AP NEWS

TrustCo Announces Fourth Quarter and Full Year 2018 Results; Net Income Up 42.4% Over Prior Year to $61.4 Million

January 23, 2019

Executive Snapshot:

-- Continued solid financial results: - Key metrics for fourth quarter 2018: -- Net income of $16.0 million in the fourth quarter 2018 up 118% compared to $7.4 million in the fourth quarter 2017 -- Return on average assets (ROAA) of 1.30% compared to 0.60% in the fourth quarter of 2017 -- Return on average equity (ROAE) of 13.18% compared to 6.38% in the fourth quarter of 2017 -- Efficiency ratio of 55.06% compared to 53.13% in the fourth quarter of 2017 (Non-GAAP measure) -- Asset quality remains strong: - Nonperforming assets (NPAs) fell by $962 thousand compared to December 31, 2017 - NPAs to total assets improved to 0.54% at December 31, 2018 - Quarterly net chargeoffs were $470 thousand in the fourth quarter 2018, compared to $212 thousand in the fourth quarter 2017

-- Loan portfolio reaches all-time high: - Average loans were up $244 million for the fourth quarter 2018 compared to fourth quarter of 2017 - At $3.9 billion as of December 31, 2018, loans continue to set new all-time highs -- Year over year deposit growth: - Average Deposits balances reached $4.2 billion in fourth quarter 2018 up $77.1 million or 1.9% from fourth quarter 2017 - Time deposits increased $153.1 million or 14.3% compared to the fourth quarter 2017 - Average interest bearing checking and demand deposits are up $42.8 million or 3.4% in the fourth quarter 2018 compared to fourth quarter 2017

GLENVILLE, N.Y., Jan. 22, 2019 (GLOBE NEWSWIRE) -- TrustCo Bank Corp NY (TrustCo, Nasdaq: TRST) today announced fourth quarter 2018 net income of $16.0 million compared to $7.4 million for the fourth quarter 2017, an increase of 118%. For the full year 2018, net income rose from $43.1 million to $61.4 million or 42.4% driven by strong performance and the lower tax rate from the Tax Cuts and Jobs Act during 2018. Income before taxes increased $2.9 million over prior year or 3.8%.

Summary

Robert J. McCormick, Chairman, President and Chief Executive Officer, noted, “We are pleased to be reporting strong 2018 performance, with an increase of over 40% in net income as compared to 2017. Our focus on traditional lending criteria and conservative balance sheet management has enabled us to produce consistent earnings, maintain solid liquidity and grow capital. Our strong financial condition is evidenced by our continued recognition as a BauerFinancial, Inc. 5-Star Superior Bank rating. These strategies have allowed us to continue to grow our business and take advantage of changes in market and competitive conditions. We continue to achieve new records in residential loan balances through our customer relationships, driving our growth. Our Board’s decision to increase our quarterly cash dividend by 3.8% to $0.2725 per share reinforces our financial strength. A meaningful and growing dividend is part of our commitment to provide consistent and favorable long-term shareholder return. We will continue to take advantage of opportunities as they are presented during the coming year and beyond.”

TrustCo continued to see solid loan growth throughout 2018 compared to the prior year, led by an increase in residential mortgages. Loan portfolio expansion was funded by a combination of utilizing portions of our strong cash balances and cash flow from our loan and investment portfolios. The continued shift toward loans helped expand the margin despite higher deposit rates. We note that current mortgage rates exceed the yield on our existing portfolio of mortgages, which, if sustained, will be a positive factor for net interest margin going forward. The Federal Reserve decision to raise the target Federal Funds rate throughout the course of the year has contributed to our results as our cash position immediately repriced upward.

Total average deposits were up $77.1 million in the fourth quarter 2018 versus the fourth quarter 2017. Interest bearing checking accounts and demand deposits increased $42.8 million in the fourth quarter 2018 versus 2017. The overall cost of funds increased 23 basis points to 0.61% from the fourth quarter 2017 to the fourth quarter 2018. The shift towards loans in the asset mix, coupled with a 93 basis-point increase in the yield on Federal Funds more than offset the higher cost of funds, resulting in a 9 basis-point gain in net interest margin to 3.38%.

Details

Average loans were up $244 million or 6.8% in the fourth quarter 2018 over the same period in 2017. Average residential loans, our primary lending focus, were up $256 million or 8.2% in the fourth quarter 2018, over the same period in 2017. Total loan growth was offset by a $19.2 million decline in average outstanding home equity lines of credit over the same period. Mr. McCormick noted, “The growth of our loans and our focus to strengthen the core deposit base reflect the long term strategic focus of our Company.”

Average deposits were up $77.1 million or 1.9% for the fourth quarter 2018 over the same period a year earlier. Average Core deposits excluding money market deposit accounts declined by $16 million or 0.6%, in fourth quarter 2018 verses 2017. Money market deposits, our highest costing core deposit declined $59.7 million. The cost of total deposits increased to 0.60% in the fourth quarter 2018 from 0.36% in the fourth quarter 2017.

For the fourth quarter 2018, return on average assets and return on average equity were 1.30% and 13.18%, respectively, compared to 0.60% and 6.38% for the fourth quarter 2017. Diluted earnings per share were $0.166 for the fourth quarter 2018, compared to $0.076 for the fourth quarter 2017. Total operating expenses increased by $1.4 million in the fourth quarter 2018 as compared to the fourth quarter 2017, with the most significant increases coming in infrastructure investment and professional services. The increase in expenses was offset with a $1.7 million increase in revenue (net interest income plus non-interest income). The effective tax rate was 18.9% in the fourth quarter of 2018, compared to 62.6% in the same period a year ago. This was partially driven by implementation of a tax planning strategy that reduced taxes on a one time basis of $880 thousand.

For 2018, return on average assets and return on average equity were 1.25% and 13.05%, respectively, compared to 0.88% and 9.64% for the year ended 2017. Diluted earnings per share were $0.636 through December of 2018, compared to $0.448 for the same time period in 2017.

“TrustCo strives to maximize customer relationships through attracting and increasing core deposit balances. We have always designed our branches to be smaller and more cost effective than those built by many of our competitors. We use open floor plans that help maximize the value of our branches. We remain mindful that fully achieving our goals for newer branches will take time and continued work. We believe success in growing customer relationships provides basic building blocks that will help drive profit growth for the coming years.”

Nonperforming loans (NPLs) were $25.0 million at December 31, 2018, compared to $24.4 million at December 31, 2017. NPLs were equal to 0.64% of total loans at December 31, 2018, compared to 0.67% at December 31, 2017. The coverage ratio, or allowance for loan losses to NPLs, was 179.2% at December 31, 2018, compared to 181.2% at December 31, 2017. Nonperforming assets (NPAs) were $26.7 million at December 31, 2018 compared to $27.6 million at December 31, 2017. The ratio of allowance for loan losses to total loans was 1.16% as of December 31, 2018, compared to 1.21% at December 31, 2017 and reflects both the continued improvement in asset quality and the economic conditions in our primary markets. The allowance for loan losses was $44.8 million at December 31, 2018 compared to $44.2 million at December 31, 2017. The provision for loan losses was $1.4 million for 2018, compared to $2.0 million in 2017. Net chargeoffs decreased to $803 thousand for 2018 from $1.7 million for 2017. The annualized net chargeoff ratio was 0.05% for 2018, compared to 0.02% in 2017.

The net interest margin for the fourth quarter 2018 was 3.38%, up 9 basis points versus the fourth quarter 2017, as increases in short term interest rates led to significantly higher earnings on Federal Funds, while slightly better returns were also achieved in the loan and investment portfolios. Higher loan volumes also increased interest income. During the same period, the cost of interest bearing liabilities increased 23 basis points.

At December 31, 2018 the equity to asset ratio was 9.88%, compared to 9.34% at December 31, 2017. Book value per share at December 31, 2018 was $5.06 compared to $4.75 a year earlier.

TrustCo Bank Corp NY is a $5.0 billion savings and loan holding company and through its subsidiary, TrustCo Bank, operated 148 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at December 31, 2018.

In addition, the Bank’s Financial Services Department offers a full range of investment services, retirement planning and trust and estate administration services. The common shares of TrustCo are traded on the NASDAQ Global Select Market under the symbol TRST.

A conference call to discuss fourth quarter 2018 results will be held at 9:00 a.m. Eastern Time on January 23, 2019. 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 10127907. The call will also be audio webcast at https://services.choruscall.com/links/trst190123.html and will be available for one year.

Safe Harbor Statement All statements in this news release that are not historical are forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended. Forward-looking statements can be identified by words such as “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding our expectations for our performance during 2018, the impact of Federal Reserve actions regarding interest rates and the growth of loans and deposits throughout our branch network, our ability to capitalize on economic changes in the areas in which we operate and the extent to which higher expenses to fulfill operating and regulatory requirements recur or diminish over time. Such forward-looking statements are subject to factors that could cause actual results to differ materially for TrustCo from those discussed. TrustCo wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The following important factors, among others, in some cases have affected and in the future could affect TrustCo’s actual results and could cause TrustCo’s actual financial performance to differ materially from that expressed in any forward-looking statement: our ability to continue to originate a significant volume of one-to-four family mortgage loans in our market areas; our ability to continue to maintain noninterest expense and other overhead costs at reasonable levels relative to income; our ability to comply with the supervisory agreement entered into with Trustco Bank’s regulator and potential regulatory actions if we fail to comply; restrictions or conditions imposed by our regulators on our operations that may make it more difficult for us to achieve our goals; the future earnings and capital levels of Trustco Bank and the continued ability of Trustco Bank under regulatory rules and the supervisory agreement to distribute capital to TrustCo, which could affect our ability to pay dividends; results of supervisory monitoring or examinations of Trustco Bank and TrustCo by our respective regulators; our ability to make accurate assumptions and judgments regarding the credit risks associated with lending and investing activities; the effect of changes in financial services laws and regulations and the impact of other governmental initiatives affecting the financial services industry; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board, inflation, interest rates, market and monetary fluctuations; adverse conditions on the securities markets that lead to impairment in the value of securities in our investment portfolio; changes in law and policy accompanying the new presidential administration and uncertainty or speculation pending the enactment of such changes; 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; technological changes and electronic, cyber, and physical security breaches; real estate and collateral values; changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the FASB or PCAOB; changes in local market areas and general business and economic trends, as well as changes in consumer spending and saving habits; our success at managing the risks involved in the foregoing and managing our business; and other risks and uncertainties under the heading “Risk Factors” in our most recent annual report on Form 10-K and, if any, in our subsequent quarterly reports on Form 10-Q or other securities filings.

FINANCIAL HIGHLIGHTS (dollars in thousands, except per share data) (Unaudited) Three months ended 12/31/2018 9/30/2018 12/31/2017 Summary of operations Net interest income (TE) $ 40,740 40,526 39,259 Provision for loan losses 500 300 300 Noninterest income 4,452 4,455 4,288 Noninterest expense 24,919 24,544 23,536 Net income 16,033 15,199 7,362 Per common share Net income per share: - Basic $ 0.166 0.157 0.077 - Diluted 0.166 0.157 0.076 Cash dividends 0.068 0.068 0.066 Book value at period end 5.06 4.93 4.75 Market price at period end 6.86 8.50 9.20 At period end Full time equivalent employees 854 807 846 Full service banking offices 148 148 145 Performance ratios Return on average assets 1.30 % 1.24 0.60 Return on average equity 13.18 12.84 6.38 Efficiency (1) 55.06 53.39 53.13 Net interest spread (TE) 3.27 3.26 3.22 Net interest margin (TE) 3.38 3.35 3.29 Dividend payout ratio 41.07 43.29 85.81 Capital ratios at period end Consolidated tangible equity to tangible 9.87 % 9.76 9.33 assets (2) Consolidated equity to assets 9.88 % 9.77 9.34 Asset quality analysis at period end Nonperforming loans to total loans 0.64 0.62 0.67 Nonperforming assets to total assets 0.54 0.53 0.56 Allowance for loan losses to total loans 1.16 1.17 1.21 Coverage ratio (3) 1.8x 1.9x 1.8x (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 FINANCIAL HIGHLIGHTS, Continued (dollars in thousands, except per share data) (Unaudited) Years ended 12/31/2018 12/31/2017 Summary of operations Net interest income (TE) $ 160,698 154,413 Provision for loan losses 1,400 2,000 Noninterest income 18,081 18,373 Noninterest expense 97,713 93,994 Net income 61,445 43,145 Per common share Net income per share: - Basic $ 0.637 0.449 - Diluted 0.636 0.448 Cash dividends 0.268 0.263 Tangible Book value at period end 5.06 4.75 Market price at period end 6.86 9.20 Performance ratios Return on average assets 1.25 % 0.88 Return on average equity 13.05 9.64 Efficiency (1) 53.97 53.75 Net interest spread (TE) 3.25 3.16 Net interest margin (TE) 3.33 3.22 Dividend payout ratio 42.02 58.44 (1) Calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income (excluding net securities transactions and gain on sale of building and nonperforming loans). TE = Taxable equivalent. CONSOLIDATED STATEMENTS OF INCOME (dollars in thousands, except per share data) (Unaudited) Three months ended 12/31/2018 9/30/2018 6/30/2018 3/31/2018 12/31/2017 Interest and dividend income: Interest and fees on loans $ 41,184 40,073 38,956 38,091 37,914 Interest and dividends on securities available for sale: U. S. government sponsored enterprises 788 787 787 750 614 State and political subdivisions 2 7 6 7 10 Mortgage-backed securities and collateralized mortgage obligations - residential 1,554 1,601 1,675 1,763 1,730 Corporate bonds 202 202 150 133 148 Small Business Administration - guaranteed participation securities 329 325 333 352 358 Mortgage-backed securities and collateralized mortgage obligations - commercial - - (5 ) 42 43 Other securities 5 4 4 5 4 Total interest and dividends on securities 2,880 2,926 2,950 3,052 2,907 available for sale ---------- - ---------- - ---------- - --------- - --------- - Interest on held to maturity securities: Mortgage-backed securities and collateralized mortgage obligations - residential 226 232 244 260 261 Total interest on held to maturity 226 232 244 260 261 securities ---------- - ---------- - ---------- - --------- - --------- - Federal Reserve Bank and Federal Home Loan 207 82 198 77 151 Bank stock Interest on federal funds sold and other 2,367 2,425 2,467 2,017 1,779 short-term investments ---------- - ---------- - ---------- - --------- - --------- - Total interest income 46,864 45,738 44,815 43,497 43,012 ---------- - ---------- - ---------- - --------- - --------- - Interest expense: Interest on deposits: Interest-bearing checking 111 113 112 106 107 Savings 401 417 420 419 429 Money market deposit accounts 618 544 452 439 457 Time deposits 4,643 3,864 3,439 2,860 2,412 Interest on short-term borrowings 352 277 283 358 359 ---------- - ---------- - --------- - --------- - Total interest expense 6,125 5,215 4,706 4,182 3,764 ---------- - ---------- - ---------- - --------- - --------- - Net interest income 40,739 40,523 40,109 39,315 39,248 Less: Provision for loan losses 500 300 300 300 300 ---------- - ---------- - ---------- - --------- - --------- - Net interest income after provision for loan 40,239 40,223 39,809 39,015 38,948 losses ---------- - ---------- - ---------- - --------- - --------- - Noninterest income: Trustco Financial Services income 1,356 1,516 1,596 1,815 1,457 Fees for services to customers 2,897 2,693 2,677 2,645 2,597 Other 199 246 222 219 234 ---------- - ---------- - --------- - --------- - Total noninterest income 4,452 4,455 4,495 4,679 4,288 ---------- - ---------- - ---------- - --------- - --------- - Noninterest expenses: Salaries and employee benefits 10,183 10,761 10,741 10,422 10,536 Net occupancy expense 4,800 3,997 4,101 4,315 4,140 Equipment expense 1,741 1,783 1,793 1,751 1,465 Professional services 1,733 1,578 1,814 1,430 1,325 Outsourced services 1,875 1,875 1,825 1,925 1,760 Advertising expense 876 844 670 630 559 FDIC and other insurance 522 682 514 1,023 1,102 Other real estate expense, net 37 528 294 372 401 Other 3,152 2,496 2,343 2,287 2,248 ---------- - ---------- - --------- - --------- - Total noninterest expenses 24,919 24,544 24,095 24,155 23,536 ---------- - ---------- - ---------- - --------- - --------- - Income before taxes 19,772 20,134 20,209 19,539 19,700 Income taxes 3,739 4,935 4,804 4,731 12,338 ---------- - ---------- - ---------- - --------- - --------- - Net income $ 16,033 15,199 15,405 14,808 7,362 ---------- - ---------- - ---------- - --------- - --------- - Net income per common share: - Basic $ 0.166 0.157 0.160 0.154 0.077 ---------- - ---------- - ---------- - --------- - --------- - - Diluted 0.166 0.157 0.160 0.153 0.076 ---------- - ---------- - ---------- - --------- - --------- - Average basic shares (in thousands) 96,555 96,555 96,449 96,353 96,230 Average diluted shares (in thousands) 96,689 96,689 96,580 96,490 96,393 Note: Taxable equivalent net interest income $ 40,740 40,526 40,119 39,319 39,259 CONSOLIDATED STATEMENTS OF INCOME, Continued (dollars in thousands, except per share data) (Unaudited) Years ended 12/31/2018 12/31/2017 Interest and dividend income: Interest and fees on loans $ 158,304 148,133 Interest and dividends on securities available for sale: U. S. government sponsored enterprises 3,112 2,281 State and political subdivisions 22 39 Mortgage-backed securities and collateralized mortgage obligations - residential 6,593 7,447 Corporate bonds 687 606 Small Business Administration - guaranteed participation securities 1,339 1,547 Mortgage-backed securities and collateralized mortgage obligations - commercial 37 109 Other securities 18 16 Total interest and dividends on securities 11,808 12,045 available for sale ---------- - ---------- Interest on held to maturity securities: Mortgage-backed securities-residential 962 1,149 Corporate bonds - 410 Total interest on held to maturity 962 1,559 securities ---------- - ---------- Federal Reserve Bank and Federal Home Loan 564 544 Bank stock Interest on federal funds sold and other 9,276 6,679 short-term investments ---------- - ---------- Total interest income 180,914 168,960 ---------- - ---------- Interest expense: Interest on deposits: Interest-bearing checking 442 478 Savings 1,657 1,729 Money market deposit accounts 2,053 1,860 Time deposits 14,806 9,123 Interest on short-term borrowings 1,270 1,402 ---------- Total interest expense 20,228 14,592 ---------- - ---------- Net interest income 160,686 154,368 Less: Provision for loan losses 1,400 2,000 ---------- - ---------- Net interest income after provision for loan 159,286 152,368 losses ---------- - ---------- Noninterest income: Trustco Financial Services income 6,283 6,584 Fees for services to customers 10,912 10,798 Other 886 991 ---------- - ---------- Total noninterest income 18,081 18,373 ---------- - ---------- Noninterest expenses: Salaries and employee benefits 42,107 40,665 Net occupancy expense 17,213 16,543 Equipment expense 7,068 6,118 Professional services 6,555 6,895 Outsourced services 7,500 6,410 Advertising expense 3,020 2,578 FDIC and other insurance 2,741 4,179 Other real estate expense, net 1,231 1,171 Other 10,278 9,435 ---------- - ---------- Total noninterest expenses 97,713 93,994 ---------- - ---------- Income before taxes 79,654 76,747 Income taxes 18,209 33,602 ---------- - ---------- Net income $ 61,445 43,145 ---------- - ---------- Net income per common share: - Basic $ 0.637 0.449 ---------- - ---------- - Diluted 0.636 0.448 ---------- - ---------- Average basic shares (in thousands) 96,505 96,112 Average diluted shares (in thousands) 96,646 96,222 Note: Taxable equivalent net interest income $ 160,698 154,413 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (dollars in thousands) (Unaudited) 12/31/2018 9/30/2018 6/30/2018 3/31/2018 12/31/2017 ASSETS: Cash and due from banks $ 49,260 42,195 40,567 39,373 44,125 Federal funds sold and other short term 454,449 423,254 546,049 577,797 568,615 investments ---------- - ---------- - ---------- - --------- - --------- - Total cash and cash equivalents 503,709 465,449 586,616 617,170 612,740 Securities available for sale: U. S. government sponsored enterprises 152,160 150,053 150,704 151,327 137,994 States and political subdivisions 173 180 524 525 525 Mortgage-backed securities and collateralized mortgage obligations - residential 262,032 269,093 283,252 297,633 315,840 Small Business Administration - guaranteed participation securities 56,475 57,894 61,876 64,113 67,059 Mortgage-backed securities and collateralized mortgage obligations - commercial - - - 9,573 9,700 Corporate bonds 29,938 29,977 29,977 35,227 40,162 Other securities 685 685 685 685 685 Total securities available for sale 501,463 507,882 527,018 559,083 571,965 Held to maturity securities: Mortgage-backed securities and collateralized mortgage obligations - residential 22,501 23,462 24,730 26,174 27,551 Total held to maturity securities 22,501 23,462 24,730 26,174 27,551 Federal Reserve Bank and Federal Home Loan 8,953 8,953 8,953 8,779 8,779 Bank stock Loans: Commercial 196,146 190,987 190,904 185,129 186,207 Residential mortgage loans 3,376,708 3,331,212 3,245,151 3,171,548 3,132,521 Home equity line of credit 289,540 293,750 295,791 301,885 308,916 Installment loans 11,702 9,967 9,309 8,413 8,763 ---------- - ---------- - ---------- - --------- - --------- - Loans, net of deferred net costs 3,874,096 3,825,916 3,741,155 3,666,975 3,636,407 Less: Allowance for loan losses 44,766 44,736 44,503 44,379 44,170 ---------- - ---------- - ---------- - --------- - --------- - Net loans 3,829,330 3,781,180 3,696,652 3,622,596 3,592,237 Bank premises and equipment, net 34,694 35,214 35,521 35,240 35,157 Other assets 58,263 63,211 61,069 62,522 59,579 ---------- - ---------- - ---------- - --------- - --------- - Total assets $ 4,958,913 4,885,351 4,940,559 4,931,564 4,908,008 ---------- - ---------- - ---------- - --------- - --------- - LIABILITIES: Deposits: Demand $ 405,069 403,047 404,564 403,782 398,399 Interest-bearing checking 904,678 918,486 925,295 915,163 891,052 Savings accounts 1,182,683 1,221,127 1,257,744 1,266,852 1,260,447 Money market deposit accounts 507,311 501,270 512,453 539,839 556,462 Time deposits 1,274,506 1,155,994 1,155,214 1,109,444 1,066,966 ---------- - ---------- - ---------- - --------- - --------- - Total deposits 4,274,247 4,199,924 4,255,270 4,235,080 4,173,326 Short-term borrowings 161,893 176,377 182,705 203,910 242,991 Accrued expenses and other liabilities 32,902 31,932 31,769 30,477 33,383 ---------- - ---------- - ---------- - --------- - --------- - Total liabilities 4,469,042 4,408,233 4,469,744 4,469,467 4,449,700 ---------- - ---------- - ---------- - --------- - --------- - SHAREHOLDERS’ EQUITY: Capital stock 100,175 100,175 100,093 100,002 99,998 Surplus 176,710 176,764 176,243 175,674 175,651 Undivided profits 256,397 246,965 238,342 229,267 219,436 Accumulated other comprehensive loss, net of (10,309 ) (13,000 ) (9,796 ) (8,490 ) (1,806 ) tax Treasury stock at cost (33,102 ) (33,786 ) (34,067 ) (34,356 ) (34,971 ) ---------- - ---------- - ---------- - --------- - --------- - Total shareholders’ equity 489,871 477,118 470,815 462,097 458,308 ---------- - ---------- - ---------- - --------- - --------- - Total liabilities and shareholders’ equity $ 4,958,913 4,885,351 4,940,559 4,931,564 4,908,008 ---------- - ---------- - ---------- - --------- - --------- - Outstanding shares (in thousands) 96,659 96,586 96,475 96,359 96,289

NONPERFORMING ASSETS (dollars in thousands) (Unaudited) 12/31/2019/30/20186/30/20183/31/201812/31/201 8 7 Nonperforming Assets New York and other states* Loans in nonaccrual status: Commercial $ 645 928 767 1,213 1,543 Real estate mortgage - 1 to 4 family 22,373 20,750 21,209 21,424 20,350 Installment 4 13 6 19 57 ------ - ------ - ------ - ------ - ------ - Total non-accrual loans 23,022 21,691 21,982 22,656 21,950 Other nonperforming real estate mortgages - 1 to 4 family 34 35 36 38 38 ------ - ------ - ------ - ------ - ------ - Total nonperforming loans 23,056 21,726 22,018 22,694 21,988 Other real estate owned 1,675 2,306 2,569 2,190 3,246 ------ - ------ - ------ - ------ - ------ - Total nonperforming assets $ 24,731 24,032 24,587 24,884 25,234 ------ - ------ - ------ - ------ - ------ - Florida Loans in nonaccrual status: Commercial $ - - - - - Real estate mortgage - 1 to 4 family 1,915 2,054 2,143 2,154 2,389 Installment 15 13 - 4 - ------ - ------ - ------ - ------ - ------ - Total non-accrual loans 1,930 2,067 2,143 2,158 2,389 Other nonperforming real estate mortgages - 1 to 4 family - - - - - ------ - ------ - ------ - ------ - ------ - Total nonperforming loans 1,930 2,067 2,143 2,158 2,389 Other real estate owned - - - - - ------ - ------ - ------ - ------ - ------ - Total nonperforming assets $ 1,930 2,067 2,143 2,158 2,389 ------ - ------ - ------ - ------ - ------ - Total Loans in nonaccrual status: Commercial $ 645 928 767 1,213 1,543 Real estate mortgage - 1 to 4 family 24,288 22,804 23,352 23,578 22,739 Installment 19 26 6 23 57 ------ - ------ - ------ - ------ - ------ - Total non-accrual loans 24,952 23,758 24,125 24,814 24,339 Other nonperforming real estate mortgages - 1 to 4 family 34 35 36 38 38 ------ - ------ - ------ - ------ - ------ - Total nonperforming loans 24,986 23,793 24,161 24,852 24,377 Other real estate owned 1,675 2,306 2,569 2,190 3,246 ------ - ------ - ------ - ------ - ------ - Total nonperforming assets $ 26,661 26,099 26,730 27,042 27,623 ------ - ------ - ------ - ------ - ------ - Quarterly Net Chargeoffs (Recoveries) New York and other states* Commercial $ 99 (2 ) (1 ) (6 ) (86 ) Real estate mortgage - 1 to 4 family 323 (3 ) 150 28 249 Installment 35 64 27 66 50 ------ - ------ - ------ - ------ - ------ - Total net chargeoffs $ 457 59 176 88 213 ------ - ------ - ------ - ------ - ------ - Florida Commercial $ - - - - - Real estate mortgage - 1 to 4 family (3 ) - - - (1 ) Installment 16 8 - 2 - ------ - ------ - ------ - ------ - ------ - Total net chargeoffs $ 13 8 - 2 (1 ) ------ - ------ - ------ - ------ - ------ - Total Commercial $ 99 (2 ) (1 ) (6 ) (86 ) Real estate mortgage - 1 to 4 family 320 (3 ) 150 28 248 Installment 51 72 27 68 50 ------ - ------ - ------ - ------ - ------ - Total net chargeoffs $ 470 67 176 90 212 ------ - ------ - ------ - ------ - ------ - Asset Quality Ratios Total nonperforming loans (1) $ 24,986 23,793 24,161 24,852 24,377 Total nonperforming assets (1) 26,661 26,099 26,730 27,042 27,623 Total net chargeoffs (2) 470 67 176 90 212 Allowance for loan losses (1) 44,766 44,736 44,503 44,379 44,170 Nonperforming loans to total loans 0.64 % 0.62 % 0.65 % 0.68 % 0.67 % Nonperforming assets to total assets 0.54 % 0.53 % 0.54 % 0.55 % 0.56 % Allowance for loan losses to total loans 1.16 % 1.17 % 1.19 % 1.21 % 1.21 % Coverage ratio (1) 179.2 % 188.0 % 184.2 % 178.6 % 181.2 % Annualized net chargeoffs to average loans (2) 0.05 % 0.01 % 0.02 % 0.01 % 0.02 % Allowance for loan losses to annualized net chargeoffs (2) 23.8x 166.9x 63.2x 123.3x 52.1x * Includes New York, New Jersey, Vermont and Massachusetts. (1) At period-end (2) For the period ended

DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY - INTEREST RATES AND INTEREST DIFFERENTIAL (dollars in thousands) (Unaudited) Three months ended Three months ended December 31, 2018 December 31, 2017 ------------------------------ ------------------------------ Average Interest Average Average Interest Average Balance Rate Balance Rate Assets Securities available for sale: U. S. government sponsored enterprises $ 154,867 788 2.03 % $ 139,565 614 1.76 % Mortgage backed securities and collateralized mortgage obligations - residential 276,747 1,554 2.25 328,826 1,730 2.10 State and political subdivisions 172 3 7.82 519 10 7.71 Corporate bonds 30,068 202 2.68 41,006 148 1.44 Small Business Administration - guaranteed participation securities 59,363 329 2.21 69,643 358 2.06 Mortgage backed securities and collateralized mortgage obligations - commercial - - - 9,843 43 1.75 Other 684 5 2.92 685 4 2.34 ----------- --------- ------- ----------- --------- ------- Total securities available for sale 521,901 2,881 2.21 590,087 2,907 1.97 Federal funds sold and other short-term 416,765 2,367 2.25 539,700 1,779 1.32 Investments Held to maturity securities: Corporate bonds - - - - - - Mortgage backed securities and collateralized mortgage obligations - residential 22,947 226 3.93 28,418 261 3.67 ----------- --------- ------- ----------- --------- ------- Total held to maturity securities 22,947 226 3.93 28,418 261 3.67 Federal Reserve Bank and Federal Home 8,953 207 9.25 8,779 151 6.88 Loan Bank stock Commercial loans 191,899 2,577 5.37 186,655 2,429 5.21 Residential mortgage loans 3,359,540 34,808 4.14 3,103,792 32,051 4.13 Home equity lines of credit 291,411 3,544 4.82 310,626 3,240 4.17 Installment loans 10,486 255 9.65 8,276 205 9.91 ----------- --------- ------- ----------- --------- ------- Loans, net of unearned income 3,853,336 41,184 4.27 3,609,349 37,925 4.20 Total interest earning assets 4,823,902 46,865 3.88 4,776,333 43,023 3.60 Allowance for loan losses (44,887 ) (44,322 ) Cash & non-interest earning assets 120,646 128,340 --------- - --------- - Total assets $ 4,899,661 $ 4,860,351 --------- - --------- - Liabilities and shareholders’ equity Deposits: Interest bearing checking accounts $ 892,241 111 0.05 % $ 856,031 107 0.05 % Money market accounts 499,771 618 0.49 559,463 457 0.33 Savings 1,200,864 401 0.13 1,259,938 429 0.14 Time deposits 1,227,034 4,643 1.50 1,073,956 2,412 0.90 ----------- --------- ------- ----------- --------- ------- Total interest bearing deposits 3,819,910 5,773 0.60 3,749,388 3,405 0.36 Short-term borrowings 171,247 352 0.82 232,207 359 0.62 ----------- --------- ------- ----------- --------- ------- Total interest bearing liabilities 3,991,157 6,125 0.61 3,981,595 3,764 0.38 ------- - ------- - Demand deposits 396,959 390,343 Other liabilities 28,748 30,392 Shareholders’ equity 482,797 458,021 --------- - --------- - Total liabilities and shareholders’ $ 4,899,661 $ 4,860,351 equity --------- - --------- - Net interest income, tax equivalent 40,740 39,259 ------- - ------- - Net interest spread 3.27 % 3.22 % Net interest margin (net interest income to total interest earning assets) 3.38 % 3.29 % Tax equivalent adjustment (1 ) (11 ) ------- - ------- - Net interest income 40,739 39,248 ------- - ------- - DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY - INTEREST RATES AND INTEREST DIFFERENTIAL, Continued (dollars in thousands) (Unaudited) Year ended Year ended December 31, 2018 December 31, 2017 ------------------------------ ------------------------------ Average Interest Average Average Interest Average Balance Rate Balance Rate Assets Securities available for sale: U. S. government sponsored enterprises $ 155,381 3,112 2.00 % $ 139,652 2,281 1.63 % Mortgage backed securities and collateralized mortgage obligations - residential 294,732 6,593 2.24 350,256 7,447 2.13 State and political subdivisions 414 34 8.11 682 55 8.06 Corporate bonds 30,310 687 2.27 41,946 606 1.44 Small Business Administration - guaranteed participation securities 63,430 1,339 2.11 73,996 1,547 2.09 Mortgage backed securities and collateralized mortgage obligations - commercial 2,769 37 1.33 9,963 109 1.09 Other 685 18 3.50 685 16 2.34 ----------- --------- ------- ----------- --------- ------- Total securities available for sale 547,721 11,820 2.88 617,180 12,061 1.95 Federal funds sold and other short-term 495,066 9,276 1.87 611,586 6,679 1.09 Investments Held to maturity securities: Corporate bonds - - - 6,663 410 6.15 Mortgage backed securities and collateralized mortgage obligations - residential 24,801 962 3.88 31,266 1,149 3.67 ----------- --------- ------- ----------- --------- ------- Total held to maturity securities 24,801 962 3.88 37,929 1,559 4.11 Federal Reserve Bank and Federal Home 8,907 564 8.44 9,295 544 5.85 Loan Bank stock Commercial loans 188,362 9,913 5.26 185,376 9,741 5.25 Residential mortgage loans 3,250,800 133,930 4.12 3,002,706 124,961 4.16 Home equity lines of credit 297,678 13,562 4.56 318,660 12,692 3.98 Installment loans 9,242 899 9.73 8,158 768 9.41 ----------- --------- ------- ----------- --------- ------- Loans, net of unearned income 3,746,082 158,304 4.23 3,514,900 148,162 4.22 Total interest earning assets 4,822,577 180,926 3.75 4,790,890 169,005 3.53 Allowance for loan losses (44,651 ) (44,319 ) Cash & non-interest earning assets 122,524 129,097 --------- - --------- - Total assets $ 4,900,450 $ 4,875,668 --------- - --------- - Liabilities and shareholders’ equity Deposits: Interest bearing checking accounts $ 897,378 442 0.05 % $ 844,010 478 0.06 % Money market accounts 521,233 2,053 0.39 572,270 1,860 0.33 Savings 1,241,619 1,657 0.13 1,275,268 1,729 0.14 Time deposits 1,149,980 14,806 1.29 1,097,190 9,123 0.83 ----------- --------- ------- ----------- --------- ------- Total interest bearing deposits 3,810,210 18,958 0.50 3,788,738 13,190 0.35 Short-term borrowings 194,810 1,270 0.65 228,086 1,402 0.61 ----------- --------- ------- ----------- --------- ------- Total interest bearing liabilities 4,005,020 20,228 0.51 4,016,824 14,592 0.36 ------- - ------- - Demand deposits 396,367 382,658 Other liabilities 28,249 28,506 Shareholders’ equity 470,814 447,680 --------- - --------- - Total liabilities and shareholders’ $ 4,900,450 4,875,668 equity --------- - --------- - Net interest income, tax equivalent 160,698 154,413 ------- - ------- - Net interest spread 3.25 % 3.16 % Net interest margin (net interest income to total interest earning assets) 3.33 % 3.22 % Tax equivalent adjustment (12 ) (45 ) ------- - ------- - Net interest income 160,686 154,368 ------- - ------- -

Non-GAAP Financial Measures Reconciliation

Tangible equity as a percentage of tangible assets at period end is a non-GAAP financial measure derived from GAAP-based amounts. We calculate tangible equity and tangible assets by excluding the balance of intangible assets from shareholders’ equity and total assets, respectively. We calculate tangible equity as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end. We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios.

The efficiency ratio is a non-GAAP measure of expense control relative to revenue from net interest income and fee income. We calculate the efficiency ratio by dividing total noninterest expenses as determined under GAAP, but excluding other real estate expense, net, by net interest income (fully taxable equivalent) and total noninterest income as determined under GAAP, but excluding net gains on the sale of nonperforming loans and securities and other non-routine items from this calculation. We believe that this provides a reasonable measure of primary banking expenses relative to primary banking revenue.

We believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our financial results. Our management internally assesses our performance based, in part, on these measures. However, these non-GAAP financial measures are supplemental and not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these measures, this presentation may not be comparable to other similarly titled measures reported by other companies. A reconciliation of the non-GAAP measures of tangible common equity, tangible book value per share, efficiency ratio, net income and net income per share to the underlying GAAP numbers is set forth below.

NON-GAAP FINANCIAL MEASURES RECONCILIATION (dollars in thousands, except per share amounts) (Unaudited) Tangible Book Value Per Share 12/31/2018 9/30/2018 12/31/2017 Equity 489,871 477,118 458,308 Less: Intangible assets 553 553 553 Tangible equity 489,318 476,565 457,755 --------- - --------- - --------- - Shares outstanding 96,659 96,586 96,289 --------- - --------- - --------- - Tangible book value per share 5.06 4.93 4.75 Book value per share 5.07 4.94 4.76 Tangible Equity to Tangible Assets Total Assets $ 4,958,913 4,885,351 4,908,008 Less: Intangible assets 553 553 553 Tangible assets 4,958,360 4,884,798 4,907,455 --------- - --------- - --------- - Tangible Equity to Tangible Assets 9.87 % 9.76 % 9.33 % Equity to Assets 9.88 % 9.77 % 9.34 % Three months ended Years ended ----------------------------------- ------------------- Efficiency Ratio 12/31/2018 9/30/2018 12/31/2017 12/31/201812/31/2017 Net interest income $ 40,739 40,523 39,248 160,686 154,368 Taxable equivalent adjustment 1 3 11 12 45 Net interest income (fully taxable equivalent) 40,740 40,526 39,259 160,698 154,413 Non-interest income 4,452 4,455 4,288 18,081 18,373 Less: Net gain on sale of nonperforming loans - - - - 84 Revenue used for efficiency ratio 45,192 44,981 43,547 178,779 172,702 --------- - --------- - --------- - ------- - ------- - Total noninterest expense 24,919 24,544 23,536 97,713 93,994 Less: Other real estate expense, net 37 528 401 1,231 1,171 Expense used for efficiency ratio 24,882 24,016 23,135 96,482 92,823 --------- - --------- - --------- - ------- - ------- - Efficiency Ratio 55.06 % 53.39 % 53.13 % 53.97 % 53.75 %

AP RADIO
Update hourly