8-K
TRUSTCO BANK CORP N Y (TRST)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): October 23, 2023
TrustCo Bank Corp NY
(Exact name of registrant as specified in its charter)
| New York | 0-10592 | 14-1630287 |
|---|---|---|
| State or Other Jurisdiction of Incorporation or Organization | Commission File No. | I.R.S. Employer Identification Number |
5 SARNOWSKI DRIVE, GLENVILLE, NEW YORK 12302
(Address of principal executive offices)
(518) 377-3311
(Registrant’s Telephone Number,
Including Area Code)
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $1.00 par value | TRST | Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
TrustCo Bank Corp NY
| Item 2.02. | Results of Operations and Financial Condition |
|---|
On October 23, 2023 TrustCo Bank Corp NY (“TrustCo”) issued a press release with results for the quarter ending September 30, 2023. Attached is a copy of the press release labeled as Exhibit 99(a).
| Item 9.01. | Financial Statements and Exhibits |
|---|---|
| (d) | Exhibits |
| --- | --- |
| Reg S-K Exhibit No. | Description |
| --- | --- |
| 99(a) | Press release dated October 23, 2023 for the period ending September 30, 2023, regarding quarterly results. |
| 104 | Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL document. |
-2-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Dated: October 23, 2023 | ||
|---|---|---|
| TrustCo Bank Corp NY | ||
| (Registrant) | ||
| By: | /s/ Michael M. Ozimek | |
| Michael M. Ozimek | ||
| Executive Vice President and | ||
| Chief Financial Officer |
-3-
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 | ||
| (518) 381-3693 |
FOR IMMEDIATE RELEASE:
TrustCo’s Home Town Approach to Customer Relationships Propels Loans to All Time High
Reports Third Quarter Net Income Of $14.7 million
Executive Snapshot:
| • | Loan portfolio reaches all-time high: |
|---|---|
| o | Total loans were up $330.8 million or 7.1% for the third quarter 2023 compared to third quarter 2022 |
| --- | --- |
| o | At $5.0 billion as of September 30, 2023, loans continue to set new all-time highs |
| --- | --- |
| • | Continued solid financial results: |
| --- | --- |
| o | Key metrics for third quarter 2023: |
| --- | --- |
| ◾ | Net income of $14.7 million |
| --- | --- |
| ◾ | Net interest income of $42.2 million |
| --- | --- |
| ◾ | Return on average assets (ROAA) of 0.96% |
| --- | --- |
| ◾ | Return on average equity (ROAE) of 9.32% |
| --- | --- |
| ◾ | Book value at period end was $32.80, up from $30.89 compared to September 30, 2022 |
| --- | --- |
| • | Superior asset quality: |
| --- | --- |
| o | Nonperforming loans (NPLs) were $17.9 million as of September 30, 2023, down from the same period in the prior year, and continue to remain at low levels |
| --- | --- |
| o | NPLs to total loans improved to 0.36% compared to 0.40% at September 30, 2022 |
| --- | --- |
| o | Quarterly net recoveries were $12 thousand in the third quarter 2023, resulting in seven consecutive quarters of net recoveries |
| --- | --- |
| • | Capital continues to grow: |
| --- | --- |
| o | Consolidated equity to assets increased to 10.31% at September 30, 2023 from 9.69% at September 30, 2022 |
| --- | --- |
Page | 1
Glenville, New York –October 23, 2023
TrustCo Bank Corp NY (TrustCo, NASDAQ: TRST) today announced third quarter 2023 net income of $14.7 million, or $0.77 diluted earnings per share, compared to net income of $16.4 million, or $0.86 diluted earnings per share, for the second quarter 2023; and compared to net income of $19.4 million, or $1.01 diluted earnings per share, for the third quarter 2022; and net income of $48.8 million, or $2.57 diluted earnings per share, for the nine months ended September 30, 2023, compared to net income of $54.3 million, or $2.84 diluted earnings per share, for the nine months ended September 30, 2022. Total loan growth increased $330.8 million, or 7.1% for the third quarter 2023 over the same period in 2022.
Overview
Chairman, President, and CEO, Robert J. McCormick said “Our strength, in large measure, is characterized by our credit quality. Solid underwriting and the avoidance of irresponsible lending have long been part of the fabric of our company, and we recently have had seven consecutive quarters of net loan recoveries. We have leveraged strong customer relationships to foster organic loan portfolio growth and retain deposits despite competitive pressure on pricing. We are realizing the benefits of our long-term capital preservation strategy, avoiding the pitfalls of low-return investments that have plagued others. Liquidity management continues to be an acute focus, and our capital ratio results this quarter exemplify those efforts. Other TrustCo hallmarks continue to serve us well – we are debt free and extremely well-capitalized. While we can’t predict the future, no matter what the rate environment, we stand ready to capitalize on opportunities.”
TrustCo saw deposit balances rebound from the end of the prior year with net deposit inflows during the first nine months of 2023. Loan growth continued across all categories in the third quarter 2023 compared to the prior year’s third quarter, led by an increase in residential mortgages. Loan portfolio expansion was funded by a combination of utilizing a portion of our strong cash balances and by cash flow from investments, deposit inflows, and cash flow from the existing loan portfolio. The Federal Reserve’s decision to raise the target Federal Funds rate multiple times since March 2022 has contributed to our results in the third quarter 2023, as our cash position and other variable rate products continue to reprice upward, and they are likely to continue to do so to the extent there are additional rate increases. Accordingly, deposit costs continue to increase while we are also experiencing a shift in deposits to Time Deposits. We continue to deploy strong marketing efforts to retain our deposit balances. We also note that current mortgage rates significantly exceed the yield on our existing portfolio of mortgages, which, if sustained, should result in positive to net interest margin going forward. TrustCo’s strong liquidity position continues to allow us to take advantage of opportunities as they arise.
Details
Average loans were up $337.6 million or 7.4% in the third quarter 2023 over the same period in 2022. Average residential loans, our primary lending focus, were up $219.4 million, or 5.3%, in the third quarter 2023 over the same period in 2022. Average commercial loans and home equity lines of credit also increased $53.6 million, or 25.8%, and $58.9 million, or 22.5%, respectively, in the third quarter 2023 over the same period in 2022.
Page | 2
We are actively retaining deposits, which is evident since they have increased since December 31, 2022. Total deposits as of September 30, 2023 increased $41.6 million to $5.23 billion from December 31, 2022. As we move forward, our objective is to continue to encourage customers to retain these funds in the expanded product offerings of the Bank through aggressive marketing and product differentiation. We understood the big inflows of deposits during the pandemic were temporary and that is why we did not invest that liquidity into securities or loans, but we instead retained that liquidity on the balance sheet for when depositors would start to absorb the funds. This gave us flexibility to strategically price deposits while retaining core customers.
Net interest income was $42.2 million for the third quarter 2023, a decrease of $5.6 million, or 11.7%, compared to the same period in 2022, driven by a higher cost of deposits, partially offset by the increased yield on the cash balance at the Federal Reserve Bank due to the increases in the Federal Funds target rate over the past year, and loan growth. The net interest margin for the third quarter 2023 was 2.85%, down 31 basis points from 3.16% in the third quarter of 2022. The yield on interest earnings assets increased to 3.88%, up 64 basis points from 3.24 % in the third quarter of 2022. The cost of interest bearing liabilities increased to 1.33% in the third quarter 2023 from 0.11% in the third quarter 2022.
Asset quality remains strong and has been consistent over the past twelve months. The Company recorded a provision for credit losses of $100 thousand in the third quarter of 2023, which is the result of a provision for credit losses on loans of $300 thousand, offset by a benefit for credit losses on unfunded commitments of $200 thousand as a result of a corresponding decrease in unfunded loan commitments. The ratio of allowance for credit losses on loans to total loans was 0.95% and 0.98% as of September 30, 2023 and 2022, respectively. The allowance for credit losses on loans was $47.2 million at September 30, 2023, compared to $45.5 million at September 30, 2022. NPLs were $17.9 million at September 30, 2023, compared to $18.7 million at September 30, 2022. NPLs were 0.36% and 0.40% of total loans at September 30, 2023 and 2022, respectively. The coverage ratio, or allowance for credit losses on loans to NPLs, was 264.2% at September 30, 2023, compared to 243.6% at September 30, 2022. Nonperforming assets (NPAs) were $19.1 million at September 30, 2023, compared to $19.4 million at September 30, 2022. Additionally, we have also had minimal charge-offs and have been in a net recovery position for the past seven quarters.
At September 30, 2023, our equity to asset ratio was 10.31%, compared to 9.69% at September 30, 2022. Book value per share at September 30, 2023 was $32.80, up 6.2% compared to $30.89 a year earlier.
A conference call to discuss third quarter 2023 results will be held at 9:00 a.m. Eastern Time on October 24, 2023. Those wishing to participate in the call may dial toll-free for the United States at 1-833-470-1428, and for Canada at 1-833-950-0062, Access code 040076. A replay of the call will be available for thirty days by dialing toll-free for the United States and Canada at 1-866-813-9403, Access code 265872. The call will also be audio webcast at https://events.q4inc.com/attendee/175259326 , and will be available for one year.
Page | 3
About TrustCo Bank Corp NY
TrustCo Bank Corp NY is a $6.1 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 143 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at September 30, 2023.
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.
Page | 4
Forward-Looking Statements
All statements in this news release that are not historical are forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. 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 development, results or periods. Examples of forward-looking statements include, among others, statements we make regarding our expectations for our future performance, including our expectations regarding the effects of the economic environment on our financial results, our ability to retain customers and the amount of customers’ business, including deposit balances, with us, the impact of the Federal Reserve’s actions regarding interest rates, the growth of loans and deposits throughout our branch network, the increase in residential mortgage rates, and our ability to capitalize on economic changes in the areas in which we operate. Forward-looking statements are based on management’s current expectations as well as certain assumptions and estimates made by, and information available to, management at the time the statements are made. Such forward-looking statements are subject to factors and uncertainties that could cause actual results to differ materially for TrustCo from the views, beliefs and projections expressed in such statements, and many of the risks and uncertainties are heightened by or may, in the future, be heightened by volatility in financial markets and macroeconomic or geopolitical concerns related to inflation, rising interest rates and ongoing armed conflicts (including the Russia/Ukraine conflict and the conflict in Israel and surrounding areas). 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: the soundness of other financial institutions; U.S. government shutdowns or failure to increase the debt ceiling; changes in interest rates, including recent and possible future increases fueled by inflation; inflationary pressures and rising prices; exposure to credit risk in our lending activities; the sufficiency of our allowance for credit losses on loans to cover actual loan losses; our ability to meet the cash flow requirements of our depositors or borrowers or meet our operating cash needs to fund corporate expansion and other activities; claims and litigation pertaining to fiduciary responsibility and lender liability; our dependency upon the services of the management team; our disclosure controls and procedures’ ability to prevent or detect errors or acts of fraud; the adequacy of our business continuity and disaster recovery plans; the effectiveness of our risk management framework; the chance of a prolonged economic downturn, especially one affecting our geographic market area; instability in global economic conditions and geopolitical matters, as well as volatility in financial markets; fluctuations in the trust wealth management fees we receive as a result of investment performance; the impact of regulatory capital rules on our growth; changes in laws and regulations; our compliance with the USA PATRIOT Act, Bank Secrecy Act, and other laws and regulations that could result in fines or sanctions; changes in tax laws; limitations on our ability to pay dividends; TrustCo Realty Corp.’s ability to qualify as a real estate investment trust; changes in accounting standards; competition within our market areas; consumers and businesses’ use of non-banks to complete financial transactions; our reliance on third-party service providers; the impact of data breaches and cyber-attacks; the impact of a failure in or breach of our operational or security systems or infrastructure, or those of third parties; the impact of an unauthorized disclosure of sensitive or confidential client or customer information; the impact of interruptions in the effective operation of our computer systems; the impact of any expansion by us into new lines of business or new products and services; the impact of anti-takeover provisions in our organizational documents; the impact of the manner in which we allocate capital; the impact of severe weather events and climate change on us and the communities we serve, including societal responses to climate change; 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. The forward-looking statements contained in this news release represent TrustCo management’s judgment as of the date of this news release. TrustCo disclaims, however, any intent or obligation to update forward-looking statements, either as a result of future developments, new information or otherwise, except as may be required by law.
Page | 5
TRUSTCO BANK CORP NY
GLENVILLE, NY
FINANCIAL HIGHLIGHTS
(dollars in thousands, except per share data)
(Unaudited)
| Three months ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 9/30/2023 | 6/30/2023 | 9/30/2022 | |||||||
| Summary of operations | |||||||||
| Net interest income | $ | 42,221 | $ | 44,052 | $ | 47,793 | |||
| Provision (Credit) for credit losses | 100 | (500 | ) | 300 | |||||
| Noninterest income | 4,574 | 4,598 | 4,386 | ||||||
| Noninterest expense | 27,460 | 27,327 | 26,144 | ||||||
| Net income | 14,680 | 16,372 | 19,364 | ||||||
| Per share | |||||||||
| Net income per share: | |||||||||
| - Basic | $ | 0.77 | $ | 0.86 | $ | 1.01 | |||
| - Diluted | 0.77 | 0.86 | 1.01 | ||||||
| Cash dividends | 0.36 | 0.36 | 0.35 | ||||||
| Book value at period end | 32.80 | 32.66 | 30.89 | ||||||
| Market price at period end | 27.29 | 28.61 | 31.42 | ||||||
| At period end | |||||||||
| Full time equivalent employees | 764 | 791 | 753 | ||||||
| Full service banking offices | 143 | 143 | 144 | ||||||
| Performance ratios | |||||||||
| Return on average assets | 0.96 | % | 1.09 | % | 1.24 | % | |||
| Return on average equity | 9.32 | 10.61 | 12.78 | ||||||
| Efficiency ratio (1) | 58.33 | 55.87 | 49.87 | ||||||
| Net interest spread | 2.55 | 2.74 | 3.13 | ||||||
| Net interest margin | 2.85 | 2.98 | 3.16 | ||||||
| Dividend payout ratio | 46.65 | 41.83 | 34.57 | ||||||
| Capital ratios at period end | |||||||||
| Consolidated equity to assets | 10.31 | % | 10.23 | % | 9.69 | % | |||
| Consolidated tangible equity to tangible assets (2) | 10.30 | % | 10.22 | % | 9.68 | % | |||
| Asset quality analysis at period end | |||||||||
| Nonperforming loans to total loans | 0.36 | % | 0.40 | % | 0.40 | % | |||
| Nonperforming assets to total assets | 0.31 | 0.34 | 0.32 | ||||||
| Allowance for credit losses on loans to total loans | 0.95 | 0.96 | 0.98 | ||||||
| Coverage ratio (3) | 2.6 | x | 2.4 | x | 2.4 | x | |||
| (1) | Non-GAAP measure; calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income.<br> See Non-GAAP Financial Measures Reconciliation. | ||||||||
| --- | --- | ||||||||
| (2) | Non-GAAP measure; calculated as total shareholders’ equity less $553 of intangible assets divided by total assets less $553 of intangible assets. See Non-GAAP<br> Financial Measures Reconciliation. | ||||||||
| --- | --- | ||||||||
| (3) | Calculated as allowance for credit losses on loans divided by total nonperforming loans. | ||||||||
| --- | --- |
Page | 6
FINANCIAL HIGHLIGHTS, Continued
(dollars in thousands, except per share data)
(Unaudited)
| Nine months ended | ||||||
|---|---|---|---|---|---|---|
| 09/30/23 | 09/30/22 | |||||
| Summary of operations | ||||||
| Net interest income | $ | 133,238 | 130,949 | |||
| (Credit) Provision for credit losses | (100 | ) | (391 | ) | ||
| Noninterest income | 13,841 | 14,485 | ||||
| Noninterest expense | 82,466 | 73,914 | ||||
| Net income | 48,798 | 54,324 | ||||
| Per share | ||||||
| Net income per share: | ||||||
| - Basic | $ | 2.57 | 2.84 | |||
| - Diluted | 2.57 | 2.84 | ||||
| Cash dividends | 1.08 | 1.05 | ||||
| Book value at period end | 32.80 | 30.89 | ||||
| Market price at period end | 27.29 | 31.42 | ||||
| Performance ratios | ||||||
| Return on average assets | 1.08 | % | 1.17 | |||
| Return on average equity | 10.57 | 12.16 | ||||
| Efficiency ratio (1) | 55.70 | 50.77 | ||||
| Net interest spread | 2.78 | 2.86 | ||||
| Net interest margin | 3.01 | 2.88 | ||||
| Dividend payout ratio | 42.11 | 37.03 | ||||
| (1) | Non-GAAP measure; calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income. <br> See Non-GAAP Financial Measures Reconciliation. | |||||
| --- | --- |
Page | 7
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
(Unaudited)
| Three months ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 9/30/2023 | 6/30/2023 | 3/31/2023 | 12/31/2022 | 9/30/2022 | |||||||
| Interest and dividend income: | |||||||||||
| Interest and fees on loans | $ | 47,921 | $ | 46,062 | $ | 44,272 | $ | 42,711 | $ | 40,896 | |
| Interest and dividends on securities available for sale: | |||||||||||
| U. S. government sponsored enterprises | 672 | 691 | 692 | 693 | 479 | ||||||
| State and political subdivisions | - | 1 | - | - | 1 | ||||||
| Mortgage-backed securities and collateralized mortgage obligations - residential | 1,485 | 1,543 | 1,585 | 1,606 | 1,617 | ||||||
| Corporate bonds | 473 | 516 | 521 | 523 | 526 | ||||||
| Small Business Administration - guaranteed participation securities | 107 | 111 | 117 | 124 | 133 | ||||||
| Other securities | 2 | 3 | 2 | 2 | 3 | ||||||
| Total interest and dividends on securities available for sale | 2,739 | 2,865 | 2,917 | 2,948 | 2,759 | ||||||
| Interest on held to maturity securities: | |||||||||||
| Mortgage-backed securities and collateralized mortgage obligations - residential | 73 | 75 | 78 | 81 | 85 | ||||||
| Total interest on held to maturity securities | 73 | 75 | 78 | 81 | 85 | ||||||
| Federal Home Loan Bank stock | 131 | 110 | 110 | 98 | 80 | ||||||
| Interest on federal funds sold and other short-term investments | 6,688 | 6,970 | 6,555 | 6,246 | 5,221 | ||||||
| Total interest income | 57,552 | 56,082 | 53,932 | 52,084 | 49,041 | ||||||
| Interest expense: | |||||||||||
| Interest on deposits: | |||||||||||
| Interest-bearing checking | 102 | 49 | 66 | 61 | 43 | ||||||
| Savings | 639 | 655 | 530 | 401 | 200 | ||||||
| Money market deposit accounts | 2,384 | 1,756 | 814 | 389 | 237 | ||||||
| Time deposits | 11,962 | 9,291 | 5,272 | 1,839 | 646 | ||||||
| Interest on short-term borrowings | 244 | 279 | 285 | 208 | 122 | ||||||
| Total interest expense | 15,331 | 12,030 | 6,967 | 2,898 | 1,248 | ||||||
| Net interest income | 42,221 | 44,052 | 46,965 | 49,186 | 47,793 | ||||||
| Less: Provision (Credit) for credit losses | 100 | (500 | ) | 300 | 50 | 300 | |||||
| Net interest income after provision (credit) for credit losses | 42,121 | 44,552 | 46,665 | 49,136 | 47,493 | ||||||
| Noninterest income: | |||||||||||
| Trustco Financial Services income | 1,627 | 1,412 | 1,774 | 1,773 | 1,435 | ||||||
| Fees for services to customers | 2,590 | 2,847 | 2,648 | 2,783 | 2,705 | ||||||
| Other | 357 | 339 | 247 | 219 | 246 | ||||||
| Total noninterest income | 4,574 | 4,598 | 4,669 | 4,775 | 4,386 | ||||||
| Noninterest expenses: | |||||||||||
| Salaries and employee benefits | 12,393 | 13,122 | 13,283 | 13,067 | 12,134 | ||||||
| Net occupancy expense | 4,358 | 4,262 | 4,598 | 4,261 | 4,483 | ||||||
| Equipment expense | 1,923 | 1,873 | 1,962 | 1,700 | 1,532 | ||||||
| Professional services | 1,717 | 1,360 | 1,607 | 1,251 | 1,375 | ||||||
| Outsourced services | 2,720 | 2,491 | 2,296 | 2,102 | 2,328 | ||||||
| Advertising expense | 586 | 518 | 390 | 532 | 508 | ||||||
| FDIC and other insurance | 1,078 | 1,085 | 1,052 | 770 | 773 | ||||||
| Other real estate expense, net | 163 | 148 | 225 | 101 | 124 | ||||||
| Other | 2,522 | 2,468 | 2,266 | 2,621 | 2,887 | ||||||
| Total noninterest expenses | 27,460 | 27,327 | 27,679 | 26,405 | 26,144 | ||||||
| Income before taxes | 19,235 | 21,823 | 23,655 | 27,506 | 25,735 | ||||||
| Income taxes | 4,555 | 5,451 | 5,909 | 6,596 | 6,371 | ||||||
| Net income | $ | 14,680 | $ | 16,372 | $ | 17,746 | $ | 20,910 | $ | 19,364 | |
| Net income per common share: | |||||||||||
| - Basic | $ | 0.77 | $ | 0.86 | $ | 0.93 | $ | 1.10 | $ | 1.01 | |
| - Diluted | 0.77 | 0.86 | 0.93 | 1.10 | 1.01 | ||||||
| Average basic shares (in thousands) | 19,024 | 19,024 | 19,024 | 19,045 | 19,111 | ||||||
| Average diluted shares (in thousands) | 19,024 | 19,024 | 19,028 | 19,050 | 19,112 |
Page | 8
CONSOLIDATED STATEMENTS OF INCOME, Continued
(dollars in thousands, except per share data)
(Unaudited)
| Nine months ended | ||||||
|---|---|---|---|---|---|---|
| 09/30/23 | 09/30/22 | |||||
| Interest and dividend income: | ||||||
| Interest and fees on loans | $ | 138,255 | 119,503 | |||
| Interest and dividends on securities available for sale: | ||||||
| U. S. government sponsored enterprises | 2,055 | 712 | ||||
| State and political subdivisions | 1 | 2 | ||||
| Mortgage-backed securities and collateralized mortgage obligations - residential | 4,613 | 4,071 | ||||
| Corporate bonds | 1,510 | 1,281 | ||||
| Small Business Administration - guaranteed participation securities | 335 | 427 | ||||
| Other securities | 7 | 7 | ||||
| Total interest and dividends on securities available for sale | 8,521 | 6,500 | ||||
| Interest on held to maturity securities: | ||||||
| Mortgage-backed securities-residential | 226 | 262 | ||||
| Total interest on held to maturity securities | 226 | 262 | ||||
| Federal Home Loan Bank stock | 351 | 207 | ||||
| Interest on federal funds sold and other short-term investments | 20,213 | 8,046 | ||||
| Total interest income | 167,566 | 134,518 | ||||
| Interest expense: | ||||||
| Interest on deposits: | ||||||
| Interest-bearing checking | 217 | 129 | ||||
| Savings | 1,824 | 519 | ||||
| Money market deposit accounts | 4,954 | 661 | ||||
| Time deposits | 26,525 | 1,728 | ||||
| Interest on short-term borrowings | 808 | 532 | ||||
| Total interest expense | 34,328 | 3,569 | ||||
| Net interest income | 133,238 | 130,949 | ||||
| Less: (Credit) Provision for credit losses | (100 | ) | (391 | ) | ||
| Net interest income after (credit) provision for credit losses | 133,338 | 131,340 | ||||
| Noninterest income: | ||||||
| Trustco Financial Services income | 4,813 | 5,264 | ||||
| Fees for services to customers | 8,085 | 8,164 | ||||
| Other | 943 | 1,057 | ||||
| Total noninterest income | 13,841 | 14,485 | ||||
| Noninterest expenses: | ||||||
| Salaries and employee benefits | 38,798 | 32,837 | ||||
| Net occupancy expense | 13,218 | 13,266 | ||||
| Equipment expense | 5,758 | 4,787 | ||||
| Professional services | 4,684 | 4,326 | ||||
| Outsourced services | 7,507 | 7,108 | ||||
| Advertising expense | 1,494 | 1,514 | ||||
| FDIC and other insurance | 3,215 | 2,389 | ||||
| Other real estate expense, net | 536 | 209 | ||||
| Other | 7,256 | 7,478 | ||||
| Total noninterest expenses | 82,466 | 73,914 | ||||
| Income before taxes | 64,713 | 71,911 | ||||
| Income taxes | 15,915 | 17,587 | ||||
| Net income | $ | 48,798 | 54,324 | |||
| Net income per common share: | ||||||
| - Basic | $ | 2.57 | 2.84 | |||
| - Diluted | 2.57 | 2.84 | ||||
| Average basic shares (in thousands) | 19,024 | 19,160 | ||||
| Average diluted shares (in thousands) | 19,024 | 19,160 |
Page | 9
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)
(Unaudited)
| 9/30/2023 | 6/30/2023 | 3/31/2023 | 12/31/2022 | 9/30/2022 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ASSETS: | |||||||||||||||
| Cash and due from banks | $ | 45,940 | $ | 55,662 | $ | 47,595 | $ | 43,429 | $ | 46,236 | |||||
| Federal funds sold and other short term investments | 461,321 | 547,695 | 589,389 | 607,170 | 795,028 | ||||||||||
| Total cash and cash equivalents | 507,261 | 603,357 | 636,984 | 650,599 | 841,264 | ||||||||||
| Securities available for sale: | |||||||||||||||
| U. S. government sponsored enterprises | 121,474 | 113,570 | 119,132 | 118,187 | 102,779 | ||||||||||
| States and political subdivisions | 34 | 34 | 34 | 34 | 41 | ||||||||||
| Mortgage-backed securities and collateralized mortgage obligations - residential | 233,719 | 243,444 | 255,556 | 260,316 | 261,242 | ||||||||||
| Small Business Administration - guaranteed participation securities | 17,316 | 18,382 | 19,821 | 20,977 | 22,498 | ||||||||||
| Corporate bonds | 76,935 | 76,618 | 81,464 | 81,346 | 81,002 | ||||||||||
| Other securities | 657 | 656 | 652 | 653 | 657 | ||||||||||
| Total securities available for sale | 450,135 | 452,704 | 476,659 | 481,513 | 468,219 | ||||||||||
| Held to maturity securities: | |||||||||||||||
| Mortgage-backed securities and collateralized mortgage obligations-residential | 6,724 | 7,043 | 7,382 | 7,707 | 8,091 | ||||||||||
| Total held to maturity securities | 6,724 | 7,043 | 7,382 | 7,707 | 8,091 | ||||||||||
| Federal Reserve Bank and Federal Home Loan Bank stock | 6,203 | 6,203 | 5,797 | 5,797 | 5,797 | ||||||||||
| Loans: | |||||||||||||||
| Commercial | 268,642 | 251,434 | 246,307 | 231,011 | 217,120 | ||||||||||
| Residential mortgage loans | 4,343,006 | 4,310,005 | 4,241,459 | 4,203,451 | 4,132,365 | ||||||||||
| Home equity line of credit | 332,028 | 308,976 | 296,490 | 286,432 | 269,341 | ||||||||||
| Installment loans | 16,605 | 16,396 | 15,326 | 12,307 | 10,665 | ||||||||||
| Loans, net of deferred net costs | 4,960,281 | 4,886,811 | 4,799,582 | 4,733,201 | 4,629,491 | ||||||||||
| Less: Allowance for credit losses on loans | 47,226 | 46,914 | 46,685 | 46,032 | 45,517 | ||||||||||
| Net loans | 4,913,055 | 4,839,897 | 4,752,897 | 4,687,169 | 4,583,974 | ||||||||||
| Bank premises and equipment, net | 32,135 | 32,351 | 32,305 | 32,556 | 31,931 | ||||||||||
| Operating lease right-of-use assets | 41,475 | 43,113 | 43,478 | 44,727 | 45,733 | ||||||||||
| Other assets | 97,310 | 90,957 | 90,306 | 89,984 | 94,485 | ||||||||||
| Total assets | $ | 6,054,298 | $ | 6,075,625 | $ | 6,045,808 | $ | 6,000,052 | $ | 6,079,494 | |||||
| LIABILITIES: | |||||||||||||||
| Deposits: | |||||||||||||||
| Demand | $ | 773,293 | $ | 791,353 | $ | 806,075 | $ | 838,147 | $ | 859,829 | |||||
| Interest-bearing checking | 1,033,898 | 1,082,989 | 1,124,785 | 1,183,321 | 1,188,790 | ||||||||||
| Savings accounts | 1,235,658 | 1,315,893 | 1,400,887 | 1,521,473 | 1,562,564 | ||||||||||
| Money market deposit accounts | 610,012 | 625,253 | 600,410 | 621,106 | 716,319 | ||||||||||
| Time deposits | 1,581,504 | 1,442,959 | 1,280,301 | 1,028,763 | 954,352 | ||||||||||
| Total deposits | 5,234,365 | 5,258,447 | 5,212,458 | 5,192,810 | 5,281,854 | ||||||||||
| Short-term borrowings | 103,110 | 113,765 | 134,293 | 122,700 | 124,932 | ||||||||||
| Operating lease liabilities | 45,418 | 47,172 | 47,643 | 48,980 | 50,077 | ||||||||||
| Accrued expenses and other liabilities | 47,479 | 34,852 | 36,711 | 35,575 | 33,625 | ||||||||||
| Total liabilities | 5,430,372 | 5,454,236 | 5,431,105 | 5,400,065 | 5,490,488 | ||||||||||
| SHAREHOLDERS’ EQUITY: | |||||||||||||||
| Capital stock | 20,058 | 20,058 | 20,058 | 20,058 | 20,046 | ||||||||||
| Surplus | 257,078 | 257,078 | 257,078 | 257,078 | 256,661 | ||||||||||
| Undivided profits | 422,082 | 414,251 | 404,728 | 393,831 | 379,769 | ||||||||||
| Accumulated other comprehensive loss, net of tax | (31,506 | ) | (26,212 | ) | (23,375 | ) | (27,194 | ) | (25,209 | ) | |||||
| Treasury stock at cost | (43,786 | ) | (43,786 | ) | (43,786 | ) | (43,786 | ) | (42,261 | ) | |||||
| Total shareholders’ equity | 623,926 | 621,389 | 614,703 | 599,987 | 589,006 | ||||||||||
| Total liabilities and shareholders’ equity | $ | 6,054,298 | $ | 6,075,625 | $ | 6,045,808 | $ | 6,000,052 | $ | 6,079,494 | |||||
| Outstanding shares (in thousands) | 19,024 | 19,024 | 19,024 | 19,024 | 19,052 |
Page | 10
NONPERFORMING ASSETS
(dollars in thousands)
(Unaudited)
| 9/30/2023 | 6/30/2023 | 3/31/2023 | 12/31/2022 | 9/30/2022 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Nonperforming Assets | |||||||||||||||
| New York and other states* | |||||||||||||||
| Loans in nonaccrual status: | |||||||||||||||
| Commercial | $ | 540 | $ | 545 | $ | 560 | $ | 219 | $ | 179 | |||||
| Real estate mortgage - 1 to 4 family | 14,633 | 16,260 | 15,722 | 14,949 | 16,295 | ||||||||||
| Installment | 93 | 124 | 59 | 23 | 29 | ||||||||||
| Total non-accrual loans | 15,266 | 16,929 | 16,341 | 15,191 | 16,503 | ||||||||||
| Other nonperforming real estate mortgages - 1 to 4 family | 5 | 7 | 8 | 10 | 12 | ||||||||||
| Total nonperforming loans | 15,271 | 16,936 | 16,349 | 15,201 | 16,515 | ||||||||||
| Other real estate owned | 1,185 | 1,412 | 1,869 | 2,061 | 682 | ||||||||||
| Total nonperforming assets | $ | 16,456 | $ | 18,348 | $ | 18,218 | $ | 17,262 | $ | 17,197 | |||||
| Florida | |||||||||||||||
| Loans in nonaccrual status: | |||||||||||||||
| Commercial | $ | 314 | $ | 314 | $ | 314 | $ | 314 | $ | - | |||||
| Real estate mortgage - 1 to 4 family | 2,228 | 2,170 | 2,437 | 1,895 | 2,104 | ||||||||||
| Installment | 65 | - | 62 | 83 | 65 | ||||||||||
| Total non-accrual loans | 2,607 | 2,484 | 2,813 | 2,292 | 2,169 | ||||||||||
| Other nonperforming real estate mortgages - 1 to 4 family | - | - | - | - | - | ||||||||||
| Total nonperforming loans | 2,607 | 2,484 | 2,813 | 2,292 | 2,169 | ||||||||||
| Other real estate owned | - | - | - | - | - | ||||||||||
| Total nonperforming assets | $ | 2,607 | $ | 2,484 | $ | 2,813 | $ | 2,292 | $ | 2,169 | |||||
| Total | |||||||||||||||
| Loans in nonaccrual status: | |||||||||||||||
| Commercial | $ | 854 | $ | 859 | $ | 874 | $ | 533 | $ | 179 | |||||
| Real estate mortgage - 1 to 4 family | 16,861 | 18,430 | 18,159 | 16,844 | 18,399 | ||||||||||
| Installment | 158 | 124 | 121 | 106 | 94 | ||||||||||
| Total non-accrual loans | 17,873 | 19,413 | 19,154 | 17,483 | 18,672 | ||||||||||
| Other nonperforming real estate mortgages - 1 to 4 family | 5 | 7 | 8 | 10 | 12 | ||||||||||
| Total nonperforming loans | 17,878 | 19,420 | 19,162 | 17,493 | 18,684 | ||||||||||
| Other real estate owned | 1,185 | 1,412 | 1,869 | 2,061 | 682 | ||||||||||
| Total nonperforming assets | $ | 19,063 | $ | 20,832 | $ | 21,031 | $ | 19,554 | $ | 19,366 | |||||
| Quarterly Net (Recoveries) Chargeoffs | |||||||||||||||
| New York and other states* | |||||||||||||||
| Commercial | $ | - | $ | (129 | ) | $ | - | $ | - | $ | - | ||||
| Real estate mortgage - 1 to 4 family | (26 | ) | (161 | ) | (53 | ) | (46 | ) | (164 | ) | |||||
| Installment | 14 | 21 | (6 | ) | 31 | 34 | |||||||||
| Total net (recoveries) chargeoffs | $ | (12 | ) | $ | (269 | ) | $ | (59 | ) | $ | (15 | ) | $ | (130 | ) |
| Florida | |||||||||||||||
| Commercial | $ | - | $ | - | $ | - | $ | - | $ | - | |||||
| Real estate mortgage - 1 to 4 family | - | - | (25 | ) | - | - | |||||||||
| Installment | - | 40 | 31 | - | (2 | ) | |||||||||
| Total net (recoveries) chargeoffs | $ | - | $ | 40 | $ | 6 | $ | - | $ | (2 | ) | ||||
| Total | |||||||||||||||
| Commercial | $ | - | $ | (129 | ) | $ | - | $ | - | $ | - | ||||
| Real estate mortgage - 1 to 4 family | (26 | ) | (161 | ) | (78 | ) | (46 | ) | (164 | ) | |||||
| Installment | 14 | 61 | 25 | 31 | 32 | ||||||||||
| Total net (recoveries) chargeoffs | $ | (12 | ) | $ | (229 | ) | $ | (53 | ) | $ | (15 | ) | $ | (132 | ) |
| Asset Quality Ratios | |||||||||||||||
| Total nonperforming loans (1) | $ | 17,878 | $ | 19,420 | $ | 19,162 | $ | 17,493 | $ | 18,684 | |||||
| Total nonperforming assets (1) | 19,063 | 20,832 | 21,031 | 19,554 | 19,366 | ||||||||||
| Total net recoveries (2) | (12 | ) | (229 | ) | (53 | ) | (15 | ) | (132 | ) | |||||
| Allowance for credit losses on loans (1) | 47,226 | 46,914 | 46,685 | 46,032 | 45,517 | ||||||||||
| Nonperforming loans to total loans | 0.36 | % | 0.40 | % | 0.40 | % | 0.37 | % | 0.40 | % | |||||
| Nonperforming assets to total assets | 0.31 | % | 0.34 | % | 0.35 | % | 0.33 | % | 0.32 | % | |||||
| Allowance for credit losses on loans to total loans | 0.95 | % | 0.96 | % | 0.97 | % | 0.97 | % | 0.98 | % | |||||
| Coverage ratio (1) | 264.2 | % | 241.6 | % | 243.6 | % | 263.1 | % | 243.6 | % | |||||
| Annualized net (recoveries) chargeoffs to average loans (2) | 0.00 | % | -0.02 | % | 0.00 | % | 0.00 | % | -0.01 | % | |||||
| Allowance for credit losses on loans<br><br> to annualized net (recoveries) chargeoffs (2) | N/A | N/A | N/A | N/A | N/A |
* Includes New York, New Jersey, Vermont and Massachusetts.
(1) At period-end
(2) For the three-month period ended
Page | 11
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY -
INTEREST RATES AND INTEREST DIFFERENTIAL
| (dollars in thousands) | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Unaudited) | Three months ended<br><br> <br>September 30, 2023 | Three months ended<br><br> <br>September 30, 2022 | ||||||||||||||
| Average<br><br> <br>Balance | Interest | Average<br><br> <br>Rate | Average<br><br> <br>Balance | Interest | Average<br><br> <br>Rate | |||||||||||
| Assets | ||||||||||||||||
| Securities available for sale: | ||||||||||||||||
| U. S. government sponsored enterprises | $ | 119,406 | $ | 672 | 2.25 | % | $ | 104,633 | $ | 479 | 1.83 | % | ||||
| Mortgage backed securities and collateralized<br><br> <br>mortgage obligations - residential | 269,535 | 1,485 | 2.19 | 302,886 | 1,617 | 2.13 | ||||||||||
| State and political subdivisions | 34 | - | 6.74 | 41 | 1 | 8.12 | ||||||||||
| Corporate bonds | 80,331 | 473 | 2.36 | 86,965 | 526 | 2.42 | ||||||||||
| Small Business Administration - guaranteed participation securities | 19,801 | 107 | 2.15 | 25,533 | 133 | 2.08 | ||||||||||
| Other | 686 | 2 | 1.17 | 686 | 3 | 1.75 | ||||||||||
| Total securities available for sale | 489,793 | 2,739 | 2.24 | 520,744 | 2,759 | 2.12 | ||||||||||
| Federal funds sold and other short-term Investments | 494,597 | 6,688 | 5.37 | 918,909 | 5,221 | 2.25 | ||||||||||
| Held to maturity securities: | ||||||||||||||||
| Mortgage backed securities and collateralized<br><br> <br>mortgage obligations - residential | 6,877 | 73 | 4.22 | 8,306 | 85 | 4.08 | ||||||||||
| Total held to maturity securities | 6,877 | 73 | 4.22 | 8,306 | 85 | 4.08 | ||||||||||
| Federal Home Loan Bank stock | 6,203 | 131 | 8.45 | 5,797 | 80 | 5.52 | ||||||||||
| Commercial loans | 261,061 | 3,398 | 5.21 | 207,477 | 2,484 | 4.79 | ||||||||||
| Residential mortgage loans | 4,325,219 | 39,321 | 3.64 | 4,105,859 | 35,342 | 3.44 | ||||||||||
| Home equity lines of credit | 320,446 | 4,946 | 6.12 | 261,575 | 2,896 | 4.39 | ||||||||||
| Installment loans | 15,959 | 256 | 6.37 | 10,213 | 174 | 6.75 | ||||||||||
| Loans, net of unearned income | 4,922,685 | 47,921 | 3.89 | 4,585,124 | 40,896 | 3.57 | ||||||||||
| Total interest earning assets | 5,920,155 | $ | 57,552 | 3.88 | 6,038,880 | $ | 49,041 | 3.24 | ||||||||
| Allowance for credit losses on loans | (47,077 | ) | (45,519 | ) | ||||||||||||
| Cash & non-interest earning assets | 172,523 | 188,672 | ||||||||||||||
| Total assets | $ | 6,045,601 | $ | 6,182,033 | ||||||||||||
| Liabilities and shareholders’ equity | ||||||||||||||||
| Deposits: | ||||||||||||||||
| Interest bearing checking accounts | $ | 1,050,313 | $ | 102 | 0.04 | % | $ | 1,195,370 | $ | 43 | 0.01 | % | ||||
| Money market accounts | 625,031 | 2,384 | 1.51 | 744,868 | 237 | 0.13 | ||||||||||
| Savings | 1,282,641 | 639 | 0.20 | 1,579,513 | 200 | 0.05 | ||||||||||
| Time deposits | 1,494,402 | 11,962 | 3.18 | 981,704 | 646 | 0.26 | ||||||||||
| Total interest bearing deposits | 4,452,387 | 15,087 | 1.34 | 4,501,455 | 1,126 | 0.10 | ||||||||||
| Short-term borrowings | 110,018 | 244 | 0.88 | 138,105 | 122 | 0.35 | ||||||||||
| Total interest bearing liabilities | 4,562,405 | $ | 15,331 | 1.33 | 4,639,560 | $ | 1,248 | 0.11 | ||||||||
| Demand deposits | 776,885 | 859,122 | ||||||||||||||
| Other liabilities | 81,411 | 82,290 | ||||||||||||||
| Shareholders’ equity | 624,900 | 601,061 | ||||||||||||||
| Total liabilities and shareholders’ equity | $ | 6,045,601 | $ | 6,182,033 | ||||||||||||
| Net interest income, GAAP and non-GAAP tax equivalent (1) | $ | 42,221 | $ | 47,793 | ||||||||||||
| Net interest spread, GAAP and non-GAAP tax equivalent (1) | 2.55 | % | 3.13 | % | ||||||||||||
| Net interest margin (net interest income to total interest earning assets),<br><br> <br>GAAP and non-GAAP tax equivalent (1) | 2.85 | % | 3.16 | % | ||||||||||||
| Tax equivalent adjustment (1) | - | - | ||||||||||||||
| Net interest income | $ | 42,221 | $ | 47,793 | ||||||||||||
| (1) | Tax equivalent adjustment to a measure results in a non-GAAP financial measure. See Non-GAAP Financial Measures Reconciliation. | |||||||||||||||
| --- | --- |
Page | 12
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY -
INTEREST RATES AND INTEREST DIFFERENTIAL, Continued
(dollars in thousands)
| (Unaudited) | Nine months ended<br><br> <br>September 30, 2023 | Nine months ended<br><br> <br>September 30, 2022 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Average<br><br> <br>Balance | Interest | Average<br><br> <br>Rate | Average<br><br> <br>Balance | Interest | Average<br><br> <br>Rate | |||||||||||
| Assets | ||||||||||||||||
| Securities available for sale: | ||||||||||||||||
| U. S. government sponsored enterprises | $ | 120,243 | 2,055 | 2.28 | % | $ | 79,423 | 712 | 1.19 | % | ||||||
| Mortgage backed securities and collateralized<br><br> <br>mortgage obligations - residential | 278,252 | 4,613 | 2.21 | 282,423 | 4,071 | 1.92 | ||||||||||
| State and political subdivisions | 34 | 1 | 6.74 | 41 | 2 | 6.73 | ||||||||||
| Corporate bonds | 83,732 | 1,510 | 2.41 | 75,957 | 1,281 | 2.25 | ||||||||||
| Small Business Administration - guaranteed participation securities | 20,876 | 335 | 2.14 | 27,623 | 427 | 2.06 | ||||||||||
| Other | 686 | 7 | 1.02 | 686 | 7 | 2.04 | ||||||||||
| Total securities available for sale | 503,823 | 8,521 | 1.69 | 466,153 | 6,500 | 2.79 | ||||||||||
| Federal funds sold and other short-term Investments | 540,570 | 20,213 | 5.00 | 1,068,217 | 8,046 | 1.01 | ||||||||||
| Held to maturity securities: | ||||||||||||||||
| Mortgage backed securities and collateralized<br><br> <br>mortgage obligations - residential | 7,205 | 226 | 4.18 | 8,897 | 262 | 3.93 | ||||||||||
| Total held to maturity securities | 7,205 | 226 | 4.18 | 8,897 | 262 | 3.93 | ||||||||||
| Federal Home Loan Bank stock | 5,957 | 351 | 5.89 | 5,734 | 207 | 7.22 | ||||||||||
| Commercial loans | 249,738 | 9,716 | 5.19 | 200,525 | 7,412 | 4.93 | ||||||||||
| Residential mortgage loans | 4,269,494 | 114,227 | 3.57 | 4,054,657 | 104,310 | 3.43 | ||||||||||
| Home equity lines of credit | 305,075 | 13,598 | 5.96 | 246,026 | 7,289 | 3.96 | ||||||||||
| Installment loans | 15,015 | 714 | 6.35 | 9,507 | 492 | 6.91 | ||||||||||
| Loans, net of unearned income | 4,839,322 | 138,255 | 3.81 | 4,510,715 | 119,503 | 3.53 | ||||||||||
| Total interest earning assets | 5,896,877 | 167,566 | 3.79 | 6,059,716 | 134,518 | 2.96 | ||||||||||
| Allowance for credit losses on loans | (46,812 | ) | (46,225 | ) | ||||||||||||
| Cash & non-interest earning assets | 173,521 | 196,333 | ||||||||||||||
| Total assets | $ | 6,023,586 | $ | 6,209,824 | ||||||||||||
| Liabilities and shareholders’ equity | ||||||||||||||||
| Deposits: | ||||||||||||||||
| Interest bearing checking accounts | $ | 1,088,859 | 217 | 0.03 | % | $ | 1,199,154 | 129 | 0.01 | % | ||||||
| Money market accounts | 613,119 | 4,954 | 1.08 | 771,301 | 661 | 0.11 | ||||||||||
| Savings | 1,363,052 | 1,824 | 0.18 | 1,557,503 | 519 | 0.04 | ||||||||||
| Time deposits | 1,343,762 | 26,525 | 2.64 | 971,539 | 1,728 | 0.24 | ||||||||||
| Total interest bearing deposits | 4,408,792 | 33,520 | 1.02 | 4,499,497 | 3,037 | 0.09 | ||||||||||
| Short-term borrowings | 121,911 | 808 | 0.89 | 194,228 | 532 | 0.37 | ||||||||||
| Total interest bearing liabilities | 4,530,703 | 34,328 | 1.01 | 4,693,725 | 3,569 | 0.10 | ||||||||||
| Demand deposits | 793,890 | 836,953 | ||||||||||||||
| Other liabilities | 81,771 | 81,780 | ||||||||||||||
| Shareholders’ equity | 617,224 | 597,366 | ||||||||||||||
| Total liabilities and shareholders’ equity | $ | 6,023,588 | $ | 6,209,824 | ||||||||||||
| Net interest income, GAAP and non-GAAP tax equivalent (1) | 133,238 | 130,949 | ||||||||||||||
| Net interest spread, GAAP and non-GAAP tax equivalent (1) | 2.78 | % | 2.86 | % | ||||||||||||
| Net interest margin (net interest income to total interest earning assets),<br><br> <br>GAAP and non-GAAP tax equivalent (1) | 3.01 | % | 2.88 | % | ||||||||||||
| Tax equivalent adjustment (1) | - | - | ||||||||||||||
| Net interest income | 133,238 | 130,949 | ||||||||||||||
| (1) | Tax equivalent adjustment to a measure results in a non-GAAP financial measure. See Non-GAAP Financial Measures Reconciliation. | |||||||||||||||
| --- | --- |
Page | 13
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 total 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. Additionally, we believe that this measure is important to many investors in the marketplace who are interested in relative changes from period to period in equity and total assets, each exclusive of changes in intangible assets.
Net interest income is commonly presented on a taxable equivalent basis. That is, to the extent that some component of the institution’s net interest income will be exempt from taxation (e.g., was received by the institution as a result of its holdings of state or municipal obligations), an amount equal to the tax benefit derived from that component is added back to the net interest income total. Management considers this adjustment helpful to investors in comparing one financial institution’s net interest income (pre- tax) to that of another institution, as each will have a different proportion of tax-exempt items in their portfolios. Moreover, net interest income is itself a component of another financial measure commonly used by financial institutions, net interest margin, which is the ratio of net interest income to average interest earning assets. Additionally, management and many financial institutions also present net interest spread, which is the average yield on interest earning assets minus the average rate paid on interest bearing liabilities. For purposes of these measures as well, taxable equivalent net interest income is generally used by financial institutions, again to provide investors with a better basis of comparison from institution to institution. We calculate taxable equivalent net interest margin by dividing net interest income, adjusted to include the benefit of non-taxable interest income, by average interest earning assets. We calculate taxable equivalent net interest spread as the difference between average yield on interest earning assets, adjusted to include the benefit of non-taxable interest income, and the average rate paid on interest bearing liabilities.
The efficiency ratio is a non-GAAP measure of expense control relative to revenue from net interest income and non-interest fee income. We calculate the efficiency ratio by dividing total noninterest expenses as determined under GAAP, excluding other real estate expense, net, by net interest income (fully taxable equivalent) and total noninterest income as determined under GAAP, excluding non-routine items from this calculation. We believe that this provides a reasonable measure of primary banking expenses relative to primary banking revenue. Additionally, we believe this measure is important to investors looking for a measure of efficiency in our productivity measured by the amount of revenue generated for each dollar spent.
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 equity as a percentage of tangible assets, and efficiency ratio to the most directly comparable GAAP measures is set forth below. We have not presented a reconciliation of taxable equivalent net interest income, taxable equivalent net interest margin or taxable equivalent net interest spread to the most directly comparable GAAP measure, as there was no difference between the taxable equivalent measure and comparable GAAP measure for any period presented in this release.
Page | 14
NON-GAAP FINANCIAL MEASURES RECONCILIATION
(dollars in thousands)
(Unaudited)
| 9/30/2023 | 6/30/2023 | 9/30/2022 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Tangible Book Value Per Share | |||||||||||||||
| Equity (GAAP) | $ | 623,926 | $ | 621,389 | $ | 589,006 | |||||||||
| Less: Intangible assets | 553 | 553 | 553 | ||||||||||||
| Tangible equity (Non-GAAP) | $ | 623,373 | $ | 620,836 | $ | 588,453 | |||||||||
| Shares outstanding | 19,024 | 19,024 | 19,052 | ||||||||||||
| Tangible book value per share | 32.77 | 32.63 | 30.89 | ||||||||||||
| Book value per share | 32.80 | 32.66 | 30.92 | ||||||||||||
| Tangible Equity to Tangible Assets | |||||||||||||||
| Total Assets (GAAP) | $ | 6,054,298 | $ | 6,075,625 | $ | 6,079,494 | |||||||||
| Less: Intangible assets | 553 | 553 | 553 | ||||||||||||
| Tangible assets (Non-GAAP) | $ | 6,053,745 | $ | 6,075,072 | $ | 6,078,941 | |||||||||
| Tangible Equity to Tangible Assets (Non-GAAP) | 10.30 | % | 10.22 | % | 9.68 | % | |||||||||
| Equity to Assets (GAAP) | 10.31 | % | 10.23 | % | 9.69 | % | |||||||||
| Three months ended | Nine months ended | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Efficiency Ratio | 9/30/2023 | 6/30/2023 | 9/30/2022 | 9/30/2023 | 9/30/2022 | ||||||||||
| Net interest income (GAAP) | $ | 42,221 | $ | 44,052 | $ | 47,793 | $ | 133,238 | $ | 130,949 | |||||
| Taxable equivalent adjustment | - | - | - | - | - | ||||||||||
| Net interest income (fully taxable equivalent) (Non-GAAP) | 42,221 | 44,052 | 47,793 | 133,238 | 130,949 | ||||||||||
| Non-interest income (GAAP) | 4,574 | 4,598 | 4,386 | 13,841 | 14,485 | ||||||||||
| Less: Net gain on sale of building | - | - | - | - | 268 | ||||||||||
| Revenue used for efficiency ratio (Non-GAAP) | $ | 46,795 | $ | 48,650 | $ | 52,179 | $ | 147,079 | $ | 145,166 | |||||
| Total noninterest expense (GAAP) | $ | 27,460 | $ | 27,327 | 26,144 | $ | 82,466 | 73,914 | |||||||
| Less: Other real estate expense, net | 163 | 148 | 124 | 536 | 209 | ||||||||||
| Expense used for efficiency ratio (Non-GAAP) | $ | 27,297 | $ | 27,179 | $ | 26,020 | $ | 81,930 | $ | 73,705 | |||||
| Efficiency Ratio | 58.33 | % | 55.87 | % | 49.87 | % | 55.70 | % | 50.77 | % |
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