollars in thousands, except per share data)
(Unaudited)
Six Months Ended
06/30/13 06/30/12
Summary of operations
Net interest income (TE) $ 67,337 67,630
Provision for loan losses 4,000 6,100
Net securities transactions 1,434 732
Noninterest income 9,074 8,854
Noninterest expense 43,426 42,184
Net income 18,931 17,975
Per common share
Net income per share:
- Basic $ 0.201 0.192
- Diluted 0.201 0.192
Cash dividends 0.131 0.131
Tangible Book value at period end 3.69 3.73
Market price at period end 5.44 5.58
Performance ratios
Return on average assets 0.87% 0.84
Return on average equity 10.60 10.47
Efficiency (1) 53.92 53.02
Net interest spread (TE) 3.09 3.11
Net interest margin (TE) 3.15 3.19
Dividend payout ratio 65.27 68.35
(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.
(dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
6/30/2013 3/31/2013 12/31/2012 9/30/2012 6/30/2012
Interest and dividend income:
Interest and fees on loans $ 31,639 31,481 31,776 32,103 32,277
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises 627 816 1,191 1,996 2,606
State and political subdivisions 148 191 295 340 368
Mortgage-backed securities and collateralized mortgage obligations-residential 2,701 2,769 2,237 2,003 1,364
Corporate bonds 233 218 232 529 648
Small Business Administration-guaranteed participation securities 564 496 276 43 --
Mortgage-backed securities and collateralized mortgage obligations-commercial 38 29 -- -- --
Other securities 3 5 5 4 5
Total interest and dividends on securities available for sale 4,314 4,524 4,236 4,915 4,991
Interest on held to maturity securities:
Mortgage-backed securities and collateralized mortgage obligations-residential 716 789 823 976 1,198
Corporate bonds 214 312 385 385 387
Total interest on held to maturity securities 930 1,101 1,208 1,361 1,585
Federal Reserve Bank and Federal Home Loan Bank stock 121 119 127 120 149
Interest on federal funds sold and other short-term investments 327 245 265 258 299
Total interest income 37,331 37,470 37,612 38,757 39,301
Interest expense:
Interest on deposits:
Interest-bearing checking 82 80 80 79 78
Savings 829 916 921 870 979
Money market deposit accounts 630 685 703 673 770
Time deposits 1,883 1,820 1,967 2,629 3,230
Interest on short-term borrowings 367 364 361 348 378
Total interest expense 3,791 3,865 4,032 4,599 5,435
Net interest income 33,540 33,605 33,580 34,158 33,866
Provision for loan losses 2,000 2,000 3,000 2,900 3,000
Net interest income after provision for loan losses 31,540 31,605 30,580 31,258 30,866
Noninterest income:
Trustco Financial Services income 1,287 1,421 1,815 1,145 1,407
Fees for services to customers 2,968 2,887 3,386 3,234 2,939
Net gain on securities transactions 1,432 2 763 666 55
Other 229 282 197 172 176
Total noninterest income 5,916 4,592 6,161 5,217 4,577
Noninterest expenses:
Salaries and employee benefits 7,647 8,178 8,427 7,587 7,519
Net occupancy expense 3,910 4,053 3,889 3,756 3,817
Equipment expense 1,582 1,718 1,637 1,316 1,600
Professional services 1,565 1,420 1,458 1,657 1,489
Outsourced services 1,350 1,350 1,175 1,350 1,347
Advertising expense 714 730 1,037 935 1,060
FDIC and other insurance 1,004 1,010 1,007 983 953
Other real estate expense, net 1,473 749 375 1,210 665
Other 2,624 2,349 2,145 1,849 2,599
Total noninterest expenses 21,869 21,557 21,150 20,643 21,049
20,396 20,808 (412)
Income before taxes 15,587 14,640 15,591 15,832 14,394
Income taxes 5,824 5,472 5,785 6,079 5,328
Net income $ 9,763 9,168 9,806 9,753 9,066
Net income per Common Share:
- Basic $ 0.104 0.097 0.104 0.104 0.097
- Diluted 0.104 0.097 0.104 0.104 0.097
Average basic shares (thousands) 94,204 94,068 93,824 93,692 93,561
Average diluted shares (thousands) 94,211 94,073 93,828 93,700 93,562
Note: Taxable equivalent net interest income $ 33,630 33,707 33,718 34,321 33,993
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
(Unaudited)
Six Months Ended
6/30/2013 6/30/2012
Interest and dividend income:
Interest and fees on loans $ 63,120 64,702
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises 1,443 4,910
State and political subdivisions 339 778
Mortgage-backed securities and collateralized mortgage obligations-residential 5,470 2,457
Corporate bonds 451 1,470
Small Business Administration-guaranteed participation securities 1,060 --
Mortgage-backed securities and collateralized mortgage obligations-commercial 67 --
Other securities 8 10
Total interest and dividends on securities available for sale 8,838 9,625
Interest on held to maturity securities:
U. S. government sponsored enterprises -- 25
Mortgage-backed securities-residential 1,505 2,488
Corporate bonds 526 896
Total interest on held to maturity securities 2,031 3,409
Federal Reserve Bank and Federal Home Loan Bank stock 240 239
Interest on federal funds sold and other short-term investments 572 619
Total interest income 74,801 78,594
Interest expense:
Interest on deposits:
Interest-bearing checking 162 156
Savings 1,745 2,081
Money market deposit accounts 1,315 1,693
Time deposits 3,703 6,648
Interest on short-term borrowings 731 766
Total interest expense 7,656 11,344
Net interest income 67,145 67,250
Provision for loan losses 4,000 6,100
Net interest income after provision for loan losses 63,145 61,150
Noninterest income:
Trust department income 2,708 2,801
Fees for services to customers 5,855 5,670
Net gain on securities transactions 1,434 732
Other 511 383
Total noninterest income 10,508 9,586
Noninterest expenses:
Salaries and employee benefits 15,825 15,262
Net occupancy expense 7,963 7,612
Equipment expense 3,300 3,120
Professional services 2,985 2,925
Outsourced services 2,700 2,597
Advertising expense 1,444 1,869
FDIC and other insurance 2,014 1,833
Other real estate expense, net 2,222 1,631
Other 4,973 5,335
Total noninterest expenses 43,426 42,184
Income before taxes 30,227 28,552
Income taxes 11,296 10,577
Net income $ 18,931 17,975
Net income per Common Share:
- Basic $ 0.201 0.192
- Diluted 0.201 0.192
Average basic shares (thousands) 94,134 93,503
Average diluted shares (thousands) 94,141 93,504
Note: Taxable equivalent net interest income $ 67,337 67,630
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)
(Unaudited)
6/30/2013 3/31/2013 12/31/2012 9/30/2012 6/30/2012
ASSETS:
Cash and due from banks $ 40,580 39,512 55,789 40,354 36,589
Federal funds sold and other short term investments 588,252 405,262 488,227 402,290 486,049
Total cash and cash equivalents 628,832 444,774 544,016 442,644 522,638
Securities available for sale:
U. S. government sponsored enterprises 188,133 263,165 263,108 427,798 643,189
States and political subdivisions 12,159 15,265 26,457 33,857 36,978
Mortgage-backed securities and collateralized mortgage obligations-residential 504,793 612,555 518,776 515,879 354,285
Corporate bonds 53,053 59,239 26,529 49,296 73,311
Small Business Administration-guaranteed participation securities 108,665 115,464 76,562 25,338 --
Mortgage-backed securities and collateralized mortgage obligations-commercial 10,725 11,136 -- -- --
Other securities 660 660 660 660 660
Total securities available for sale 878,188 1,077,484 912,092 1,052,828 1,108,423
Held to maturity securities:
Mortgage-backed securities and collateralized mortgage obligations-residential 88,852 98,038 108,471 120,877 133,562
Corporate bonds 9,937 19,935 34,955 35,074 35,193
Total held to maturity securities 98,789 117,973 143,426 155,951 168,755
Federal Reserve Bank and Federal Home Loan Bank stock 10,500 9,632 9,632 9,632 9,632
Loans:
Commercial 216,977 212,637 219,577 217,431 235,347
Residential mortgage loans 2,205,334 2,154,188 2,126,668 2,056,972 2,003,046
Home equity line of credit 334,571 332,111 333,909 327,083 317,157
Installment loans 5,544 4,831 4,579 4,455 4,071
Loans, net of deferred fees and costs 2,762,426 2,703,767 2,684,733 2,605,941 2,559,621
Less:
Allowance for loan losses 47,589 47,658 47,927 47,364 48,018
Net loans 2,714,837 2,656,109 2,636,806 2,558,577 2,511,603
Bank premises and equipment, net 38,301 35,787 36,239 37,251 37,868
Other assets 73,757 69,998 64,402 61,290 62,480
Total assets $ 4,443,204 4,411,757 4,346,613 4,318,173 4,421,399
LIABILITIES:
Deposits:
Demand $ 314,985 298,243 300,544 292,350 283,873
Interest-bearing checking 591,844 579,077 560,064 536,892 528,101
Savings accounts 1,228,281 1,213,226 1,198,517 1,167,927 1,122,208
Money market deposit accounts 634,804 656,577 667,589 668,064 644,627
Certificates of deposit (in denominations of $100,000 or more) 397,707 384,559 352,734 359,246 452,043
Other time accounts 725,255 725,998 724,745 751,974 867,798
Total deposits 3,892,876 3,857,680 3,804,193 3,776,453 3,898,650
Short-term borrowings 176,325 171,019 159,846 161,751 150,718
Accrued expenses and other liabilities 25,380 22,169 23,776 22,352 22,124
Total liabilities 4,094,581 4,050,868 3,987,815 3,960,556 4,071,492
SHAREHOLDERS' EQUITY:
Capital stock 98,912 98,912 98,912 98,912 98,912
Surplus 173,897 174,386 174,899 175,284 175,773
Undivided profits 138,953 135,373 132,378 128,750 125,153
Accumulated other comprehensive income (loss), net of tax (16,831) (169) 1,558 4,879 1,585
Treasury stock at cost (46,308) (47,613) (48,949) (50,208) (51,516)
Total shareholders' equity 348,623 360,889 358,798 357,617 349,907
Total liabilities and shareholders' equity $ 4,443,204 4,411,757 4,346,613 4,318,173 4,421,399
Outstanding shares (thousands) 94,204 94,071 93,935 93,807 93,674
NONPERFORMING ASSETS
(dollars in thousands)
(Unaudited)
Nonperforming Assets
06/30/13 03/31/13 12/31/12 09/30/12 06/30/12
New York and other states*
Loans in nonaccrual status:
Commercial $ 5,891 5,978 6,635 5,880 5,656
Real estate mortgage - 1 to 4 family 30,736 34,027 35,286 32,593 29,167
Installment 36 35 6 71 1
Total non-accrual loans 36,663 40,040 41,927 38,544 34,824
Other nonperforming real estate mortgages - 1 to 4 family 174 225 231 238 243
Total nonperforming loans 36,837 40,265 42,158 38,782 35,067
Other real estate owned 3,918 4,461 2,979 2,716 2,787
Total nonperforming assets $ 40,755 44,726 45,137 41,498 37,854
Florida
Loans in nonaccrual status:
Commercial $ 583 2,595 2,698 2,698 8,435
Real estate mortgage - 1 to 4 family 6,022 7,013 7,820 8,438 7,954
Installment -- 1 1 7 1
Total non-accrual loans 6,605 9,609 10,519 11,143 16,390
Other nonperforming real estate mortgages - 1 to 4 family -- -- -- -- --
Total nonperforming loans 6,605 9,609 10,519 11,143 16,390
Other real estate owned 6,427 5,406 5,726 5,975 1,083
Total nonperforming assets $ 13,032 15,015 16,245 17,118 17,473
Total
Loans in nonaccrual status:
Commercial $ 6,474 8,573 9,333 8,578 14,091
Real estate mortgage - 1 to 4 family 36,758 41,040 43,106 41,031 37,121
Installment 36 36 7 78 2
Total non-accrual loans 43,268 49,649 52,446 49,687 51,214
Other nonperforming real estate mortgages - 1 to 4 family 174 225 231 238 243
Total nonperforming loans 43,442 49,874 52,677 49,925 51,457
Other real estate owned 10,345 9,867 8,705 8,691 3,870
Total nonperforming assets $ 53,787 59,741 61,382 58,616 55,327
Quarterly Net Chargeoffs
06/30/13 03/31/13 12/31/12 09/30/12 06/30/12
New York and other states*
Commercial $ 49 248 152 9 713
Real estate mortgage - 1 to 4 family 1,885 1,563 1,410 2,157 1,844
Installment 13 15 72 7 7
Total net chargeoffs $ 1,947 1,826 1,634 2,173 2,564
Florida
Commercial $ (1) 99 (18) 736 288
Real estate mortgage - 1 to 4 family 123 344 810 644 665
Installment -- -- 12 1 --
Total net chargeoffs $ 122 443 804 1,381 953
Total
Commercial $ 48 347 134 745 1,001
Real estate mortgage - 1 to 4 family 2,008 1,907 2,220 2,801 2,509
Installment 13 15 84 8 7
Total net chargeoffs $ 2,069 2,269 2,438 3,554 3,517
Asset Quality Ratios
06/30/13 03/31/13 12/31/12 09/30/12 06/30/12
Total nonperforming loans(1) $ 43,442 49,874 52,677 49,925 51,457
Total nonperforming assets(1) 53,787 59,741 61,382 58,616 55,327
Total net chargeoffs(2) 2,069 2,269 2,438 3,554 3,517
Allowance for loan losses(1) 47,589 47,658 47,927 47,364 48,018
Nonperforming loans to total loans(1) 1.57% 1.84% 1.96% 1.92% 2.01%
Nonperforming assets to total assets(1) 1.21% 1.35% 1.41% 1.36% 1.25%
Allowance for loan losses to total loans(1) 1.72% 1.76% 1.79% 1.82% 1.88%
Coverage ratio(1) 109.5% 95.6% 91.0% 94.9% 93.3%
Annualized net chargeoffs to average loans(2) 0.30% 0.34% 0.37% 0.55% 0.55%
Allowance for loan losses to annualized net chargeoffs(2) 5.8x 5.3x 4.9x 3.3x 3.4x
* Includes New York, New Jersey, Vermont and Massachusetts.
(1) At period-end
(2) For the period ended
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY-
INTEREST RATES AND INTEREST DIFFERENTIAL
(dollars in thousands) Three months ended Three months ended
(Unaudited) June 30, 2013 June 30, 2012
Average
Balance
Interest Average
Rate
Average
Balance
Interest Average
Rate
Assets
Securities available for sale:
U. S. government sponsored enterprises $ 218,199 627 1.15 % $ 719,590 2,606 1.45 %
Mortgage backed securities and collateralized mortgage obligations-residential 545,989 2,701 1.98 255,039 1,364 2.14
State and political subdivisions 13,098 231 7.05 36,730 489 5.33
Corporate bonds 54,724 233 1.70 77,020 648 3.37
Small Business Administration-guaranteed participation securities 114,760 564 1.97 -- -- 0.00
Mortgage backed securities and collateralized mortgage obligations-commercial 11,136 38 1.36 -- -- 0.00
Other 660 3 1.82 660 5 3.03
Total securities available for sale 958,566 4,397 1.83 1,089,039 5,112 1.88
Federal funds sold and other short-term Investments 529,672 327 0.25 489,228 299 0.25
Held to maturity securities:
Corporate bonds 13,947 214 6.14 35,251 387 4.39
Mortgage backed securities and collateralized mortgage obligations-residential 93,644 716 3.06 138,419 1,198 3.46
Total held to maturity securities 107,591 930 3.46 173,670 1,585 3.65
Federal Reserve Bank and Federal Home Loan Bank stock 10,434 121 4.64 9,432 149 6.32
Commercial loans 214,158 2,812 5.25 235,651 3,138 5.33
Residential mortgage loans 2,177,171 25,866 4.75 1,988,017 26,124 5.26
Home equity lines of credit 333,510 2,806 3.37 316,289 2,875 3.66
Installment loans 4,930 162 13.16 3,762 146 15.60
Loans, net of unearned income 2,729,769 31,646 4.64 2,543,719 32,283 5.08
Total interest earning assets 4,336,032 37,421 3.45 4,305,088 39,428 3.67
Allowance for loan losses (48,298) (49,386)
Cash & non-interest earning assets 146,387 138,964
Total assets $ 4,434,121 $ 4,394,666
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts $ 581,785 82 0.06 % $ 514,219 78 0.06 %
Money market accounts 650,927 630 0.39 636,171 770 0.49
Savings 1,218,683 829 0.27 1,104,422 979 0.36
Time deposits 1,119,710 1,883 0.67 1,341,038 3,230 0.97
Total interest bearing deposits 3,571,105 3,424 0.38 3,595,850 5,057 0.57
Short-term borrowings 179,878 367 0.82 153,082 378 0.99
Total interest bearing liabilities 3,750,983 3,791 0.41 3,748,932 5,435 0.58
Demand deposits 301,123 279,761
Other liabilities 20,590 18,435
Shareholders' equity 361,425 347,538
Total liabilities and shareholders' equity $ 4,434,121 $ 4,394,666
Net interest income, tax equivalent 33,630 33,993
Net interest spread 3.04 % 3.09 %
Net interest margin (net interest income to total interest earning assets) 3.10 % 3.16 %
Tax equivalent adjustment (90) (127)
Net interest income 33,540 33,866
(dollars in thousands) Six months ended Six months ended
(Unaudited) June 30, 2013 June 30, 2012
Average
Balance
Interest Average
Rate
Average
Balance
Interest Average
Rate
Assets
Securities available for sale:
U. S. government sponsored enterprises $ 244,430 1,443 1.18 % $ 655,168 4,910 1.50 %
Mortgage backed securities and collateralized mortgage obligations-residential 551,667 5,470 1.98 229,849 2,457 2.14
State and political subdivisions 15,812 516 6.53 38,371 1,092 5.69
Corporate bonds 51,061 451 1.76 85,094 1,470 3.46
Small Business Administration-guaranteed participation securities 107,263 1,060 1.98 -- -- 0.00
Mortgage backed securities and collateralized mortgage obligations-commercial 9,764 67 1.37 -- -- 0.00
Other 660 8 2.42 660 10 3.03
Total securities available for sale 980,657 9,015 1.84 1,009,142 9,939 1.97
Federal funds sold and other short-term Investments 468,154 572 0.25 501,617 619 0.25
Held to maturity securities:
U. S. government sponsored enterprises -- -- 0.00 2,143 25 2.38
Corporate bonds 18,086 526 5.81 44,074 896 4.06
Mortgage backed securities and collateralized mortgage obligations-residential 98,598 1,505 3.05 140,783 2,488 3.53
Total held to maturity securities 116,684 2,031 3.48 187,000 3,409 3.65
Federal Reserve Bank and Federal Home Loan Bank stock 10,035 240 4.78 9,218 239 5.19
Commercial loans 215,178 5,659 5.26 238,460 6,501 5.45
Residential mortgage loans 2,156,733 51,550 4.79 1,975,333 52,236 5.30
Home equity lines of credit 333,472 5,606 3.39 315,644 5,740 3.66
Installment loans 4,730 320 13.65 3,688 291 15.87
Loans, net of unearned income 2,710,113 63,135 4.67 2,533,125 64,768 5.12
Total interest earning assets 4,285,643 74,993 3.51 4,240,102 78,974 3.73
Allowance for loan losses (48,377) (49,613)
Cash & non-interest earning assets 149,670 140,522
Total assets $ 4,386,936 $ 4,331,011
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts $ 567,261 162 0.06 % $ 498,290 156 0.06 %
Money market accounts 655,027 1,315 0.40 634,032 1,693 0.54
Savings 1,211,173 1,745 0.29 1,062,010 2,081 0.39
Time deposits 1,104,379 3,703 0.68 1,353,072 6,648 0.99
Total interest bearing deposits 3,537,840 6,925 0.39 3,547,404 10,578 0.60
Short-term borrowings 174,001 731 0.85 149,283 766 1.03
Total interest bearing liabilities 3,711,841 7,656 0.42 3,696,687 11,344 0.62
Demand deposits 294,449 270,706
Other liabilities 20,339 18,333
Shareholders' equity 360,307 345,285
Total liabilities and shareholders' equity $ 4,386,936 $ 4,331,011
Net interest income, tax equivalent 67,337 67,630
Net interest spread 3.09 % 3.11 %
Net interest margin (net interest income to total interest earning assets) 3.15 % 3.19 %
Tax equivalent adjustment (192) (380)
Net interest income 67,145 67,250

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)
06/30/13 03/31/13 12/31/12 09/30/12 06/30/12
Tangible Book Value Per Share
Equity $ 348,623 360,889 358,798 357,617 349,907
Less: Intangible assets 553 553 553 553 553
Tangible equity 348,070 360,336 358,245 357,064 349,354
Shares outstanding 94,204 94,071 93,935 93,807 93,674
Tangible book value per share 3.69 3.83 3.81 3.81 3.73
Book value per share 3.70 3.84 3.82 3.81 3.74
Tangible Equity to Tangible Assets
Total Assets 4,443,204 4,411,757 4,346,613 4,318,173 4,421,399
Less: Intangible assets 553 553 553 553 553
Tangible assets 4,442,651 4,411,204 4,346,060 4,317,620 4,420,846
Tangible Equity to Tangible Assets 7.83% 8.17% 8.24% 8.27% 7.90%
Equity to Assets 7.85% 8.18% 8.25% 8.28% 7.91%
3 Months Ended 6 Months Ended
Efficiency Ratio 06/30/13 03/31/13 12/31/12 09/30/12 06/30/12 06/30/13 06/30/12
Net interest income (fully taxable equivalent) $ 33,630 33,707 33,718 34,321 33,993 67,337 67,630
Non-interest income 5,916 4,592 6,161 5,217 4,577 10,508 9,586
Less: Net gain on securities 1,432 2 763 666 55 1,434 732
Recurring revenue 38,114 38,297 39,116 38,872 38,515 76,411 76,484
Total Noninterest expense 21,869 21,557 21,150 20,643 21,049 43,426 42,184
Less: Other real estate expense, net 1,473 749 375 1,210 665 2,222 1,631
Recurring expense 20,396 20,808 20,775 19,433 20,384 41,204 40,553
Efficiency Ratio 53.51% 54.33% 53.11% 49.99% 52.92% 53.92% 53.02%

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