Executive Snapshot:

• Continued solid financial results:
  • Core net income for 2015 rose to $42.2 million from $41.5 million in 2014
  • Key metrics for fourth quarter of 2015 results:
    • Net income of $10.2 million in fourth quarter of 2015 compared to $10.7 million in fourth quarter of 2014
    • Operating expenses increased $868 thousand in the fourth quarter of 2015 compared to the fourth quarter of 2014
    • Return on average assets (ROA) of 0.86%
    • Return on average equity (ROE) of 9.75%
    • Efficiency ratio of 55.37%
       
• Asset quality improvement:
  • Most asset quality measures continued to improve compared to both the fourth quarter of 2014 and the third quarter of 2015
  • Nonperforming assets (NPAs) fell by $5.7 million compared to December 31, 2014
  • NPAs to total assets improved from 0.87% to 0.73% compared to December 31, 2014
  • Quarterly net chargeoffs increased to 0.21% of average loans on an annualized basis, compared to 0.15% for the fourth quarter of 2014
     
• Continued expansion of customer base:
  • Focus on capitalizing on opportunities presented by expanded branch network
  • Average deposits per branch grew $452 thousand from December 31, 2014 to December 31, 2015 on a same store basis
  • Average core deposits were $109 million higher in the fourth quarter of 2015 compared to the fourth quarter of 2014
     
• Loan portfolio reaches all-time high:
  • Average loans were up $163 million for the fourth quarter of 2015 compared to fourth quarter of 2014
  • At $3.29 billion as of December 31, 2015, loans reached an all-time high

                         
Note: See non-GAAP financial measures reconciliation for information on core income

GLENVILLE, N.Y., Jan. 21, 2016 (GLOBE NEWSWIRE) -- TrustCo Bank Corp NY (TrustCo) (Nasdaq:TRST) today announced that fourth quarter of 2015 GAAP net income was $10.2 million compared to $10.7 million for the fourth quarter of 2014.  Despite added operating costs during the second half of 2015 in response to recent regulatory concerns, core net income for the full year 2015 increased to $42.2 million from $41.5 million in 2014. 

Robert J. McCormick, President and Chief Executive Officer noted, “We continue to be pleased with the ongoing improvement in our asset quality during both the fourth quarter and over the last year. Our long-term focus on traditional lending criteria and conservative balance sheet management has enabled us to maintain strong liquidity and capital and allowed us to continue to grow our business and take advantage of changes in market and competitive conditions.”

Mr. McCormick also noted, “We consider our fourth quarter 2015 results to be solid and were encouraged by the increase in pre-tax earnings from the third quarter to the fourth quarter.  As we  discussed in recent quarters, increased operating costs in response to regulatory concerns have hampered earnings.  Higher expenses were anticipated in order to fulfill operating and regulatory requirements.  We took aggressive action to meet these requirements during the second half of 2015, resulting in added costs in both the third and the fourth quarters.  While some of these costs will be recurring, others will diminish over time.  In terms of our core business, we continue to make solid progress, adding customer relationships which ultimately position our business well for the future.  Our highly liquid balance sheet continues to allow us to fund our loan growth without having to overpay for deposits.  We look forward to 2016 with optimism.  We will continue taking advantage of opportunities as they are presented.”

TrustCo saw continued strong loan growth in the fourth quarter of 2015.  Loan portfolio expansion was funded by a combination of deposit growth and cash flow from the Bank’s investment portfolio.  The continued shift toward loans helped offset the margin impact from continued comparatively low yields on cash and investments.  The growth in average deposits was led by lower cost core deposits.  TrustCo’s strong liquidity position continues to allow the Company to take advantage of opportunities when interest rate conditions change.

For the fourth quarter of 2015, return on average assets and return on average equity were 0.86% and 9.75%, respectively, compared to 0.92% and 10.70% for the fourth quarter of 2014.  GAAP diluted earnings per share were $0.107 for the fourth quarter of 2015, compared to $0.112 for the fourth quarter of 2014. 

For the full year 2015, core diluted net income per share was up slightly to $0.443, compared to $0.438 for 2014.  GAAP diluted net income per share was $0.444 for 2015, compared to $0.466 for 2014.  Return on average assets and equity were 0.89% and 10.41% for 2015, compared to 0.97% and 11.54% for 2014, all on a GAAP basis.  Non-GAAP measures are discussed on pages 13 and 14.

Average loans were up $162.8 million or 5.2% in the fourth quarter of 2015, over the same period in 2014.  Average deposits were up $94.0 million or 2.4% for the fourth quarter of 2015 over the same period a year earlier.  Most of the increase in deposits came from core deposit accounts, which consist of checking, savings and money market deposits.  Average core deposits increased $108.7 million from the fourth quarter of 2014 to the fourth quarter of 2015.  Core deposits typically represent longer term customer relationships and are generally lower cost than time deposits.  Mr. McCormick noted that, “The year-over-year growth of our loans and core deposit base reflect the long term strategic focus of the Company. 

“While some banks have backed away from branches, a customer friendly branch franchise continues to be the key to our long term plans.  We continue to make significant progress expanding loans and deposits throughout our entire branch network.  We expect that trend to continue as the newer branches continue to mature. 

“At December 31, 2015, our average branch size was $28.1 million.  On a same store basis, our average deposits per branch grew by $452 thousand from December 31, 2014 to December 31, 2015.  We have always designed our branches to be smaller and more cost effective than those built by many of our competitors.  We use open floor plans that help maximize the value of our branches.  We remain mindful that fully achieving our goals for newer branches will take time and continued work.  We believe success in growing customer relationships provides basic building blocks that will help drive profit growth for the coming years.”

Asset quality and the allowance for loan losses coverage of nonperforming loans (NPLs) improved from both December 31, 2014 and September 30, 2015 to December 31, 2015.  NPLs declined to $28.3 million at December 31, 2015, compared to $34.0 million at December 31, 2014 and $31.9 million at September 30, 2015.  NPLs were equal to 0.86% of total loans at December 31, 2015, compared to 1.08% a year earlier and 0.97% at September 30, 2015.  The coverage ratio, or allowance for loan losses to NPLs, was 158.4% at December 31, 2015, compared to 141.4% at September 30, 2015 and 136.2% at December 31, 2014.  Nonperforming assets (NPAs) declined to $34.7 million at December 31, 2015 from $37.8 million at September 30, 2015 and $40.5 million at December 31, 2014.  Overall, virtually every asset quality indicator improved during the fourth quarter of 2015 relative to the third quarter of 2015 and the fourth quarter of 2014.  The ratio of loan loss allowance to total loans was 1.36% as of December 31, 2015, compared to 1.38% at September 30, 2015 and to 1.47% at December 31, 2014 and reflects both the improvement in asset quality and economic conditions in our lending areas.  The allowance for loan losses was $44.8 million at December 31, 2015 compared to $45.1 million at September 30, 2015 and $46.3 million at December 31, 2014.

The net interest margin for the fourth quarter of 2015 was 3.14% compared to 3.08% in the third quarter of 2015 and 3.17% in the fourth quarter of 2014. 

At December 31, 2015 the tangible equity ratio was 8.72% compared to 8.71% at September 30, 2015 and 8.46% at December 31, 2014.  The equity to asset ratio was 8.73% at December 31, 2015, compared to 8.72% at September 30, 2015 and 8.47% at December 31, 2014.  Tangible book value per share at December 31, 2015 was $4.33 compared to $4.14 a year earlier and GAAP book value per share was $4.34 and $4.15, respectively.  Non-GAAP measures are discussed on pages 13 and 14.

TrustCo Bank Corp NY is a $4.7 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 146 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at December 31, 2015.

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 2015 results will be held at 9:00 a.m. Eastern Time on January 22, 2016.  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 10079078. The call will also be audio webcast at: http://services.choruscall.com/links/trst160122.html, and will be available for one year. 

Safe Harbor Statement 

All statements in this news release that are not historical are forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended.  Forward-looking statements can be identified by words such as "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding our expectations for our performance during 2016 and for the growth of loans and deposits throughout our branch network, our ability to capitalize on economic changes in the areas in which we operate and the extent to which higher expenses to fulfill operating and regulatory requirements recur or diminish over time.  Such forward-looking statements are subject to factors that could cause actual results to differ materially for TrustCo from those discussed. TrustCo wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The following important factors, among others, in some cases have affected and in the future could affect TrustCo’s actual results and could cause TrustCo’s actual financial performance to differ materially from that expressed in any forward-looking statement:  our ability to continue to originate a significant volume of one-to-four family mortgage loans in our market areas; our ability to continue to maintain noninterest expense and other overhead costs at reasonable levels relative to income; our ability to comply with the supervisory agreement entered into with Trustco Bank’s regulator and potential regulatory actions if we fail to comply; restrictions or conditions imposed by our regulators on our operations that may make it more difficult for us to achieve our goals; the future earnings and capital levels of Trustco Bank and the continued ability of Trustco Bank under regulatory rules and the supervisory agreement to distribute capital to TrustCo, which could affect our ability to pay dividends; results of examinations of Trustco Bank and TrustCo by our respective regulators; our ability to make accurate assumptions and judgments regarding the credit risks associated with lending and investing activities; the effect of changes in financial services laws and regulations and the impact of other governmental initiatives affecting the financial services industry; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board, inflation, interest rates, market and monetary fluctuations; 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; real estate and collateral values; changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the FASB or PCAOB; changes in local market areas and general business and economic trends, as well as changes in consumer spending and saving habits; our success at managing the risks involved in the foregoing and managing our business; and other risks and uncertainties under the heading “Risk Factors” in our most recent annual report on Form 10-K, as amended, and, if any, in our subsequent quarterly reports on Form 10-Q or other securities filings.

TRUSTCO BANK CORP NY
GLENVILLE, NY
FINANCIAL HIGHLIGHTS
(dollars in thousands, except per share data)
(Unaudited)
					Three Months Ended
		12/31/15			09/30/15			12/31/14
Summary of operations
Net interest income (TE)	$		36,278			36,069			35,693
Provision for loan losses			1,300			800			1,000
Net securities transactions			2			-			335
Noninterest income, excluding net securities transactions			4,428			4,365			4,417
Noninterest expense			23,108			23,464			22,240
Net income			10,180			10,616			10,660
Per common share
Net income per share:
- Basic	$		0.107			0.112			0.113
- Diluted			0.107			0.111			0.112
Cash dividends			0.066			0.066			0.066
Tangible Book value at period end			4.33			4.33			4.14
Market price at period end			6.14			5.84			7.26
At period end
Full time equivalent employees			787			778			737
Full service banking offices			146			146			144
Performance ratios
Return on average assets			0.86	%		0.88			0.92
Return on average equity			9.75			10.35			10.70
Efficiency (1)			55.37			56.04			53.35
Net interest spread (TE)			3.08			3.02			3.11
Net interest margin (TE)			3.14			3.08			3.17
Dividend payout ratio			61.54			58.82			58.55
Capital ratio at period end
Consolidated tangible equity to tangible assets (2)			8.72			8.71			8.46
Asset quality analysis at period end
Nonperforming loans to total loans			0.86			0.97			1.08
Nonperforming assets to total assets			0.73			0.80			0.87
Allowance for loan losses to total loans			1.36			1.38			1.47
Coverage ratio (3)		1.6x				1.4			1.4
(1)  Calculated as noninterest expense (excluding ORE income/expense) divided by
taxable equivalent net interest income plus noninterest income (excluding
net securities transactions, the net gain on sale of building, and the net sale of nonperforming loans).
(2)  The tangible equity ratio excludes $553 of intangibles from both equity and assets.
(3)  Calculated as allowance for loan losses divided by total nonperforming loans.
TE = Taxable equivalent.
FINANCIAL HIGHLIGHTS, Continued
(dollars in thousands, except per share data)
(Unaudited)
		Years Ended
		12/31/15			12/31/14
Summary of operations
Net interest income (TE)	$		143,222			141,583
Provision for loan losses			3,700			5,100
Net securities transactions			251			717
Noninterest income			17,621			19,189
Noninterest expense			90,560			84,670
Net income			42,238			44,193
Per common share
Net income per share:
- Basic	$		0.444			0.467
- Diluted			0.444			0.466
Cash dividends			0.263			0.263
Tangible Book value at period end			4.33			4.14
Market price at period end			6.14			7.26
Performance ratios
Return on average assets			0.89	%		0.97
Return on average equity			10.41			11.54
Efficiency (1)			55.08			52.60
Net interest spread (TE)			3.03			3.10
Net interest margin (TE)			3.09			3.16
Dividend payout ratio			59.13			56.30
(1)  Calculated as noninterest expense (excluding ORE income/expense) divided by
taxable equivalent net interest income plus noninterest income (excluding
net securities transactions).
TE = Taxable equivalent.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
(Unaudited)
		Three Months Ended
		12/31/2015			9/30/2015			6/30/2015			3/31/2015			12/31/2014
Interest and dividend income:
Interest and fees on loans	$		35,930			35,631			35,343			34,983			35,051
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises			256			584			366			212			233
State and political subdivisions			16			23			23			25			29
Mortgage-backed securities and collateralized mortgage obligations-residential			2,233			2,230			2,276			2,393			2,733
Corporate bonds			-			-			-			1			2
Small Business Administration-guaranteed participation securities			482			497			503			522			524
Mortgage-backed securities and collateralized mortgage obligations-commercial			37			37			38			37			37
Other securities			4			4			4			4			4
Total interest and dividends on securities available for sale			3,028			3,375			3,210			3,194			3,562
Interest on held to maturity securities:
Mortgage-backed securities and collateralized mortgage obligations-residential			425			461			480			478			512
Corporate bonds			154			153			154			154			154
Total interest on held to maturity securities			579			614			634			632			666
Federal Reserve Bank and Federal Home Loan Bank stock			120			113			118			116			123
Interest on federal funds sold and other short-term investments			494			408			423			400			363
Total interest income			40,151			40,141			39,728			39,325			39,765
Interest expense:
Interest on deposits:
Interest-bearing checking			115			117			111			105			98
Savings			608			603			599			658			663
Money market deposit accounts			513			537			547			617			634
Time deposits			2,375			2,544			2,500			2,434			2,366
Interest on short-term borrowings			278			290			300			346			335
Total interest expense			3,889			4,091			4,057			4,160			4,096
Net interest income			36,262			36,050			35,671			35,165			35,669
Provision for loan losses			1,300			800			800			800			1,000
Net interest income after provision for loan losses			34,962			35,250			34,871			34,365			34,669
Noninterest income:
Trustco Financial Services income			1,489			1,351			1,478			1,653			1,451
Fees for services to customers			2,704			2,770			2,691			2,524			2,753
Net gain on securities transactions			2			-			-			249			335
Other			235			244			285			197			213
Total noninterest income			4,430			4,365			4,454			4,623			4,752
Noninterest expenses:
Salaries and employee benefits			8,042			7,834			8,164			8,481			9,003
Net occupancy expense			3,884			3,929			3,878			4,108			3,869
Equipment expense			1,530			1,596			1,803			1,942			1,919
Professional services			2,067			2,238			2,066			1,507			1,536
Outsourced services			1,585			1,425			1,425			1,425			1,225
Advertising expense			592			668			733			600			602
FDIC and other insurance			2,055			2,202			1,017			1,065			949
Other real estate expense, net			570			806			201			424			841
Other			2,783			2,766			2,844			2,305			2,296
Total noninterest expenses			23,108			23,464			22,131			21,857			22,240
Income before taxes			16,284			16,151			17,194			17,131			17,181
Income taxes			6,104			5,535			6,467			6,416			6,521
Net income	$		10,180			10,616			10,727			10,715			10,660
Net income per common share:
- Basic	$		0.107			0.112			0.113			0.113			0.113
- Diluted			0.107			0.111			0.113			0.113			0.112
Average basic shares (in thousands)			95,256			95,149			95,056			94,947			94,681
Average diluted shares (in thousands)			95,349			95,234			95,190			95,074			94,813
Note:  Taxable equivalent net interest income	$		36,278			36,069			35,690			35,185			35,693
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
(Unaudited)
		Years Ended
		12/31/2015			12/31/2014
Interest and dividend income:
Interest and fees on loans	$		141,887			135,960
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises			1,418			1,417
State and political subdivisions			87			179
Mortgage-backed securities and collateralized mortgage obligations-residential			9,132			12,150
Corporate bonds			1			65
Small Business Administration-guaranteed participation securities			2,004			2,154
Mortgage-backed securities and collateralized mortgage obligations-commercial			149			151
Other securities			16			16
Total interest and dividends on securities available for sale			12,807			16,132
Interest on held to maturity securities:
Mortgage-backed securities-residential			1,844			2,259
Corporate bonds			615			615
Total interest on held to maturity securities			2,459			2,874
Federal Reserve Bank and Federal Home Loan Bank stock			467			511
Interest on federal funds sold and other short-term investments			1,725			1,464
Total interest income			159,345			156,941
Interest expense:
Interest on deposits:
Interest-bearing checking			448			365
Savings			2,468			2,662
Money market deposit accounts			2,214			2,499
Time deposits			9,853			8,565
Interest on short-term borrowings			1,214			1,397
Total interest expense			16,197			15,488
Net interest income			143,148			141,453
Provision for loan losses			3,700			5,100
Net interest income after provision for loan losses			139,448			136,353
Noninterest income:
Trust department income			5,971			5,837
Fees for services to customers			10,689			10,844
Net gain on securities transactions			251			717
Other			961			2,508
Total noninterest income			17,872			19,906
Noninterest expenses:
Salaries and employee benefits			32,521			32,879
Net occupancy expense			15,799			16,251
Equipment expense			6,871			7,219
Professional services			7,878			5,807
Outsourced services			5,860			5,350
Advertising expense			2,593			2,487
FDIC and other insurance			6,339			3,907
Other real estate expense, net			2,001			1,009
Other			10,698			9,761
Total noninterest expenses			90,560			84,670
Income before taxes			66,760			71,589
Income taxes			24,522			27,396
Net income	$		42,238			44,193
Net income per Common Share:
- Basic	$		0.444			0.467
- Diluted			0.444			0.466
Average basic shares (thousands)			95,103			94,628
Average diluted shares (thousands)			95,213			94,753
Note:  Taxable equivalent net interest income	$		143,222			141,583
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)
(Unaudited)
		12/31/2015			9/30/2015			6/30/2015			3/31/2015			12/31/2014
ASSETS:
Cash and due from banks	$		41,698			42,560			37,574			44,853			43,505
Federal funds sold and other short term investments			676,458			655,512			641,011			705,273			627,943
Total cash and cash equivalents			718,156			698,072			678,585			750,126			671,448
Securities available for sale:
U. S. government sponsored enterprises			86,737			103,492			152,082			108,248			77,800
States and political subdivisions			1,290			1,963			1,969			1,974			2,271
Mortgage-backed securities and collateralized mortgage obligations-residential			411,729			413,878			429,205			445,273			483,560
Corporate bonds			-			-			-			1,500			1,500
Small Business Administration-guaranteed participation securities			90,416			94,038			95,323			98,668			100,496
Mortgage-backed securities and collateralized mortgage obligations-commercial			10,180			10,491			10,399			10,503			10,447
Other securities			685			685			685			685			685
Total securities available for sale			601,037			624,547			689,663			666,851			676,759
Held to maturity securities:
Mortgage-backed securities and collateralized mortgage obligations-residential			46,490			50,027			53,576			57,296			60,986
Corporate bonds			9,975			9,971			9,967			9,964			9,960
Total held to maturity securities			56,465			59,998			63,543			67,260			70,946
Federal Reserve Bank and Federal Home Loan Bank stock			9,480			9,480			9,480			9,228			9,228
Loans:
Commercial			203,415			208,794			209,399			212,145			223,382
Residential mortgage loans			2,721,173			2,707,944			2,669,929			2,620,925			2,575,222
Home equity line of credit			359,325			356,337			354,946			352,552			352,134
Installment loans			9,391			8,930			8,674			8,003			7,594
Loans, net of deferred fees and costs			3,293,304			3,282,005			3,242,948			3,193,625			3,158,332
Less:
Allowance for loan losses			44,762			45,149			45,571			45,944			46,327
Net loans			3,248,542			3,236,856			3,197,377			3,147,681			3,112,005
Bank premises and equipment, net			37,643			37,506			38,100			38,812			38,565
Other assets			63,669			59,358			64,589			60,698			65,488
Total assets	$		4,734,992			4,725,817			4,741,337			4,740,656			4,644,439
LIABILITIES:
Deposits:
Demand	$		365,081			354,162			355,783			347,315			331,425
Interest-bearing checking			754,347			719,071			713,001			696,137			682,210
Savings accounts			1,262,194			1,237,549			1,250,154			1,237,115			1,216,831
Money market deposit accounts			610,826			617,103			633,239			640,368			638,542
Time deposits			1,107,930			1,168,908			1,185,264			1,196,233			1,163,233
Total deposits			4,100,378			4,096,793			4,137,441			4,117,168			4,032,241
Short-term borrowings			191,226			184,405			170,750			194,738			189,116
Accrued expenses and other liabilities			30,078			32,327			30,687			28,274			29,638
Total liabilities			4,321,682			4,313,525			4,338,878			4,340,180			4,250,995
SHAREHOLDERS' EQUITY:
Capital stock			98,973			98,964			98,964			98,964			98,945
Surplus			171,443			171,788			171,988			172,237			172,353
Undivided profits			184,009			180,093			175,721			171,232			166,745
Accumulated other comprehensive loss, net of tax			(4,781	)		(1,174	)		(5,927	)		(2,687	)		(4,509	)
Treasury stock at cost			(36,334	)		(37,379	)		(38,287	)		(39,270	)		(40,090	)
Total shareholders' equity			413,310			412,292			402,459			400,476			393,444
Total liabilities and shareholders' equity	$		4,734,992			4,725,817			4,741,337			4,740,656			4,644,439
Outstanding shares (in thousands)			95,262			95,149			95,056			94,956			94,857

 

NONPERFORMING ASSETS
(dollars in thousands)
(Unaudited)
Nonperforming Assets
		12/31/15			09/30/15			06/30/15			03/31/15			12/31/14
New York and other states*
Loans in nonaccrual status:
Commercial	$		3,024			3,699			3,263			2,489			3,835
Real estate mortgage - 1 to 4 family			23,273			26,059			27,366			28,215			27,221
Installment			90			69			79			77			77
Total non-accrual loans			26,387			29,827			30,708			30,781			31,133
Other nonperforming real estate mortgages - 1 to 4 family			48			50			74			75			125
Total nonperforming loans			26,435			29,877			30,782			30,856			31,258
Other real estate owned			6,120			5,893			5,833			6,288			5,533
Total nonperforming assets	$		32,555			35,770			36,615			37,144			36,791
Florida
Loans in nonaccrual status:
Commercial	$		-			-			-			-			-
Real estate mortgage - 1 to 4 family			1,817			2,054			1,678			2,608			2,740
Installment			8			9			10			20			13
Total non-accrual loans			1,825			2,063			1,688			2,628			2,753
Other nonperforming real estate mortgages - 1 to 4 family			-			-			-			-			-
Total nonperforming loans			1,825			2,063			1,688			2,628			2,753
Other real estate owned			335			-			275			670			908
Total nonperforming assets	$		2,160			2,063			1,963			3,298			3,661
Total
Loans in nonaccrual status:
Commercial	$		3,024			3,699			3,263			2,489			3,835
Real estate mortgage - 1 to 4 family			25,090			28,113			29,044			30,823			29,961
Installment			98			78			89			97			90
Total non-accrual loans			28,212			31,890			32,396			33,409			33,886
Other nonperforming real estate mortgages - 1 to 4 family			48			50			74			75			125
Total nonperforming loans			28,260			31,940			32,470			33,484			34,011
Other real estate owned			6,455			5,893			6,108			6,958			6,441
Total nonperforming assets	$		34,715			37,833			38,578			40,442			40,452
Quarterly Net Chargeoffs (Recoveries)
		12/31/15			09/30/15			06/30/15			03/31/15			12/31/14
New York and other states*
Commercial	$		672			3			50			34			(16	)
Real estate mortgage - 1 to 4 family			963			1,159			933			1,004			1,591
Installment			35			26			24			37			48
Total net chargeoffs	$		1,670			1,188			1,007			1,075			1,623
Florida
Commercial	$		(2	)		(3	)		(1	)		(1	)		(476	)
Real estate mortgage - 1 to 4 family			6			33			167			109			37
Installment			13			4			-			-			1
Total net chargeoffs	$		17			34			166			108			(438	)
Total
Commercial	$		670			-			49			33			(492	)
Real estate mortgage - 1 to 4 family			969			1,192			1,100			1,113			1,628
Installment			48			30			24			37			49
Total net chargeoffs	$		1,687			1,222			1,173			1,183			1,185
Asset Quality Ratios
		12/31/15			09/30/15			06/30/15			03/31/15			12/31/14
Total nonperforming loans(1)	$		28,260			31,940			32,470			33,484			34,011
Total nonperforming assets(1)			34,715			37,833			38,578			40,442			40,452
Total net chargeoffs(2)			1,687			1,222			1,173			1,183			1,185
Allowance for loan losses(1)			44,762			45,149			45,571			45,944			46,327
Nonperforming loans to total loans			0.86	%		0.97	%		1.00	%		1.05	%		1.08	%
Nonperforming assets to total assets			0.73	%		0.80	%		0.81	%		0.85	%		0.87	%
Allowance for loan losses to total loans			1.36	%		1.38	%		1.41	%		1.44	%		1.47	%
Coverage ratio(1)			158.4	%		141.4	%		140.3	%		137.2	%		136.2	%
Annualized net chargeoffs to average loans(2)			0.21	%		0.15	%		0.15	%		0.15	%		0.15	%
Allowance for loan losses to annualized net chargeoffs(2)		6.6x			9.3x			9.7x			9.6x			9.8x
* Includes New York, New Jersey, Vermont and Massachusetts.
(1)  At period-end
(2)  For the period ended

 

DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY-
INTEREST RATES AND INTEREST DIFFERENTIAL
(dollars in thousands)		Three months ended										Three months ended
(Unaudited)		December 31, 2015										December 31, 2014
		Average				Interest			Average			Average				Interest			Average
		Balance							Rate			Balance							Rate
Assets
Securities available for sale:
U. S. government sponsored enterprises	$		80,605				256		1.27	%	$		80,520				233		1.16	%
Mortgage backed securities and
collateralized mortgage obligations-residential			412,193				2,233		2.17				517,694				2,733		2.11
State and political subdivisions			1,280				25		7.78				2,436				45		7.32
Corporate bonds			-				-		0.00				1,261				2		0.54
Small Business Administration-guaranteed participation securities			93,329				482		2.07				103,846				524		2.02
Mortgage backed securities and
collateralized mortgage obligations-commercial			10,464				37		1.41				10,737				37		1.40
Other			685				4		2.34				685				4		2.34
Total securities available for sale			598,556				3,037		2.03				717,179				3,578		2.00
Federal funds sold and other
short-term Investments			669,545				494		0.29				579,870				363		0.25
Held to maturity securities:
Corporate bonds			9,973				154		6.17				9,958				154		6.18
Mortgage backed securities and
collateralized mortgage obligations-residential			48,275				425		3.52				62,720				512		3.27
Total held to maturity securities			58,248				579		3.97				72,678				666		3.67
Federal Reserve Bank and Federal Home Loan Bank stock			9,480				120		5.06				9,228				123		5.33
Commercial loans			202,854				2,667		5.26				220,516				2,847		5.16
Residential mortgage loans			2,714,016				29,874		4.40				2,543,869				28,875		4.54
Home equity lines of credit			357,990				3,204		3.55				349,984				3,161		3.58
Installment loans			9,126				192		8.37				6,861				176		10.19
Loans, net of unearned income			3,283,986				35,937		4.37				3,121,230				35,059		4.49
Total interest earning assets			4,619,815				40,167		3.47				4,500,185				39,789		3.53
Allowance for loan losses			(45,467	)									(46,902	)
Cash & non-interest earning assets			136,209										140,041
Total assets	$		4,710,557								$		4,593,324
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts	$		721,150				115		0.06	%	$		656,694				98		0.06	%
Money market accounts			615,815				513		0.33				644,676				634		0.39
Savings			1,250,127				608		0.19				1,214,885				663		0.22
Time deposits			1,133,396				2,375		0.83				1,148,055				2,366		0.82
Total interest bearing deposits			3,720,488				3,611		0.39				3,664,310				3,761		0.41
Short-term borrowings			186,462				278		0.59				185,577				335		0.72
Total interest bearing liabilities			3,906,950				3,889		0.39				3,849,887				4,096		0.42
Demand deposits			360,916										323,070
Other liabilities			28,570										25,214
Shareholders' equity			414,121										395,153
Total liabilities and shareholders' equity	$		4,710,557								$		4,593,324
Net interest income, tax equivalent							36,278										35,693
Net interest spread									3.08	%									3.11	%
Net interest margin (net interest income
to total interest earning assets)									3.14	%									3.17	%
Tax equivalent adjustment							(16	)									(24	)
Net interest income							36,262										35,669
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY-
INTEREST RATES AND INTEREST DIFFERENTIAL
(dollars in thousands)		Year ended										Year ended
(Unaudited)		December 31, 2015										December 31, 2014
		Average				Interest			Average			Average				Interest			Average
		Balance							Rate			Balance							Rate
Assets
Securities available for sale:
U. S. government sponsored enterprises	$		107,436				1,418		1.32	%	$		113,563				1,417		1.25	%
Mortgage backed securities and
collateralized mortgage obligations-residential			439,343				9,132		2.08				555,430				12,150		2.19
State and political subdivisions			1,812				133		7.40				3,924				280		7.14
Corporate bonds			613				1		0.16				3,156				65		2.04
Small Business Administration-guaranteed participation securities			97,496				2,004		2.06				107,029				2,154		2.01
Mortgage backed securities and
collateralized mortgage obligations-commercial			10,566				149		1.41				10,837				151		1.40
Other			685				16		2.34				674				16		2.37
Total securities available for sale			657,951				12,853		1.95				794,613				16,233		2.04
Federal funds sold and other
short-term Investments			664,516				1,725		0.26				589,873				1,464		0.25
Held to maturity securities:
Corporate bonds			9,967				615		6.17				9,952				615		6.18
Mortgage backed securities and
collateralized mortgage obligations-residential			53,763				1,844		3.43				68,404				2,259		3.30
Total held to maturity securities			63,730				2,459		3.86				78,356				2,874		3.67
Federal Reserve Bank and Federal Home Loan Bank stock			9,414				467		4.96				10,135				511		5.04
Commercial loans			210,210				10,861		5.17				221,251				11,328		5.12
Residential mortgage loans			2,661,421				117,820		4.43				2,443,558				111,720		4.57
Home equity lines of credit			354,718				12,508		3.53				343,264				12,263		3.57
Installment loans			8,457				726		8.59				6,083				678		11.14
Loans, net of unearned income			3,234,806				141,915		4.39				3,014,156				135,989		4.51
Total interest earning assets			4,630,417				159,419		3.44				4,487,133				157,071		3.50
Allowance for loan losses			(46,023	)									(47,409	)
Cash & non-interest earning assets			136,752										135,217
Total assets	$		4,721,146								$		4,574,941
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts	$		708,331				448		0.06	%	$		636,140				365		0.06	%
Money market accounts			628,096				2,214		0.35				650,779				2,499		0.38
Savings			1,245,100				2,468		0.20				1,227,473				2,662		0.22
Time deposits			1,173,426				9,853		0.84				1,145,118				8,565		0.75
Total interest bearing deposits			3,754,953				14,983		0.40				3,659,510				14,091		0.39
Short-term borrowings			184,725				1,214		0.66				189,430				1,397		0.74
Total interest bearing liabilities			3,939,678				16,197		0.41				3,848,940				15,488		0.40
Demand deposits			348,552										319,458
Other liabilities			27,155										23,733
Shareholders' equity			405,761										382,810
Total liabilities and shareholders' equity	$		4,721,146								$		4,574,941
Net interest income, tax equivalent							143,222										141,583
Net interest spread									3.03	%									3.10	%
Net interest margin (net interest income
to total interest earning assets)									3.09	%									3.16	%
Tax equivalent adjustment							(74	)									(130	)
Net interest income							143,148										141,453

 

Non-GAAP Financial Measures Reconciliation

Tangible book value per share and tangible equity as a percentage of tangible assets at period end are non-GAAP financial measures derived from GAAP-based amounts. We calculate tangible equity and tangible assets by excluding the balance of intangible assets from shareholders’ equity and total assets, respectively. We calculate tangible book value per share by dividing tangible equity by common shares outstanding, as compared to book value per common share, which we calculate by dividing shareholders’ equity by common shares outstanding. We calculate tangible equity as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end. We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios. 

The efficiency ratio is a non-GAAP measure of expense control relative to 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 a building, nonperforming loans and securities from this calculation.  We believe that this provides a reasonable measure of primary banking expenses relative to primary banking revenue. 

Core net income (“core earnings”) and core net income (“core earnings”) per share are non-GAAP financial measures derived from GAAP-based amounts. We calculate core earnings by excluding the net after-tax gain on the sale of the proposed Florida operations building, the net after-tax gain on a significant sale of an ORE property and net after-tax gains on the sale of non-performing loans from net income and from net income per share.  We believe that this provides a reasonable measure of core net income (earnings).

We believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our financial position, results and ratios. Our management internally assesses our performance based, in part, on these measures.  However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these measures, this presentation may not be comparable to other similarly titled measures reported by other companies. A reconciliation of the non-GAAP measures of tangible common equity, tangible book value per share, 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)
		12/31/15			09/30/15			12/31/14
Tangible Book Value Per Share
Equity	$		413,310			412,292			393,444
Less: Intangible assets			553			553			553
Tangible equity			412,757			411,739			392,891
Shares outstanding			95,262			95,149			94,857
Tangible book value per share			4.33			4.33			4.14
Book value per share			4.34			4.33			4.15
Tangible Equity to Tangible Assets
Total Assets			4,734,992			4,725,817			4,644,439
Less: Intangible assets			553			553			553
Tangible assets			4,734,439			4,725,264			4,643,886
Tangible Equity to Tangible Assets			8.72	%		8.71	%		8.46	%
Equity to Assets			8.73	%		8.72	%		8.47	%
		3 Months Ended										Years Ended
Efficiency Ratio		12/31/15			09/30/15			12/31/14				12/31/15			12/31/14
Net interest income	$		36,262			36,050			35,669				143,148			141,453
Taxable equivalent adjustment			16			19			24				74			130
Net interest income (fully taxable equivalent)			36,278			36,069			35,693				143,222			141,583
Non-interest income			4,430			4,365			4,752				17,872			19,906
Less:  Net gain on sale of building and nonperforming loans			-			-			-				60			1,719
Less:  Net gain on securities			2			-			335				251			717
Revenue used for efficiency ratio			40,706			40,434			40,110				160,783			159,053
Total noninterest expense			23,108			23,464			22,240				90,560			84,670
Less:  Other real estate expense, net			570			806			841				2,001			1,009
Expense used for efficiency ratio			22,538			22,658			21,399				88,559			83,661
Efficiency Ratio			55.37	%		56.04	%		53.35	%			55.08	%		52.60	%
		3 Months Ended										Years Ended
Core Net Income		12/31/15			09/30/15			12/31/14				12/31/15			12/31/14
Net income	$		10,180			10,616			10,660				42,238			44,193
Less:  Gain on sale of building, nonperforming loans, and significant ORE gain, net of tax			-			-			-				37			2,684
Core net income			10,180			10,616			10,660				42,201			41,509
Average basic shares outstanding (in thousands)			95,256			95,149			94,681				95,103			94,628
Average diluted shares outstanding (in thousands)			95,349			95,234			94,813				95,213			94,753
Net income per common share:
- Basic	$		0.107			0.112			0.113				0.444			0.467
- Diluted			0.107			0.111			0.112				0.444			0.466
Core net income per common share:
- Basic	$		0.107			0.112			0.113				0.444			0.439
- Diluted			0.107			0.111			0.112				0.443			0.438

 

 

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