TrustCo Announces 2012 Earnings Up 13%

GLENVILLE, N.Y., Jan. 22, 2013 (GLOBE NEWSWIRE) -- TrustCo Bank Corp NY (TrustCo) (Nasdaq:TRST) today announced that net income was up 13.4% from $33.1 million in the year ended December 31, 2011 to $37.5 million for the year ended December 31, 2012. Net income for the fourth quarter of 2012 was $9.8 million, up 12.5% over the prior-year period and equal to diluted earnings per share of $0.104, compared to net income of $8.7 million and diluted earnings per share of $0.093 for the fourth quarter of 2011.

TrustCo saw continued balance sheet growth in 2012 in both loans and deposits. Robert J. McCormick, President and Chief Executive Officer noted, "We are pleased that 2012 resulted in continued solid earnings growth. We continue to add profitable customer relationships on both the deposit and loan side, which helped our bottom line grow in 2012 and we believe will continue to do so into 2013. Our highly liquid balance sheet allows us to fund loan growth without having to overpay for deposits, which enabled us to significantly restructure our deposit mix during 2012, and should be of additional benefit when interest rates eventually begin to rise. We look forward to 2013 with optimism, though we note that our industry continues to face challenges as the economy remains fragile and interest rates remain at unprecedented levels. We will continue to take advantage of opportunities that are presented." Return on average equity and return on average assets were 10.70% and 0.87%, respectively, for 2012, compared to 11.04% and 0.81% for 2011. The efficiency ratio was 52.28% for 2012, compared to 49.95% for 2011. The ratios for both years rank TrustCo among industry leaders, a continuation of longer term trends. TrustCo's efficiency ratio and return on average equity, for example, have ranked in the top ten in its peer group in 10 of the last 15 years for the former and in 12 of the last 15 years for the latter. Results for 2012 include the full year effect of the common stock offering completed on July 6, 2011. 

Mr. McCormick also noted, "We continue to see some signs of economic improvement in the markets in which we operate, although high levels of unemployment and other persistent issues continue to constrain any significant economic growth. We believe our long-term focus on traditional lending criteria and conservative balance sheet management has enabled us to maintain a strong balance sheet and continued profitability. As a result, we have been able to focus on conducting business, which has put us in a position to take advantage of changes in market and competitive conditions."

TrustCo continued to report solid growth in loans and deposits on a year-over-year basis. For the full year ended December 31, 2012, average loans were up $149.6 million or 6.2% compared to the same period in 2011, while average deposits increased $172.1 million or 4.7% over the same period. Mr. McCormick noted that, "The year-over-year growth of our loans and deposits reflects the long term strategic focus of the Bank. The growth in deposits came despite a tactical decision earlier in the year to intensify our focus on enhancing our mix of deposits and growing our core customer base, which resulted in the planned loss of higher costing certificate of deposit balances and an improvement of our net interest margin. 

"Our branch franchise continues to be the key to our long term plans. We have made significant progress in expanding our loans and deposits through our branches, and expect that to continue as the new branches grow. We remain mindful that fully achieving our goals for our newer branches will take time and continued hard work. We believe our success in growing customer relationships provides the basic building blocks that will help drive profit growth over the coming years."

For the three months ended December 31, 2012 net income was $9.8 million compared to net income of $8.7 million for the fourth quarter of 2011. Return on average equity and return on average assets were 10.88% and 0.91%, respectively, for the fourth quarter of 2012 and 10.15% and 0.83% for the comparable period in 2011.

Reported credit results for the year were affected by the implementation in the third quarter of new OCC guidance which affected consumer loans where the borrower's obligation to TrustCo has been discharged in bankruptcy and the borrower has not reaffirmed the debt.  Implementation of this new OCC guidance affected third quarter results as follows:

  • Net $4.0 million of performing consumer loans were reclassified to nonaccrual status, and
  • $804 thousand increase in net charge offs, which was covered by the reserve.

Nonperforming loans were $52.7 million as of December 31, 2012, compared to $48.8 million at December 31, 2011. This includes the NPLs added as a result of the OCC guidance noted above. Care should be taken in examining NPL numbers across banking institutions as not all regulators provided this guidance to the institutions they regulate. Nonperforming assets were $61.4 million at December 31, 2012, compared to $54.0 million at December 31, 2011. At December 31, 2012, nonperforming loans were equal to 1.96% of total loans, compared to 1.93% at December 31, 2011. Nonperforming assets to total assets were 1.41% at December 31, 2012, compared to 1.27% at December 31, 2011. The allowance for loan losses as a percentage of gross loans and as a multiple of net charge-offs remains strong. The allowance to total loans was 1.79% at December 31, 2012 and 1.93% at December 31, 2011. For the fourth quarter of 2012 the allowance covered annualized fourth quarter net charge-offs by 4.9 times, compared to an annualized 3.7 times for the fourth quarter of 2011. The coverage ratio, or allowance for loan losses to nonperforming loans was 91.0% at December 31, 2012, compared to 99.9% at December 31, 2011

Net interest margin for the fourth quarter of 2012 was 3.21%, equal to the third quarter level and down from 3.35% in the fourth quarter of 2011. 

At December 31, 2012 the tangible equity ratio was 8.24% compared to 7.97% at December 31, 2011. Tangible book value per share ended the fourth quarter at $3.81 compared to $3.62 in the year-ago period.

TrustCo Bank Corp NY is a $4.3 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 138 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at December 31, 2012.

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 2012 results will be held at 9:00 a.m. Eastern Time on January 23, 2013. Those wishing to participate in the call may dial toll-free 1-888-317-6016. International callers must dial + 1-412-317-6016.  A replay of the call will be available until April 24, 2013 by dialing 1-877-344-7529 ( 1-412-317-0088 for international callers), Conference Number 10023478. The call will also be audio webcast at: http://services.choruscall.com/links/trst130123.html , and will be available until January 23, 2014. 

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. The "forward-looking statements" may include statements regarding future events or performance and statements regarding TrustCo's ability to offer and sell securities under its shelf registration statement. 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: credit risk, the effects of and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System, inflation, interest rates, market and monetary fluctuations, competition, the effect of changes in financial services laws and regulations (including laws concerning taxation, banking and securities), real estate and collateral values, changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board ("FASB") or the Public Company Accounting Oversight Board; changes in local market areas and general business and economic trends and the matters described under the heading "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2011, as amended, and in our subsequent securities filings.
TRUSTCO BANK CORP NY      
GLENVILLE, NY      
       
FINANCIAL HIGHLIGHTS      
       
(dollars in thousands, except per share data)      
(Unaudited)      
    Three Months Ended  
  12/31/12 09/30/12 12/31/11
Summary of operations      
Net interest income (TE)  $ 33,718  34,321  34,220
Provision for loan losses  3,000  2,900  4,200
Net securities transactions  763  666  132
Noninterest income  5,398  4,551  4,219
Noninterest expense  21,150  20,643  19,524
Net income  9,806  9,753  8,714
       
Per common share      
Net income per share:      
- Basic  $ 0.104  0.104  0.093
- Diluted  $ 0.104  0.104  0.093
Cash dividends  0.066  0.066  0.066
Tangible Book value at period end  3.81  3.81  3.62
Market price at period end  5.28  5.71  5.61
       
At period end      
Full time equivalent employees 759 760 726
Full service banking offices 138 138 136
       
Performance ratios      
Return on average assets 0.91% 0.89 0.83
Return on average equity 10.88 10.97 10.15
Efficiency (1) 53.11 49.99 47.53
Net interest spread (TE) 3.15 3.15 3.26
Net interest margin (TE) 3.21 3.21 3.35
Dividend payout ratio 63.00 63.13 70.50
       
Capital ratio at period end      
Consolidated tangible equity to tangible assets (2) 8.24 8.27 7.97
       
Asset quality analysis at period end      
Nonperforming loans to total loans (4) 1.96 1.92 1.93
Nonperforming assets to total assets 1.41 1.36 1.27
Allowance for loan losses to total loans 1.79 1.82 1.93
Coverage ratio (3) 0.9x 0.9 1.0
       
       
(1) Calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income (excluding net securities transactions).
(2) The tangible equity ratio excludes $553,000 of intangibles from both equity and assets.
(3) Calculated as allowance for loan losses divided by total nonperforming loans.
(4) Included in the September 30, 2012 balance of nonperforming loans is net $4.0 million of performing loans that have been reclassified to nonaccrual status as a result of recent OCC guidance.
TE = Taxable equivalent.
     
FINANCIAL HIGHLIGHTS, Continued    
     
(dollars in thousands, except per share data)    
(Unaudited)    
  Year Ended
  12/31/12 12/31/11
Summary of operations    
Net interest income (TE)  $ 135,669  135,717
Provision for loan losses  12,000  18,750
Net securities transactions  2,161  1,428
Noninterest income  18,803  17,345
Noninterest expense  83,977  82,142
Net income  37,534  33,087
     
Per common share    
Net income per share:    
- Basic  $ 0.400  0.389
- Diluted  0.400  0.389
Cash dividends  0.263  0.263
Tangible Book value at period end  3.81  3.62
Market price at period end  5.28  5.61
     
Performance ratios    
Return on average assets 0.87% 0.81
Return on average equity 10.70 11.04
Efficiency (1) 52.28 49.95
Net interest spread (TE) 3.13 3.31
Net interest margin (TE) 3.20 3.40
Dividend payout ratio 65.60 67.71
     
     
(1) Calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income (excluding net securities transactions).
TE = Taxable equivalent.
           
CONSOLIDATED STATEMENTS OF INCOME          
           
(dollars in thousands, except per share data)          
(Unaudited)          
  Three Months Ended
  12/31/2012 9/30/2012 6/30/2012 3/31/2012 12/31/2011
Interest and dividend income:           
Interest and fees on loans  $ 31,776  32,103  32,277  32,425  32,711
Interest and dividends on securities available for sale:           
U. S. government sponsored enterprises  1,191  1,996  2,606  2,304  2,661
State and political subdivisions  295  340  368  410  490
Mortgage-backed securities and collateralized mortgage obligations-residential  2,237  2,003  1,364  1,093  1,083
Corporate bonds  232  529  648  822  886
Small Business Administration-guaranteed participation securities  276  43  --  --  --
Other securities  5  4  5  5  5
Total interest and dividends on securities available for sale  4,236  4,915  4,991  4,634  5,125
           
Interest on held to maturity securities:           
U. S. government sponsored enterprises  --  --  --  25  97
Mortgage-backed securities and collateralized mortgage obligations-residential  823  976  1,198  1,290  1,151
Corporate bonds  385  385  387  509  590
Total interest on held to maturity securities  1,208  1,361  1,585  1,824  1,838
           
Federal Reserve Bank and Federal Home Loan Bank stock  127  120  149  90  80
           
Interest on federal funds sold and other short-term investments  265  258  299  320  284
Total interest income  37,612  38,757  39,301  39,293  40,038
           
Interest expense:           
Interest on deposits:          
Interest-bearing checking  80  79  78  78  76
Savings  921  870  979  1,102  1,018
Money market deposit accounts  703  673  770  923  1,030
Time deposits  1,967  2,629  3,230  3,418  3,552
Interest on short-term borrowings  361  348  378  388  401
Total interest expense  4,032  4,599  5,435  5,909  6,077
           
Net interest income  33,580  34,158  33,866  33,384  33,961
           
Provision for loan losses  3,000  2,900  3,000  3,100  4,200
Net interest income after provision for loan losses   30,580  31,258  30,866  30,284  29,761
           
Noninterest income:          
Trust department income  1,815  1,145  1,407  1,394  1,086
Fees for services to customers  3,386  3,234  2,939  2,732  2,920
Net gain on securities transactions  763  666  55  677  132
Other  197  172  176  207  213
Total noninterest income  6,161  5,217  4,577  5,010  4,351
           
Noninterest expenses:           
Salaries and employee benefits  8,427  7,587  7,519  7,743  7,638
Net occupancy expense  3,889  3,756  3,817  3,795  3,664
Equipment expense  1,637  1,316  1,600  1,520  1,200
Professional services  1,458  1,657  1,489  1,436  1,411
Outsourced services  1,175  1,350  1,347  1,250  1,050
Advertising expense  1,037  935  1,060  809  607
FDIC and other insurance  1,007  983  953  880  577
Other real estate expense, net  375  1,210  665  966  1,254
Other  2,145  1,849  2,599  2,737  2,123
Total noninterest expenses  21,150  20,643  21,049  21,136  19,524
           
Income before taxes  15,591  15,832  14,394  14,158  14,588
Income taxes  5,785  6,079  5,328  5,249  5,874
           
Net income  $ 9,806  9,753  9,066  8,909  8,714
Net income per Common Share:           
- Basic  $ 0.104 0.104 0.097 0.095 0.093
           
- Diluted 0.104 0.104 0.097 0.095 0.093
           
Average basic shares (thousands)  93,824  93,692  93,561  93,546  93,308
Average diluted shares (thousands)  93,828  93,700  93,562  93,546  93,308
           
Note: Taxable equivalent net interest income  $ 33,718  34,321  33,993  33,637  34,220
     
CONSOLIDATED STATEMENTS OF INCOME    
     
(dollars in thousands, except per share data)    
(Unaudited)    
  Year Ended
  12/31/2012 12/31/2011
     
Interest and dividend income:     
Interest and fees on loans  $ 128,581  129,212
Interest and dividends on securities available for sale:     
U. S. government sponsored enterprises  8,097  12,998
State and political subdivisions  1,413  2,471
Mortgage-backed securities and collateralized mortgage obligations-residential  6,697  3,091
Corporate bonds  2,231  4,059
Small Business Administration-guaranteed participation securities  319  --
Other securities  19  20
Total interest and dividends on securities available for sale  18,776  22,639
     
Interest on held to maturity securities:     
U. S. government sponsored enterprises  25  261
Mortgage-backed securities-residential  4,287  4,765
Corporate bonds  1,666  2,465
Total interest on held to maturity securities  5,978  7,491
     
Federal Reserve Bank and Federal Home Loan Bank stock  486  304
     
Interest on federal funds sold and other short-term investments  1,142  1,102
Total interest income  154,963  160,748
     
Interest expense:     
Interest on deposits:    
Interest-bearing checking  315  285
Savings  3,872  3,788
Money market deposit accounts  3,069  4,599
Time deposits  11,244  15,998
Interest on short-term borrowings  1,475  1,574
Total interest expense  19,975  26,244
     
Net interest income  134,988  134,504
     
Provision for loan losses  12,000  18,750
Net interest income after provision for loan losses   122,988  115,754
     
Noninterest income:    
Trust department income  5,761  5,088
Fees for services to customers  12,290  11,305
Net gain on securities transactions  2,161  1,428
Other  752  952
Total noninterest income  20,964  18,773
     
Noninterest expenses:     
Salaries and employee benefits  31,276  28,751
Net occupancy expense  15,257  14,687
Equipment expense  6,073  5,652
Professional services  6,040  5,729
Outsourced services  5,122  5,100
Advertising expense  3,841  2,784
FDIC and other insurance  3,823  4,655
Other real estate expense, net  3,216  5,693
Other  9,329  9,091
Total noninterest expenses  83,977  82,142
     
Income before taxes  59,975  52,385
Income taxes  22,441  19,298
     
Net income  $ 37,534  33,087
     
Net income per Common Share:     
- Basic  $ 0.400 0.389
     
- Diluted 0.400 0.389
     
Average basic shares (thousands)  93,633  85,073
Average diluted shares (thousands)  93,637  85,073
     
Note: Taxable equivalent net interest income  $ 135,669  135,717
           
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION          
           
(dollars in thousands)          
(Unaudited)          
           
           
  12/31/2012 9/30/2012 6/30/2012 3/31/2012 12/31/2011
ASSETS:          
           
Cash and due from banks  $ 55,789 40,354 36,589 39,426 44,395
Federal funds sold and other short term investments 488,227 402,290 486,049 486,055 488,548
Total cash and cash equivalents 544,016 442,644 522,638 525,481 532,943
           
Securities available for sale:          
U. S. government sponsored enterprises 263,108 427,798 643,189 744,725 563,460
States and political subdivisions 26,457 33,857 36,978 38,367 43,968
Mortgage-backed securities and collateralized mortgage obligations-residential 518,776 515,879 354,285 219,301 204,022
Corporate bonds 26,529 49,296 73,311 81,654 96,608
Small Business Administration-guaranteed participation securities 76,562  25,338  --   --   -- 
Other securities 660 660 660 660 660
Total securities available for sale 912,092 1,052,828 1,108,423 1,084,707 908,718
           
Held to maturity securities:          
U. S. government sponsored enterprises  --   --   --   --   15,000
Mortgage-backed securities and collateralized mortgage obligations-residential 108,471 120,877 133,562 143,629 141,857
Corporate bonds 34,955 35,074 35,193 35,312 59,431
Total held to maturity securities 143,426 155,951 168,755 178,941 216,288
           
Federal Reserve Bank and Federal Home Loan Bank stock 9,632 9,632 9,632 9,004 9,004
           
Loans:          
Commercial 219,577 217,431 235,347 235,513 248,163
Residential mortgage loans 2,126,668 2,056,972 2,003,046 1,970,278 1,955,951
Home equity line of credit 333,909 327,083 317,157 314,668 313,038
Installment loans 4,579 4,455 4,071 3,855 4,151
Loans, net of deferred fees and costs 2,684,733 2,605,941 2,559,621 2,524,314 2,521,303
Less:          
Allowance for loan losses 47,927 47,364 48,018 48,535 48,717
Net loans 2,636,806 2,558,577 2,511,603 2,475,779 2,472,586
           
Bank premises and equipment, net 36,239 37,251 37,868 37,099 37,006
Other assets 64,402 61,290 62,480 63,432 67,099
           
Total assets  $ 4,346,613 4,318,173 4,421,399 4,374,443 4,243,644
           
LIABILITIES:          
Deposits:          
Demand  $ 300,544 292,350 283,873 281,628 267,776
Interest-bearing checking 560,064 536,892 528,101 507,510 489,227
Savings accounts 1,198,517 1,167,927 1,122,208 1,068,058 978,819
Money market deposit accounts 667,589 668,064 644,627 631,761 635,434
Certificates of deposit (in denominations of $100,000 or more) 352,734 359,246 452,043 467,447 460,971
Other time accounts 724,745 751,974 867,798 894,946 903,746
Total deposits 3,804,193 3,776,453 3,898,650 3,851,350 3,735,973
           
Short-term borrowings 159,846 161,751 150,718 159,002 147,563
Accrued expenses and other liabilities 23,776 22,352 22,124 19,445 21,592
           
Total liabilities 3,987,815 3,960,556 4,071,492 4,029,797 3,905,128
           
SHAREHOLDERS' EQUITY:          
Capital stock 98,912 98,912 98,912 98,912 98,912
Surplus 174,899 175,284 175,773 176,199 176,638
Undivided profits 132,378 128,750 125,153 122,235 119,465
Accumulated other comprehensive income (loss), net of tax 1,558 4,879 1,585 53 (2,493)
Treasury stock at cost (48,949) (50,208) (51,516) (52,753) (54,006)
           
Total shareholders' equity 358,798 357,617 349,907 344,646 338,516
           
Total liabilities and shareholders' equity  $ 4,346,613 4,318,173 4,421,399 4,374,443 4,243,644
           
Outstanding shares (thousands)  93,935  93,807  93,674  93,549  93,315
           
NONPERFORMING ASSETS          
           
(dollars in thousands)          
(Unaudited)          
           
Nonperforming Assets          
  12/31/12 09/30/12 06/30/12 03/31/12 12/31/11
New York and other states*          
Loans in nonaccrual status:          
Commercial  $ 6,635  5,880  5,656  5,667  4,981
Real estate mortgage - 1 to 4 family  35,286  32,593  29,167  29,894  27,820
Installment  6  71  1  9  3
Total non-accrual loans  41,927  38,544  34,824  35,570  32,804
Other nonperforming real estate mortgages - 1 to 4 family  231  238  243  306  312
Total nonperforming loans  42,158  38,782  35,067  35,876  33,116
Other real estate owned  2,979  2,716  2,787  2,411  2,382
Total nonperforming assets  $ 45,137  41,498  37,854  38,287  35,498
           
Florida          
Loans in nonaccrual status:          
Commercial  $ 2,698  2,698  8,435  5,874  5,000
Real estate mortgage - 1 to 4 family  7,820  8,438  7,954  9,404  10,662
Installment  1  7  1  --  --
Total non-accrual loans  10,519  11,143  16,390  15,278  15,662
Other nonperforming real estate mortgages - 1 to 4 family  --  --  --  --  --
Total nonperforming loans  10,519  11,143  16,390  15,278  15,662
Other real estate owned  5,726  5,975  1,083  1,293  2,883
Total nonperforming assets  $ 16,245  17,118  17,473  16,571  18,545
           
Total          
Loans in nonaccrual status:          
Commercial  $ 9,333  8,578  14,091  11,541  9,981
Real estate mortgage - 1 to 4 family  43,106  41,031  37,121  39,298  38,482
Installment  7  78  2  9  3
Total non-accrual loans  52,446  49,687  51,214  50,848  48,466
Other nonperforming real estate mortgages - 1 to 4 family  231  238  243  306  312
Total nonperforming loans  52,677  49,925  51,457  51,154  48,778
Other real estate owned  8,705  8,691  3,870  3,704  5,265
Total nonperforming assets  $ 61,382  58,616  55,327  54,858  54,043
           
           
Quarterly Net Chargeoffs          
  12/31/12 09/30/12 06/30/12 03/31/12 12/31/11
New York and other states*          
Commercial  $ 152  9  713  321  99
Real estate mortgage - 1 to 4 family  1,410  2,157  1,844  1,136  1,404
Installment  72  7  7  (8)  5
Total net chargeoffs  $ 1,634  2,173  2,564  1,449  1,508
           
Florida          
Commercial  $ (18)  736  288  160  400
Real estate mortgage - 1 to 4 family  810  644  665  1,673  1,359
Installment  12  1  --  --  (2)
Total net chargeoffs  $ 804  1,381  953  1,833  1,757
           
Total          
Commercial  $ 134  745  1,001  481  499
Real estate mortgage - 1 to 4 family  2,220  2,801  2,509  2,809  2,763
Installment  84  8  7  (8)  3
Total net chargeoffs  $ 2,438  3,554  3,517  3,282  3,265
           
           
Asset Quality Ratios          
  12/31/12 09/30/12 06/30/12 03/31/12 12/31/11
Total nonperforming loans(1)  $ 52,677  49,925  51,457  51,154  48,778
Total nonperforming assets(1)  61,382  58,616  55,327  54,858  54,043
Total net chargeoffs(2)  2,438  3,554  3,517  3,282  3,265
           
Allowance for loan losses(1) 47,927 47,364 48,018 48,535 48,717
           
Nonperforming loans to total loans(1) 1.96% 1.92% 2.01% 2.03% 1.93%
Nonperforming assets to total assets(1) 1.41% 1.36% 1.25% 1.25% 1.27%
Allowance for loan losses to total loans(1) 1.79% 1.82% 1.88% 1.92% 1.93%
Coverage ratio(1) 91.0% 94.9% 93.3% 94.9% 99.9%
Annualized net chargeoffs to average loans(2) 0.37% 0.55% 0.55% 0.52% 0.52%
Allowance for loan losses to annualized net chargeoffs(2) 4.9x 3.3x 3.4x 3.7x 3.7x
           
* Includes New York, New Jersey, Vermont and Massachusetts.
(1) At period-end
(2) For the period ended
             
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY--            
INTEREST RATES AND INTEREST DIFFERENTIAL            
             
(dollars in thousands) Three months ended Three months ended
(Unaudited) December 31, 2012 December 31, 2011
  Average Interest Average Average Interest Average
  Balance   Rate Balance   Rate
             
Assets            
             
Securities available for sale:            
U. S. government sponsored enterprises  $ 370,086 1,191 1.29%  $ 592,488 2,661 1.80%
Mortgage backed securities and collateralized mortgage obligations-residential 480,382 2,237  1.86 199,155 1,083 2.18
State and political subdivisions 30,619 425 5.55 47,373 712 6.01
Corporate bonds 35,640 232 2.59 102,532 886 3.46
Small Business Administration-guaranteed participation securities 54,678 276  2.02  --   --  0.00
Other 660 5  3.03 660 5  3.03
             
Total securities available for sale 972,065 4,366  1.80 942,208 5,347  2.27
             
Federal funds sold and other short-term Investments 427,298 265 0.25 444,599 284 0.25
             
Held to maturity securities:            
U. S. government sponsored enterprises  --   -- 0.00  16,413  97 2.37
Corporate bonds 35,013 385 4.40 59,491 590 3.96
Mortgage backed securities and collateralized mortgage obligations-residential 114,647 823 2.87 119,739 1,151 3.85
             
Total held to maturity securities 149,660 1,208 3.23 195,643 1,838 3.76
             
Federal Reserve Bank and Federal Home Loan Bank stock 9,632 127  5.27 6,954 80  4.60
             
Commercial loans 216,787 2,917  5.38 239,680 3,401 5.67
Residential mortgage loans 2,087,003 25,804 4.95 1,945,375 26,331 5.41
Home equity lines of credit 331,441 2,905 3.49 310,052 2,870 3.67
Installment loans 4,274 158 14.68 3,532 146 16.37
             
Loans, net of unearned income 2,639,505 31,784 4.81 2,498,639 32,748 5.24
             
Total interest earning assets 4,198,160 37,750 3.59 4,088,043 40,297 3.94
             
Allowance for loan losses (48,312)     (49,250)    
Cash & non-interest earning assets 146,482     143,121    
             
             
Total assets  $ 4,296,330      $ 4,181,914    
             
             
Liabilities and shareholders' equity            
             
Deposits:            
Interest bearing checking accounts  $ 532,579 80 0.06%  $ 467,418 76 0.07%
Money market accounts 669,201 703 0.42 639,365 1,030 0.64
Savings 1,184,601 921 0.31 951,562 1,018 0.42
Time deposits 1,085,054 1,967 0.72 1,360,979 3,552 1.04
             
Total interest bearing deposits 3,471,435 3,671 0.42 3,419,324 5,676 0.66
Short-term borrowings 161,816 361 0.89 142,443 401 1.12
             
Total interest bearing liabilities 3,633,251 4,032 0.44 3,561,767 6,077 0.68
             
Demand deposits 283,528     258,980    
Other liabilities 21,006     20,423    
Shareholders' equity 358,545     340,744    
             
Total liabilities and shareholders' equity  $ 4,296,330      $ 4,181,914    
             
Net interest income , tax equivalent   33,718     34,220  
             
Net interest spread     3.15%     3.26%
             
Net interest margin (net interest income to total interest earning assets)     3.21%     3.35%
             
Tax equivalent adjustment   (138)     (259)  
             
             
Net interest income    33,580     33,961  
             
             
(dollars in thousands) Year ended Year ended
(Unaudited) December 31, 2012 December 31, 2011
  Average Interest Average Average Interest Average
  Balance   Rate Balance   Rate
             
Assets            
             
Securities available for sale:            
U. S. government sponsored enterprises  $ 568,425 8,097 1.42%  $ 667,037 12,998 1.95%
Mortgage backed securities and collateralized mortgage obligations-residential 334,616 6,697 2.00 112,504 3,091 2.75
State and political subdivisions 35,435 2,012 5.68 58,725 3,625 6.17
Corporate bonds 68,182 2,231 3.27 108,513 4,059 3.74
Small Business Administration-guaranteed participation securities 15,707 319  2.03  --   --  0.00
Other 660 19  2.88 703 20  2.84
             
Total securities available for sale 1,023,025 19,375  1.89 947,482 23,793  2.51
             
Federal funds sold and other short-term Investments 461,495 1,142 0.25 432,631 1,102 0.25
             
Held to maturity securities:            
U. S. government sponsored enterprises  1,048  25 2.43  11,035  261 2.36
Corporate bonds 39,570 1,666 4.21 56,253 2,465 4.38
Mortgage backed securities and collateralized mortgage obligations-residential 131,092 4,287 3.27 114,296 4,765 4.17
             
Total held to maturity securities 171,710 5,978 3.48 181,584 7,491 4.13
             
Federal Reserve Bank and Federal Home Loan Bank stock 9,425 486  5.16 6,898 304  4.41
             
Commercial loans 230,539 12,486  5.42 247,691 14,285 5.77
Residential mortgage loans 2,017,230 104,028 5.16 1,873,028 103,281 5.51
Home equity lines of credit 321,299 11,551 3.60 298,996 11,117 3.72
Installment loans 3,915 598 15.28 3,622 588 16.23
             
Loans, net of unearned income 2,572,983 128,663 5.00 2,423,337 129,271 5.33
             
Total interest earning assets 4,238,638 155,644 3.67 3,991,932 161,961 4.06
             
Allowance for loan losses (49,148)     (46,210)    
Cash & non-interest earning assets 143,303     144,068    
             
             
Total assets  $ 4,332,793      $ 4,089,790    
             
             
Liabilities and shareholders' equity            
             
Deposits:            
Interest bearing checking accounts  $ 515,062 315 0.06%  $ 456,397 285 0.06%
Money market accounts 649,452 3,069 0.47 632,786 4,599 0.73
Savings 1,115,151 3,872 0.35 889,773 3,788 0.43
Time deposits 1,251,846 11,244 0.90 1,403,312 15,998 1.14
             
Total interest bearing deposits 3,531,511 18,500 0.52 3,382,268 24,670 0.73
Short-term borrowings 152,982 1,475 0.96 133,803 1,574 1.18
             
Total interest bearing liabilities 3,684,493 19,975 0.54 3,516,071 26,244 0.75
             
Demand deposits 278,179     255,327    
Other liabilities 19,441     18,653    
Shareholders' equity 350,680     299,739    
             
Total liabilities and shareholders' equity  $ 4,332,793      $ 4,089,790    
             
Net interest income , tax equivalent   135,669     135,717  
             
Net interest spread     3.13%     3.31%
             
Net interest margin (net interest income to total interest earning assets)     3.20%     3.40%
             
Tax equivalent adjustment   (681)     (1,213)  
             
             
Net interest income    134,988     134,504  

Non-GAAP Financial Measures Reconciliation

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

The efficiency ratio is a non-GAAP measure of expense control relative to recurring revenue. We calculate the efficiency ratio by dividing total noninterest expenses as determined under GAAP, but excluding other real estate expense, net, which we refer to below as recurring expense, by net interest income (fully taxable equivalent) and total noninterest income as determined under GAAP, but excluding net gains on securities from this calculation, which we refer to below as recurring revenue. We believe that this provides one reasonable measure of core expenses relative to core revenue. 

We believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our financial position, results and ratios. Our management internally assesses our performance based, in part, on these measures. However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these measures, this presentation may not be comparable to other similarly titled measures reported by other companies. A reconciliation of the non-GAAP measures of tangible common equity, tangible book value per share and efficiency ratio to the underlying GAAP numbers is set forth below.
Non-GAAP Financial Measures Reconciliation              
               
(dollars in thousands, except per share amounts)              
(Unaudited)              
  12/31/12 09/30/12 06/30/12 03/31/12 12/31/11    
Tangible Book Value Per Share              
               
Equity  $ 358,798  357,617  349,907  344,646 338,516    
Less: Intangible assets  553  553  553  553  553    
Tangible equity  358,245  357,064  349,354  344,093  337,963    
               
Shares outstanding  93,935  93,807  93,674  93,549  93,315    
Tangible book value per share  3.81  3.81  3.73  3.68  3.62    
Book value per share  3.82  3.81  3.74  3.68  3.63    
               
Tangible Equity to Tangible Assets              
Total Assets 4,346,613 4,318,173 4,421,399 4,374,443 4,243,644    
Less: Intangible assets  553  553  553  553  553    
Tangible assets  4,346,060  4,317,620  4,420,846  4,373,890  4,243,091    
               
Tangible Equity to Tangible Assets 8.24% 8.27% 7.90% 7.87% 7.97%    
Equity to Assets 8.25% 8.28% 7.91% 7.88% 7.98%    
               
  3 Months Ended Year Ended
Efficiency Ratio 12/31/12 09/30/12 06/30/12 03/31/12 12/31/11 12/31/12 12/31/11
               
Net interest income (fully taxable equivalent)  $ 33,718  34,321  33,993  33,637 34,220  135,669  135,717
Non-interest income  6,161  5,217  4,577  5,010  4,351  20,964  18,773
Less: Net gain on securities  763  666  55  677  132  2,161  1,428
Recurring revenue  39,116  38,872  38,515  37,970  38,439  154,472  153,062
               
Total Noninterest expense  21,150  20,643  21,049  21,136  19,524  83,977  82,142
Less: Other real estate expense, net  375  1,210  665  966  1,254  3,216  5,693
Recurring expense  20,775  19,433  20,384  20,170  18,270  80,761  76,449
               
Efficiency Ratio 53.11% 49.99% 52.92% 53.12% 47.53% 52.28% 49.95%
CONTACT: Kevin T. Timmons         Vice President/Treasurer         (518) 381-3607

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