EX-99.(A) 2 ex99_a.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‘s Fourth Quarter Caps Off A Solid 2019

Glenville, New York – January 21, 2020

TrustCo Bank Corp NY (TrustCo, Nasdaq: TRST) today announced full year 2019 net income of $57.8 million or $0.597 diluted earnings per share, and income of $13.9 million or $0.143 diluted earnings per share for the fourth quarter of 2019.  Average residential loan growth increased 5.6% or $187.7 million to a record $3.5 billion for the fourth quarter 2019.

Summary

Robert J. McCormick, Chairman, President and Chief Executive Officer noted, “We are pleased to report an increase in average residential loans of 5.6% or $187.7 million in the fourth quarter 2019 compared to the fourth quarter 2018.  Our focus on foundational principles of strong increasing book value, capital and asset growth, and operational efficiencies has 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.  We continue to add core customer relationships, which ultimately drive future growth.  Loan growth and stabilizing cost of funds as a result of federal interest rate cuts have put us in a good position as we move forward.”

“TrustCo continued to invest in the community and our business and consumers throughout 2019.  Evidenced by the record levels of residential loan balances achieved in 2019, the more than 10,000 hours of community service by our employees, and thousands of dollars of direct contributions to charitable organizations throughout the regions we serve.  We are particularly pleased that we have continued our over 100 year tradition of direct capital distributions to our shareholders in the form of cash dividends which in 2019 amounted to $26.2 million.”  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 us to take advantage of opportunities when interest rate conditions change.

Page | 1
Details

Average loans were up $167.8 million or 4.4% in the fourth quarter 2019 over the same period in 2018.  Average residential loans, our primary lending focus, were up $187.7 million or 5.6% in the fourth quarter 2019, over the same period in 2018.  Average deposits were up $218.8 million or 5.2% for the fourth quarter 2019 over the same period a year earlier.  The increase in deposits was the result of a $195.0 million or 15.9% increase in average time deposits in the fourth quarter 2019 over the same period last year.  Excluding time deposits, total average core deposit accounts, which consist of checking, savings and money market deposit accounts, were up $23.8 million or 0.8% for the fourth quarter 2019 compared to the fourth quarter 2018.

The cost of interest bearing liabilities increased to 0.90% in the fourth quarter 2019 from 0.61% in the fourth quarter 2018.  The cost of savings and interest bearing checking decreased slightly by 3 basis points and by 4 basis points, respectively, in the fourth quarter 2019 over the same period in 2018.  Money market deposits increased by 32 basis points to 0.81% versus 0.49% from the fourth quarter 2018.  The net interest margin for the fourth quarter 2019 was 3.02%.  A strategy executed during 2019 included offering competitive shorter term time deposit rates, which we expect will help stabilize net interest margin in the first and second quarter of 2020 as our shorter term time deposits would be expected to 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 $47.3 million or 9.8% in the fourth quarter of 2019 compared to the same period in 2018.  On this expanded equity, return on average assets and return on average equity were 1.06% and 10.41%, respectively, compared to 1.30% and 13.18% for the fourth quarter 2018.  Diluted earnings per share were $0.143 for the fourth quarter 2019, compared to $0.166 for the fourth quarter 2018.  Total operating expenses decreased by $1.0 million in the fourth quarter 2019 as compared to the fourth quarter 2018, driven by decreases in net occupancy expense, professional services, advertising expense, FDIC and other insurance expense, other real estate expense, and other expense, partially offset by an increase primarily in salaries and employee benefits.

Asset quality and the resulting loan loss reserve measures continued to improve.  Nonperforming loans (NPLs) were $20.9 million at December 31, 2019, compared to $25.0 million at December 31, 2018.  NPLs were equal to 0.51% of total loans at December 31, 2019, compared to 0.64% at December 31, 2018.  The coverage ratio, or allowance for loan losses to NPLs, was 212.4% at December 31, 2019, compared to 179.2% at December 31, 2018.  Nonperforming assets (NPAs) were $22.4 million at December 31, 2019 compared to $26.7 million at December 31, 2018.  The ratio of allowance for loan losses to total loans was 1.09% as of December 31, 2019, compared to 1.16% at December 31, 2018 and reflects both the continued improvement in asset quality and the economic conditions in our primary markets.  The allowance for loan losses was $44.3 million at December 31, 2019 compared to $44.8 million at December 31, 2018.  The provision for loan losses for the year was $159 thousand for 2019, compared to $1.4 million in 2018.  Net chargeoffs decreased to $608 thousand for 2019 from $804 thousand for 2018.  The quarterly annualized net chargeoff ratio was 0.02% for 2019, compared to 0.05% in 2018.

Page | 2
At December 31, 2019 the equity to asset ratio was 10.31%, compared to 9.88% at December 31, 2018.  Book value per share at December 31, 2019 was $5.55 compared to $5.07 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 December 31, 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 fourth quarter 2019 results will be held at 9:00 a.m. Eastern Time on January 22, 2020.  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 10138363.  The call will also be audio webcast at https://services.choruscall.com/links/trst200122.html and will be available for one year.
 
Page | 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 2020, including our expectations for the repricing of our CD portfolio and the stabilizing of our net interest margin, 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.

Page | 4
TRUSTCO BANK CORP NY
GLENVILLE, NY

FINANCIAL HIGHLIGHTS

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

   
Three months ended
  
   
12/31/2019
    
9/30/2019
    
12/31/2018
  
Summary of operations
                  
Net interest income (TE)
  
$
38,243
      
38,644
      
40,740
  
Provision for loan losses
    
200
      
-
      
500
  
Noninterest income
    
4,115
      
4,925
      
4,452
  
Noninterest expense
    
23,891
      
24,070
      
24,919
  
Net income
    
13,907
      
14,708
      
16,033
  
                         
Per common share
                        
Net income per share:
                        
- Basic
  
$
0.143
      
0.152
      
0.166
  
- Diluted
    
0.143
      
0.152
      
0.166
  
Cash dividends
    
0.068
      
0.068
      
0.068
  
Tangible Book value at period end
    
5.55
      
5.42
      
5.06
  
Market price at period end
    
8.67
      
8.15
      
6.86
  
                         
At period end
                        
Full time equivalent employees
    
814
      
823
      
854
  
Full service banking offices
    
148
      
148
      
148
  
                         
Performance ratios
                        
Return on average assets
    
1.06
%
    
1.12
      
1.30
  
Return on average equity
    
10.41
      
11.19
      
13.18
  
Efficiency (1)
    
57.31
      
55.17
      
55.06
  
Net interest spread (TE)
    
2.86
      
2.88
      
3.27
  
Net interest margin (TE)
    
3.02
      
3.04
      
3.38
  
Dividend payout ratio
    
47.48
      
44.85
      
41.07
  
                         
Capital ratios at period end
                        
Consolidated tangible equity to tangible assets (2)
    
10.30
%
    
10.07
      
9.87
  
Consolidated equity to assets
    
10.31
%
    
10.07
      
9.88
  
                         
Asset quality analysis at period end
                        
Nonperforming loans to total loans
    
0.51
      
0.53
      
0.64
  
Nonperforming assets to total assets
    
0.43
      
0.45
      
0.54
  
Allowance for loan losses to total loans
    
1.09
      
1.11
      
1.16
  
Coverage ratio (3)
    
2.1
x
    
2.1
x
    
1.8
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

Page | 5
FINANCIAL HIGHLIGHTS, Continued

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

   
Year ended
  
   
12/31/2019
    
12/31/2018
  
Summary of operations
            
Net interest income (TE)
  
$
155,812
      
160,698
  
Provision for loan losses
    
159
      
1,400
  
Noninterest income
    
18,591
      
18,081
  
Noninterest expense
    
97,730
      
97,713
  
Net income
    
57,840
      
61,445
  
                 
Per common share
                
Net income per share:
                
- Basic
  
$
0.597
      
0.637
  
- Diluted
    
0.597
      
0.636
  
Cash dividends
    
0.273
      
0.268
  
Tangible Book value at period end
    
5.55
      
5.06
  
Market price at period end
    
8.67
      
6.86
  
                 
Performance ratios
                
Return on average assets
    
1.12
      
1.25
  
Return on average equity
    
11.26
      
13.05
  
Efficiency (1)
    
56.13
      
53.97
  
Net interest spread (TE)
    
2.94
      
3.25
  
Net interest margin (TE)
    
3.10
      
3.33
  
Dividend payout ratio
    
45.60
      
42.02
  

(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.

Page | 6
CONSOLIDATED STATEMENTS OF INCOME

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

   
Three months ended
  
   
12/31/2019
    
9/30/2019
    
6/30/2019
    
3/31/2019
    
12/31/2018
  
Interest and dividend income:
                              
Interest and fees on loans
  
$
42,002
      
41,923
      
41,432
      
41,253
      
41,184
  
Interest and dividends on securities available for sale:
                                        
U. S. government sponsored enterprises
    
609
      
996
      
821
      
783
      
788
  
State and political subdivisions
    
2
      
2
      
3
      
1
      
2
  
Mortgage-backed securities and collateralized mortgage obligations - residential
    
2,334
      
2,178
      
2,152
      
1,555
      
1,554
  
Corporate bonds
    
295
      
321
      
272
      
208
      
202
  
Small Business Administration - guaranteed participation securities
    
253
      
282
      
289
      
297
      
329
  
Other securities
    
6
      
6
      
5
      
5
      
5
  
Total interest and dividends on securities available for sale
    
3,499
      
3,785
      
3,542
      
2,849
      
2,880
  
                                         
Interest on held to maturity securities:
                                        
Mortgage-backed securities and collateralized mortgage obligations - residential
    
184
      
187
      
209
      
217
      
226
  
Total interest on held to maturity securities
    
184
      
187
      
209
      
217
      
226
  
                                         
Federal Reserve Bank and Federal Home Loan Bank stock
    
203
      
81
      
199
      
85
      
207
  
                                         
Interest on federal funds sold and other short-term investments
    
1,635
      
2,552
      
3,282
      
3,009
      
2,367
  
Total interest income
    
47,523
      
48,528
      
48,664
      
47,413
      
46,864
  
                                         
Interest expense:
                                        
Interest on deposits:
                                        
Interest-bearing checking
    
21
      
52
      
94
      
121
      
111
  
Savings
    
271
      
323
      
367
      
377
      
401
  
Money market deposit accounts
    
1,175
      
1,177
      
1,119
      
826
      
618
  
Time deposits
    
7,468
      
7,974
      
7,512
      
5,976
      
4,643
  
Interest on short-term borrowings
    
347
      
359
      
381
      
381
      
352
  
Total interest expense
    
9,282
      
9,885
      
9,473
      
7,681
      
6,125
  
                                         
Net interest income
    
38,241
      
38,643
      
39,191
      
39,732
      
40,739
  
                                         
Less: (Credit) Provision for loan losses
    
200
      
-
      
(341
)
    
300
      
500
  
Net interest income after provision for loan losses
    
38,041
      
38,643
      
39,532
      
39,432
      
40,239
  
                                         
Noninterest income:
                                        
Trustco Financial Services income
    
1,454
      
1,517
      
1,683
      
1,733
      
1,356
  
Fees for services to customers
    
2,377
      
2,602
      
2,611
      
2,520
      
2,897
  
Other
    
284
      
806
      
620
      
384
      
199
  
Total noninterest income
    
4,115
      
4,925
      
4,914
      
4,637
      
4,452
  
                                         
Noninterest expenses:
                                        
Salaries and employee benefits
    
11,743
      
11,725
      
11,711
      
11,451
      
10,183
  
Net occupancy expense
    
4,399
      
4,094
      
4,006
      
4,167
      
4,800
  
Equipment expense
    
1,768
      
1,689
      
1,709
      
1,902
      
1,741
  
Professional services
    
1,449
      
1,507
      
1,568
      
1,650
      
1,733
  
Outsourced services
    
1,925
      
1,875
      
1,875
      
1,925
      
1,875
  
Advertising expense
    
464
      
494
      
778
      
785
      
876
  
FDIC and other insurance
    
259
      
282
      
598
      
648
      
522
  
Other real estate (income) expense, net
    
(385
)
    
33
      
210
      
(24
)
    
37
  
Other
    
2,269
      
2,371
      
2,447
      
2,363
      
3,152
  
Total noninterest expenses
    
23,891
      
24,070
      
24,902
      
24,867
      
24,919
  
                                         
Income before taxes
    
18,265
      
19,498
      
19,544
      
19,202
      
19,772
  
Income taxes
    
4,358
      
4,790
      
4,877
      
4,644
      
3,739
  
                                         
Net income
  
$
13,907
      
14,708
      
14,667
      
14,558
      
16,033
  
                                         
Net income per common share:
                                        
- Basic
  
$
0.143
      
0.152
      
0.152
      
0.150
      
0.166
  
 
                                        
- Diluted
    
0.143
      
0.152
      
0.151
      
0.150
      
0.166
  
                                         
Average basic shares (in thousands)
    
96,919
      
96,907
      
96,822
      
96,744
      
96,555
  
Average diluted shares (in thousands)
    
97,015
      
96,977
      
96,891
      
96,822
      
96,689
  
                                         
Note:  Taxable equivalent net interest income
  
$
38,243
      
38,644
      
39,192
      
39,733
      
40,740
  

Page | 7
CONSOLIDATED STATEMENTS OF INCOME, Continued

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

   
Year ended
  
   
12/31/19
    
12/31/18
  
Interest and dividend income:
            
Interest and fees on loans
  
$
166,610
      
158,304
  
Interest and dividends on securities available for sale:
                
U. S. government sponsored enterprises
    
3,209
      
3,112
  
State and political subdivisions
    
8
      
22
  
Mortgage-backed securities and collateralized mortgage obligations - residential
    
8,219
      
6,593
  
Corporate bonds
    
1,096
      
687
  
Small Business Administration - guaranteed participation securities
    
1,121
      
1,339
  
Mortgage-backed securities and collateralized mortgage obligations - commercial
    
-
      
37
  
Other securities
    
22
      
18
  
Total interest and dividends on securities available for sale
    
13,675
      
11,808
  
                 
Interest on held to maturity securities:
                
Mortgage-backed securities-residential
    
797
      
962
  
Total interest on held to maturity securities
    
797
      
962
  
                 
Federal Reserve Bank and Federal Home Loan Bank stock
    
568
      
564
  
                 
Interest on federal funds sold and other short-term investments
    
10,478
      
9,276
  
Total interest income
    
192,128
      
180,914
  
                 
Interest expense:
                
Interest on deposits:
                
Interest-bearing checking
    
288
      
442
  
Savings
    
1,338
      
1,657
  
Money market deposit accounts
    
4,297
      
2,053
  
Time deposits
    
28,930
      
14,806
  
Interest on short-term borrowings
    
1,468
      
1,270
  
Total interest expense
    
36,321
      
20,228
  
                 
Net interest income
    
155,807
      
160,686
  
                 
Less: Provision for loan losses
    
159
      
1,400
  
Net interest income after provision for loan losses
    
155,648
      
159,286
  
                 
Noninterest income:
                
Trustco Financial Services income
    
6,387
      
6,283
  
Fees for services to customers
    
10,110
      
10,912
  
Other
    
2,094
      
886
  
Total noninterest income
    
18,591
      
18,081
  
                 
Noninterest expenses:
                
Salaries and employee benefits
    
46,630
      
42,107
  
Net occupancy expense
    
16,666
      
17,213
  
Equipment expense
    
7,068
      
7,068
  
Professional services
    
6,174
      
6,555
  
Outsourced services
    
7,600
      
7,500
  
Advertising expense
    
2,521
      
3,020
  
FDIC and other insurance
    
1,787
      
2,741
  
Other real estate (income) expense, net
    
(166
)
    
1,231
  
Other
    
9,450
      
10,278
  
Total noninterest expenses
    
97,730
      
97,713
  
                 
Income before taxes
    
76,509
      
79,654
  
Income taxes
    
18,669
      
18,209
  
                 
Net income
  
$
57,840
      
61,445
  
                 
Net income per common share:
                
- Basic
  
$
0.597
      
0.637
  
 
                
- Diluted
    
0.597
      
0.636
  
                 
Average basic shares (in thousands)
    
96,849
      
96,505
  
Average diluted shares (in thousands)
    
96,927
      
96,646
  
                 
Note:  Taxable equivalent net interest income
  
$
155,812
      
160,698
  

Page | 8
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(dollars in thousands)
(Unaudited)

   
12/31/2019
    
9/30/2019
    
6/30/2019
    
3/31/2019
    
12/31/2018
  
ASSETS:
                              
                               
Cash and due from banks
  
$
48,198
      
49,526
      
42,471
      
43,064
      
49,260
  
Federal funds sold and other short term investments
    
408,648
      
401,151
      
517,684
      
576,123
      
454,449
  
Total cash and cash equivalents
    
456,846
      
450,677
      
560,155
      
619,187
      
503,709
  
                                         
Securities available for sale:
                                        
U. S. government sponsored enterprises
    
104,512
      
164,490
      
184,448
      
148,292
      
152,160
  
States and political subdivisions
    
162
      
169
      
170
      
172
      
173
  
Mortgage-backed securities and collateralized mortgage obligations - residential
    
389,517
      
406,166
      
354,679
      
312,946
      
262,032
  
Small Business Administration - guaranteed participation securities
    
48,511
      
50,970
      
53,091
      
54,113
      
56,475
  
Corporate bonds
    
30,436
      
40,281
      
40,467
      
30,258
      
29,938
  
Other securities
    
685
      
683
      
685
      
685
      
685
  
Total securities available for sale
    
573,823
      
662,759
      
633,540
      
546,466
      
501,463
  
                                         
Held to maturity securities:
                                        
Mortgage-backed securities and collateralized mortgage obligations-residential
    
18,618
      
19,705
      
20,667
      
21,609
      
22,501
  
Total held to maturity securities
    
18,618
      
19,705
      
20,667
      
21,609
      
22,501
  
                                         
Federal Reserve Bank and Federal Home Loan Bank stock
    
9,183
      
9,183
      
9,183
      
8,953
      
8,953
  
                                         
Loans:
                                        
Commercial
    
199,499
      
192,443
      
190,507
      
190,347
      
196,146
  
Residential mortgage loans
    
3,583,774
      
3,508,647
      
3,428,829
      
3,376,193
      
3,376,708
  
Home equity line of credit
    
267,922
      
273,526
      
277,559
      
282,034
      
289,540
  
Installment loans
    
11,001
      
10,703
      
9,514
      
12,579
      
11,702
  
Loans, net of deferred net costs
    
4,062,196
      
3,985,319
      
3,906,409
      
3,861,153
      
3,874,096
  
                                         
Less: Allowance for loan losses
    
44,317
      
44,329
      
44,365
      
44,671
      
44,766
  
Net loans
    
4,017,879
      
3,940,990
      
3,862,044
      
3,816,482
      
3,829,330
  
                                         
Bank premises and equipment, net
    
34,622
      
34,168
      
34,058
      
34,428
      
34,694
  
Operating lease right-of-use assets
    
51,475
      
49,618
      
51,097
      
51,559
      
-
  
Other assets
    
58,876
      
55,369
      
56,926
      
57,637
      
58,263
  
                                         
Total assets
  
$
5,221,322
      
5,222,469
      
5,227,670
      
5,156,321
      
4,958,913
  
                                         
LIABILITIES:
                                        
Deposits:
                                        
Demand
  
$
463,858
      
453,439
      
432,780
      
408,417
      
405,069
  
Interest-bearing checking
    
875,672
      
869,101
      
888,433
      
895,099
      
904,678
  
Savings accounts
    
1,113,146
      
1,110,947
      
1,132,308
      
1,150,329
      
1,182,683
  
Money market deposit accounts
    
599,163
      
570,457
      
562,318
      
538,043
      
507,311
  
Time deposits
    
1,398,177
      
1,457,223
      
1,446,428
      
1,421,181
      
1,274,506
  
Total deposits
    
4,450,016
      
4,461,167
      
4,462,267
      
4,413,069
      
4,274,247
  
                                         
Short-term borrowings
    
148,666
      
151,095
      
166,746
      
159,778
      
161,893
  
Operating lease liabilities
    
56,553
      
54,731
      
56,237
      
56,723
      
-
  
Accrued expenses and other liabilities
    
27,830
      
29,313
      
26,790
      
25,033
      
32,902
  
                                         
Total liabilities
    
4,683,065
      
4,696,306
      
4,712,040
      
4,654,603
      
4,469,042
  
                                         
SHAREHOLDERS' EQUITY:
                                        
Capital stock
    
100,205
      
100,200
      
100,180
      
100,180
      
100,175
  
Surplus
    
176,427
      
176,395
      
176,396
      
176,510
      
176,710
  
Undivided profits
    
288,067
      
280,542
      
272,433
      
264,364
      
256,397
  
Accumulated other comprehensive income (loss), net of tax
    
4,461
      
(71
)
    
(1,774
)
    
(7,011
)
    
(10,309
)
Treasury stock at cost
    
(30,903
)
    
(30,903
)
    
(31,605
)
    
(32,325
)
    
(33,102
)
                                         
Total shareholders' equity
    
538,257
      
526,163
      
515,630
      
501,718
      
489,871
  
 
                                        
Total liabilities and shareholders' equity
  
$
5,221,322
      
5,222,469
      
5,227,670
      
5,156,321
      
4,958,913
  
                                         
Outstanding shares (in thousands)
    
96,922
      
96,917
      
96,822
      
96,746
      
96,659
  

Page | 9
NONPERFORMING ASSETS

(dollars in thousands)
(Unaudited)

 
  
12/31/2019
    
9/30/2019
    
6/30/2019
    
3/31/2019
    
12/31/2018
  
Nonperforming Assets
                              
 
                              
New York and other states*
                              
Loans in nonaccrual status:
                              
Commercial
  
$
816
      
888
      
905
      
701
      
645
  
Real estate mortgage - 1 to 4 family
    
18,407
      
18,275
      
19,633
      
22,343
      
22,373
  
Installment
    
3
      
13
      
1
      
26
      
4
  
Total non-accrual loans
    
19,226
      
19,176
      
20,539
      
23,070
      
23,022
  
Other nonperforming real estate mortgages - 1 to 4 family
    
29
      
30
      
31
      
33
      
34
  
Total nonperforming loans
    
19,255
      
19,206
      
20,570
      
23,103
      
23,056
  
Other real estate owned
    
1,579
      
2,409
      
2,625
      
1,262
      
1,675
  
Total nonperforming assets
  
$
20,834
      
21,615
      
23,195
      
24,365
      
24,731
  
 
                                        
Florida
                                        
Loans in nonaccrual status:
                                        
Commercial
  
$
-
      
-
      
-
      
-
      
-
  
Real estate mortgage - 1 to 4 family
    
1,614
      
1,809
      
1,564
      
1,644
      
1,915
  
Installment
    
-
      
-
      
-
      
-
      
15
  
Total non-accrual loans
    
1,614
      
1,809
      
1,564
      
1,644
      
1,930
  
Other nonperforming real estate mortgages - 1 to 4 family
    
-
      
-
      
-
      
-
      
-
  
Total nonperforming loans
    
1,614
      
1,809
      
1,564
      
1,644
      
1,930
  
Other real estate owned
    
-
      
-
      
-
      
-
      
-
  
Total nonperforming assets
  
$
1,614
      
1,809
      
1,564
      
1,644
      
1,930
  
 
                                        
Total
                                        
Loans in nonaccrual status:
                                        
Commercial
  
$
816
      
888
      
905
      
701
      
645
  
Real estate mortgage - 1 to 4 family
    
20,021
      
20,084
      
21,197
      
23,987
      
24,288
  
Installment
    
3
      
13
      
1
      
26
      
19
  
Total non-accrual loans
    
20,840
      
20,985
      
22,103
      
24,714
      
24,952
  
Other nonperforming real estate mortgages - 1 to 4 family
    
29
      
30
      
31
      
33
      
34
  
Total nonperforming loans
    
20,869
      
21,015
      
22,134
      
24,747
      
24,986
  
Other real estate owned
    
1,579
      
2,409
      
2,625
      
1,262
      
1,675
  
Total nonperforming assets
  
$
22,448
      
23,424
      
24,759
      
26,009
      
26,661
  
 
                                        
Quarterly Net (Recoveries) Chargeoffs
                                        
 
                                        
New York and other states*
                                        
Commercial
  
$
(1
)
    
(28
)
    
(1
)
    
4
      
99
  
Real estate mortgage - 1 to 4 family
    
146
      
39
      
(54
)
    
318
      
323
  
Installment
    
67
      
9
      
45
      
23
      
35
  
Total net chargeoffs (recoveries)
  
$
212
      
20
      
(10
)
    
345
      
457
  
 
                                        
Florida
                                        
Commercial
  
$
-
      
-
      
-
      
-
      
-
  
Real estate mortgage - 1 to 4 family
    
(1
)
    
-
      
(25
)
    
19
      
(3
)
Installment
    
1
      
16
      
-
      
31
      
16
  
Total net chargeoffs (recoveries)
  
$
-
      
16
      
(25
)
    
50
      
13
  
 
                                        
Total
                                        
Commercial
  
$
(1
)
    
(28
)
    
(1
)
    
4
      
99
  
Real estate mortgage - 1 to 4 family
    
145
      
39
      
(79
)
    
337
      
320
  
Installment
    
68
      
25
      
45
      
54
      
51
  
Total net chargeoffs (recoveries)
  
$
212
      
36
      
(35
)
    
395
      
470
  
 
                                        
Asset Quality Ratios
                                        
 
                                        
Total nonperforming loans (1)
  
$
20,869
      
21,015
      
22,134
      
24,747
      
24,986
  
Total nonperforming assets (1)
    
22,448
      
23,424
      
24,759
      
26,009
      
26,661
  
Total net chargeoffs (recoveries) (2)
    
212
      
36
      
(35
)
    
395
      
470
  
 
                                        
Allowance for loan losses (1)
    
44,317
      
44,329
      
44,365
      
44,671
      
44,766
  
 
                                        
Nonperforming loans to total loans
    
0.51
%
    
0.53
%
    
0.57
%
    
0.64
%
    
0.64
%
Nonperforming assets to total assets
    
0.43
%
    
0.45
%
    
0.47
%
    
0.50
%
    
0.54
%
Allowance for loan losses to total loans
    
1.09
%
    
1.11
%
    
1.14
%
    
1.16
%
    
1.16
%
Coverage ratio (1)
    
212.4
%
    
210.9
%
    
200.4
%
    
180.5
%
    
179.2
%
Annualized net chargeoffs to average loans (2)
    
0.02
%
    
0.00
%
    
0.00
%
    
0.04
%
    
0.05
%
Allowance for loan losses to annualized net chargeoffs (2)
    
52.3
x
    
307.8
x
    
N/A
      
28.3
x
    
23.8
x

*
Includes New York, New Jersey, Vermont and Massachusetts.
(1)
At period-end
(2)
For the period ended

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

(dollars in thousands)
(Unaudited)
  
Three months ended
December 31, 2019
    
Three months ended
December 31, 2018
  
   
Average
Balance
    
Interest
    
Average
Rate
    
Average
Balance
    
Interest
    
Average
Rate
  
Assets
                                    
                                     
Securities available for sale:
                                    
U. S. government sponsored enterprises
  
$
127,284
      
609
      
1.91
%
  
$
154,867
      
788
      
2.03
%
Mortgage backed securities and collateralized mortgage obligations - residential
    
396,335
      
2,334
      
2.36
      
276,747
      
1,554
      
2.25
  
State and political subdivisions
    
165
      
4
      
9.70
      
172
      
3
      
7.82
  
Corporate bonds
    
37,795
      
295
      
3.12
      
30,068
      
202
      
2.68
  
Small Business Administration - guaranteed participation securities
    
49,787
      
253
      
2.03
      
59,363
      
329
      
2.21
  
Mortgage backed securities and collateralized mortgage obligations - commercial
    
-
      
-
      
-
      
-
      
-
      
-
  
Other
    
685
      
6
      
3.50
      
684
      
5
      
2.92
  
                                                 
Total securities available for sale
    
612,051
      
3,501
      
2.29
      
521,901
      
2,881
      
2.21
  
                                                 
Federal funds sold and other short-term Investments
    
395,311
      
1,635
      
1.65
      
416,765
      
2,367
      
2.25
  
                                                 
Held to maturity securities:
                                                
Mortgage backed securities and collateralized mortgage obligations - residential
    
19,185
      
184
      
3.84
      
22,947
      
226
      
3.93
  
                                                 
Total held to maturity securities
    
19,185
      
184
      
3.84
      
22,947
      
226
      
3.93
  
                                                 
Federal Reserve Bank and Federal Home Loan Bank stock
    
9,183
      
203
      
8.84
      
8,953
      
207
      
9.25
  
                                                 
Commercial loans
    
192,427
      
2,517
      
5.23
      
191,899
      
2,577
      
5.37
  
Residential mortgage loans
    
3,547,219
      
36,179
      
4.08
      
3,359,540
      
34,808
      
4.14
  
Home equity lines of credit
    
270,766
      
3,110
      
4.59
      
291,411
      
3,544
      
4.82
  
Installment loans
    
10,682
      
196
      
7.34
      
10,486
      
255
      
9.65
  
                                                 
Loans, net of unearned income
    
4,021,094
      
42,002
      
4.18
      
3,853,336
      
41,184
      
4.27
  
                                                 
Total interest earning assets
    
5,056,824
      
47,525
      
3.76
      
4,823,902
      
46,865
      
3.88
  
                                                 
Allowance for loan losses
    
(44,320
)
                    
(44,887
)
                
Cash & non-interest earning assets
    
188,605
                      
120,646
                  
                                                 
Total assets
  
$
5,201,109
                    
$
4,899,661
                  
                                                 
Liabilities and shareholders' equity
                                                
                                                 
Deposits:
                                                
Interest bearing checking accounts
  
$
864,774
      
21
      
0.01
%
  
$
892,241
      
111
      
0.05
%
Money market accounts
    
583,048
      
1,175
      
0.81
      
499,771
      
618
      
0.49
  
Savings
    
1,111,259
      
271
      
0.10
      
1,200,864
      
401
      
0.13
  
Time deposits
    
1,422,049
      
7,468
      
2.10
      
1,227,034
      
4,643
      
1.50
  
                                                 
Total interest bearing deposits
    
3,981,130
      
8,935
      
0.90
      
3,819,910
      
5,773
      
0.60
  
Short-term borrowings
    
154,898
      
347
      
0.90
      
171,247
      
352
      
0.82
  
                                                 
Total interest bearing liabilities
    
4,136,028
      
9,282
      
0.90
      
3,991,157
      
6,125
      
0.61
  
                                                 
Demand deposits
    
454,585
                      
396,959
                  
Other liabilities
    
80,386
                      
28,748
                  
Shareholders' equity
    
530,110
                      
482,797
                  
                                                 
Total liabilities and shareholders' equity
  
$
5,201,109
                    
$
4,899,661
                  
                                                 
Net interest income, tax equivalent
            
38,243
                      
40,740
          
                                                 
Net interest spread
                    
2.86
%
                    
3.27
%
                                                 
Net interest margin (net interest income to total interest earning assets)
                    
3.02
%
                    
3.38
%
                                                 
Tax equivalent adjustment
            
(2
)
                    
(1
)
        
                                                 
Net interest income
            
38,241
                      
40,739
          

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

(dollars in thousands)
(Unaudited)
  
Year ended
December 31, 2019
    
Year ended
December 31, 2018
  
   
Average
Balance
    
Interest
    
Average
Rate
    
Average
Balance
    
Interest
    
Average
Rate
  
Assets
                                    
                                     
Securities available for sale:
                                    
U. S. government sponsored enterprises
  
$
156,292
      
3,209
      
2.05
%
  
$
155,381
      
3,112
      
2.00
%
Mortgage backed securities and collateralized mortgage obligations - residential
    
345,718
      
8,219
      
2.38
      
294,732
      
6,593
      
2.24
  
State and political subdivisions
    
167
      
13
      
7.78
      
414
      
34
      
8.11
  
Corporate bonds
    
34,637
      
1,096
      
3.16
      
30,310
      
687
      
2.27
  
Small Business Administration - guaranteed participation securities
    
53,269
      
1,121
      
2.10
      
63,430
      
1,339
      
2.11
  
Mortgage backed securities and collateralized mortgage obligations - commercial
    
-
      
-
      
-
      
2,769
      
37
      
1.33
  
Other
    
685
      
22
      
3.21
      
685
      
18
      
3.50
  
                                                 
Total securities available for sale
    
590,768
      
13,680
      
2.32
      
547,721
      
11,820
      
2.88
  
                                                 
Federal funds sold and other short-term Investments
    
477,181
      
10,478
      
2.20
      
495,066
      
9,276
      
1.87
  
                                                 
Held to maturity securities:
                                                
Mortgage backed securities and collateralized mortgage obligations - residential
    
20,643
      
797
      
3.86
      
24,801
      
962
      
3.88
  
                                                 
Total held to maturity securities
    
20,643
      
797
      
3.86
      
24,801
      
962
      
3.88
  
                                                 
Federal Reserve Bank and Federal Home Loan Bank stock
    
9,123
      
568
      
6.23
      
8,907
      
564
      
8.44
  
                                                 
Commercial loans
    
191,636
      
10,243
      
5.35
      
188,362
      
9,913
      
5.26
  
Residential mortgage loans
    
3,445,940
      
141,964
      
4.12
      
3,250,800
      
133,930
      
4.12
  
Home equity lines of credit
    
277,905
      
13,551
      
4.88
      
297,678
      
13,562
      
4.56
  
Installment loans
    
10,718
      
852
      
7.95
      
9,242
      
899
      
9.73
  
                                                 
Loans, net of unearned income
    
3,926,199
      
166,610
      
4.24
      
3,746,082
      
158,304
      
4.23
  
                                                 
Total interest earning assets
    
5,023,914
      
192,133
      
3.82
      
4,822,577
      
180,926
      
3.75
  
                                                 
Allowance for loan losses
    
(44,639
)
                    
(44,651
)
                
Cash & non-interest earning assets
    
182,545
                      
122,524
                  
                                                 
Total assets
  
$
5,161,820
                    
$
4,900,450
                  
                                                 
Liabilities and shareholders' equity
                                                
                                                 
Deposits:
                                                
Interest bearing checking accounts
  
$
874,700
      
288
      
0.03
%
  
$
897,378
      
442
      
0.05
%
Money market accounts
    
555,547
      
4,297
      
0.77
      
521,233
      
2,053
      
0.39
  
Savings
    
1,134,050
      
1,338
      
0.12
      
1,241,619
      
1,657
      
0.13
  
Time deposits
    
1,417,487
      
28,930
      
2.04
      
1,149,980
      
14,806
      
1.29
  
                                                 
Total interest bearing deposits
    
3,981,784
      
34,853
      
0.88
      
3,810,210
      
18,958
      
0.50
  
Short-term borrowings
    
159,220
      
1,468
      
0.92
      
194,810
      
1,270
      
0.65
  
                                                 
Total interest bearing liabilities
    
4,141,004
      
36,321
      
0.88
      
4,005,020
      
20,228
      
0.51
  
                                                 
Demand deposits
    
427,276
                      
396,367
                  
Other liabilities
    
80,051
                      
28,249
                  
Shareholders' equity
    
513,489
                      
470,814
                  
                                                 
Total liabilities and shareholders' equity
  
$
5,161,820
                    
$
4,900,450
                  
                                                 
Net interest income, tax equivalent
            
155,812
                      
160,698
          
                                                 
Net interest spread
                    
2.94
%
                    
3.25
%
                                                 
Net interest margin (net interest income to total interest earning assets)
                    
3.10
%
                    
3.33
%
                                                 
Tax equivalent adjustment
            
(5
)
                    
(12
)
        
                                                 
Net interest income
            
155,807
                      
160,686
          

Page | 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)

Tangible Book Value Per Share
  
12/31/2019
    
9/30/2019
    
12/31/2018
              
                               
Equity (GAAP)
  
$
538,257
      
526,163
      
489,871
              
Less: Intangible assets
    
553
      
553
      
553
              
Tangible equity (Non-GAAP)
    
537,704
      
525,610
      
489,318
              
                                     
Shares outstanding
    
96,922
      
96,917
      
96,659
              
Tangible book value per share (Non-GAAP)
    
5.55
      
5.42
      
5.06
              
Book value per share (GAAP)
    
5.55
      
5.43
      
5.07
              
                                     
Tangible Equity to Tangible Assets
                                    
                                     
Total Assets (GAAP)
  
$
5,221,322
      
5,222,469
      
4,958,913
              
Less: Intangible assets
    
553
      
553
      
553
              
Tangible assets (Non-GAAP)
    
5,220,769
      
5,221,916
      
4,958,360
              
                                     
Tangible Equity to Tangible Assets (Non-GAAP)
    
10.30
%
    
10.07
%
    
9.87
%
            
Equity to Assets (GAAP)
    
10.31
%
    
10.07
%
    
9.88
%
            
                                     
   
Three months ended
    
Year ended
  
Efficiency Ratio
  
12/31/2019
    
9/30/2019
    
12/31/2018
    
12/31/2019
    
12/31/2018
  
                                     
Net interest income (GAAP)
  
$
38,241
      
38,643
      
40,739
    
$
155,807
      
160,686
  
Taxable equivalent adjustment
    
2
      
1
      
1
      
5
      
12
  
Net interest income (fully taxable equivalent) (Non-GAAP)
    
38,243
      
38,644
      
40,740
      
155,812
      
160,698
  
Non-interest income (GAAP)
    
4,115
      
4,925
      
4,452
      
18,591
      
18,081
  
Revenue used for efficiency ratio (Non-GAAP)
    
42,358
      
43,569
      
45,192
      
174,403
      
178,779
  
                                         
Total noninterest expense (GAAP)
    
23,891
      
24,070
      
24,919
      
97,730
      
97,713
  
Less:  Other real estate (income) expense, net
    
(385
)
    
33
      
37
      
(166
)
    
1,231
  
Expense used for efficiency ratio (Non-GAAP)
    
24,276
      
24,037
      
24,882
      
97,896
      
96,482
  
                                         
Efficiency Ratio
    
57.31
%
    
55.17
%
    
55.06
%
    
56.13
%
    
53.97
%


Page | 13