EX-99.A 2 ex99a.htm EXHIBIT 99(A)
Exhibit 99 (a)




News Release
5 Sarnowski Drive, Glenville, New York, 12302
(518) 377-3311          Fax:  (518) 381-3668

Subsidiary:
Trustco Bank
NASDAQ -- TRST

Contact:
Robert Leonard
Executive Vice President and
Chief Risk Officer
(518) 381-3693

FOR IMMEDIATE RELEASE:

TrustCo Announces Third Quarter 2019 Results;
Net Income of $14.7 Million and 5.3% Average Residential Loan Growth Year over Year

Glenville, New York – October 21, 2019
 
TrustCo Bank Corp NY (TrustCo, NASDAQ: TRST) · TrustCo Bank Corp NY today announced third quarter 2019 net income of $14.7 million or $0.152 diluted earnings per share compared to $15.2 million or $0.157 diluted earnings per share in the third quarter of 2018 despite an increase of $4.7 million in interest expense during the same time period. Similar results were noted during the nine month period wherein net income was $43.9 million for the nine months ended September 30, 2019 versus $45.4 million for the same period in 2018 while total interest expense increased by $12.9 million.

Summary

Robert J. McCormick, Chairman, President and Chief Executive Officer noted, “We are pleased to be able to report an increase in average residential loan growth of 5.3% or $175.6 million in the third quarter 2019 compared to the third quarter 2018.  Our focus on traditional lending criteria, conservative balance sheet management and expense control 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.  Our strong financial condition is evidenced by our continued recognition as a BauerFinancial, Inc. 5-Star Superior Bank Rating.”  Average deposits increased 5.6% for the third quarter of 2019 compared to the third quarter 2018.  Mr. McCormick further added “We continue to add core customer relationships, which ultimately drive future growth.  Loan growth and stabilizing cost of funds as a result of federal rate cuts have put us in a good position as we move forward.”

1
TrustCo saw solid loan growth in the third quarter of 2019 compared to the prior year led by an increase in residential mortgages.  Loan portfolio expansion was funded by a combination of utilizing our strong cash balances and growth in our deposit base.  TrustCo’s strong liquidity position continues to allow it to take advantage of opportunities when interest rate conditions change.

Details

Average loans were up $158.4 million or 4.2% in the third quarter 2019 over the same period in 2018.  Average residential loans, our primary lending focus, were up $175.6 million or 5.3% in the third quarter 2019, over the same period in 2018.  Average deposits are up $236.4 million or 5.6% for the third quarter 2019 over the same period a year earlier.  The increase in deposits was the result of a $301.1 million or 26.0% increase in average time deposits over the same period last year.  Excluding time deposits, total average core deposit accounts, which consist of checking, savings and money market deposits accounts, were down $64.7 million or 2.1% for the third quarter 2019 compared to the third quarter 2018.

The cost of interest bearing liabilities increased to 0.94% in the third quarter 2019 from 0.52% in the third quarter 2018.  The cost of savings and interest bearing checking decreased slightly by 2 basis points and 3 basis points, respectively, from the third quarter 2018.  Money market deposits increased 41 basis points to 0.83% versus 0.42% from the third quarter 2018. A significant portion of our CD portfolio is expected to reprice during the fourth quarter which at current lower market rates will have a positive impact on net interest margin.  The net interest spread for the third quarter 2019 was 2.88%, down 38 basis points from 3.26% in the third quarter of 2018.  Net interest income (TE) decreased by 4.6% or $1.9 million over the same period last year.  Because we offered competitive shorter term rates, we expect margin to stabilize in the fourth quarter of 2019 as our shorter term time deposits could reprice lower and provide opportunity for increased margin expansion.

The Bank continued to demonstrate its ability to grow shareholders’ equity as average equity was up $46.5 million or 9.8% in the third quarter of 2019 compared to the same period in 2018.  On this expanded equity, return on average assets and return on average equity for the third quarter 2019 were 1.12% and 11.19%, respectively, compared to 1.24% and 12.84% for the third quarter 2018.  Improving efficiencies to reduce costs continues to remain a key area of focus.  Total operating expenses decreased by $474 thousand or 1.9% in the third quarter 2019 as compared to the third quarter 2018, driven by decreases in advertising expense, FDIC and other insurance expense, and other real estate expense, partially offset by an increase in salaries and employee benefits. The growth in salaries and benefit expense was the result of our targeted effort to hire and retain talent.

2
Asset quality and the resulting loan loss reserve measures continued to improve.  Nonperforming loans (NPLs) were $21.0 million at September 30, 2019, compared to $23.8 million at September 30, 2018.  NPLs were 0.53% of total loans at September 30, 2019, compared to 0.62% at September 30, 2018.  The coverage ratio, or allowance for loan losses to NPLs, was 210.9% at September 30, 2019, compared to 188.0% at September 30, 2018.  Nonperforming assets (NPAs) were $23.4 million at September 30, 2019 compared to $26.1 million at September 30, 2018.  The ratio of allowance for loan losses to total loans was 1.11% as of September 30, 2019, compared to 1.17% at September 30, 2018 which reflects both an improvement in asset quality and economic conditions in our lending areas.  The allowance for loan losses was $44.3 million at September 30, 2019 compared to $44.7 million at September 30, 2018.  Net chargeoffs for the third quarter 2019 were $36 thousand versus $67 thousand in the third quarter 2018.  As a result of the aforementioned loan growth and improvement in asset quality trends, the Company did not record a provision for loan losses during the third quarter 2019.

At September 30, 2019 the tangible equity to tangible asset ratio was 10.07%, compared to 9.76% at September 30, 2018.  As mentioned earlier, the Company is proud of its ability to grow shareholders’ equity.  Tangible book value per share at September 30, 2019 was $5.42, up 9.94% compared to $4.93 a year earlier.

TrustCo Bank Corp NY is a $5.2 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 148 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at September 30, 2019.

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 third quarter 2019 results will be held at 9:00 a.m. Eastern Time on October 22, 2019.  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 10135926.  The call will also be audio webcast at: https://services.choruscall.com/links/trst191022.html, and will be available for one year.
 
3
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 2019, the impact of Federal Reserve actions regarding interest rates and 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 make accurate assumptions and judgments regarding the credit risks associated with lending and investing activities; 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; 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 us and Trustco Bank and the continued receipt of approvals from our primary federal banking regulators under regulatory rules 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; adverse conditions in the securities markets that lead to impairment in the value of securities in our investment portfolio; unanticipated effects from the Tax Cut and Jobs Act that may limit its benefits or adversely impact our business;  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; the effect of changes in financial services laws and regulations and the impact of other governmental initiatives affecting the financial services industry; changes in management personnel; real estate and collateral values; changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the FASB or PCAOB; disruptions, security breaches, or other adverse events affecting the third-party vendors who perform several of our critical processing functions; technological changes and electronic, cyber and physical security breaches; 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.

4
TRUSTCO BANK CORP NY
GLENVILLE, NY

FINANCIAL HIGHLIGHTS

(dollars in thousands, except per share data)
(Unaudited)

   
Three months ended
  
   
9/30/2019
    
6/30/2019
    
9/30/2018
  
Summary of operations
                  
Net interest income (TE)
  
$
38,644
      
39,192
      
40,526
  
(Credit) Provision for loan losses
    
-
      
(341
)
    
300
  
Noninterest income
    
4,925
      
4,914
      
4,455
  
Noninterest expense
    
24,070
      
24,902
      
24,544
  
Net income
    
14,708
      
14,667
      
15,199
  
                         
Per common share
                        
Net income per share:
                        
- Basic
  
$
0.152
      
0.152
      
0.157
  
- Diluted
    
0.152
      
0.151
      
0.157
  
Cash dividends
    
0.068
      
0.068
      
0.068
  
Tangible Book value at period end
    
5.42
      
5.32
      
4.93
  
Market price at period end
    
8.15
      
7.92
      
8.50
  
                         
At period end
                        
Full time equivalent employees
    
823
      
858
      
807
  
Full service banking offices
    
148
      
148
      
148
  
                         
Performance ratios
                        
Return on average assets
    
1.12
%
    
1.14
      
1.24
  
Return on average equity
    
11.19
      
11.60
      
12.84
  
Efficiency (1)
    
55.17
      
55.98
      
53.39
  
Net interest spread (TE)
    
2.88
      
2.95
      
3.26
  
Net interest margin (TE)
    
3.04
      
3.11
      
3.35
  
Dividend payout ratio
    
44.85
      
44.94
      
43.29
  
                         
Capital ratios at period end
                        
Consolidated tangible equity to tangible assets (2)
    
10.07
%
    
9.85
      
9.76
  
Consolidated equity to assets
    
10.07
%
    
9.86
      
9.77
  
                         
Asset quality analysis at period end
                        
Nonperforming loans to total loans
    
0.53
      
0.57
      
0.62
  
Nonperforming assets to total assets
    
0.45
      
0.47
      
0.53
  
Allowance for loan losses to total loans
    
1.11
      
1.14
      
1.17
  
Coverage ratio (3)
    
2.1
x
    
2.0
x
    
1.9
x

(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

5
FINANCIAL HIGHLIGHTS, Continued

(dollars in thousands, except per share data)
(Unaudited)

   
Nine months ended
  
   
09/30/19
    
09/30/18
  
Summary of operations
            
Net interest income (TE)
  
$
117,569
      
119,957
  
(Credit) Provision for loan losses
    
(41
)
    
900
  
Noninterest income
    
14,476
      
13,629
  
Noninterest expense
    
73,839
      
72,794
  
Net income
    
43,933
      
45,412
  
                 
Per common share
                
Net income per share:
                
- Basic
  
$
0.454
      
0.471
  
- Diluted
    
0.453
      
0.470
  
Cash dividends
    
0.204
      
0.199
  
Tangible Book value at period end
    
5.42
      
4.93
  
Market price at period end
    
8.15
      
8.50
  
                 
Performance ratios
                
Return on average assets
    
1.14
      
1.24
  
Return on average equity
    
11.56
      
13.00
  
Efficiency (1)
    
55.75
      
53.60
  
Net interest spread (TE)
    
2.98
      
3.24
  
Net interest margin (TE)
    
3.13
      
3.32
  
Dividend payout ratio
    
45.00
      
42.35
  

(1)
Calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income (excluding net securities transactions and gain on sale of building and nonperforming loans).

TE = Taxable equivalent.

6
CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands, except per share data)
(Unaudited)

   
Three months ended
  
   
9/30/2019
    
6/30/2019
    
3/31/2019
    
12/31/2018
    
9/30/2018
  
Interest and dividend income:
                              
Interest and fees on loans
  
$
41,923
      
41,432
      
41,253
      
41,184
      
40,073
  
Interest and dividends on securities available for sale:
                                  
U. S. government sponsored enterprises
    
996
      
821
      
783
      
788
      
787
  
State and political subdivisions
    
2
      
3
      
1
      
2
      
7
  
Mortgage-backed securities and collateralized mortgage obligations - residential
    
2,178
      
2,152
      
1,555
      
1,554
      
1,601
  
Corporate bonds
    
321
      
272
      
208
      
202
      
202
  
Small Business Administration - guaranteed participation securities
    
282
      
289
      
297
      
329
      
325
  
Mortgage-backed securities and collateralized mortgage obligations - commercial
    
-
      
-
      
-
      
-
      
-
  
Other securities
    
6
      
5
      
5
      
5
      
4
  
Total interest and dividends on securities available for sale
    
3,785
      
3,542
      
2,849
      
2,880
      
2,926
  
                                         
Interest on held to maturity securities:
                                        
Mortgage-backed securities and collateralized mortgage obligations - residential
    
187
      
209
      
217
      
226
      
232
  
Total interest on held to maturity securities
    
187
      
209
      
217
      
226
      
232
  
                                         
Federal Reserve Bank and Federal Home Loan Bank stock
    
81
      
199
      
85
      
207
      
82
  
                                         
Interest on federal funds sold and other short-term investments
    
2,552
      
3,282
      
3,009
      
2,367
      
2,425
  
Total interest income
    
48,528
      
48,664
      
47,413
      
46,864
      
45,738
  
                                         
Interest expense:
                                        
Interest on deposits:
                                        
Interest-bearing checking
    
52
      
94
      
121
      
111
      
113
  
Savings
    
323
      
367
      
377
      
401
      
417
  
Money market deposit accounts
    
1,177
      
1,119
      
826
      
618
      
544
  
Time deposits
    
7,974
      
7,512
      
5,976
      
4,643
      
3,864
  
Interest on short-term borrowings
    
359
      
381
      
381
      
352
      
277
  
Total interest expense
    
9,885
      
9,473
      
7,681
      
6,125
      
5,215
  
                                         
Net interest income
    
38,643
      
39,191
      
39,732
      
40,739
      
40,523
  
                                         
Less: (Credit) Provision for loan losses
    
-
      
(341
)
    
300
      
500
      
300
  
Net interest income after provision for loan losses
    
38,643
      
39,532
      
39,432
      
40,239
      
40,223
  
                                         
Noninterest income:
                                        
Trustco Financial Services income
    
1,517
      
1,683
      
1,733
      
1,356
      
1,516
  
Fees for services to customers
    
2,602
      
2,611
      
2,520
      
2,897
      
2,693
  
Other
    
806
      
620
      
384
      
199
      
246
  
Total noninterest income
    
4,925
      
4,914
      
4,637
      
4,452
      
4,455
  
                                         
Noninterest expenses:
                                        
Salaries and employee benefits
    
11,725
      
11,711
      
11,451
      
10,183
      
10,761
  
Net occupancy expense
    
4,094
      
4,006
      
4,167
      
4,800
      
3,997
  
Equipment expense
    
1,689
      
1,709
      
1,902
      
1,741
      
1,783
  
Professional services
    
1,507
      
1,568
      
1,650
      
1,733
      
1,578
  
Outsourced services
    
1,875
      
1,875
      
1,925
      
1,875
      
1,875
  
Advertising expense
    
494
      
778
      
785
      
876
      
844
  
FDIC and other insurance
    
282
      
598
      
648
      
522
      
682
  
Other real estate (income) expense, net
    
33
      
210
      
(24
)
    
37
      
528
  
Other
    
2,371
      
2,447
      
2,363
      
3,152
      
2,496
  
Total noninterest expenses
    
24,070
      
24,902
      
24,867
      
24,919
      
24,544
  
                                         
Income before taxes
    
19,498
      
19,544
      
19,202
      
19,772
      
20,134
  
Income taxes
    
4,790
      
4,877
      
4,644
      
3,739
      
4,935
  
                                         
Net income
  
$
14,708
      
14,667
      
14,558
      
16,033
      
15,199
  
                                         
Net income per common share:
                                        
- Basic
  
$
0.152
      
0.152
      
0.150
      
0.166
      
0.157
  
 
                                        
- Diluted
    
0.152
      
0.151
      
0.150
      
0.166
      
0.157
  
                                         
Average basic shares (in thousands)
    
96,907
      
96,822
      
96,744
      
96,555
      
96,555
  
Average diluted shares (in thousands)
    
96,977
      
96,891
      
96,822
      
96,689
      
96,689
  
                                         
Note:  Taxable equivalent net interest income
  
$
38,644
      
39,192
      
39,733
      
40,740
      
40,526
  

7
CONSOLIDATED STATEMENTS OF INCOME, Continued

(dollars in thousands, except per share data)
(Unaudited)

   
Nine months ended
  
   
09/30/19
    
09/30/18
  
Interest and dividend income:
            
Interest and fees on loans
  
$
124,608
      
117,120
  
Interest and dividends on securities available for sale:
                
U. S. government sponsored enterprises
    
2,600
      
2,324
  
State and political subdivisions
    
6
      
20
  
Mortgage-backed securities and collateralized mortgage obligations - residential
    
5,885
      
5,039
  
Corporate bonds
    
801
      
485
  
Small Business Administration - guaranteed participation securities
    
868
      
1,010
  
Mortgage-backed securities and collateralized mortgage obligations - commercial
    
-
      
37
  
Other securities
    
16
      
13
  
Total interest and dividends on securities available for sale
    
10,176
      
8,928
  
                 
Interest on held to maturity securities:
                
Mortgage-backed securities-residential
    
613
      
736
  
Total interest on held to maturity securities
    
613
      
736
  
                 
Federal Reserve Bank and Federal Home Loan Bank stock
    
365
      
357
  
                 
Interest on federal funds sold and other short-term investments
    
8,843
      
6,909
  
Total interest income
    
144,605
      
134,050
  
                 
Interest expense:
                
Interest on deposits:
                
Interest-bearing checking
    
267
      
331
  
Savings
    
1,067
      
1,256
  
Money market deposit accounts
    
3,122
      
1,435
  
Time deposits
    
21,462
      
10,163
  
Interest on short-term borrowings
    
1,121
      
918
  
Total interest expense
    
27,039
      
14,103
  
                 
Net interest income
    
117,566
      
119,947
  
                 
Less: (Credit) Provision for loan losses
    
(41
)
    
900
  
Net interest income after provision for loan losses
    
117,607
      
119,047
  
                 
Noninterest income:
                
Trustco Financial Services income
    
4,933
      
4,927
  
Fees for services to customers
    
7,733
      
8,015
  
Other
    
1,810
      
687
  
Total noninterest income
    
14,476
      
13,629
  
                 
Noninterest expenses:
                
Salaries and employee benefits
    
34,887
      
31,924
  
Net occupancy expense
    
12,267
      
12,413
  
Equipment expense
    
5,300
      
5,327
  
Professional services
    
4,725
      
4,822
  
Outsourced services
    
5,675
      
5,625
  
Advertising expense
    
2,057
      
2,144
  
FDIC and other insurance
    
1,528
      
2,219
  
Other real estate expense, net
    
219
      
1,194
  
Other
    
7,181
      
7,126
  
Total noninterest expenses
    
73,839
      
72,794
  
                 
Income before taxes
    
58,244
      
59,882
  
Income taxes
    
14,311
      
14,470
  
                 
Net income
  
$
43,933
      
45,412
  
                 
Net income per common share:
                
- Basic
  
$
0.454
      
0.471
  
 
                
- Diluted
    
0.453
      
0.470
  
                 
Average basic shares (in thousands)
    
96,825
      
96,453
  
Average diluted shares (in thousands)
    
96,897
      
96,587
  
                 
Note:  Taxable equivalent net interest income
  
$
117,569
      
119,957
  

8
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(dollars in thousands)
(Unaudited)

   
9/30/2019
    
6/30/2019
    
3/31/2019
    
12/31/2018
    
9/30/2018
  
ASSETS:
                              
                               
Cash and due from banks
  
$
49,526
      
42,471
      
43,064
      
49,260
      
42,195
  
Federal funds sold and other short term investments
    
401,151
      
517,684
      
576,123
      
454,449
      
423,254
  
Total cash and cash equivalents
    
450,677
      
560,155
      
619,187
      
503,709
      
465,449
  
                                         
Securities available for sale:
                                        
U. S. government sponsored enterprises
    
164,490
      
184,448
      
148,292
      
152,160
      
150,053
  
States and political subdivisions
    
169
      
170
      
172
      
173
      
180
  
Mortgage-backed securities and collateralized mortgage obligations - residential
    
406,166
      
354,679
      
312,946
      
262,032
      
269,093
  
Small Business Administration - guaranteed participation securities
    
50,970
      
53,091
      
54,113
      
56,475
      
57,894
  
Corporate bonds
    
40,281
      
40,467
      
30,258
      
29,938
      
29,977
  
Other securities
    
683
      
685
      
685
      
685
      
685
  
Total securities available for sale
    
662,759
      
633,540
      
546,466
      
501,463
      
507,882
  
                                         
Held to maturity securities:
                                        
Mortgage-backed securities and collateralized mortgage obligations-residential
    
19,705
      
20,667
      
21,609
      
22,501
      
23,462
  
Total held to maturity securities
    
19,705
      
20,667
      
21,609
      
22,501
      
23,462
  
                                         
Federal Reserve Bank and Federal Home Loan Bank stock
    
9,183
      
9,183
      
8,953
      
8,953
      
8,953
  
                                         
Loans:
                                        
Commercial
    
192,443
      
190,507
      
190,347
      
196,146
      
190,987
  
Residential mortgage loans
    
3,508,647
      
3,428,829
      
3,376,193
      
3,376,708
      
3,331,212
  
Home equity line of credit
    
273,526
      
277,559
      
282,034
      
289,540
      
293,750
  
Installment loans
    
10,703
      
9,514
      
12,579
      
11,702
      
9,967
  
Loans, net of deferred net costs
    
3,985,319
      
3,906,409
      
3,861,153
      
3,874,096
      
3,825,916
  
                                         
Less: Allowance for loan losses
    
44,329
      
44,365
      
44,671
      
44,766
      
44,736
  
Net loans
    
3,940,990
      
3,862,044
      
3,816,482
      
3,829,330
      
3,781,180
  
                                         
Bank premises and equipment, net
    
34,168
      
34,058
      
34,428
      
34,694
      
35,214
  
Operating lease right-of-use assets
    
49,618
      
51,097
      
51,559
      
-
      
-
  
Other assets
    
55,369
      
56,926
      
57,637
      
58,263
      
63,211
  
                                         
Total assets
  
$
5,222,469
      
5,227,670
      
5,156,321
      
4,958,913
      
4,885,351
  
                                         
LIABILITIES:
                                        
Deposits:
                                        
Demand
  
$
453,439
      
432,780
      
408,417
      
405,069
      
403,047
  
Interest-bearing checking
    
869,101
      
888,433
      
895,099
      
904,678
      
918,486
  
Savings accounts
    
1,110,947
      
1,132,308
      
1,150,329
      
1,182,683
      
1,221,127
  
Money market deposit accounts
    
570,457
      
562,318
      
538,043
      
507,311
      
501,270
  
Time deposits
    
1,457,223
      
1,446,428
      
1,421,181
      
1,274,506
      
1,155,994
  
Total deposits
    
4,461,167
      
4,462,267
      
4,413,069
      
4,274,247
      
4,199,924
  
                                         
Short-term borrowings
    
151,095
      
166,746
      
159,778
      
161,893
      
176,377
  
Operating lease liabilities
    
54,731
      
56,237
      
56,723
      
-
      
-
  
Accrued expenses and other liabilities
    
29,313
      
26,790
      
25,033
      
32,902
      
31,932
  
                                         
Total liabilities
    
4,696,306
      
4,712,040
      
4,654,603
      
4,469,042
      
4,408,233
  
                                         
SHAREHOLDERS' EQUITY:
                                        
Capital stock
    
100,200
      
100,180
      
100,180
      
100,175
      
100,175
  
Surplus
    
176,395
      
176,396
      
176,510
      
176,710
      
176,764
  
Undivided profits
    
280,542
      
272,433
      
264,364
      
256,397
      
246,965
  
Accumulated other comprehensive loss, net of tax
    
(71
)
    
(1,774
)
    
(7,011
)
    
(10,309
)
    
(13,000
)
Treasury stock at cost
    
(30,903
)
    
(31,605
)
    
(32,325
)
    
(33,102
)
    
(33,786
)
                                         
Total shareholders' equity
    
526,163
      
515,630
      
501,718
      
489,871
      
477,118
  
 
                                        
Total liabilities and shareholders' equity
  
$
5,222,469
      
5,227,670
      
5,156,321
      
4,958,913
      
4,885,351
  
                                         
Outstanding shares (in thousands)
    
96,917
      
96,822
      
96,746
      
96,659
      
96,586
  

9
NONPERFORMING ASSETS

(dollars in thousands)
(Unaudited)

   
9/30/2019
    
6/30/2019
    
3/31/2019
    
12/31/2018
    
9/30/2018
  
Nonperforming Assets
                              
                               
New York and other states*
                              
Loans in nonaccrual status:
                              
Commercial
  
$
888
      
905
      
701
      
645
      
928
  
Real estate mortgage - 1 to 4 family
    
18,275
      
19,633
      
22,343
      
22,373
      
20,750
  
Installment
    
13
      
1
      
26
      
4
      
13
  
Total non-accrual loans
    
19,176
      
20,539
      
23,070
      
23,022
      
21,691
  
Other nonperforming real estate mortgages - 1 to 4 family
    
30
      
31
      
33
      
34
      
35
  
Total nonperforming loans
    
19,206
      
20,570
      
23,103
      
23,056
      
21,726
  
Other real estate owned
    
2,409
      
2,625
      
1,262
      
1,675
      
2,306
  
Total nonperforming assets
  
$
21,615
      
23,195
      
24,365
      
24,731
      
24,032
  
                                         
Florida
                                        
Loans in nonaccrual status:
                                        
Commercial
  
$
-
      
-
      
-
      
-
      
-
  
Real estate mortgage - 1 to 4 family
    
1,809
      
1,564
      
1,644
      
1,915
      
2,054
  
Installment
    
-
      
-
      
-
      
15
      
13
  
Total non-accrual loans
    
1,809
      
1,564
      
1,644
      
1,930
      
2,067
  
Other nonperforming real estate mortgages - 1 to 4 family
    
-
      
-
      
-
      
-
      
-
  
Total nonperforming loans
    
1,809
      
1,564
      
1,644
      
1,930
      
2,067
  
Other real estate owned
    
-
      
-
      
-
      
-
      
-
  
Total nonperforming assets
  
$
1,809
      
1,564
      
1,644
      
1,930
      
2,067
  
                                         
Total
                                        
Loans in nonaccrual status:
                                        
Commercial
  
$
888
      
905
      
701
      
645
      
928
  
Real estate mortgage - 1 to 4 family
    
20,084
      
21,197
      
23,987
      
24,288
      
22,804
  
Installment
    
13
      
1
      
26
      
19
      
26
  
Total non-accrual loans
    
20,985
      
22,103
      
24,714
      
24,952
      
23,758
  
Other nonperforming real estate mortgages - 1 to 4 family
    
30
      
31
      
33
      
34
      
35
  
Total nonperforming loans
    
21,015
      
22,134
      
24,747
      
24,986
      
23,793
  
Other real estate owned
    
2,409
      
2,625
      
1,262
      
1,675
      
2,306
  
Total nonperforming assets
  
$
23,424
      
24,759
      
26,009
      
26,661
      
26,099
  
                                         
                                         
Quarterly Net (Recoveries) Chargeoffs
                                        
                                         
New York and other states*
                                        
Commercial
  
$
(28
)
    
(1
)
    
4
      
99
      
(2
)
Real estate mortgage - 1 to 4 family
    
39
      
(54
)
    
318
      
323
      
(3
)
Installment
    
9
      
45
      
23
      
35
      
64
  
Total net chargeoffs (recoveries)
  
$
20
      
(10
)
    
345
      
457
      
59
  
                                         
Florida
                                        
Commercial
  
$
-
      
-
      
-
      
-
      
-
  
Real estate mortgage - 1 to 4 family
    
-
      
(25
)
    
19
      
(3
)
    
-
  
Installment
    
16
      
-
      
31
      
16
      
8
  
Total net chargeoffs (recoveries)
  
$
16
      
(25
)
    
50
      
13
      
8
  
                                         
Total
                                        
Commercial
  
$
(28
)
    
(1
)
    
4
      
99
      
(2
)
Real estate mortgage - 1 to 4 family
    
39
      
(79
)
    
337
      
320
      
(3
)
Installment
    
25
      
45
      
54
      
51
      
72
  
Total net chargeoffs (recoveries)
  
$
36
      
(35
)
    
395
      
470
      
67
  
                                         
                                         
Asset Quality Ratios
                                        
                                         
Total nonperforming loans (1)
  
$
21,015
      
22,134
      
24,747
      
24,986
      
23,793
  
Total nonperforming assets (1)
    
23,424
      
24,759
      
26,009
      
26,661
      
26,099
  
Total net chargeoffs (recoveries) (2)
    
36
      
(35
)
    
395
      
470
      
67
  
                                         
Allowance for loan losses (1)
    
44,329
      
44,365
      
44,671
      
44,766
      
44,736
  
                                         
Nonperforming loans to total loans
    
0.53
%
    
0.57
%
    
0.64
%
    
0.64
%
    
0.62
%
Nonperforming assets to total assets
    
0.45
%
    
0.47
%
    
0.50
%
    
0.54
%
    
0.53
%
Allowance for loan losses to total loans
    
1.11
%
    
1.14
%
    
1.16
%
    
1.16
%
    
1.17
%
Coverage ratio (1)
    
210.9
%
    
200.4
%
    
180.5
%
    
179.2
%
    
188.0
%
Annualized net chargeoffs to average loans (2)
    
0.00
%
    
0.00
%
    
0.04
%
    
0.05
%
    
0.01
%
Allowance for loan losses to annualized net chargeoffs (2)
    
307.8
x
    
-316.9
x
    
28.3
x
    
23.8
x
    
166.9
x

* Includes New York, New Jersey, Vermont and Massachusetts.

(1)
At period-end
(2)
For the period ended

10
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY -
INTEREST RATES AND INTEREST DIFFERENTIAL

(dollars in thousands)
(Unaudited)

   
Three months ended
September 30, 2019
    
Three months ended
September 30, 2018
  
   
Average
    
Interest
    
Average
    
Average
    
Interest
    
Average
  
   
Balance
          
Rate
    
Balance
          
Rate
  
Assets
                                    
                                     
Securities available for sale:
                                    
U. S. government sponsored enterprises
  
$
183,580
      
996
      
2.17
%
  
$
154,865
      
787
      
2.03
%
Mortgage backed securities and collateralized mortgage obligations - residential
    
370,808
      
2,178
      
2.35
      
287,760
      
1,601
      
2.23
  
State and political subdivisions
    
166
      
3
      
7.23
      
453
      
10
      
8.88
  
Corporate bonds
    
40,231
      
321
      
3.19
      
30,110
      
202
      
2.68
  
Small Business Administration - guaranteed participation securities
    
51,988
      
282
      
2.17
      
62,368
      
325
      
2.09
  
Mortgage backed securities and collateralized mortgage obligations - commercial
    
-
      
-
      
-
      
-
      
-
      
-
  
Other
    
685
      
6
      
3.50
      
685
      
4
      
2.34
  
                                                 
Total securities available for sale
    
647,458
      
3,786
      
2.34
      
536,241
      
2,929
      
2.18
  
                                                 
Federal funds sold and other short-term Investments
    
465,251
      
2,552
      
2.19
      
486,552
      
2,425
      
1.98
  
                                                 
Held to maturity securities:
                                                
Mortgage backed securities and collateralized mortgage obligations - residential
    
20,197
      
187
      
3.70
      
24,080
      
232
      
3.86
  
                                                 
Total held to maturity securities
    
20,197
      
187
      
3.70
      
24,080
      
232
      
3.86
  
                                                 
Federal Reserve Bank and Federal Home Loan Bank stock
    
9,183
      
81
      
3.53
      
8,953
      
82
      
3.66
  
                                                 
Commercial loans
    
190,538
      
2,596
      
5.45
      
188,757
      
2,480
      
5.25
  
Residential mortgage loans
    
3,465,102
      
35,743
      
4.13
      
3,289,534
      
33,949
      
4.13
  
Home equity lines of credit
    
275,047
      
3,401
      
4.95
      
294,518
      
3,418
      
4.60
  
Installment loans
    
9,967
      
183
      
7.34
      
9,447
      
226
      
9.51
  
                                                 
Loans, net of unearned income
    
3,940,654
      
41,923
      
4.26
      
3,782,256
      
40,073
      
4.23
  
                                                 
Total interest earning assets
    
5,082,743
      
48,529
      
3.82
      
4,838,082
      
45,741
      
3.78
  
                                                 
Allowance for loan losses
    
(44,448
)
                    
(44,770
)
                
Cash & non-interest earning assets
    
188,528
                      
120,474
                  
                                                 
                                                 
Total assets
  
$
5,226,823
                    
$
4,913,786
                  
                                                 
                                                 
Liabilities and shareholders' equity
                                                
                                                 
Deposits:
                                                
Interest bearing checking accounts
  
$
874,179
      
52
      
0.02
%
  
$
913,150
      
113
      
0.05
%
Money market accounts
    
567,554
      
1,177
      
0.83
      
508,795
      
544
      
0.42
  
Savings
    
1,126,935
      
323
      
0.11
      
1,244,889
      
417
      
0.13
  
Time deposits
    
1,457,510
      
7,974
      
2.19
      
1,156,422
      
3,864
      
1.33
  
                                                 
Total interest bearing deposits
    
4,026,178
      
9,526
      
0.95
      
3,823,256
      
4,938
      
0.51
  
Short-term borrowings
    
160,162
      
359
      
0.90
      
183,796
      
277
      
0.60
  
                                                 
Total interest bearing liabilities
    
4,186,340
      
9,885
      
0.94
      
4,007,052
      
5,215
      
0.52
  
                                                 
Demand deposits
    
438,789
                      
405,311
                  
Other liabilities
    
80,188
                      
26,429
                  
Shareholders' equity
    
521,506
                      
474,994
                  
                                                 
Total liabilities and shareholders' equity
  
$
5,226,823
                    
$
4,913,786
                  
                                                 
Net interest income, tax equivalent
            
38,644
                      
40,526
          
                                                 
Net interest spread
                    
2.88
%
                    
3.26
%
                                                 
                                                 
Net interest margin (net interest income to total interest earning assets)
                    
3.04
%
                    
3.35
%
                                                 
Tax equivalent adjustment
            
(1
)
                    
(3
)
        
                                                 
                                                 
Net interest income
            
38,643
                      
40,523
          

11
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY -
INTEREST RATES AND INTEREST DIFFERENTIAL, Continued

(dollars in thousands)
(Unaudited)

   
Nine months ended
September 30, 2019
    
Nine months ended
September 30, 2018
  
   
Average
    
Interest
    
Average
    
Average
    
Interest
    
Average
  
   
Balance
          
Rate
    
Balance
          
Rate
  
Assets
                                    
                                     
Securities available for sale:
                                    
U. S. government sponsored enterprises
  
$
166,119
      
2,600
      
2.09
%
  
$
155,434
      
2,324
      
1.99
%
Mortgage backed securities and collateralized mortgage obligations - residential
    
329,188
      
5,885
      
2.38
      
300,645
      
5,039
      
2.23
  
State and political subdivisions
    
167
      
9
      
7.19
      
494
      
30
      
8.14
  
Corporate bonds
    
33,678
      
801
      
3.17
      
30,384
      
485
      
2.13
  
Small Business Administration - guaranteed participation securities
    
54,414
      
868
      
2.13
      
64,769
      
1,010
      
2.08
  
Mortgage backed securities and collateralized mortgage obligations - commercial
    
-
      
-
      
-
      
3,651
      
37
      
1.34
  
Other
    
685
      
16
      
3.11
      
685
      
13
      
2.53
  
                                                 
Total securities available for sale
    
584,251
      
10,179
      
2.32
      
556,062
      
8,938
      
2.14
  
                                                 
Federal funds sold and other short-term Investments
    
504,512
      
8,843
      
2.34
      
521,470
      
6,909
      
1.77
  
                                                 
Held to maturity securities:
                                                
Mortgage backed securities and collateralized mortgage obligations - residential
    
21,123
      
613
      
3.87
      
25,410
      
736
      
3.86
  
                                                 
Total held to maturity securities
    
21,123
      
613
      
3.87
      
25,410
      
736
      
3.86
  
                                                 
Federal Reserve Bank and Federal Home Loan Bank stock
    
9,104
      
365
      
5.35
      
8,893
      
357
      
5.35
  
                                                 
Commercial loans
    
191,370
      
7,725
      
5.38
      
187,198
      
7,336
      
5.23
  
Residential mortgage loans
    
3,412,411
      
105,786
      
4.13
      
3,214,950
      
99,123
      
4.11
  
Home equity lines of credit
    
280,248
      
10,441
      
4.97
      
299,723
      
10,018
      
4.47
  
Installment loans
    
10,718
      
656
      
8.16
      
8,831
      
644
      
9.75
  
                                                 
Loans, net of unearned income
    
3,894,747
      
124,608
      
4.27
      
3,710,702
      
117,120
      
4.21
  
                                                 
Total interest earning assets
    
5,013,737
      
144,608
      
3.85
      
4,822,537
      
134,060
      
3.71
  
                                                 
Allowance for loan losses
    
(44,744
)
                    
(44,573
)
                
Cash & non-interest earning assets
    
180,568
                      
123,134
                  
                                                 
                                                 
Total assets
  
$
5,149,561
                    
$
4,901,098
                  
                                                 
                                                 
Liabilities and shareholders' equity
                                                
                                                 
Deposits:
                                                
Interest bearing checking accounts
  
$
878,106
      
267
      
0.04
%
  
$
899,319
      
331
      
0.05
%
Money market accounts
    
546,601
      
3,122
      
0.76
      
528,310
      
1,435
      
0.36
  
Savings
    
1,141,607
      
1,067
      
0.12
      
1,255,245
      
1,256
      
0.13
  
Time deposits
    
1,416,306
      
21,462
      
2.02
      
1,124,592
      
10,163
      
1.21
  
                                                 
Total interest bearing deposits
    
3,982,620
      
25,918
      
0.87
      
3,807,466
      
13,185
      
0.46
  
Short-term borrowings
    
160,647
      
1,121
      
0.93
      
202,412
      
918
      
0.61
  
                                                 
Total interest bearing liabilities
    
4,143,267
      
27,039
      
0.87
      
4,009,878
      
14,103
      
0.47
  
                                                 
Demand deposits
    
418,327
                      
396,288
                  
Other liabilities
    
79,937
                      
28,062
                  
Shareholders' equity
    
508,030
                      
466,870
                  
                                                 
Total liabilities and shareholders' equity
  
$
5,149,561
                    
$
4,901,098
                  
                                                 
Net interest income, tax equivalent
            
117,569
                      
119,957
          
                                                 
Net interest spread
                    
2.98
%
                    
3.24
%
                                                 
                                                 
Net interest margin (net interest income to total interest earning assets)
                    
3.13
%
                    
3.32
%
                                                 
Tax equivalent adjustment
            
(3
)
                    
(10
)
        
                                                 
                                                 
Net interest income
            
117,566
                      
119,947
          

12
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 and other non-routine items 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)

   
9/30/2019
    
6/30/2019
    
9/30/2018
  
                   
Tangible Equity to Tangible Assets
                  
Total Assets
  
$
5,222,469
      
5,227,670
      
4,885,351
  
Less: Intangible assets
    
553
      
553
      
553
  
Tangible assets
    
5,221,916
      
5,227,117
      
4,884,798
  
                         
Equity
    
526,163
      
515,630
      
477,118
  
Less: Intangible assets
    
553
      
553
      
553
  
Tangible equity
    
525,610
      
515,077
      
476,565
  
Tangible Equity to Tangible Assets
    
10.07
%
    
9.85
%
    
9.76
%
Equity to Assets
    
10.07
%
    
9.86
%
    
9.77
%

   
Three months ended
    
Nine months ended
  
Efficiency Ratio
  
9/30/2019
    
6/30/2019
    
9/30/2018
    
9/30/2019
    
9/30/2018
  
                               
Net interest income (fully taxable equivalent)
  
$
38,644
      
39,192
      
40,526
    
$
117,569
      
119,957
  
Non-interest income
    
4,925
      
4,914
      
4,455
      
14,476
      
13,629
  
Revenue used for efficiency ratio
    
43,569
      
44,106
      
44,981
      
132,045
      
133,586
  
                                         
Total noninterest expense
    
24,070
      
24,902
      
24,544
      
73,839
      
72,794
  
Less:  Other real estate (income) expense, net
    
33
      
210
      
528
      
219
      
1,194
  
Expense used for efficiency ratio
    
24,037
      
24,692
      
24,016
      
73,620
      
71,600
  
                                         
Efficiency Ratio
    
55.17
%
    
55.98
%
    
53.39
%
    
55.75
%
    
53.60
%


13