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 24, 2022
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 24, 2022, TrustCo Bank Corp NY (“TrustCo”) issued a press release with results for the quarter ending September 30, 2022. 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 24, 2022 for the period ending September 30, 2022, 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 24, 2022 | ||
|---|---|---|
| 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 Reports Another Record Quarter;
Net Income of $19.4 Million up 15.5% over the Prior Year Quarter
Glenville, New York –October 24, 2022
TrustCo Bank Corp NY (TrustCo, NASDAQ: TRST) today announced third quarter 2022 net income of $19.4 million or $1.013 diluted earnings per share, compared to net income of $16.8 million or $0.871 diluted earnings per share for the third quarter 2021. On a year-to-date basis, net income of $54.3 million or $2.835 diluted earnings per share for the nine months ended September 30, 2022 was an increase of 20.0%, compared to net income of $45.3 million or $2.349 diluted earnings per share for the nine months ended September 30, 2021.
Overview
Chairman, President, and CEO, Robert J. McCormick said “First and foremost, we are very pleased to advise our shareholders that all of our people in Florida are safe following Hurricane Ian and that Trustco Bank has suffered only minor property damage. All Florida operations resumed in due course following the storm.” Mr. McCormick also said: “As to our performance this period, we are very pleased to report yet another record quarter for net income. Our record earnings, sustained now over several quarters, are the product of our effectively executed strategic vision for the company. We expect a strong finish in 2022 and are optimistic about our prospects for 2023.”
TrustCo saw continued loan growth in the third quarter of 2022 compared to the prior year, 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, as well as growth in funding from customers and expansion of earnings. The continued shift toward loans helped sustain margin expansion while the cost of funds actually decreased 4 basis points from the third quarter of 2021 to the third quarter 2022. In addition, total average deposits grew $105.1 million over the same period. The Federal Reserve decision to begin to raise the target Federal Funds rate has contributed to our results during 2022, as our cash position and other variable rate products repriced upward, and is likely to continue to do so during the remainder of 2022 to the extent there are additional rate increases. We also note that current mortgage rates significantly exceed the yield on our existing portfolio of mortgages, which, if sustained, should be a positive going forward. TrustCo’s strong liquidity position continues to allow us to take advantage of opportunities as they arise.
Page | 1
In response to Hurricane Ian, the Bank continues to assess the impact to the counties in Florida that we do business in. We are currently monitoring all customer contact in the affected counties and to date have not identified circumstances that would have a material adverse impact on the performance of our loan portfolio.
Details
Average loans were up $213.5 million or 4.9% in the third quarter 2022 over the same period in 2021. Average residential loans, our primary lending focus, were up $185.0 million, or 4.7%, in the third quarter 2022 over the same period in 2021. As mentioned above, average deposits were up $105.1 million or 2.0% for the third quarter 2022 over the same period a year earlier. The increase in deposits was the result of a $275.7 million or 6.7% increase in total average core deposit accounts, which consist of interest bearing and non-interest bearing checking, savings and money market deposits, offset by a decrease in average time deposits of $170.6 million or 14.8% for the third quarter 2022 over the same period in 2021. Within the core deposits, checking balances were up $120.5 million or 6.2% (including interest bearing and non-interest bearing checking balances), money market balances were up $6.2 million or 0.8%, and savings balances were up $149.0 million or 10.4%. We believe the increase in core deposits continues to reflect the desire of customers to have additional funds in the safety and security offered by TrustCo’s long history of conservative banking. As we move forward, our objective is to continue to encourage customers to retain these additional funds in the expanded product offerings of the Bank through aggressive marketing and product differentiation.
Net interest income, on a tax equivalent basis, was $47.8 million for the third quarter of 2022, an increase of $7.9 million or 19.8% compared to the same period in 2021, driven by solid liquidity, low cost core deposit base, and the recent increases in the Federal Funds target rate. The net interest margin for the third quarter 2022 was 3.16%, up 51 basis points from 2.65% in the third quarter of 2021. The cost of interest bearing liabilities decreased to 0.11% in the third quarter 2022 from 0.15% in the third quarter 2021. A significant portion of our CD portfolio (time deposits) repriced during the last year while interest rates remained low; however, the Bank continues to monitor the recent Federal Funds target rate increases and the effects it is having on deposit rates as we move forward. Continued increases in rates by the Federal Reserve Board will more than likely cause an increase in rates on interest bearing liabilities.
For the third quarter of 2022, return on average assets and return on average equity were 1.24% and 12.78%, respectively, compared to 1.08% and 11.40% for the third quarter of 2021. As previously discussed, improving efficiencies to reduce costs continues to remain a key area of focus as we are proud of our efficiency ratio. The efficiency ratio was 49.87% for the third quarter of 2022, a decrease compared to 55.82% for the third quarter of 2021. Total operating expenses increased by $1.4 million in the third quarter of 2022 as compared to the third quarter of 2021, with increases in salary and employee benefits, occupancy, outsourced services and the other expense categories, partly offset by declines in the equipment and the professional services categories. The modest increase in expenses was more than offset by an $8 million increase in revenue (net interest income plus non-interest income) and resulted in a notable improvement in the bottom line.
Page | 2
Asset quality remains strong and loan loss reserve measures are consistent over the past twelve months. The Company recorded a provision for credit losses of $300 thousand in the third quarter of 2022, which includes a provision for credit losses on loans of $100 thousand and a provision for credit losses on unfunded commitments of $200 thousand as a result of a corresponding increase in unfunded loan commitments. The ratio of allowance for credit losses on loans to total loans was 0.98% and 1.08% as of September 30, 2022 and 2021, respectively. The allowance for credit losses on loans was $45.5 million at September 30, 2022, compared to $47.4 million at September 30, 2021. Nonperforming loans (NPLs) were $18.7 million at September 30, 2022, compared to $20.2 million at September 30, 2021. NPLs were 0.40% and 0.46% of total loans at September 30, 2022 and 2021, respectively. The coverage ratio, or allowance for credit losses on loans to NPLs, was 243.6% at September 30, 2022, compared to 234.7% at September 30, 2021. Nonperforming assets (NPAs) were $19.4 million at September 30, 2022, compared to $20.7 million at September 30, 2021. As mentioned in the prior quarters, the Company adopted Accounting Standards Update 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“CECL”) effective January 1, 2022. TrustCo recorded a net decrease to retained earnings of $3.5 million upon adoption of the new accounting standard. The transition adjustment at January 1, 2022 included a $2.4 million increase in the allowance for credit losses on loans, a $2.3 million increase in the allowance for estimated credit losses on unfunded off-balance sheet credit exposures, and a corresponding increase in deferred tax assets of $1.2 million.
At September 30, 2022 our equity to asset ratio was 9.69%, compared to 9.56% at September 30, 2021. Book value per share at September 30, 2022 was $30.89, up 1.3% compared to $30.50 a year earlier.
TrustCo Bank Corp NY is a $6.1 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 144 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at September 30, 2022.
In addition, the Bank’s Financial Services Department offers a full range of investment services, retirement planning and trust and estate administration services. The common shares of TrustCo are traded on the NASDAQ Global Select Market under the symbol TRST.
A conference call to discuss third quarter 2022 results will be held at 9:00 a.m. Eastern Time on October 25, 2022. Those wishing to participate in the call may dial toll-free for the United States at 1-833-927-1758, for Canada at 1-833-950-0062, and all other locations at 1-929-526-1599, Access code 903558. A replay of the call will be available for thirty days by dialing toll-free for the United States at 1-866-813-9403, for Canada at 1-226-828-7578, and all other locations at +44-204-525-0658, Access code 380809. The call will also be audio webcast at https://events.q4inc.com/attendee/510776782, and will be available at that web address for one year.
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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 2022, 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 Federal Reserve decision to raise Federal funds target rate, as well as other actions regarding interest rates and 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. Such forward-looking statements are subject to factors that could cause actual results to differ materially for TrustCo from those discussed, and many of the risks and uncertainties are heightened by or may, in the future, be heightened by the effects of the COVID-19 pandemic and macroeconomic or geopolitical concerns related to inflation, rising interest rates and the war in Ukraine. 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 effects of inflation and inflationary pressures and changes in monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board; the impact of the actions taken by governmental authorities to contain the COVID-19 pandemic or address the impact of the pandemic on the economy, and the effect of all of such items on our operations, liquidity and capital position, and on the financial condition of our borrowers and other customers; changes in and uncertainty related to benchmark interest rates used to price loans and deposits; future business strategies related to the implementation of CECL; credit risks and risks from concentrations (by geographic area and by loan product) within our loan portfolio; changes in local market areas and general business and economic trends, as well as changes in consumer spending and savings habits; and our ability to assess and react effectively to such changes; our ability to continue to originate a significant volume of one-to-four family mortgage loans in our market areas; our ability to continue to maintain noninterest expense and other overhead costs at reasonable levels relative to income; our ability to make accurate assumptions and judgments regarding the credit risks associated with lending and investing activities; restrictions or conditions imposed by our regulators on our operations that may make it more difficult for us to achieve our goals; the future earnings and capital levels of us and Trustco Bank and the continued receipt of approvals from our primary federal banking regulators under regulatory rules to distribute capital to TrustCo, which could affect our ability to pay dividends; results of supervisory monitoring or examinations of Trustco Bank and TrustCo by our respective regulators; adverse conditions in the securities markets that lead to impairment in the value of securities in our investment portfolio; the perceived overall value of our products and services by users, including in comparison to competitors’ products and services and the willingness of current and prospective customers to substitute competitors’ products and services for our products and services; changes in consumer spending, borrowing and saving habits; the effect of changes in financial services laws and regulations and the impact of other governmental initiatives affecting the financial services industry; changes in management personnel; real estate and collateral values; changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the FASB or PCAOB; disruptions, security breaches, or other adverse events affecting the third-party vendors who perform several of our critical processing functions; technological changes and electronic, cyber and physical security breaches; our success at managing the risks involved in the foregoing and managing our business; and other risks and uncertainties under the heading “Risk Factors” in our most recent annual report on Form 10-K and, if any, in our subsequent quarterly reports on Form 10-Q or other securities filings.
Page | 4
TRUSTCO BANK CORP NY
GLENVILLE, NY
FINANCIAL HIGHLIGHTS
(dollars in thousands, except per share data)
(Unaudited)
| Three months ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| 9/30/2022 | 6/30/2022 | 9/30/2021 | |||||||
| Summary of operations | |||||||||
| Net interest income (TE) | $ | 47,793 | 43,060 | 39,888 | |||||
| Provision (Credit) for credit losses | 300 | (491 | ) | (2,800 | ) | ||||
| Noninterest income | 4,386 | 4,916 | 4,295 | ||||||
| Noninterest expense | 26,144 | 25,005 | 24,697 | ||||||
| Net income | 19,364 | 17,871 | 16,762 | ||||||
| Per share | |||||||||
| Net income per share: | |||||||||
| - Basic | $ | 1.013 | 0.933 | 0.871 | |||||
| - Diluted | 1.013 | 0.933 | 0.871 | ||||||
| Cash dividends | 0.350 | 0.350 | 0.341 | ||||||
| Book value at period end | 30.89 | 31.06 | 30.50 | ||||||
| Market price at period end | 31.42 | 30.84 | 31.97 | ||||||
| At period end | |||||||||
| Full time equivalent employees | 753 | 793 | 743 | ||||||
| Full service banking offices | 144 | 144 | 147 | ||||||
| Performance ratios | |||||||||
| Return on average assets | 1.24 | % | 1.15 | 1.08 | |||||
| Return on average equity | 12.78 | 12.08 | 11.40 | ||||||
| Efficiency ratio (1) | 49.87 | 51.97 | 55.82 | ||||||
| Net interest spread (TE) | 3.13 | 2.80 | 2.62 | ||||||
| Net interest margin (TE) | 3.16 | 2.83 | 2.65 | ||||||
| Dividend payout ratio | 34.57 | 37.46 | 39.13 | ||||||
| Capital ratios at period end | |||||||||
| Consolidated tangible equity to tangible assets (2) | 9.68 | % | 9.54 | 9.55 | |||||
| Consolidated equity to assets | 9.69 | % | 9.55 | 9.56 | |||||
| Asset quality analysis at period end | |||||||||
| Nonperforming loans to total loans | 0.40 | 0.41 | 0.46 | ||||||
| Nonperforming assets to total assets | 0.32 | 0.31 | 0.34 | ||||||
| Allowance for credit losses on loans to total loans | 0.98 | 1.00 | 1.08 | ||||||
| Coverage ratio (3) | 2.4 | x | 2.4 | x | 2.3 | x | |||
| (1) | Non-GAAP measure; calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income. See Non-GAAP Financial<br> 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 Financial Measures<br> Reconciliation. | ||||||||
| --- | --- | ||||||||
| (3) | Calculated as allowance for credit losses on loans divided by total nonperforming loans. | ||||||||
| --- | --- |
TE = Taxable equivalent
Page | 5
FINANCIAL HIGHLIGHTS, Continued
(dollars in thousands, except per share data)
(Unaudited)
| Nine months ended | ||||||
|---|---|---|---|---|---|---|
| 09/30/22 | 09/30/21 | |||||
| Summary of operations | ||||||
| Net interest income (TE) | $ | 130,949 | 120,117 | |||
| (Credit) Provision for credit losses | (391 | ) | (2,450 | ) | ||
| Noninterest income | 14,485 | 13,411 | ||||
| Noninterest expense | 73,914 | 75,472 | ||||
| Net income | 54,324 | 45,278 | ||||
| Per share | ||||||
| Net income per share: | ||||||
| - Basic | $ | 2.835 | 2.349 | |||
| - Diluted | 2.835 | 2.349 | ||||
| Cash dividends | 1.050 | 1.022 | ||||
| Book value at period end | 30.89 | 30.50 | ||||
| Market price at period end | 31.42 | 31.97 | ||||
| Performance ratios | ||||||
| Return on average assets | 1.17 | % | 1.00 | |||
| Return on average equity | 12.16 | 10.50 | ||||
| Efficiency ratio (1) | 50.77 | 56.36 | ||||
| Net interest spread (TE) | 2.86 | 2.67 | ||||
| Net interest margin (TE) | 2.88 | 2.71 | ||||
| Dividend payout ratio | 37.03 | 43.50 | ||||
| (1) | Non-GAAP measure; calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income. See Non-GAAP Financial<br> Measures Reconciliation. | |||||
| --- | --- |
TE = Taxable equivalent.
Page | 6
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
(Unaudited)
| Three months ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 9/30/2022 | 6/30/2022 | 3/31/2022 | 12/31/2021 | 9/30/2021 | ||||||||||
| Interest and dividend income: | ||||||||||||||
| Interest and fees on loans | $ | 40,896 | 39,604 | 39,003 | 39,655 | 39,488 | ||||||||
| Interest and dividends on securities available for sale: | ||||||||||||||
| U. S. government sponsored enterprises | 479 | 147 | 86 | 76 | 91 | |||||||||
| State and political subdivisions | 1 | - | 1 | - | 1 | |||||||||
| Mortgage-backed securities and collateralized mortgage obligations - residential | 1,617 | 1,367 | 1,087 | 1,073 | 1,038 | |||||||||
| Corporate bonds | 526 | 522 | 233 | 206 | 220 | |||||||||
| Small Business Administration – guaranteed participation securities | 133 | 140 | 154 | 165 | 181 | |||||||||
| Other securities | 3 | 2 | 2 | 4 | 5 | |||||||||
| Total interest and dividends on securities available for sale | 2,759 | 2,178 | 1,563 | 1,524 | 1,536 | |||||||||
| Interest on held to maturity securities: | ||||||||||||||
| Mortgage-backed securities and collateralized mortgage obligations - residential | 85 | 87 | 90 | 97 | 104 | |||||||||
| Total interest on held to maturity securities | 85 | 87 | 90 | 97 | 104 | |||||||||
| Federal Home Loan Bank stock | 80 | 65 | 62 | 62 | 64 | |||||||||
| Interest on federal funds sold and other short-term investments | 5,221 | 2,253 | 572 | 432 | 470 | |||||||||
| Total interest income | 49,041 | 44,187 | 41,290 | 41,770 | 41,662 | |||||||||
| Interest expense: | ||||||||||||||
| Interest on deposits: | ||||||||||||||
| Interest-bearing checking | 43 | 42 | 44 | 42 | 38 | |||||||||
| Savings | 200 | 163 | 156 | 149 | 154 | |||||||||
| Money market deposit accounts | 237 | 210 | 214 | 201 | 202 | |||||||||
| Time deposits | 646 | 536 | 546 | 865 | 1,149 | |||||||||
| Interest on short-term borrowings | 122 | 176 | 234 | 221 | 232 | |||||||||
| Total interest expense | 1,248 | 1,127 | 1,194 | 1,478 | 1,775 | |||||||||
| Net interest income | 47,793 | 43,060 | 40,096 | 40,292 | 39,887 | |||||||||
| Less: Provision (Credit) for credit losses | 300 | (491 | ) | (200 | ) | (3,000 | ) | (2,800 | ) | |||||
| Net interest income after provision for loan losses | 47,493 | 43,551 | 40,296 | 43,292 | 42,687 | |||||||||
| Noninterest income: | ||||||||||||||
| Trustco Financial Services income | 1,435 | 1,996 | 1,833 | 1,766 | 1,558 | |||||||||
| Fees for services to customers | 2,705 | 2,658 | 2,801 | 2,578 | 2,531 | |||||||||
| Other | 246 | 262 | 549 | 182 | 206 | |||||||||
| Total noninterest income | 4,386 | 4,916 | 5,183 | 4,526 | 4,295 | |||||||||
| Noninterest expenses: | ||||||||||||||
| Salaries and employee benefits | 12,134 | 11,464 | 9,239 | 11,984 | 11,909 | |||||||||
| Net occupancy expense | 4,483 | 4,254 | 4,529 | 4,569 | 4,259 | |||||||||
| Equipment expense | 1,532 | 1,667 | 1,588 | 1,758 | 1,628 | |||||||||
| Professional services | 1,375 | 1,484 | 1,467 | 1,579 | 1,483 | |||||||||
| Outsourced services | 2,328 | 2,500 | 2,280 | 1,950 | 2,015 | |||||||||
| Advertising expense | 508 | 389 | 617 | 762 | 310 | |||||||||
| FDIC and other insurance | 773 | 804 | 812 | 780 | 746 | |||||||||
| Other real estate expense (income), net | 124 | 74 | 11 | (28 | ) | 32 | ||||||||
| Other | 2,887 | 2,369 | 2,222 | 2,836 | 2,315 | |||||||||
| Total noninterest expenses | 26,144 | 25,005 | 22,765 | 26,190 | 24,697 | |||||||||
| Income before taxes | 25,735 | 23,462 | 22,714 | 21,628 | 22,285 | |||||||||
| Income taxes | 6,371 | 5,591 | 5,625 | 5,387 | 5,523 | |||||||||
| Net income | $ | 19,364 | 17,871 | 17,089 | 16,241 | 16,762 | ||||||||
| Net income per common share: | ||||||||||||||
| - Basic | $ | 1.013 | 0.933 | 0.890 | 0.845 | 0.871 | ||||||||
| - Diluted | 1.013 | 0.933 | 0.890 | 0.845 | 0.871 | |||||||||
| Average basic shares (in thousands) | 19,111 | 19,153 | 19,209 | 19,216 | 19,249 | |||||||||
| Average diluted shares (in thousands) | 19,112 | 19,153 | 19,210 | 19,218 | 19,252 | |||||||||
| Note: Taxable equivalent net interest income | $ | 47,793 | 43,060 | 40,096 | 40,292 | 39,888 |
Page | 7
CONSOLIDATED STATEMENTS OF INCOME, Continued
(dollars in thousands, except per share data)
(Unaudited)
| Nine months ended | ||||||
|---|---|---|---|---|---|---|
| 09/30/22 | 09/30/21 | |||||
| Interest and dividend income: | ||||||
| Interest and fees on loans | $ | 119,503 | 119,513 | |||
| Interest and dividends on securities available for sale: | ||||||
| U. S. government sponsored enterprises | 712 | 238 | ||||
| State and political subdivisions | 2 | 2 | ||||
| Mortgage-backed securities and collateralized mortgage obligations - residential | 4,071 | 3,442 | ||||
| Corporate bonds | 1,281 | 859 | ||||
| Small Business Administration - guaranteed participation securities | 427 | 580 | ||||
| Other securities | 7 | 16 | ||||
| Total interest and dividends on securities available for sale | 6,500 | 5,137 | ||||
| Interest on held to maturity securities: | ||||||
| Mortgage-backed securities-residential | 262 | 338 | ||||
| Total interest on held to maturity securities | 262 | 338 | ||||
| Federal Home Loan Bank stock | 207 | 198 | ||||
| Interest on federal funds sold and other short-term investments | 8,046 | 1,026 | ||||
| Total interest income | 134,518 | 126,212 | ||||
| Interest expense: | ||||||
| Interest on deposits: | ||||||
| Interest-bearing checking | 129 | 136 | ||||
| Savings | 519 | 475 | ||||
| Money market deposit accounts | 661 | 721 | ||||
| Time deposits | 1,728 | 4,076 | ||||
| Interest on short-term borrowings | 532 | 688 | ||||
| Total interest expense | 3,569 | 6,096 | ||||
| Net interest income | 130,949 | 120,116 | ||||
| Less: (Credit) Provision for credit losses | (391 | ) | (2,450 | ) | ||
| Net interest income after provision for loan losses | 131,340 | 122,566 | ||||
| Noninterest income: | ||||||
| Trustco Financial Services income | 5,264 | 5,592 | ||||
| Fees for services to customers | 8,164 | 7,221 | ||||
| Other | 1,057 | 598 | ||||
| Total noninterest income | 14,485 | 13,411 | ||||
| Noninterest expenses: | ||||||
| Salaries and employee benefits | 32,837 | 36,737 | ||||
| Net occupancy expense | 13,266 | 13,173 | ||||
| Equipment expense | 4,787 | 4,859 | ||||
| Professional services | 4,326 | 4,529 | ||||
| Outsourced services | 7,108 | 6,434 | ||||
| Advertising expense | 1,514 | 1,213 | ||||
| FDIC and other insurance | 2,389 | 2,230 | ||||
| Other real estate expense, net | 209 | 211 | ||||
| Other | 7,478 | 6,086 | ||||
| Total noninterest expenses | 73,914 | 75,472 | ||||
| Income before taxes | 71,911 | 60,505 | ||||
| Income taxes | 17,587 | 15,227 | ||||
| Net income | $ | 54,324 | 45,278 | |||
| Net income per common share: | ||||||
| - Basic | $ | 2.835 | 2.349 | |||
| - Diluted | 2.835 | 2.349 | ||||
| Average basic shares (in thousands) | 19,160 | 19,272 | ||||
| Average diluted shares (in thousands) | 19,160 | 19,278 | ||||
| Note: Taxable equivalent net interest income | $ | 130,949 | 120,117 |
Page | 8
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)
(Unaudited)
| 9/30/2022 | 6/30/2022 | 3/31/2022 | 12/31/2021 | 9/30/2021 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ASSETS: | |||||||||||||||
| Cash and due from banks | $ | 46,236 | 46,611 | 47,526 | 48,357 | 45,486 | |||||||||
| Federal funds sold and other short term investments | 795,028 | 999,573 | 1,225,022 | 1,171,113 | 1,147,853 | ||||||||||
| Total cash and cash equivalents | 841,264 | 1,046,184 | 1,272,548 | 1,219,470 | 1,193,339 | ||||||||||
| Securities available for sale: | |||||||||||||||
| U. S. government sponsored enterprises | 102,779 | 101,100 | 62,059 | 59,179 | 59,749 | ||||||||||
| States and political subdivisions | 41 | 41 | 41 | 41 | 48 | ||||||||||
| Mortgage-backed securities and collateralized mortgage obligations - residential | 261,242 | 287,450 | 244,045 | 270,798 | 293,585 | ||||||||||
| Small Business Administration - guaranteed participation securities | 22,498 | 25,428 | 28,086 | 31,674 | 34,569 | ||||||||||
| Corporate bonds | 81,002 | 87,740 | 74,089 | 45,337 | 45,915 | ||||||||||
| Other securities | 657 | 656 | 671 | 684 | 686 | ||||||||||
| Total securities available for sale | 468,219 | 502,415 | 408,991 | 407,713 | 434,552 | ||||||||||
| Held to maturity securities: | |||||||||||||||
| Mortgage-backed securities and collateralized mortgage obligations-residential | 8,091 | 8,544 | 9,183 | 9,923 | 10,701 | ||||||||||
| Total held to maturity securities | 8,091 | 8,544 | 9,183 | 9,923 | 10,701 | ||||||||||
| Federal Home Loan Bank stock | 5,797 | 5,797 | 5,604 | 5,604 | 5,604 | ||||||||||
| Loans: | |||||||||||||||
| Commercial | 217,120 | 199,886 | 192,408 | 200,200 | 204,679 | ||||||||||
| Residential mortgage loans | 4,132,365 | 4,076,657 | 4,026,434 | 3,998,187 | 3,951,285 | ||||||||||
| Home equity line of credit | 269,341 | 253,758 | 236,117 | 230,976 | 231,314 | ||||||||||
| Installment loans | 10,665 | 10,258 | 9,395 | 9,416 | 9,451 | ||||||||||
| Loans, net of deferred net costs | 4,629,491 | 4,540,559 | 4,464,354 | 4,438,779 | 4,396,729 | ||||||||||
| Less: Allowance for credit losses on loans | 45,517 | 45,285 | 46,178 | 44,267 | 47,350 | ||||||||||
| Net loans | 4,583,974 | 4,495,274 | 4,418,176 | 4,394,512 | 4,349,379 | ||||||||||
| Bank premises and equipment, net | 31,931 | 32,381 | 32,644 | 33,027 | 33,233 | ||||||||||
| Operating lease right-of-use assets | 45,733 | 47,343 | 48,569 | 48,090 | 45,836 | ||||||||||
| Other assets | 94,485 | 88,853 | 86,158 | 78,207 | 62,191 | ||||||||||
| Total assets | $ | 6,079,494 | 6,226,791 | 6,281,873 | 6,196,546 | 6,134,835 | |||||||||
| LIABILITIES: | |||||||||||||||
| Deposits: | |||||||||||||||
| Demand | $ | 859,829 | 851,573 | 835,281 | 794,878 | 790,663 | |||||||||
| Interest-bearing checking | 1,188,790 | 1,208,159 | 1,225,093 | 1,191,304 | 1,148,593 | ||||||||||
| Savings accounts | 1,562,564 | 1,577,034 | 1,553,152 | 1,504,554 | 1,433,130 | ||||||||||
| Money market deposit accounts | 716,319 | 760,338 | 796,275 | 782,079 | 744,051 | ||||||||||
| Time deposits | 954,352 | 999,737 | 940,215 | 995,314 | 1,124,581 | ||||||||||
| Total deposits | 5,281,854 | 5,396,841 | 5,350,016 | 5,268,129 | 5,241,018 | ||||||||||
| Short-term borrowings | 124,932 | 147,282 | 248,371 | 244,686 | 230,770 | ||||||||||
| Operating lease liabilities | 50,077 | 51,777 | 53,094 | 52,720 | 50,515 | ||||||||||
| Accrued expenses and other liabilities | 33,625 | 36,259 | 37,497 | 29,883 | 25,849 | ||||||||||
| Total liabilities | 5,490,488 | 5,632,159 | 5,688,978 | 5,595,418 | 5,548,152 | ||||||||||
| SHAREHOLDERS' EQUITY: | |||||||||||||||
| Capital stock | 20,046 | 20,046 | 20,046 | 20,046 | 20,042 | ||||||||||
| Surplus | 256,661 | 256,661 | 256,661 | 256,661 | 256,565 | ||||||||||
| Undivided profits | 379,769 | 367,100 | 355,948 | 349,056 | 339,554 | ||||||||||
| Accumulated other comprehensive (loss) income, net of tax | (25,209 | ) | (9,422 | ) | (2,369 | ) | 12,147 | 7,304 | |||||||
| Treasury stock at cost | (42,261 | ) | (39,753 | ) | (37,391 | ) | (36,782 | ) | (36,782 | ) | |||||
| Total shareholders' equity | 589,006 | 594,632 | 592,895 | 601,128 | 586,683 | ||||||||||
| Total liabilities and shareholders' equity | $ | 6,079,494 | 6,226,791 | 6,281,873 | 6,196,546 | 6,134,835 | |||||||||
| Outstanding shares (in thousands) | 19,052 | 19,127 | 19,202 | 19,220 | 19,216 |
Page | 9
NONPERFORMING ASSETS
(dollars in thousands)
(Unaudited)
| 9/30/2022 | 6/30/2022 | 3/31/2022 | 12/31/2021 | 9/30/2021 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Nonperforming Assets | |||||||||||||||
| New York and other states* | |||||||||||||||
| Loans in nonaccrual status: | |||||||||||||||
| Commercial | $ | 179 | 203 | 187 | 112 | 176 | |||||||||
| Real estate mortgage - 1 to 4 family | 16,295 | 16,259 | 17,065 | 16,574 | 17,878 | ||||||||||
| Installment | 29 | 40 | 33 | 37 | 32 | ||||||||||
| Total non-accrual loans | 16,503 | 16,502 | 17,285 | 16,723 | 18,086 | ||||||||||
| Other nonperforming real estate mortgages - 1 to 4 family | 12 | 14 | 16 | 17 | 19 | ||||||||||
| Total nonperforming loans | 16,515 | 16,516 | 17,301 | 16,740 | 18,105 | ||||||||||
| Other real estate owned | 682 | 644 | 269 | 362 | 511 | ||||||||||
| Total nonperforming assets | $ | 17,197 | 17,160 | 17,570 | 17,102 | 18,616 | |||||||||
| Florida | |||||||||||||||
| Loans in nonaccrual status: | |||||||||||||||
| Commercial | $ | - | - | - | - | - | |||||||||
| Real estate mortgage - 1 to 4 family | 2,104 | 2,192 | 2,109 | 2,016 | 2,066 | ||||||||||
| Installment | 65 | 5 | 8 | - | - | ||||||||||
| Total non-accrual loans | 2,169 | 2,197 | 2,117 | 2,016 | 2,066 | ||||||||||
| Other nonperforming real estate mortgages - 1 to 4 family | - | - | - | - | - | ||||||||||
| Total nonperforming loans | 2,169 | 2,197 | 2,117 | 2,016 | 2,066 | ||||||||||
| Other real estate owned | - | - | - | - | - | ||||||||||
| Total nonperforming assets | $ | 2,169 | 2,197 | 2,117 | 2,016 | 2,066 | |||||||||
| Total | |||||||||||||||
| Loans in nonaccrual status: | |||||||||||||||
| Commercial | $ | 179 | 203 | 187 | 112 | 176 | |||||||||
| Real estate mortgage - 1 to 4 family | 18,399 | 18,451 | 19,174 | 18,590 | 19,944 | ||||||||||
| Installment | 94 | 45 | 41 | 37 | 32 | ||||||||||
| Total non-accrual loans | 18,672 | 18,699 | 19,402 | 18,739 | 20,152 | ||||||||||
| Other nonperforming real estate mortgages - 1 to 4 family | 12 | 14 | 16 | 17 | 19 | ||||||||||
| Total nonperforming loans | 18,684 | 18,713 | 19,418 | 18,756 | 20,171 | ||||||||||
| Other real estate owned | 682 | 644 | 269 | 362 | 511 | ||||||||||
| Total nonperforming assets | $ | 19,366 | 19,357 | 19,687 | 19,118 | 20,682 | |||||||||
| Quarterly Net (Recoveries) Chargeoffs | |||||||||||||||
| New York and other states* | |||||||||||||||
| Commercial | $ | - | - | 36 | - | 30 | |||||||||
| Real estate mortgage - 1 to 4 family | (164 | ) | (119 | ) | (97 | ) | 52 | (39 | ) | ||||||
| Installment | 34 | 12 | 3 | 31 | 14 | ||||||||||
| Total net (recoveries) chargeoffs | $ | (130 | ) | (107 | ) | (58 | ) | 83 | 5 | ||||||
| Florida | |||||||||||||||
| Commercial | $ | - | - | - | - | - | |||||||||
| Real estate mortgage - 1 to 4 family | - | - | - | - | - | ||||||||||
| Installment | (2 | ) | - | - | - | - | |||||||||
| Total net (recoveries) chargeoffs | $ | (2 | ) | - | - | - | - | ||||||||
| Total | |||||||||||||||
| Commercial | $ | - | - | 36 | - | 30 | |||||||||
| Real estate mortgage - 1 to 4 family | (164 | ) | (119 | ) | (97 | ) | 52 | (39 | ) | ||||||
| Installment | 32 | 12 | 3 | 31 | 14 | ||||||||||
| Total net (recoveries) chargeoffs | $ | (132 | ) | (107 | ) | (58 | ) | 83 | 5 | ||||||
| Asset Quality Ratios | |||||||||||||||
| Total nonperforming loans (1) | $ | 18,684 | 18,713 | 19,418 | 18,756 | 20,171 | |||||||||
| Total nonperforming assets (1) | 19,366 | 19,357 | 19,687 | 19,118 | 20,682 | ||||||||||
| Total net (recoveries) chargeoffs (2) | (132 | ) | (107 | ) | (58 | ) | 83 | 5 | |||||||
| Allowance for credit losses on loans (1) | 45,517 | 45,285 | 46,178 | 44,267 | 47,350 | ||||||||||
| Nonperforming loans to total loans | 0.40 | % | 0.41 | % | 0.43 | % | 0.42 | % | 0.46 | % | |||||
| Nonperforming assets to total assets | 0.32 | % | 0.31 | % | 0.31 | % | 0.31 | % | 0.34 | % | |||||
| Allowance for credit losses on loans to total loans | 0.98 | % | 1.00 | % | 1.03 | % | 1.00 | % | 1.08 | % | |||||
| Coverage ratio (1) | 243.6 | % | 242.0 | % | 237.8 | % | 236.0 | % | 234.7 | % | |||||
| Annualized net (recoveries) chargeoffs to average loans (2) | -0.01 | % | -0.01 | % | -0.01 | % | 0.01 | % | 0.00 | % | |||||
| Allowance for credit losses on loans to annualized net (recoveries) chargeoffs (2) | N/A | N/A | N/A | 133.3 | x | 2367.5 | x | ||||||||
| * | Includes New York, New Jersey, Vermont and Massachusetts. | ||||||||||||||
| --- | --- | ||||||||||||||
| (1) | At period-end | ||||||||||||||
| --- | --- | ||||||||||||||
| (2) | For the three-month period ended | ||||||||||||||
| --- | --- |
Page | 10
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY -
INTEREST RATES AND INTEREST DIFFERENTIAL
(dollars in thousands)
| (Unaudited) | Three months ended | Three months ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, 2022 | September 30, 2021 | ||||||||||||||||
| Average | Interest | Average | Average | Interest | Average | ||||||||||||
| Balance | Rate | Balance | Rate | ||||||||||||||
| Assets | |||||||||||||||||
| Securities available for sale: | |||||||||||||||||
| U. S. government sponsored enterprises | $ | 104,633 | 479 | 1.83 | % | $ | 68,505 | 91 | 0.53 | % | |||||||
| Mortgage backed securities and collateralized mortgage obligations - residential | 302,886 | 1,617 | 2.13 | 300,765 | 1,038 | 1.38 | |||||||||||
| State and political subdivisions | 41 | 1 | 8.12 | 48 | 2 | 6.66 | |||||||||||
| Corporate bonds | 86,965 | 526 | 2.42 | 48,543 | 220 | 1.81 | |||||||||||
| Small Business Administration - guaranteed participation securities | 25,533 | 133 | 2.08 | 34,578 | 181 | 2.09 | |||||||||||
| Other | 686 | 3 | 1.75 | 686 | 5 | 2.92 | |||||||||||
| Total securities available for sale | 520,744 | 2,759 | 2.12 | 453,125 | 1,537 | 1.36 | |||||||||||
| Federal funds sold and other short-term Investments | 918,909 | 5,221 | 2.25 | 1,166,679 | 470 | 0.16 | |||||||||||
| Held to maturity securities: | |||||||||||||||||
| Mortgage backed securities and collateralized mortgage obligations - residential | 8,306 | 85 | 4.08 | 11,168 | 104 | 3.72 | |||||||||||
| Total held to maturity securities | 8,306 | 85 | 4.08 | 11,168 | 104 | 3.72 | |||||||||||
| Federal Home Loan Bank stock | 5,797 | 80 | 5.52 | 5,604 | 64 | 4.57 | |||||||||||
| Commercial loans | 207,477 | 2,484 | 4.79 | 210,825 | 2,649 | 5.03 | |||||||||||
| Residential mortgage loans | 4,105,859 | 35,342 | 3.44 | 3,920,903 | 34,532 | 3.52 | |||||||||||
| Home equity lines of credit | 261,575 | 2,896 | 4.39 | 231,269 | 2,152 | 3.69 | |||||||||||
| Installment loans | 10,213 | 174 | 6.75 | 8,669 | 155 | 7.10 | |||||||||||
| Loans, net of unearned income | 4,585,124 | 40,896 | 3.57 | 4,371,666 | 39,488 | 3.61 | |||||||||||
| Total interest earning assets | 6,038,880 | 49,041 | 3.24 | 6,008,242 | 41,663 | 2.77 | |||||||||||
| Allowance for credit losses on loans | (45,519 | ) | (50,160 | ) | |||||||||||||
| Cash & non-interest earning assets | 188,672 | 195,902 | |||||||||||||||
| Total assets | $ | 6,182,033 | $ | 6,153,984 | |||||||||||||
| Liabilities and shareholders' equity | |||||||||||||||||
| Deposits: | |||||||||||||||||
| Interest bearing checking accounts | $ | 1,195,370 | 43 | 0.01 | % | $ | 1,153,812 | 38 | 0.01 | % | |||||||
| Money market accounts | 744,868 | 237 | 0.13 | 738,662 | 202 | 0.11 | |||||||||||
| Savings | 1,579,513 | 200 | 0.05 | 1,430,558 | 154 | 0.04 | |||||||||||
| Time deposits | 981,704 | 646 | 0.26 | 1,152,298 | 1,149 | 0.40 | |||||||||||
| Total interest bearing deposits | 4,501,455 | 1,126 | 0.10 | 4,475,330 | 1,543 | 0.14 | |||||||||||
| Short-term borrowings | 138,105 | 122 | 0.35 | 240,183 | 232 | 0.38 | |||||||||||
| Total interest bearing liabilities | 4,639,560 | 1,248 | 0.11 | 4,715,513 | 1,775 | 0.15 | |||||||||||
| Demand deposits | 859,122 | 780,163 | |||||||||||||||
| Other liabilities | 82,290 | 75,116 | |||||||||||||||
| Shareholders' equity | 601,061 | 583,192 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 6,182,033 | $ | 6,153,984 | |||||||||||||
| Net interest income, tax equivalent | 47,793 | 39,888 | |||||||||||||||
| Net interest spread | 3.13 | % | 2.62 | % | |||||||||||||
| Net interest margin (net interest income to total interest earning assets) | 3.16 | % | 2.65 | % | |||||||||||||
| Tax equivalent adjustment | - | (1 | ) | ||||||||||||||
| Net interest income | 47,793 | 39,887 |
Page | 11
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY -
INTEREST RATES AND INTEREST DIFFERENTIAL, Continued
(dollars in thousands)
| (Unaudited) | Nine months ended | Nine months ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, 2022 | September 30, 2021 | ||||||||||||||||
| Average | Interest | Average | Average | Interest | Average | ||||||||||||
| Balance | Rate | Balance | Rate | ||||||||||||||
| Assets | |||||||||||||||||
| Securities available for sale: | |||||||||||||||||
| U. S. government sponsored enterprises | $ | 79,423 | 712 | 1.19 | % | $ | 65,103 | 238 | 0.49 | % | |||||||
| Mortgage backed securities and collateralized mortgage obligations - residential | 282,423 | 4,071 | 1.92 | 318,472 | 3,442 | 1.44 | |||||||||||
| State and political subdivisions | 41 | 2 | 6.73 | 49 | 3 | 8.16 | |||||||||||
| Corporate bonds | 75,957 | 1,281 | 2.25 | 56,245 | 859 | 2.04 | |||||||||||
| Small Business Administration - guaranteed participation securities | 27,623 | 427 | 2.06 | 36,981 | 580 | 2.09 | |||||||||||
| Other | 686 | 7 | 2.04 | 686 | 16 | 3.11 | |||||||||||
| Total securities available for sale | 466,153 | 6,500 | 2.79 | 477,536 | 5,138 | 1.43 | |||||||||||
| Federal funds sold and other short-term Investments | 1,068,217 | 8,046 | 1.01 | 1,108,018 | 1,026 | 0.12 | |||||||||||
| Held to maturity securities: | |||||||||||||||||
| Mortgage backed securities and collateralized mortgage obligations - residential | 8,897 | 262 | 3.93 | 12,199 | 338 | 3.70 | |||||||||||
| Total held to maturity securities | 8,897 | 262 | 3.93 | 12,199 | 338 | 3.70 | |||||||||||
| Federal Home Loan Bank stock | 5,734 | 207 | 7.22 | 5,570 | 198 | 4.74 | |||||||||||
| Commercial loans | 200,525 | 7,412 | 4.93 | 212,832 | 8,203 | 5.14 | |||||||||||
| Residential mortgage loans | 4,054,657 | 104,310 | 3.43 | 3,852,960 | 104,219 | 3.61 | |||||||||||
| Home equity lines of credit | 246,026 | 7,289 | 3.96 | 234,682 | 6,622 | 3.77 | |||||||||||
| Installment loans | 9,507 | 492 | 6.91 | 8,608 | 469 | 7.28 | |||||||||||
| Loans, net of unearned income | 4,510,715 | 119,503 | 3.53 | 4,309,082 | 119,513 | 3.70 | |||||||||||
| Total interest earning assets | 6,059,716 | 134,518 | 2.96 | 5,912,405 | 126,213 | 2.85 | |||||||||||
| Allowance for credit losses on loans | (46,225 | ) | (50,101 | ) | |||||||||||||
| Cash & non-interest earning assets | 196,333 | 196,876 | |||||||||||||||
| Total assets | $ | 6,209,824 | $ | 6,059,180 | |||||||||||||
| Liabilities and shareholders' equity | |||||||||||||||||
| Deposits: | |||||||||||||||||
| Interest bearing checking accounts | $ | 1,199,154 | 129 | 0.01 | % | $ | 1,129,480 | 136 | 0.02 | % | |||||||
| Money market accounts | 771,301 | 661 | 0.11 | 731,171 | 721 | 0.13 | |||||||||||
| Savings | 1,557,503 | 519 | 0.04 | 1,376,494 | 475 | 0.05 | |||||||||||
| Time deposits | 971,539 | 1,728 | 0.24 | 1,203,708 | 4,076 | 0.45 | |||||||||||
| Total interest bearing deposits | 4,499,497 | 3,037 | 0.09 | 4,440,853 | 5,408 | 0.16 | |||||||||||
| Short-term borrowings | 194,228 | 532 | 0.37 | 232,532 | 688 | 0.40 | |||||||||||
| Total interest bearing liabilities | 4,693,725 | 3,569 | 0.10 | 4,673,385 | 6,096 | 0.17 | |||||||||||
| Demand deposits | 836,953 | 735,495 | |||||||||||||||
| Other liabilities | 81,780 | 73,689 | |||||||||||||||
| Shareholders' equity | 597,366 | 576,611 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 6,209,824 | $ | 6,059,180 | |||||||||||||
| Net interest income, tax equivalent | 130,949 | 120,117 | |||||||||||||||
| Net interest spread | 2.86 | % | 2.67 | % | |||||||||||||
| Net interest margin (net interest income to | |||||||||||||||||
| total interest earning assets) | 2.88 | % | 2.71 | % | |||||||||||||
| Tax equivalent adjustment | - | (1 | ) | ||||||||||||||
| Net interest income | 130,949 | 120,116 |
Page | 12
Non-GAAP Financial Measures Reconciliation
Tangible equity as a percentage of tangible assets at period end is a non-GAAP financial measure derived from GAAP-based amounts. We calculate tangible equity and tangible assets by excluding the balance of intangible assets from 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.
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, 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 securities and other non-routine items from this calculation. We believe that this provides a reasonable measure of primary banking expenses relative to primary banking revenue. 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 common equity and efficiency ratio to the most directly comparable GAAP measures is set forth below.
NON-GAAP FINANCIAL MEASURES RECONCILIATION
(dollars in thousands)
(Unaudited)
| 9/30/2022 | 6/30/2022 | 9/30/2021 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Tangible Equity to Tangible Assets | |||||||||||||||
| Total Assets (GAAP) | $ | 6,079,494 | 6,226,791 | 6,134,835 | |||||||||||
| Less: Intangible assets | 553 | 553 | 553 | ||||||||||||
| Tangible assets (Non-GAAP) | 6,078,941 | 6,226,238 | 6,134,282 | ||||||||||||
| Equity (GAAP) | 589,006 | 594,632 | 586,683 | ||||||||||||
| Less: Intangible assets | 553 | 553 | 553 | ||||||||||||
| Tangible equity (Non-GAAP) | 588,453 | 594,079 | 586,130 | ||||||||||||
| Tangible Equity to Tangible Assets (Non-GAAP) | 9.68 | % | 9.54 | % | 9.55 | % | |||||||||
| Equity to Assets (GAAP) | 9.69 | % | 9.55 | % | 9.56 | % | |||||||||
| Three months ended | Nine months ended | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Efficiency Ratio | 9/30/2022 | 6/30/2022 | 9/30/2021 | 9/30/2022 | 9/30/2021 | ||||||||||
| Net interest income (fully taxable equivalent) (Non-GAAP) | $ | 47,793 | 43,060 | 39,888 | $ | 130,949 | 120,117 | ||||||||
| Non-interest income (GAAP) | 4,386 | 4,916 | 4,295 | 14,485 | 13,411 | ||||||||||
| Less: Net gain on sale of building | - | - | - | 268 | - | ||||||||||
| Revenue used for efficiency ratio (Non-GAAP) | 52,179 | 47,976 | 44,183 | 145,166 | 133,528 | ||||||||||
| Total noninterest expense (GAAP) | 26,144 | 25,005 | 24,697 | 73,914 | 75,472 | ||||||||||
| Less: Other real estate (income) expense, net | 124 | 74 | 32 | 209 | 211 | ||||||||||
| Expense used for efficiency ratio (Non-GAAP) | 26,020 | 24,931 | 24,665 | 73,705 | 75,261 | ||||||||||
| Efficiency Ratio | 49.87 | % | 51.97 | % | 55.82 | % | 50.77 | % | 56.36 | % |
Page | 13