Exhibit 99(a)
 | News Release |
5 Sarnowski Drive, Glenville, New York, 12302
(518) 377-3311 Fax: (518) 381-3668
| Subsidiary: | Trustco Bank | NASDAQ -- TRST |
| Contact: | Robert Leonard |
| Executive Vice President and | |
| Chief Risk Officer | |
| (518) 381-3693 |
FOR IMMEDIATE RELEASE:
TrustCo is Pleased to Report Third Quarter 2020 Results;
Net Income of $14.1 Million and 6.9% Average Residential Loan Growth Year over Year
Glenville, New York – October 21, 2020
TrustCo Bank Corp NY (TrustCo, NASDAQ: TRST) • TrustCo Bank Corp NY today announced third quarter 2020 net income of $14.1 million or $0.146 diluted earnings per share, and $38.6 million or $0.400 diluted earnings per share for the nine months ended September 30, 2020.
Summary
Robert J. McCormick, Chairman, President and Chief Executive Officer noted, “We continue to keep a pulse on the best ways to adapt to the changing needs of our customers in light of the ongoing impact of the pandemic. Our unparalleled dedication to customer service positions us as a stable partner to our customers as they seek updated information, support and advice in a volatile time. In response to these changing needs, we made a significant investment in our online and mobile banking offerings, rolling out a completely updated experience for customers that includes real-time account alerts, secure messaging, enhanced billpay and more. We also recently introduced ClickSwitch, an automated tool that allows new customers to change direct deposits and recurring payments in just a few minutes, creating new business opportunities for the Bank. We expect to see more activity and interest in these offerings and have an exciting plan for ongoing updates and new innovations.”
Trustco’s commitment to supporting its communities and front line workers remains steadfast. In an effort to bolster our students and schools during an unpredictable back to school period, we donated more than 450 backpacks and contributed financially to the elementary school near our newly renovated Mont Pleasant Branch. This is just one example of ways we have prioritized giving back in addition to our designated Coronavirus (“COVID-19”) Fund, donating time and financial support to front line organizations across the communities, and the COVID-19 Financial Relief Program, providing support to our borrowers experiencing economic hardships in various ways.
We also continue to closely monitor the impact of the pandemic on our business and results of operations. As of September 30, 2020, we had 24 residential loans in deferral totaling $5 million, and 6 commercial loans in deferral totaling $2 million. This represents 0.2% of total outstanding loans. As of June 30, 2020, we had 668 residential loans in deferral totaling $145 million, and 90 commercial loans in deferral totaling $45 million. This represented 4.5% of total outstanding loans. We are encouraged to see that most of our residential and commercial borrowers who had payment deferral arrangements with us have returned to making regular loan payments. Additionally, the Bank has funded 663 Paycheck Protection Program (“PPP”) loans totaling $46 million.
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The third quarter of 2020 saw continued loan and deposit growth. Our focus on traditional lending criteria and conservative balance sheet management has produced consistent earnings while maintaining strong liquidity and growing capital. This approach allowed us to continue to expand our business and take advantage of changes in market and competitive conditions. As mentioned in prior quarters, the pandemic has created an uncertain future, and we believe we continue to be well-positioned to help our customers through this economic disruption and turmoil. We also continue to hire across our locations for all levels of staff. As we enter the fourth quarter of 2020 and beyond, management views the Bank as well-positioned to deploy its existing liquidity into our residential loan portfolio, and we will continue to closely monitor how the current market conditions change.
TrustCo saw average loans grow 6.5% in the third quarter of 2020 compared to the third quarter of 2019. Year over year, loan portfolio expansion was funded by a combination of utilizing a portion of our strong cash balances, cash flow from investments, and the growth in funding from customer deposits. Total average deposits are up $442.3 million or 9.9% in the third quarter 2020 compared to the prior year.
Details
Average loans were up $254.6 million or 6.5% in the third quarter 2020 over the same period in 2019. Average residential loans, our primary lending focus, were up $237.6 million, or 6.9%, in the third quarter 2020 over the same period in 2019. Average deposits are up $442.3 million or 9.9% for the third quarter 2020 over the same period a year earlier. The increase in deposits was the result of a $544.6 million or 18.1% increase total average core deposit accounts, which consist of interest bearing and non-interest bearing checking, savings and money market deposits, for the third quarter 2020 compared to the third quarter 2019. Within core, checking balances were up $333.8 million or 25.4% (including interest bearing and non-interest bearing checking balances). The increase in core deposits reflects the desire by customers to have additional funds in the safety and security offered by TrustCo’s long history of conservative banking. As we move forward, the objective is to encourage customers to retain these additional funds in the expanded product offerings of the Bank through aggressive marketing and product differentiation. Average time deposits decreased $102.3 million or 7.0% for the third quarter 2020 compared to the third quarter 2019.
The cost of interest bearing liabilities decreased to 0.52% in the third quarter 2020 from 0.94% in the third quarter 2019. A significant portion of our CD portfolio repriced during the last half of 2019 and the first nine months of 2020, which resulted in lower rates due to market conditions. The net interest margin for the third quarter 2020 was 2.73%, down 31 basis points from 3.04% in the third quarter of 2019 primarily due to the decrease in market rates over the same period resulting in less interest earned on our short-term funds and variable rate loans. Additionally, because we offered competitive shorter term rates on our time deposits in the past, we expect the cost of interest bearing liabilities to continue to decrease as time deposits reprice at lower rates.
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The Bank continued to demonstrate its ability to grow shareholders’ equity as average equity was up $35.8 million or 6.9% in the third quarter of 2020 compared to the same period in 2019. Return on average assets and return on average equity for the third quarter 2020 were 0.98% and 10.04%, respectively, compared to 1.12% and 11.19% for the third quarter 2019. Improving efficiencies to reduce costs continues to remain a key area of focus. Total operating expenses decreased by $1.4 million or 5.8% in the third quarter 2020 as compared to the third quarter 2019, driven by decreases in almost all expense categories, with the exception of increases in occupancy expense and FDIC and other insurance expense.
Asset quality and loan loss reserve measures have stayed consistent. Nonperforming loans (NPLs) were $21.8 million at September 30, 2020, compared to $21.0 million at September 30, 2019. NPLs were 0.52% of total loans at September 30, 2020, compared to 0.53% at September 30, 2019. The coverage ratio, or allowance for loan losses to NPLs, was 225.4% at September 30, 2020, compared to 210.9% at September 30, 2019. Nonperforming assets (NPAs) were $22.2 million at September 30, 2020, compared to $23.4 million at September 30, 2019. The ratio of allowance for loan losses to total loans was 1.17% as of September 30, 2020, compared to 1.11% at September 30, 2019. The allowance for loan losses was $49.1 million at September 30, 2020, compared to $44.3 million at September 30, 2019. The provision for loan losses increased to $1.0 million for the third quarter 2020 compared to $-0- in the same period in the prior year, primarily driven by the uncertainty in the current economic environment resulting from COVID-19. The Bank did not adopt “FASB Accounting Standards Update 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“CECL”) as of January 1, 2020 as allowed by the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The Bank will adopt CECL as required by the CARES Act at the earlier of the termination of the National Emergency concerning COVID-19 or December 31, 2020. Net chargeoffs for the third quarter 2020 were $21 thousand versus net chargeoffs in the third quarter 2019 of $36 thousand. The annualized net chargeoffs ratio was 0.00% for the third quarter 2020 and 2019.
At September 30, 2020 the tangible equity to tangible asset ratio was 9.76%, compared to 10.07% at September 30, 2019. Book value per share at September 30, 2020 was $5.81, up 7.2% compared to $5.42 a year earlier.
TrustCo Bank Corp NY is a $5.7 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 148 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at September 30, 2020.
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 2020 results will be held at 9:00 a.m. Eastern Time on October 22, 2020. Those wishing to participate in the call may dial toll-free 1-888-339-0764. International callers must dial 1-412-902-4195. Please ask to be joined into the TrustCo Bank Corp NY / TRST call. A replay of the call will be available for thirty days by dialing 1-877-344-7529 (1-412-317-0088 for international callers), Conference Number 10149050. The call will also be audio webcast at: https://services.choruscall.com/links/trst201022.html, and will be available 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 2020, including our expectations regarding the effects of COVID-19 on our financial results and our ability to assist our customers in addressing the effects of COVID-19, our expectations with respect to our online and mobile banking product offerings, our expectations for the repricing of our CD portfolio, the impact of Federal Reserve actions regarding interest rates and the growth of loans and deposits throughout our branch network 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. 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 effect of the COVID-19 pandemic on our business, financial condition, liquidity and results of operations; the impact of the actions taken by governmental authorities to contain COVID-19 or address the impact of COVID-19 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; our ability to continue to originate a significant volume of one-to-four family mortgage loans in our market areas; our ability to continue to maintain noninterest expense and other overhead costs at reasonable levels relative to income; our ability to make accurate assumptions and judgments regarding the credit risks associated with lending and investing activities; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board, inflation, interest rates, market and monetary fluctuations; restrictions or conditions imposed by our regulators on our operations that may make it more difficult for us to achieve our goals; the future earnings and capital levels of us and Trustco Bank and the continued receipt of approvals from our primary federal banking regulators under regulatory rules to distribute capital to TrustCo, which could affect our ability to pay dividends; results of supervisory monitoring or examinations of Trustco Bank and TrustCo by our respective regulators; adverse conditions in the securities markets that lead to impairment in the value of securities in our investment portfolio; unanticipated effects from the Tax Cut and Jobs Act that may limit its benefits or adversely impact our business; the perceived overall value of our products and services by users, including in comparison to competitors’ products and services and the willingness of current and prospective customers to substitute competitors’ products and services for our products and services; changes in consumer spending, borrowing and saving habits; the effect of changes in financial services laws and regulations and the impact of other governmental initiatives affecting the financial services industry; changes in management personnel; real estate and collateral values; changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the FASB or PCAOB; disruptions, security breaches, or other adverse events affecting the third-party vendors who perform several of our critical processing functions; technological changes and electronic, cyber and physical security breaches; changes in local market areas and general business and economic trends, as well as changes in consumer spending and saving habits; our success at managing the risks involved in the foregoing and managing our business; and other risks and uncertainties under the heading “Risk Factors” in our most recent annual report on Form 10-K and, if any, in our subsequent quarterly reports on Form 10-Q or other securities filings.
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TRUSTCO BANK CORP NY
GLENVILLE, NY
FINANCIAL HIGHLIGHTS
(dollars in thousands, except per share data)
(Unaudited)
| Three months ended | ||||||||||||
| 9/30/2020 | 6/30/2020 | 9/30/2019 | ||||||||||
| Summary of operations | ||||||||||||
| Net interest income (TE) | $ | 38,166 | 37,681 | 38,644 | ||||||||
| Provision for loan losses | 1,000 | 2,000 | - | |||||||||
| Noninterest income, excluding net gain on securities transactions | 4,341 | 3,426 | 4,925 | |||||||||
| Noninterest expense | 22,674 | 23,932 | 24,070 | |||||||||
| Net income | 14,071 | 11,254 | 14,708 | |||||||||
| Per common share | ||||||||||||
| Net income per share: | ||||||||||||
| - Basic | $ | 0.146 | 0.117 | 0.152 | ||||||||
| - Diluted | 0.146 | 0.117 | 0.152 | |||||||||
| Cash dividends | 0.068 | 0.068 | 0.068 | |||||||||
| Book value at period end | 5.81 | 5.73 | 5.42 | |||||||||
| Market price at period end | 5.22 | 6.33 | 8.15 | |||||||||
| At period end | ||||||||||||
| Full time equivalent employees | 771 | 806 | 823 | |||||||||
| Full service banking offices | 148 | 148 | 148 | |||||||||
| Performance ratios | ||||||||||||
| Return on average assets | 0.98 | % | 0.82 | 1.12 | ||||||||
| Return on average equity | 10.04 | 8.21 | 11.19 | |||||||||
| Efficiency (1) | 53.61 | 58.30 | 55.17 | |||||||||
| Net interest spread (TE) | 2.63 | 2.69 | 2.88 | |||||||||
| Net interest margin (TE) | 2.73 | 2.81 | 3.04 | |||||||||
| Dividend payout ratio | 46.68 | 58.37 | 44.85 | |||||||||
| Capital ratios at period end | ||||||||||||
| Consolidated tangible equity to tangible assets (2) | 9.76 | % | 9.74 | 10.07 | ||||||||
| Consolidated equity to assets | 9.77 | % | 9.75 | 10.07 | ||||||||
| Asset quality analysis at period end | ||||||||||||
| Nonperforming loans to total loans | 0.52 | 0.52 | 0.53 | |||||||||
| Nonperforming assets to total assets | 0.39 | 0.40 | 0.45 | |||||||||
| Allowance for loan losses to total loans | 1.17 | 1.15 | 1.11 | |||||||||
| Coverage ratio (3) | 2.3 | x | 2.2 | x | 2.1 | x | ||||||
| (1) | Non-GAAP measure; calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income. |
| (2) | Non-GAAP measure; calculated as total equity less $553 of intangible assets divided by total assets less $553 of intangible assets. |
| (3) | Calculated as allowance for loan losses divided by total nonperforming loans. |
TE = Taxable equivalent
Page | 5
FINANCIAL HIGHLIGHTS, Continued
(dollars in thousands, except per share data)
(Unaudited)
| Nine months ended | ||||||||
| 9/30/2020 | 9/30/2019 | |||||||
| Summary of operations | ||||||||
| Net interest income (TE) | $ | 114,401 | 117,569 | |||||
| Provision (Credit) for loan losses | 5,000 | (41 | ) | |||||
| Net gain on securities transactions | 1,155 | - | ||||||
| Noninterest income, excluding net gain on securities transactions | 11,946 | 14,476 | ||||||
| Noninterest expense | 70,874 | 73,839 | ||||||
| Net income | 38,638 | 43,933 | ||||||
| Per common share | ||||||||
| Net income per share: | ||||||||
| - Basic | $ | 0.400 | 0.454 | |||||
| - Diluted | 0.400 | 0.453 | ||||||
| Cash dividends | 0.204 | 0.204 | ||||||
| Book value at period end | 5.81 | 5.42 | ||||||
| Market price at period end | 5.22 | 8.15 | ||||||
| Performance ratios | ||||||||
| Return on average assets | 0.94 | 1.14 | ||||||
| Return on average equity | 9.38 | 11.56 | ||||||
| Efficiency (1) | 56.06 | 55.75 | ||||||
| Net interest spread (TE) | 2.74 | 2.98 | ||||||
| Net interest margin (TE) | 2.86 | 3.13 | ||||||
| Dividend payout ratio | 51.03 | 45.00 | ||||||
| (1) | Non-GAAP measure; calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income (excluding net gain on securities transactions). |
TE = Taxable equivalent.
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CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
(Unaudited)
| Three months ended | ||||||||||||||||||||
| 9/30/2020 | 6/30/2020 | 3/31/2020 | 12/31/2019 | 9/30/2019 | ||||||||||||||||
| Interest and dividend income: | ||||||||||||||||||||
| Interest and fees on loans | $ | 41,330 | 41,665 | 42,063 | 42,002 | 41,923 | ||||||||||||||
| Interest and dividends on securities available for sale: | ||||||||||||||||||||
| U. S. government sponsored enterprises | 14 | 106 | 421 | 609 | 996 | |||||||||||||||
| State and political subdivisions | 1 | 2 | 1 | 2 | 2 | |||||||||||||||
Mortgage-backed securities and collateralized mortgage obligations - residential | 1,319 | 1,527 | 2,113 | 2,334 | 2,178 | |||||||||||||||
| Corporate bonds | 646 | 488 | 238 | 295 | 321 | |||||||||||||||
Small Business Administration - guaranteed participation securities | 216 | 229 | 245 | 253 | 282 | |||||||||||||||
| Other securities | 5 | 5 | 6 | 6 | 6 | |||||||||||||||
| Total interest and dividends on securities available for sale | 2,201 | 2,357 | 3,024 | 3,499 | 3,785 | |||||||||||||||
| Interest on held to maturity securities: | ||||||||||||||||||||
Mortgage-backed securities and collateralized mortgage obligations - residential | 138 | 162 | 175 | 184 | 187 | |||||||||||||||
| Total interest on held to maturity securities | 138 | 162 | 175 | 184 | 187 | |||||||||||||||
| Federal Reserve Bank and Federal Home Loan Bank stock | 77 | 192 | 82 | 203 | 81 | |||||||||||||||
| Interest on federal funds sold and other short-term investments | 242 | 193 | 1,267 | 1,635 | 2,552 | |||||||||||||||
| Total interest income | 43,988 | 44,569 | 46,611 | 47,523 | 48,528 | |||||||||||||||
| Interest expense: | ||||||||||||||||||||
| Interest on deposits: | ||||||||||||||||||||
| Interest-bearing checking | 55 | 26 | 16 | 21 | 52 | |||||||||||||||
| Savings | 161 | 166 | 233 | 271 | 323 | |||||||||||||||
| Money market deposit accounts | 637 | 862 | 1,096 | 1,175 | 1,177 | |||||||||||||||
| Time deposits | 4,749 | 5,599 | 6,391 | 7,468 | 7,974 | |||||||||||||||
| Interest on short-term borrowings | 221 | 235 | 322 | 347 | 359 | |||||||||||||||
| Total interest expense | 5,823 | 6,888 | 8,058 | 9,282 | 9,885 | |||||||||||||||
| Net interest income | 38,165 | 37,681 | 38,553 | 38,241 | 38,643 | |||||||||||||||
| Less: Provision for loan losses | 1,000 | 2,000 | 2,000 | 200 | - | |||||||||||||||
| Net interest income after provision for loan losses | 37,165 | 35,681 | 36,553 | 38,041 | 38,643 | |||||||||||||||
| Noninterest income: | ||||||||||||||||||||
| Trustco Financial Services income | 1,784 | 1,368 | 1,600 | 1,454 | 1,517 | |||||||||||||||
| Fees for services to customers | 2,292 | 1,807 | 2,315 | 2,377 | 2,602 | |||||||||||||||
| Net gain on securities transactions | - | - | 1,155 | - | - | |||||||||||||||
| Other | 265 | 251 | 264 | 284 | 806 | |||||||||||||||
| Total noninterest income | 4,341 | 3,426 | 5,334 | 4,115 | 4,925 | |||||||||||||||
| Noninterest expenses: | ||||||||||||||||||||
| Salaries and employee benefits | 10,899 | 11,648 | 11,373 | 11,743 | 11,725 | |||||||||||||||
| Net occupancy expense | 4,277 | 4,385 | 4,306 | 4,399 | 4,094 | |||||||||||||||
| Equipment expense | 1,607 | 1,606 | 1,802 | 1,768 | 1,689 | |||||||||||||||
| Professional services | 1,311 | 1,182 | 1,481 | 1,449 | 1,507 | |||||||||||||||
| Outsourced services | 1,875 | 1,875 | 2,075 | 1,925 | 1,875 | |||||||||||||||
| Advertising expense | 305 | 601 | 488 | 464 | 494 | |||||||||||||||
| FDIC and other insurance | 660 | 609 | 294 | 259 | 282 | |||||||||||||||
| Other real estate (income) expense, net | (115 | ) | (32 | ) | 194 | (385 | ) | 33 | ||||||||||||
| Other | 1,855 | 2,058 | 2,255 | 2,269 | 2,371 | |||||||||||||||
| Total noninterest expenses | 22,674 | 23,932 | 24,268 | 23,891 | 24,070 | |||||||||||||||
| Income before taxes | 18,832 | 15,175 | 17,619 | 18,265 | 19,498 | |||||||||||||||
| Income taxes | 4,761 | 3,921 | 4,306 | 4,358 | 4,790 | |||||||||||||||
| Net income | $ | 14,071 | 11,254 | 13,313 | 13,907 | 14,708 | ||||||||||||||
| Net income per common share: | ||||||||||||||||||||
| - Basic | $ | 0.146 | 0.117 | 0.138 | 0.143 | 0.152 | ||||||||||||||
| - Diluted | 0.146 | 0.117 | 0.138 | 0.143 | 0.152 | |||||||||||||||
| Average basic shares (in thousands) | 96,433 | 96,433 | 96,727 | 96,919 | 96,907 | |||||||||||||||
| Average diluted shares (in thousands) | 96,440 | 96,437 | 96,750 | 97,015 | 96,977 | |||||||||||||||
| Note: Taxable equivalent net interest income | $ | 38,166 | 37,681 | 38,554 | 38,243 | 38,644 | ||||||||||||||
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CONSOLIDATED STATEMENTS OF INCOME, Continued
(dollars in thousands, except per share data)
(Unaudited)
| Nine months ended | ||||||||
| 9/30/2020 | 9/30/2019 | |||||||
| Interest and dividend income: | ||||||||
| Interest and fees on loans | $ | 125,058 | 124,608 | |||||
| Interest and dividends on securities available for sale: | ||||||||
| U. S. government sponsored enterprises | 541 | 2,600 | ||||||
| State and political subdivisions | 4 | 6 | ||||||
Mortgage-backed securities and collateralized mortgage obligations - residential | 4,959 | 5,885 | ||||||
| Corporate bonds | 1,372 | 801 | ||||||
Small Business Administration - guaranteed participation securities | 690 | 868 | ||||||
| Other securities | 16 | 16 | ||||||
| Total interest and dividends on securities available for sale | 7,582 | 10,176 | ||||||
| Interest on held to maturity securities: | ||||||||
| Mortgage-backed securities-residential | 475 | 613 | ||||||
| Total interest on held to maturity securities | 475 | 613 | ||||||
| Federal Reserve Bank and Federal Home Loan Bank stock | 351 | 365 | ||||||
| Interest on federal funds sold and other short-term investments | 1,702 | 8,843 | ||||||
| Total interest income | 135,168 | 144,605 | ||||||
| Interest expense: | ||||||||
| Interest on deposits: | ||||||||
| Interest-bearing checking | 97 | 267 | ||||||
| Savings | 560 | 1,067 | ||||||
| Money market deposit accounts | 2,595 | 3,122 | ||||||
| Time deposits | 16,739 | 21,462 | ||||||
| Interest on short-term borrowings | 778 | 1,121 | ||||||
| Total interest expense | 20,769 | 27,039 | ||||||
| Net interest income | 114,399 | 117,566 | ||||||
| Less: Provision (Credit) for loan losses | 5,000 | (41 | ) | |||||
| Net interest income after provision for loan losses | 109,399 | 117,607 | ||||||
| Noninterest income: | ||||||||
| Trustco Financial Services income | 4,752 | 4,933 | ||||||
| Fees for services to customers | 6,414 | 7,733 | ||||||
| Net gain on securities transactions | 1,155 | - | ||||||
| Other | 780 | 1,810 | ||||||
| Total noninterest income | 13,101 | 14,476 | ||||||
| Noninterest expenses: | ||||||||
| Salaries and employee benefits | 33,920 | 34,887 | ||||||
| Net occupancy expense | 12,968 | 12,267 | ||||||
| Equipment expense | 5,015 | 5,300 | ||||||
| Professional services | 3,974 | 4,725 | ||||||
| Outsourced services | 5,825 | 5,675 | ||||||
| Advertising expense | 1,394 | 2,057 | ||||||
| FDIC and other insurance | 1,563 | 1,528 | ||||||
| Other real estate expense, net | 47 | 219 | ||||||
| Other | 6,168 | 7,181 | ||||||
| Total noninterest expenses | 70,874 | 73,839 | ||||||
| Income before taxes | 51,626 | 58,244 | ||||||
| Income taxes | 12,988 | 14,311 | ||||||
| Net income | $ | 38,638 | 43,933 | |||||
| Net income per common share: | ||||||||
| - Basic | $ | 0.400 | 0.454 | |||||
| - Diluted | 0.400 | 0.453 | ||||||
| Average basic shares (in thousands) | 96,531 | 96,825 | ||||||
| Average diluted shares (in thousands) | 96,542 | 96,897 | ||||||
| Note: Taxable equivalent net interest income | $ | 114,401 | 117,569 | |||||
Page | 8
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)
(Unaudited)
| 9/30/2020 | 6/30/2020 | 3/31/2020 | 12/31/2019 | 9/30/2019 | ||||||||||||||||
| ASSETS: | ||||||||||||||||||||
| Cash and due from banks | $ | 47,703 | 44,726 | 43,362 | 48,198 | 49,526 | ||||||||||||||
| Federal funds sold and other short term investments | 908,616 | 908,110 | 492,691 | 408,648 | 401,151 | |||||||||||||||
| Total cash and cash equivalents | 956,319 | 952,836 | 536,053 | 456,846 | 450,677 | |||||||||||||||
| Securities available for sale: | ||||||||||||||||||||
| U. S. government sponsored enterprises | 29,996 | - | 54,970 | 104,512 | 164,490 | |||||||||||||||
| States and political subdivisions | 111 | 111 | 112 | 162 | 169 | |||||||||||||||
Mortgage-backed securities and collateralized mortgage obligations - residential | 309,768 | 331,469 | 352,067 | 389,517 | 406,166 | |||||||||||||||
Small Business Administration - guaranteed participation securities | 44,070 | 45,998 | 46,768 | 48,511 | 50,970 | |||||||||||||||
| Corporate bonds | 70,113 | 54,439 | 48,564 | 30,436 | 40,281 | |||||||||||||||
| Other securities | 685 | 685 | 685 | 685 | 683 | |||||||||||||||
| Total securities available for sale | 454,743 | 432,702 | 503,166 | 573,823 | 662,759 | |||||||||||||||
| Held to maturity securities: | ||||||||||||||||||||
| Mortgage-backed securities and collateralized mortgage | ||||||||||||||||||||
| obligations-residential | 15,094 | 16,633 | 17,720 | 18,618 | 19,705 | |||||||||||||||
| Total held to maturity securities | 15,094 | 16,633 | 17,720 | 18,618 | 19,705 | |||||||||||||||
| Federal Reserve Bank and Federal Home Loan Bank stock | 5,506 | 5,506 | 9,183 | 9,183 | 9,183 | |||||||||||||||
| Loans: | ||||||||||||||||||||
| Commercial | 231,663 | 231,212 | 195,805 | 199,499 | 192,443 | |||||||||||||||
| Residential mortgage loans | 3,724,746 | 3,681,898 | 3,627,121 | 3,583,774 | 3,508,647 | |||||||||||||||
| Home equity line of credit | 248,320 | 254,445 | 265,753 | 267,922 | 273,526 | |||||||||||||||
| Installment loans | 9,826 | 10,006 | 10,713 | 11,001 | 10,703 | |||||||||||||||
| Loans, net of deferred net costs | 4,214,555 | 4,177,561 | 4,099,392 | 4,062,196 | 3,985,319 | |||||||||||||||
| Less: Allowance for loan losses | 49,123 | 48,144 | 46,155 | 44,317 | 44,329 | |||||||||||||||
| Net loans | 4,165,432 | 4,129,417 | 4,053,237 | 4,017,879 | 3,940,990 | |||||||||||||||
| Bank premises and equipment, net | 34,417 | 34,042 | 34,428 | 34,622 | 34,168 | |||||||||||||||
| Operating lease right-of-use assets | 47,174 | 48,712 | 49,955 | 51,475 | 49,618 | |||||||||||||||
| Other assets | 57,244 | 57,155 | 52,905 | 58,876 | 55,369 | |||||||||||||||
| Total assets | $ | 5,735,929 | 5,677,003 | 5,256,647 | 5,221,322 | 5,222,469 | ||||||||||||||
| LIABILITIES: | ||||||||||||||||||||
| Deposits: | ||||||||||||||||||||
| Demand | $ | 635,345 | 612,960 | 480,255 | 463,858 | 453,439 | ||||||||||||||
| Interest-bearing checking | 1,024,290 | 1,001,592 | 895,254 | 875,672 | 869,101 | |||||||||||||||
| Savings accounts | 1,235,259 | 1,191,682 | 1,122,116 | 1,113,146 | 1,110,947 | |||||||||||||||
| Money market deposit accounts | 699,132 | 666,304 | 617,198 | 599,163 | 570,457 | |||||||||||||||
| Time deposits | 1,305,024 | 1,392,769 | 1,367,005 | 1,398,177 | 1,457,223 | |||||||||||||||
| Total deposits | 4,899,050 | 4,865,307 | 4,481,828 | 4,450,016 | 4,461,167 | |||||||||||||||
| Short-term borrowings | 193,455 | 177,278 | 148,090 | 148,666 | 151,095 | |||||||||||||||
| Operating lease liabilities | 52,125 | 53,710 | 54,998 | 56,553 | 54,731 | |||||||||||||||
| Accrued expenses and other liabilities | 30,771 | 27,287 | 23,546 | 27,830 | 29,313 | |||||||||||||||
| Total liabilities | 5,175,401 | 5,123,582 | 4,708,462 | 4,683,065 | 4,696,306 | |||||||||||||||
| SHAREHOLDERS' EQUITY: | ||||||||||||||||||||
| Capital stock | 100,205 | 100,205 | 100,205 | 100,205 | 100,200 | |||||||||||||||
| Surplus | 176,441 | 176,437 | 176,431 | 176,427 | 176,395 | |||||||||||||||
| Undivided profits | 306,741 | 299,239 | 294,553 | 288,067 | 280,542 | |||||||||||||||
| Accumulated other comprehensive income (loss), net of tax | 11,537 | 11,936 | 11,392 | 4,461 | (71 | ) | ||||||||||||||
| Treasury stock at cost | (34,396 | ) | (34,396 | ) | (34,396 | ) | (30,903 | ) | (30,903 | ) | ||||||||||
| Total shareholders' equity | 560,528 | 553,421 | 548,185 | 538,257 | 526,163 | |||||||||||||||
| Total liabilities and shareholders' equity | $ | 5,735,929 | 5,677,003 | 5,256,647 | 5,221,322 | 5,222,469 | ||||||||||||||
| Outstanding shares (in thousands) | 96,433 | 96,433 | 96,433 | 96,922 | 96,917 | |||||||||||||||
Page | 9
NONPERFORMING ASSETS
(dollars in thousands)
(Unaudited)
| 9/30/2020 | 6/30/2020 | 3/31/2020 | 12/31/2019 | 9/30/2019 | ||||||||||||||||
| Nonperforming Assets | ||||||||||||||||||||
| New York and other states* | ||||||||||||||||||||
| Loans in nonaccrual status: | ||||||||||||||||||||
| Commercial | $ | 491 | 571 | 630 | 816 | 888 | ||||||||||||||
| Real estate mortgage - 1 to 4 family | 19,977 | 20,215 | 18,570 | 18,407 | 18,275 | |||||||||||||||
| Installment | 49 | 6 | 24 | 3 | 13 | |||||||||||||||
| Total non-accrual loans | 20,517 | 20,792 | 19,224 | 19,226 | 19,176 | |||||||||||||||
| Other nonperforming real estate mortgages - 1 to 4 family | 25 | 26 | 27 | 29 | 30 | |||||||||||||||
| Total nonperforming loans | 20,542 | 20,818 | 19,251 | 19,255 | 19,206 | |||||||||||||||
| Other real estate owned | 423 | 830 | 1,284 | 1,579 | 2,409 | |||||||||||||||
| Total nonperforming assets | $ | 20,965 | 21,648 | 20,535 | 20,834 | 21,615 | ||||||||||||||
| Florida | ||||||||||||||||||||
| Loans in nonaccrual status: | ||||||||||||||||||||
| Commercial | $ | - | - | - | - | - | ||||||||||||||
| Real estate mortgage - 1 to 4 family | 1,254 | 1,111 | 1,492 | 1,614 | 1,809 | |||||||||||||||
| Installment | - | - | - | - | - | |||||||||||||||
| Total non-accrual loans | 1,254 | 1,111 | 1,492 | 1,614 | 1,809 | |||||||||||||||
| Other nonperforming real estate mortgages - 1 to 4 family | - | - | - | - | - | |||||||||||||||
| Total nonperforming loans | 1,254 | 1,111 | 1,492 | 1,614 | 1,809 | |||||||||||||||
| Other real estate owned | - | - | - | - | - | |||||||||||||||
| Total nonperforming assets | $ | 1,254 | 1,111 | 1,492 | 1,614 | 1,809 | ||||||||||||||
| Total | ||||||||||||||||||||
| Loans in nonaccrual status: | ||||||||||||||||||||
| Commercial | $ | 491 | 571 | 630 | 816 | 888 | ||||||||||||||
| Real estate mortgage - 1 to 4 family | 21,231 | 21,326 | 20,062 | 20,021 | 20,084 | |||||||||||||||
| Installment | 49 | 6 | 24 | 3 | 13 | |||||||||||||||
| Total non-accrual loans | 21,771 | 21,903 | 20,716 | 20,840 | 20,985 | |||||||||||||||
| Other nonperforming real estate mortgages - 1 to 4 family | 25 | 26 | 27 | 29 | 30 | |||||||||||||||
| Total nonperforming loans | 21,796 | 21,929 | 20,743 | 20,869 | 21,015 | |||||||||||||||
| Other real estate owned | 423 | 830 | 1,284 | 1,579 | 2,409 | |||||||||||||||
| Total nonperforming assets | $ | 22,219 | 22,759 | 22,027 | 22,448 | 23,424 | ||||||||||||||
| Quarterly Net (Recoveries) Chargeoffs | ||||||||||||||||||||
| New York and other states* | ||||||||||||||||||||
| Commercial | $ | (1 | ) | (6 | ) | 1 | (1 | ) | (28 | ) | ||||||||||
| Real estate mortgage - 1 to 4 family | 4 | (27 | ) | 140 | 146 | 39 | ||||||||||||||
| Installment | 18 | 44 | 4 | 67 | 9 | |||||||||||||||
| Total net (recoveries) chargeoffs | $ | 21 | 11 | 145 | 212 | 20 | ||||||||||||||
| Florida | ||||||||||||||||||||
| Commercial | $ | - | - | - | - | - | ||||||||||||||
| Real estate mortgage - 1 to 4 family | - | - | (2 | ) | (1 | ) | - | |||||||||||||
| Installment | - | - | 19 | 1 | 16 | |||||||||||||||
| Total net (recoveries) chargeoffs | $ | - | - | 17 | - | 16 | ||||||||||||||
| Total | ||||||||||||||||||||
| Commercial | $ | (1 | ) | (6 | ) | 1 | (1 | ) | (28 | ) | ||||||||||
| Real estate mortgage - 1 to 4 family | 4 | (27 | ) | 138 | 145 | 39 | ||||||||||||||
| Installment | 18 | 44 | 23 | 68 | 25 | |||||||||||||||
| Total net (recoveries) chargeoffs | $ | 21 | 11 | 162 | 212 | 36 | ||||||||||||||
| Asset Quality Ratios | ||||||||||||||||||||
| Total nonperforming loans (1) | $ | 21,796 | 21,929 | 20,743 | 20,869 | 21,015 | ||||||||||||||
| Total nonperforming assets (1) | 22,219 | 22,759 | 22,027 | 22,448 | 23,424 | |||||||||||||||
| Total net (recoveries) chargeoffs (2) | 21 | 11 | 162 | 212 | 36 | |||||||||||||||
| Allowance for loan losses (1) | 49,123 | 48,144 | 46,155 | 44,317 | 44,329 | |||||||||||||||
| Nonperforming loans to total loans | 0.52 | % | 0.52 | % | 0.51 | % | 0.51 | % | 0.53 | % | ||||||||||
| Nonperforming assets to total assets | 0.39 | % | 0.40 | % | 0.42 | % | 0.43 | % | 0.45 | % | ||||||||||
| Allowance for loan losses to total loans | 1.17 | % | 1.15 | % | 1.13 | % | 1.09 | % | 1.11 | % | ||||||||||
| Coverage ratio (1) | 225.4 | % | 219.5 | % | 222.5 | % | 212.4 | % | 210.9 | % | ||||||||||
| Annualized net chargeoffs to average loans (2) | 0.00 | % | 0.00 | % | 0.02 | % | 0.02 | % | 0.00 | % | ||||||||||
| Allowance for loan losses to annualized net chargeoffs (2) | 584.8 | x | 1094.2 | x | 71.2 | x | 52.3 | x | 307.8 | x | ||||||||||
| * | Includes New York, New Jersey, Vermont and Massachusetts. |
| (1) | At period-end |
| (2) | For the period ended |
Page | 10
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY -
INTEREST RATES AND INTEREST DIFFERENTIAL
(dollars in thousands) (Unaudited) | Three months ended September 30, 2020 | Three months ended September 30, 2019 | ||||||||||||||||||||||
Average Balance | Interest | Average Rate | Average Balance | Interest | Average Rate | |||||||||||||||||||
| Assets | ||||||||||||||||||||||||
| Securities available for sale: | ||||||||||||||||||||||||
| U. S. government sponsored enterprises | $ | 12,391 | 14 | 0.45 | % | $ | 183,580 | 996 | 2.17 | % | ||||||||||||||
Mortgage backed securities and collateralized mortgage obligations - residential | 313,296 | 1,319 | 1.68 | 370,808 | 2,178 | 2.35 | ||||||||||||||||||
| State and political subdivisions | 110 | 2 | 7.90 | 166 | 3 | 7.23 | ||||||||||||||||||
| Corporate bonds | 59,555 | 646 | 4.33 | 40,231 | 321 | 3.19 | ||||||||||||||||||
Small Business Administration - guaranteed participation securities | 43,282 | 216 | 1.99 | 51,988 | 282 | 2.17 | ||||||||||||||||||
| Other | 685 | 5 | 2.92 | 685 | 6 | 3.50 | ||||||||||||||||||
| Total securities available for sale | 429,319 | 2,202 | 2.05 | 647,458 | 3,786 | 2.34 | ||||||||||||||||||
| Federal funds sold and other short-term Investments | 938,087 | 242 | 0.10 | 465,251 | 2,552 | 2.19 | ||||||||||||||||||
| Held to maturity securities: | ||||||||||||||||||||||||
Mortgage backed securities and collateralized mortgage obligations - residential | 15,759 | 138 | 3.52 | 20,197 | 187 | 3.70 | ||||||||||||||||||
| Total held to maturity securities | 15,759 | 138 | 3.52 | 20,197 | 187 | 3.70 | ||||||||||||||||||
| Federal Reserve Bank and Federal Home Loan Bank stock | 5,506 | 77 | 5.59 | 9,183 | 81 | 3.53 | ||||||||||||||||||
| Commercial loans | 231,517 | 2,625 | 4.54 | 190,538 | 2,596 | 5.45 | ||||||||||||||||||
| Residential mortgage loans | 3,702,680 | 36,020 | 3.89 | 3,465,102 | 35,743 | 4.13 | ||||||||||||||||||
| Home equity lines of credit | 251,459 | 2,515 | 3.98 | 275,047 | 3,401 | 4.95 | ||||||||||||||||||
| Installment loans | 9,632 | 170 | 7.02 | 9,967 | 183 | 7.34 | ||||||||||||||||||
| Loans, net of unearned income | 4,195,288 | 41,330 | 3.94 | 3,940,654 | 41,923 | 4.26 | ||||||||||||||||||
| Total interest earning assets | 5,583,959 | 43,989 | 3.15 | 5,082,743 | 48,529 | 3.82 | ||||||||||||||||||
| Allowance for loan losses | (48,483 | ) | (44,448 | ) | ||||||||||||||||||||
| Cash & non-interest earning assets | 201,018 | 188,528 | ||||||||||||||||||||||
| Total assets | $ | 5,736,494 | $ | 5,226,823 | ||||||||||||||||||||
| Liabilities and shareholders' equity | ||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||
| Interest bearing checking accounts | $ | 1,024,455 | 55 | 0.02 | % | $ | 874,179 | 52 | 0.02 | % | ||||||||||||||
| Money market accounts | 682,319 | 637 | 0.37 | 567,554 | 1,177 | 0.83 | ||||||||||||||||||
| Savings | 1,222,956 | 161 | 0.05 | 1,126,935 | 323 | 0.11 | ||||||||||||||||||
| Time deposits | 1,355,244 | 4,749 | 1.39 | 1,457,510 | 7,974 | 2.19 | ||||||||||||||||||
| Total interest bearing deposits | 4,284,974 | 5,602 | 0.52 | 4,026,178 | 9,526 | 0.95 | ||||||||||||||||||
| Short-term borrowings | 193,765 | 221 | 0.45 | 160,162 | 359 | 0.90 | ||||||||||||||||||
| Total interest bearing liabilities | 4,478,739 | 5,823 | 0.52 | 4,186,340 | 9,885 | 0.94 | ||||||||||||||||||
| Demand deposits | 622,313 | 438,789 | ||||||||||||||||||||||
| Other liabilities | 78,093 | 80,188 | ||||||||||||||||||||||
| Shareholders' equity | 557,349 | 521,506 | ||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 5,736,494 | $ | 5,226,823 | ||||||||||||||||||||
| Net interest income, tax equivalent | 38,166 | 38,644 | ||||||||||||||||||||||
| Net interest spread | 2.63 | % | 2.88 | % | ||||||||||||||||||||
| Net interest margin (net interest income to | ||||||||||||||||||||||||
| total interest earning assets) | 2.73 | % | 3.04 | % | ||||||||||||||||||||
| Tax equivalent adjustment | (1 | ) | (1 | ) | ||||||||||||||||||||
| Net interest income | 38,165 | 38,643 | ||||||||||||||||||||||
Page | 11
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY -
INTEREST RATES AND INTEREST DIFFERENTIAL, Continued
(dollars in thousands) (Unaudited) | Nine months ended September 30, 2020 | Nine months ended September 30, 2019 | ||||||||||||||||||||||
Average Balance | Interest | Average Rate | Average Balance | Interest | Average Rate | |||||||||||||||||||
| Assets | ||||||||||||||||||||||||
| Securities available for sale: | ||||||||||||||||||||||||
| U. S. government sponsored enterprises | $ | 42,573 | 541 | 1.69 | % | $ | 166,119 | 2,600 | 2.09 | % | ||||||||||||||
| Mortgage backed securities and collateralized mortgage | ||||||||||||||||||||||||
| obligations - residential | 339,300 | 4,959 | 1.95 | 329,188 | 5,885 | 2.38 | ||||||||||||||||||
| State and political subdivisions | 111 | 6 | 7.79 | 167 | 9 | 7.19 | ||||||||||||||||||
| Corporate bonds | 46,508 | 1,372 | 3.93 | 33,678 | 801 | 3.17 | ||||||||||||||||||
| Small Business Administration - guaranteed | ||||||||||||||||||||||||
| participation securities | 45,313 | 690 | 2.03 | 54,414 | 868 | 2.13 | ||||||||||||||||||
| Other | 685 | 16 | 3.11 | 685 | 16 | 3.11 | ||||||||||||||||||
| Total securities available for sale | 474,490 | 7,584 | 2.13 | 584,251 | 10,179 | 2.32 | ||||||||||||||||||
| Federal funds sold and other short-term Investments | 693,286 | 1,702 | 0.33 | 504,512 | 8,843 | 2.34 | ||||||||||||||||||
| Held to maturity securities: | ||||||||||||||||||||||||
| Mortgage backed securities and collateralized mortgage | ||||||||||||||||||||||||
| obligations - residential | 17,029 | 475 | 3.72 | 21,123 | 613 | 3.87 | ||||||||||||||||||
| Total held to maturity securities | 17,029 | 475 | 3.72 | 21,123 | 613 | 3.87 | ||||||||||||||||||
| Federal Reserve Bank and Federal Home Loan Bank stock | 7,998 | 351 | 5.85 | 9,104 | 365 | 5.35 | ||||||||||||||||||
| Commercial loans | 217,573 | 7,778 | 4.77 | 191,370 | 7,725 | 5.38 | ||||||||||||||||||
| Residential mortgage loans | 3,652,766 | 108,845 | 3.97 | 3,412,411 | 105,786 | 4.13 | ||||||||||||||||||
| Home equity lines of credit | 258,956 | 7,898 | 4.07 | 280,248 | 10,441 | 4.97 | ||||||||||||||||||
| Installment loans | 10,129 | 537 | 7.08 | 10,718 | 656 | 8.16 | ||||||||||||||||||
| Loans, net of unearned income | 4,139,424 | 125,058 | 4.03 | 3,894,747 | 124,608 | 4.27 | ||||||||||||||||||
| Total interest earning assets | 5,332,227 | 135,170 | 3.38 | 5,013,737 | 144,608 | 3.85 | ||||||||||||||||||
| Allowance for loan losses | (46,618 | ) | (44,744 | ) | ||||||||||||||||||||
| Cash & non-interest earning assets | 196,835 | 180,568 | ||||||||||||||||||||||
| Total assets | $ | 5,482,444 | $ | 5,149,561 | ||||||||||||||||||||
| Liabilities and shareholders' equity | ||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||
| Interest bearing checking accounts | $ | 949,909 | 97 | 0.01 | % | $ | 878,106 | 267 | 0.04 | % | ||||||||||||||
| Money market accounts | 646,170 | 2,595 | 0.54 | 546,601 | 3,122 | 0.76 | ||||||||||||||||||
| Savings | 1,169,316 | 560 | 0.06 | 1,141,607 | 1,067 | 0.12 | ||||||||||||||||||
| Time deposits | 1,372,369 | 16,739 | 1.63 | 1,416,306 | 21,462 | 2.02 | ||||||||||||||||||
| Total interest bearing deposits | 4,137,764 | 19,991 | 0.65 | 3,982,620 | 25,918 | 0.87 | ||||||||||||||||||
| Short-term borrowings | 173,497 | 778 | 0.60 | 160,647 | 1,121 | 0.93 | ||||||||||||||||||
| Total interest bearing liabilities | 4,311,261 | 20,769 | 0.64 | 4,143,267 | 27,039 | 0.87 | ||||||||||||||||||
| Demand deposits | 543,279 | 418,327 | ||||||||||||||||||||||
| Other liabilities | 77,568 | 79,937 | ||||||||||||||||||||||
| Shareholders' equity | 550,336 | 508,030 | ||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 5,482,444 | $ | 5,149,561 | ||||||||||||||||||||
| Net interest income, tax equivalent | 114,401 | 117,569 | ||||||||||||||||||||||
| Net interest spread | 2.74 | % | 2.98 | % | ||||||||||||||||||||
| Net interest margin (net interest income to | ||||||||||||||||||||||||
| total interest earning assets) | 2.86 | % | 3.13 | % | ||||||||||||||||||||
| Tax equivalent adjustment | (2 | ) | (3 | ) | ||||||||||||||||||||
| Net interest income | 114,399 | 117,566 | ||||||||||||||||||||||
Page | 12
Non-GAAP Financial Measures Reconciliation
Tangible equity as a percentage of tangible assets at period end is a non-GAAP financial measure derived from GAAP-based amounts. We calculate tangible equity and tangible assets by excluding the balance of intangible assets from shareholders’ equity and total assets, respectively. We calculate tangible equity as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end. We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios.
The efficiency ratio is a non-GAAP measure of expense control relative to revenue from net interest income and fee income. We calculate the efficiency ratio by dividing total noninterest expenses as determined under GAAP, but excluding other real estate expense, net, by net interest income (fully taxable equivalent) and total noninterest income as determined under GAAP, but excluding net gains on the sale of securities and other non-routine items from this calculation. We believe that this provides a reasonable measure of primary banking expenses relative to primary banking revenue.
We believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our financial results. Our management internally assesses our performance based, in part, on these measures. However, these non-GAAP financial measures are supplemental and not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these measures, this presentation may not be comparable to other similarly titled measures reported by other companies. A reconciliation of the non-GAAP measures of tangible common equity, tangible book value per share, efficiency ratio, net income and net income per share to the underlying GAAP numbers is set forth below.
NON-GAAP FINANCIAL MEASURES RECONCILIATION
| (dollars in thousands, except per share amounts) | ||||||||||||
| (Unaudited) | ||||||||||||
| 9/30/2020 | 6/30/2020 | 9/30/2019 | ||||||||||
| Tangible Equity to Tangible Assets | ||||||||||||
| Total Assets (GAAP) | $ | 5,735,929 | 5,677,003 | 5,222,469 | ||||||||
| Less: Intangible assets | 553 | 553 | 553 | |||||||||
| Tangible assets (Non-GAAP) | 5,735,376 | 5,676,450 | 5,221,916 | |||||||||
| Equity (GAAP) | 560,528 | 553,421 | 526,163 | |||||||||
| Less: Intangible assets | 553 | 553 | 553 | |||||||||
| Tangible equity (Non-GAAP) | 559,975 | 552,868 | 525,610 | |||||||||
| Tangible Equity to Tangible Assets (Non-GAAP) | 9.76 | % | 9.74 | % | 10.07 | % | ||||||
| Equity to Assets (GAAP) | 9.77 | % | 9.75 | % | 10.07 | % | ||||||
| Three months ended | Nine months ended | |||||||||||||||||||
| Efficiency Ratio | 9/30/2020 | 6/30/2020 | 9/30/2019 | 9/30/2020 | 9/30/2019 | |||||||||||||||
| Net interest income (fully taxable equivalent) (Non-GAAP) | $ | 38,166 | 37,681 | 38,644 | $ | 114,401 | 117,569 | |||||||||||||
| Non-interest income (GAAP) | 4,341 | 3,426 | 4,925 | 13,101 | 14,476 | |||||||||||||||
| Less: Net gain on securities | - | - | - | 1,155 | - | |||||||||||||||
| Revenue used for efficiency ratio (Non-GAAP) | 42,507 | 41,107 | 43,569 | 126,347 | 132,045 | |||||||||||||||
| Total noninterest expense (GAAP) | 22,674 | 23,932 | 24,070 | 70,874 | 73,839 | |||||||||||||||
| Less: Other real estate (income) expense, net | (115 | ) | (32 | ) | 33 | 47 | 219 | |||||||||||||
| Expense used for efficiency ratio (Non-GAAP) | 22,789 | 23,964 | 24,037 | 70,827 | 73,620 | |||||||||||||||
| Efficiency Ratio | 53.61 | % | 58.30 | % | 55.17 | % | 56.06 | % | 55.75 | % | ||||||||||
Page | 13