TrustCo’s Home Town Approach to Customer Relationships Propels Loans to All Time High

Published

Reports Third Quarter Net Income Of $14.7 million

Executive Snapshot:

  • Loan portfolio reaches all-time high:
    • Total loans were up $330.8 million or 7.1% for the third quarter 2023 compared to third quarter 2022
    • At $5.0 billion as of September 30, 2023, loans continue to set new all-time highs
  • Continued solid financial results:
    • Key metrics for third quarter 2023:
      • Net income of $14.7 million
      • Net interest income of $42.2 million
      • Return on average assets (ROAA) of 0.96%
      • Return on average equity (ROAE) of 9.32%
      • Book value at period end was $32.80, up from $30.89 compared to September 30, 2022
  • Superior asset quality:
    • Nonperforming loans (NPLs) were $17.9 million as of September 30, 2023, down from the same period in the prior year, and continue to remain at low levels
    • NPLs to total loans improved to 0.36% compared to 0.40% at September 30, 2022
    • Quarterly net recoveries were $12 thousand in the third quarter 2023, resulting in seven consecutive quarters of net recoveries
  • Capital continues to grow:
    • Consolidated equity to assets increased to 10.31% at September 30, 2023 from 9.69% at September 30, 2022

GLENVILLE, N.Y., Oct. 23, 2023 (GLOBE NEWSWIRE) -- TrustCo Bank Corp NY (TrustCo, NASDAQ: TRST) today announced third quarter 2023 net income of $14.7 million, or $0.77 diluted earnings per share, compared to net income of $16.4 million, or $0.86 diluted earnings per share, for the second quarter 2023; and compared to net income of $19.4 million, or $1.01 diluted earnings per share, for the third quarter 2022; and net income of $48.8 million, or $2.57 diluted earnings per share, for the nine months ended September 30, 2023, compared to net income of $54.3 million, or $2.84 diluted earnings per share, for the nine months ended September 30, 2022. Total loan growth increased $330.8 million, or 7.1% for the third quarter 2023 over the same period in 2022.

Overview

Chairman, President, and CEO, Robert J. McCormick said “Our strength, in large measure, is characterized by our credit quality. Solid underwriting and the avoidance of irresponsible lending have long been part of the fabric of our company, and we recently have had seven consecutive quarters of net loan recoveries. We have leveraged strong customer relationships to foster organic loan portfolio growth and retain deposits despite competitive pressure on pricing. We are realizing the benefits of our long-term capital preservation strategy, avoiding the pitfalls of low return investments that have plagued others. Liquidity management continues to be an acute focus, and our capital ratio results this quarter exemplify those efforts. Other TrustCo hallmarks continue to serve us well – we are debt free and extremely well-capitalized. While we can’t predict the future, no matter what the rate environment, we stand ready to capitalize on opportunities.”

TrustCo saw deposit balances rebound from the end of the prior year with net deposit inflows during the first nine months of 2023. Loan growth continued across all categories in the third quarter 2023 compared to the prior year’s third quarter, led by an increase in residential mortgages. Loan portfolio expansion was funded by a combination of utilizing a portion of our strong cash balances and by cash flow from investments, deposit inflows, and cash flow from the existing loan portfolio. The Federal Reserve’s decision to raise the target Federal Funds rate multiple times since March 2022 has contributed to our results in the third quarter 2023, as our cash position and other variable rate products continue to reprice upward, and they are likely to continue to do so to the extent there are additional rate increases. Accordingly, deposit costs continue to increase while we are also experiencing a shift in deposits to Time Deposits. We continue to deploy strong marketing efforts to retain our deposit balances. We also note that current mortgage rates significantly exceed the yield on our existing portfolio of mortgages, which, if sustained, should result in positive to net interest margin going forward. TrustCo’s strong liquidity position continues to allow us to take advantage of opportunities as they arise.

Details

Average loans were up $337.6 million or 7.4% in the third quarter 2023 over the same period in 2022. Average residential loans, our primary lending focus, were up $219.4 million, or 5.3%, in the third quarter 2023 over the same period in 2022. Average commercial loans and home equity lines of credit also increased $53.6 million, or 25.8%, and $58.9 million, or 22.5%, respectively, in the third quarter 2023 over the same period in 2022.

We are actively retaining deposits, which is evident since they have increased since December 31, 2022. Total deposits as of September 30, 2023 increased $41.6 million to $5.23 billion from December 31, 2022. As we move forward, our objective is to continue to encourage customers to retain these funds in the expanded product offerings of the Bank through aggressive marketing and product differentiation.   We understood the big inflows of deposits during the pandemic were temporary and that is why we did not invest that liquidity into securities or loans, but we instead retained that liquidity on the balance sheet for when depositors would start to absorb the funds. This gave us flexibility to strategically price deposits while retaining core customers.

Net interest income was $42.2 million for the third quarter 2023, a decrease of $5.6 million, or 11.7%, compared to the same period in 2022, driven by a higher cost of deposits, partially offset by the increased yield on the cash balance at the Federal Reserve Bank due to the increases in the Federal Funds target rate over the past year, and loan growth. The net interest margin for the third quarter 2023 was 2.85%, down 31 basis points from 3.16% in the third quarter of 2022. The yield on interest earnings assets increased to 3.88%, up 64 basis points from 3.24 % in the third quarter of 2022. The cost of interest bearing liabilities increased to 1.33% in the third quarter 2023 from 0.11% in the third quarter 2022.

Asset quality remains strong and has been consistent over the past twelve months. The Company recorded a provision for credit losses of $100 thousand in the third quarter of 2023, which is the result of a provision for credit losses on loans of $300 thousand, offset by a benefit for credit losses on unfunded commitments of $200 thousand as a result of a corresponding decrease in unfunded loan commitments. The ratio of allowance for credit losses on loans to total loans was 0.95% and 0.98% as of September 30, 2023 and 2022, respectively. The allowance for credit losses on loans was $47.2 million at September 30, 2023, compared to $45.5 million at September 30, 2022. NPLs were $17.9 million at September 30, 2023, compared to $18.7 million at September 30, 2022. NPLs were 0.36% and 0.40% of total loans at September 30, 2023 and 2022, respectively. The coverage ratio, or allowance for credit losses on loans to NPLs, was 264.2% at September 30, 2023, compared to 243.6% at September 30, 2022. Nonperforming assets (NPAs) were $19.1 million at September 30, 2023, compared to $19.4 million at September 30, 2022.   Additionally, we have also had minimal charge-offs and have been in a net recovery position for the past seven quarters.  

At September 30, 2023, our equity to asset ratio was 10.31%, compared to 9.69% at September 30, 2022. Book value per share at September 30, 2023 was $32.80, up 6.2% compared to $30.89 a year earlier.

A conference call to discuss third quarter 2023 results will be held at 9:00 a.m. Eastern Time on October 24, 2023. Those wishing to participate in the call may dial toll-free for the United States at 1-833-470-1428, and for Canada at 1-833-950-0062, Access code 040076.   A replay of the call will be available for thirty days by dialing toll-free for the United States and Canada at 1-866-813-9403, Access code 265872. The call will also be audio webcast at https://events.q4inc.com/attendee/175259326 , and will be available for one year.

About TrustCo Bank Corp NY

TrustCo Bank Corp NY is a $6.1 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 143 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at September 30, 2023.

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

Forward-Looking Statements

All statements in this news release that are not historical are forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future development, results or periods. Examples of forward-looking statements include, among others, statements we make regarding our expectations for our future performance, including our expectations regarding the effects of the economic environment on our financial results, our ability to retain customers and the amount of customers’ business, including deposit balances, with us, the impact of the Federal Reserve’s actions regarding interest rates, the growth of loans and deposits throughout our branch network, the increase in residential mortgage rates, and our ability to capitalize on economic changes in the areas in which we operate. Forward-looking statements are based on management’s current expectations as well as certain assumptions and estimates made by, and information available to, management at the time the statements are made. Such forward-looking statements are subject to factors and uncertainties that could cause actual results to differ materially for TrustCo from the views, beliefs and projections expressed in such statements, and many of the risks and uncertainties are heightened by or may, in the future, be heightened by volatility in financial markets and macroeconomic or geopolitical concerns related to inflation, rising interest rates and ongoing armed conflicts (including the Russia/Ukraine conflict and the conflict in Israel and surrounding areas). TrustCo wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The following important factors, among others, in some cases have affected and in the future could affect TrustCo’s actual results and could cause TrustCo’s actual financial performance to differ materially from that expressed in any forward-looking statement: the soundness of other financial institutions; U.S. government shutdowns or failure to increase the debt ceiling; changes in interest rates, including recent and possible future increases fueled by inflation; inflationary pressures and rising prices; exposure to credit risk in our lending activities; the sufficiency of our allowance for credit losses on loans to cover actual loan losses; our ability to meet the cash flow requirements of our depositors or borrowers or meet our operating cash needs to fund corporate expansion and other activities; claims and litigation pertaining to fiduciary responsibility and lender liability; our dependency upon the services of the management team; our disclosure controls and procedures’ ability to prevent or detect errors or acts of fraud; the adequacy of our business continuity and disaster recovery plans; the effectiveness of our risk management framework; the chance of a prolonged economic downturn, especially one affecting our geographic market area; instability in global economic conditions and geopolitical matters, as well as volatility in financial markets; fluctuations in the trust wealth management fees we receive as a result of investment performance; the impact of regulatory capital rules on our growth; changes in laws and regulations; our compliance with the USA PATRIOT Act, Bank Secrecy Act, and other laws and regulations that could result in fines or sanctions; changes in tax laws; limitations on our ability to pay dividends; TrustCo Realty Corp.’s ability to qualify as a real estate investment trust; changes in accounting standards; competition within our market areas; consumers and businesses’ use of non-banks to complete financial transactions; our reliance on third-party service providers; the impact of data breaches and cyber-attacks; the impact of a failure in or breach of our operational or security systems or infrastructure, or those of third parties; the impact of an unauthorized disclosure of sensitive or confidential client or customer information; the impact of interruptions in the effective operation of our computer systems; the impact of any expansion by us into new lines of business or new products and services; the impact of anti-takeover provisions in our organizational documents; the impact of the manner in which we allocate capital; the impact of severe weather events and climate change on us and the communities we serve, including societal responses to climate change; and other risks and uncertainties under the heading “Risk Factors” in our most recent annual report on Form 10-K and, if any, in our subsequent quarterly reports on Form 10-Q or other securities filings. The forward-looking statements contained in this news release represent TrustCo management’s judgment as of the date of this news release. TrustCo disclaims, however, any intent or obligation to update forward-looking statements, either as a result of future developments, new information or otherwise, except as may be required by law.

TRUSTCO BANK CORP NY 
GLENVILLE, NY 
  
FINANCIAL HIGHLIGHTS 
  
(dollars in thousands, except per share data) 
(Unaudited) 
  Three months ended 
  9/30/2023 6/30/2023 9/30/2022 
Summary of operations       
Net interest income $42,221 $44,052  $47,793 
Provision (Credit) for credit losses  100  (500)  300 
Noninterest income  4,574  4,598   4,386 
Noninterest expense  27,460  27,327   26,144 
Net income  14,680  16,372   19,364 
        
Per share       
Net income per share:       
- Basic $0.77 $0.86  $1.01 
- Diluted  0.77  0.86   1.01 
Cash dividends  0.36  0.36   0.35 
Book value at period end  32.80  32.66   30.89 
Market price at period end  27.29  28.61   31.42 
        
At period end       
Full time equivalent employees  764  791   753 
Full service banking offices  143  143   144 
        
Performance ratios       
Return on average assets  0.96% 1.09 % 1.24%
Return on average equity  9.32  10.61   12.78 
Efficiency ratio (1)  58.33  55.87   49.87 
Net interest spread  2.55  2.74   3.13 
Net interest margin  2.85  2.98   3.16 
Dividend payout ratio  46.65  41.83   34.57 
        
Capital ratios at period end       
Consolidated equity to assets  10.31% 10.23 % 9.69%
Consolidated tangible equity to tangible assets (2)  10.30% 10.22 % 9.68%
        
Asset quality analysis at period end       
Nonperforming loans to total loans  0.36% 0.40 % 0.40%
Nonperforming assets to total assets  0.31  0.34   0.32 
Allowance for credit losses on loans to total loans  0.95  0.96   0.98 
Coverage ratio (3) 2.6x 2.4x 2.4x 
        
        
(1) Non-GAAP measure; calculated as noninterest expense (excluding ORE income/expense) divided by taxable
equivalent net interest income plus noninterest income. See Non-GAAP Financial Measures Reconciliation.
(2) Non-GAAP measure; calculated as total shareholders' equity less $553 of intangible assets divided by total assets less
$553 of intangible assets. See Non-GAAP Financial Measures Reconciliation.
(3) Calculated as allowance for credit losses on loans divided by total nonperforming loans.
        

FINANCIAL HIGHLIGHTS, Continued     
 
(dollars in thousands, except per share data)     
(Unaudited)     
  Nine months ended 
  09/30/23 09/30/22 
Summary of operations     
Net interest income$133,238  130,949  
(Credit) Provision for credit losses (100) (391) 
Noninterest income 13,841  14,485  
Noninterest expense 82,466  73,914  
Net income 48,798  54,324  
      
Per share     
Net income per share:     
- Basic$2.57  2.84  
- Diluted 2.57  2.84  
Cash dividends 1.08  1.05  
Book value at period end 32.80  30.89  
Market price at period end 27.29  31.42  
      
Performance ratios     
Return on average assets 1.08 %1.17  
Return on average equity 10.57  12.16  
Efficiency ratio (1) 55.70  50.77  
Net interest spread 2.78  2.86  
Net interest margin 3.01  2.88  
Dividend payout ratio 42.11  37.03  
      
(1) Non-GAAP measure; calculated as noninterest expense (excluding ORE income/expense) divided by taxable 
equivalent net interest income plus noninterest income. See Non-GAAP Financial Measures Reconciliation. 
      

CONSOLIDATED STATEMENTS OF INCOME
           
(dollars in thousands, except per share data)          
(Unaudited)          
  Three months ended
  9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022
Interest and dividend income:          
Interest and fees on loans $47,921 $46,062  $44,272 $42,711 $40,896
Interest and dividends on securities available for sale:          
U. S. government sponsored enterprises  672  691   692  693  479
State and political subdivisions  -  1   -  -  1
Mortgage-backed securities and collateralized mortgage          
obligations - residential  1,485  1,543   1,585  1,606  1,617
Corporate bonds  473  516   521  523  526
Small Business Administration - guaranteed          
participation securities  107  111   117  124  133
Other securities  2  3   2  2  3
Total interest and dividends on securities available for sale  2,739  2,865   2,917  2,948  2,759
           
Interest on held to maturity securities:          
Mortgage-backed securities and collateralized mortgage          
obligations - residential  73  75   78  81  85
Total interest on held to maturity securities  73  75   78  81  85
           
Federal Home Loan Bank stock  131  110   110  98  80
           
Interest on federal funds sold and other short-term investments  6,688  6,970   6,555  6,246  5,221
Total interest income  57,552  56,082   53,932  52,084  49,041
           
Interest expense:          
Interest on deposits:          
Interest-bearing checking  102  49   66  61  43
Savings  639  655   530  401  200
Money market deposit accounts  2,384  1,756   814  389  237
Time deposits  11,962  9,291   5,272  1,839  646
Interest on short-term borrowings  244  279   285  208  122
Total interest expense  15,331  12,030   6,967  2,898  1,248
           
Net interest income  42,221  44,052   46,965  49,186  47,793
           
Less: Provision (Credit) for credit losses  100  (500)  300  50  300
Net interest income after provision (credit) for credit losses  42,121  44,552   46,665  49,136  47,493
           
Noninterest income:          
Trustco Financial Services income  1,627  1,412   1,774  1,773  1,435
Fees for services to customers  2,590  2,847   2,648  2,783  2,705
Other  357  339   247  219  246
Total noninterest income  4,574  4,598   4,669  4,775  4,386
           
Noninterest expenses:          
Salaries and employee benefits  12,393  13,122   13,283  13,067  12,134
Net occupancy expense  4,358  4,262   4,598  4,261  4,483
Equipment expense  1,923  1,873   1,962  1,700  1,532
Professional services  1,717  1,360   1,607  1,251  1,375
Outsourced services  2,720  2,491   2,296  2,102  2,328
Advertising expense  586  518   390  532  508
FDIC and other insurance  1,078  1,085   1,052  770  773
Other real estate expense, net  163  148   225  101  124
Other  2,522  2,468   2,266  2,621  2,887
Total noninterest expenses  27,460  27,327   27,679  26,405  26,144
           
Income before taxes  19,235  21,823   23,655  27,506  25,735
Income taxes  4,555  5,451   5,909  6,596  6,371
           
Net income $14,680 $16,372  $17,746 $20,910 $19,364
           
Net income per common share:          
- Basic $0.77 $0.86  $0.93 $1.10 $1.01
           
- Diluted  0.77  0.86   0.93  1.10  1.01
           
Average basic shares (in thousands)  19,024  19,024   19,024  19,045  19,111
Average diluted shares (in thousands)  19,024  19,024   19,028  19,050  19,112
           

CONSOLIDATED STATEMENTS OF INCOME, Continued
 
(dollars in thousands, except per share data)
(Unaudited)
  Nine months ended 
  09/30/23 09/30/22 
Interest and dividend income:     
Interest and fees on loans$138,255  119,503  
Interest and dividends on securities available for sale:     
U. S. government sponsored enterprises 2,055  712  
State and political subdivisions 1  2  
Mortgage-backed securities and collateralized mortgage     
obligations - residential 4,613  4,071  
Corporate bonds 1,510  1,281  
Small Business Administration - guaranteed     
participation securities 335  427  
Other securities 7  7  
Total interest and dividends on securities available for sale 8,521  6,500  
      
Interest on held to maturity securities:     
Mortgage-backed securities-residential 226  262  
Total interest on held to maturity securities 226  262  
      
Federal Home Loan Bank stock 351  207  
      
Interest on federal funds sold and other short-term investments 20,213  8,046  
Total interest income 167,566  134,518  
      
Interest expense:     
Interest on deposits:     
Interest-bearing checking 217  129  
Savings 1,824  519  
Money market deposit accounts 4,954  661  
Time deposits 26,525  1,728  
Interest on short-term borrowings 808  532  
Total interest expense 34,328  3,569  
      
Net interest income 133,238  130,949  
      
Less: (Credit) Provision for credit losses (100) (391) 
Net interest income after (credit) provision for credit losses 133,338  131,340  
      
Noninterest income:     
Trustco Financial Services income 4,813  5,264  
Fees for services to customers 8,085  8,164  
Other 943  1,057  
Total noninterest income 13,841  14,485  
      
Noninterest expenses:     
Salaries and employee benefits 38,798  32,837  
Net occupancy expense 13,218  13,266  
Equipment expense 5,758  4,787  
Professional services 4,684  4,326  
Outsourced services 7,507  7,108  
Advertising expense 1,494  1,514  
FDIC and other insurance 3,215  2,389  
Other real estate expense, net 536  209  
Other 7,256  7,478  
Total noninterest expenses 82,466  73,914  
      
Income before taxes 64,713  71,911  
Income taxes 15,915  17,587  
      
Net income$48,798  54,324  
      
Net income per common share:     
- Basic$2.57  2.84  
      
- Diluted 2.57  2.84  
      
Average basic shares (in thousands) 19,024  19,160  
Average diluted shares (in thousands) 19,024  19,160  
      

 

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 
(dollars in thousands)
(Unaudited)
  9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022
ASSETS:          
           
Cash and due from banks $45,940  $55,662  $47,595  $43,429  $46,236 
Federal funds sold and other short term investments  461,321   547,695   589,389   607,170   795,028 
Total cash and cash equivalents  507,261   603,357   636,984   650,599   841,264 
           
Securities available for sale:          
U. S. government sponsored enterprises  121,474   113,570   119,132   118,187   102,779 
States and political subdivisions  34   34   34   34   41 
Mortgage-backed securities and collateralized mortgage          
obligations - residential  233,719   243,444   255,556   260,316   261,242 
Small Business Administration - guaranteed          
participation securities  17,316   18,382   19,821   20,977   22,498 
Corporate bonds  76,935   76,618   81,464   81,346   81,002 
Other securities  657   656   652   653   657 
Total securities available for sale  450,135   452,704   476,659   481,513   468,219 
           
Held to maturity securities:          
Mortgage-backed securities and collateralized mortgage          
obligations-residential  6,724   7,043   7,382   7,707   8,091 
Total held to maturity securities  6,724   7,043   7,382   7,707   8,091 
           
Federal Reserve Bank and Federal Home Loan Bank stock  6,203   6,203   5,797   5,797   5,797 
           
Loans:          
Commercial  268,642   251,434   246,307   231,011   217,120 
Residential mortgage loans  4,343,006   4,310,005   4,241,459   4,203,451   4,132,365 
Home equity line of credit  332,028   308,976   296,490   286,432   269,341 
Installment loans  16,605   16,396   15,326   12,307   10,665 
Loans, net of deferred net costs  4,960,281   4,886,811   4,799,582   4,733,201   4,629,491 
           
Less: Allowance for credit losses on loans  47,226   46,914   46,685   46,032   45,517 
Net loans  4,913,055   4,839,897   4,752,897   4,687,169   4,583,974 
           
Bank premises and equipment, net  32,135   32,351   32,305   32,556   31,931 
Operating lease right-of-use assets  41,475   43,113   43,478   44,727   45,733 
Other assets  97,310   90,957   90,306   89,984   94,485 
           
Total assets $6,054,298  $6,075,625  $6,045,808  $6,000,052  $6,079,494 
           
LIABILITIES:          
Deposits:          
Demand $773,293  $791,353  $806,075  $838,147  $859,829 
Interest-bearing checking  1,033,898   1,082,989   1,124,785   1,183,321   1,188,790 
Savings accounts  1,235,658   1,315,893   1,400,887   1,521,473   1,562,564 
Money market deposit accounts  610,012   625,253   600,410   621,106   716,319 
Time deposits  1,581,504   1,442,959   1,280,301   1,028,763   954,352 
Total deposits  5,234,365   5,258,447   5,212,458   5,192,810   5,281,854 
           
Short-term borrowings  103,110   113,765   134,293   122,700   124,932 
Operating lease liabilities  45,418   47,172   47,643   48,980   50,077 
Accrued expenses and other liabilities  47,479   34,852   36,711   35,575   33,625 
           
Total liabilities  5,430,372   5,454,236   5,431,105   5,400,065   5,490,488 
           
SHAREHOLDERS' EQUITY:          
Capital stock  20,058   20,058   20,058   20,058   20,046 
Surplus  257,078   257,078   257,078   257,078   256,661 
Undivided profits  422,082   414,251   404,728   393,831   379,769 
Accumulated other comprehensive loss, net of tax  (31,506)  (26,212)  (23,375)  (27,194)  (25,209)
Treasury stock at cost  (43,786)  (43,786)  (43,786)  (43,786)  (42,261)
           
Total shareholders' equity  623,926   621,389   614,703   599,987   589,006 
           
Total liabilities and shareholders' equity $6,054,298  $6,075,625  $6,045,808  $6,000,052  $6,079,494 
           
Outstanding shares (in thousands)  19,024   19,024   19,024   19,024   19,052 
           

 

NONPERFORMING ASSETS
       
(dollars in thousands)
(Unaudited)
  9/30/20236/30/20233/31/202312/31/20229/30/2022
Nonperforming Assets      
       
New York and other states*      
Loans in nonaccrual status:      
Commercial $540 $545 $560 $219 $179 
Real estate mortgage - 1 to 4 family  14,633  16,260  15,722  14,949  16,295 
Installment  93  124  59  23  29 
Total non-accrual loans  15,266  16,929  16,341  15,191  16,503 
Other nonperforming real estate mortgages - 1 to 4 family  5  7  8  10  12 
Total nonperforming loans  15,271  16,936  16,349  15,201  16,515 
Other real estate owned  1,185  1,412  1,869  2,061  682 
Total nonperforming assets $16,456 $18,348 $18,218 $17,262 $17,197 
       
Florida      
Loans in nonaccrual status:      
Commercial $314 $314 $314 $314 $- 
Real estate mortgage - 1 to 4 family  2,228  2,170  2,437  1,895  2,104 
Installment  65  -  62  83  65 
Total non-accrual loans  2,607  2,484  2,813  2,292  2,169 
Other nonperforming real estate mortgages - 1 to 4 family  -  -  -  -  - 
Total nonperforming loans  2,607  2,484  2,813  2,292  2,169 
Other real estate owned  -  -  -  -  - 
Total nonperforming assets $2,607 $2,484 $2,813 $2,292 $2,169 
       
Total      
Loans in nonaccrual status:      
Commercial $854 $859 $874 $533 $179 
Real estate mortgage - 1 to 4 family  16,861  18,430  18,159  16,844  18,399 
Installment  158  124  121  106  94 
Total non-accrual loans  17,873  19,413  19,154  17,483  18,672 
Other nonperforming real estate mortgages - 1 to 4 family  5  7  8  10  12 
Total nonperforming loans  17,878  19,420  19,162  17,493  18,684 
Other real estate owned  1,185  1,412  1,869  2,061  682 
Total nonperforming assets $19,063 $20,832 $21,031 $19,554 $19,366 
       
       
Quarterly Net (Recoveries) Chargeoffs      
       
New York and other states*      
Commercial $- $(129)$- $- $- 
Real estate mortgage - 1 to 4 family  (26) (161) (53) (46) (164)
Installment  14  21  (6) 31  34 
Total net (recoveries) chargeoffs $(12)$(269)$(59)$(15)$(130)
       
Florida      
Commercial $- $- $- $- $- 
Real estate mortgage - 1 to 4 family  -  -  (25) -  - 
Installment  -  40  31  -  (2)
Total net (recoveries) chargeoffs $- $40 $6 $- $(2)
       
Total      
Commercial $- $(129)$- $- $- 
Real estate mortgage - 1 to 4 family  (26) (161) (78) (46) (164)
Installment  14  61  25  31  32 
Total net (recoveries) chargeoffs $(12)$(229)$(53)$(15)$(132)
       
       
Asset Quality Ratios      
       
Total nonperforming loans (1) $17,878 $19,420 $19,162 $17,493 $18,684 
Total nonperforming assets (1)  19,063  20,832  21,031  19,554  19,366 
Total net recoveries (2)  (12) (229) (53) (15) (132)
       
Allowance for credit losses on loans (1)  47,226  46,914  46,685  46,032  45,517 
       
Nonperforming loans to total loans  0.36% 0.40% 0.40% 0.37% 0.40%
Nonperforming assets to total assets  0.31% 0.34% 0.35% 0.33% 0.32%
Allowance for credit losses on loans to total loans  0.95% 0.96% 0.97% 0.97% 0.98%
Coverage ratio (1)  264.2% 241.6% 243.6% 263.1% 243.6%
Annualized net (recoveries) chargeoffs to average loans (2)  0.00% -0.02% 0.00% 0.00% -0.01%
Allowance for credit losses on loans to annualized net (recoveries) chargeoffs (2) N/AN/AN/AN/AN/A
 
* Includes New York, New Jersey, Vermont and Massachusetts.
(1) At period-end
(2) For the three-month period ended
       

DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY -
INTEREST RATES AND INTEREST DIFFERENTIAL
 
(dollars in thousands)            
(Unaudited) Three months ended  Three months ended 
  September 30, 2023  September 30, 2022 
  Average InterestAverage  Average InterestAverage 
  Balance  Rate  Balance  Rate 
Assets            
             
Securities available for sale:            
U. S. government sponsored enterprises $119,406  $6722.25% $104,633  $4791.83%
Mortgage backed securities and collateralized mortgage            
obligations - residential  269,535   1,4852.19   302,886   1,6172.13 
State and political subdivisions  34   -6.74   41   18.12 
Corporate bonds  80,331   4732.36   86,965   5262.42 
Small Business Administration - guaranteed            
participation securities  19,801   1072.15   25,533   1332.08 
Other  686   21.17   686   31.75 
             
Total securities available for sale  489,793   2,7392.24   520,744   2,7592.12 
             
Federal funds sold and other short-term Investments  494,597   6,6885.37   918,909   5,2212.25 
             
Held to maturity securities:            
Mortgage backed securities and collateralized mortgage            
obligations - residential  6,877   734.22   8,306   854.08 
             
Total held to maturity securities  6,877   734.22   8,306   854.08 
             
Federal Home Loan Bank stock  6,203   1318.45   5,797   805.52 
             
Commercial loans  261,061   3,3985.21   207,477   2,4844.79 
Residential mortgage loans  4,325,219   39,3213.64   4,105,859   35,3423.44 
Home equity lines of credit  320,446   4,9466.12   261,575   2,8964.39 
Installment loans  15,959   2566.37   10,213   1746.75 
             
Loans, net of unearned income  4,922,685   47,9213.89   4,585,124   40,8963.57 
             
Total interest earning assets  5,920,155  $57,5523.88   6,038,880  $49,0413.24 
             
Allowance for credit losses on loans  (47,077)      (45,519)    
Cash & non-interest earning assets  172,523       188,672     
             
             
Total assets $6,045,601      $6,182,033     
             
             
Liabilities and shareholders' equity            
             
Deposits:            
Interest bearing checking accounts $1,050,313  $1020.04% $1,195,370  $430.01%
Money market accounts  625,031   2,3841.51   744,868   2370.13 
Savings  1,282,641   6390.20   1,579,513   2000.05 
Time deposits  1,494,402   11,9623.18   981,704   6460.26 
             
Total interest bearing deposits  4,452,387   15,0871.34   4,501,455   1,1260.10 
Short-term borrowings  110,018   2440.88   138,105   1220.35 
             
Total interest bearing liabilities  4,562,405  $15,3311.33   4,639,560  $1,2480.11 
             
Demand deposits  776,885       859,122     
Other liabilities  81,411       82,290     
Shareholders' equity  624,900       601,061     
             
Total liabilities and shareholders' equity $6,045,601      $6,182,033     
             
Net interest income, GAAP and non-GAAP tax equivalent (1)   $42,221     $47,793  
             
Net interest spread, GAAP and non-GAAP tax equivalent (1)    2.55%    3.13%
             
             
Net interest margin (net interest income to            
total interest earning assets), GAAP and non-GAAP tax equivalent (1)    2.85%    3.16%
             
Tax equivalent adjustment (1)    -      -  
             
             
Net interest income   $42,221     $47,793  
             
(1) Tax equivalent adjustment to a measure results in a non-GAAP financial measure. See Non-GAAP Financial Measures Reconciliation.     
             

DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY -
INTEREST RATES AND INTEREST DIFFERENTIAL, Continued
             
(dollars in thousands)            
(Unaudited) Nine months ended  Nine months ended 
  September 30, 2023  September 30, 2022 
  Average InterestAverage  Average InterestAverage 
  Balance  Rate  Balance  Rate 
Assets            
             
Securities available for sale:            
U. S. government sponsored enterprises$120,243  2,0552.28%$79,423  7121.19%
Mortgage backed securities and collateralized mortgage            
obligations - residential 278,252  4,6132.21  282,423  4,0711.92 
State and political subdivisions 34  16.74  41  26.73 
Corporate bonds 83,732  1,5102.41  75,957  1,2812.25 
Small Business Administration - guaranteed            
participation securities 20,876  3352.14  27,623  4272.06 
Other 686  71.02  686  72.04 
             
Total securities available for sale 503,823  8,5211.69  466,153  6,5002.79 
             
Federal funds sold and other short-term Investments 540,570  20,2135.00  1,068,217  8,0461.01 
             
Held to maturity securities:            
Mortgage backed securities and collateralized mortgage            
obligations - residential 7,205  2264.18  8,897  2623.93 
             
Total held to maturity securities 7,205  2264.18  8,897  2623.93 
             
Federal Home Loan Bank stock 5,957  3515.89  5,734  2077.22 
             
Commercial loans 249,738  9,7165.19  200,525  7,4124.93 
Residential mortgage loans 4,269,494  114,2273.57  4,054,657  104,3103.43 
Home equity lines of credit 305,075  13,5985.96  246,026  7,2893.96 
Installment loans 15,015  7146.35  9,507  4926.91 
             
Loans, net of unearned income 4,839,322  138,2553.81  4,510,715  119,5033.53 
             
Total interest earning assets 5,896,877  167,5663.79  6,059,716  134,5182.96 
             
Allowance for credit losses on loans (46,812)     (46,225)    
Cash & non-interest earning assets 173,521      196,333     
             
             
Total assets$6,023,586     $6,209,824     
             
             
Liabilities and shareholders' equity            
             
Deposits:            
Interest bearing checking accounts$1,088,859  2170.03%$1,199,154  1290.01%
Money market accounts 613,119  4,9541.08  771,301  6610.11 
Savings 1,363,052  1,8240.18  1,557,503  5190.04 
Time deposits 1,343,762  26,5252.64  971,539  1,7280.24 
             
Total interest bearing deposits 4,408,792  33,5201.02  4,499,497  3,0370.09 
Short-term borrowings 121,911  8080.89  194,228  5320.37 
             
Total interest bearing liabilities 4,530,703  34,3281.01  4,693,725  3,5690.10 
             
Demand deposits 793,890      836,953     
Other liabilities 81,771      81,780     
Shareholders' equity 617,224      597,366     
             
Total liabilities and shareholders' equity$6,023,588     $6,209,824     
             
Net interest income, GAAP and non-GAAP tax equivalent (1)   133,238     130,949  
             
Net interest spread, GAAP and non-GAAP tax equivalent (1)    2.78%    2.86%
             
             
Net interest margin (net interest income to            
total interest earning assets), GAAP and non-GAAP tax equivalent (1)    3.01%    2.88%
             
Tax equivalent adjustment (1)   -     -  
             
             
Net interest income   133,238     130,949  
             
(1) Tax equivalent adjustment to a measure results in a non-GAAP financial measure. See Non-GAAP Financial Measures Reconciliation.     
             

 

Non-GAAP Financial Measures Reconciliation

Tangible equity as a percentage of tangible assets at period end is a non-GAAP financial measure derived from GAAP-based amounts. We calculate tangible equity and tangible assets by excluding the balance of intangible assets from total shareholders’ equity and total assets, respectively. We calculate tangible equity as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end. We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios. Additionally, we believe that this measure is important to many investors in the marketplace who are interested in relative changes from period to period in equity and total assets, each exclusive of changes in intangible assets.

Net interest income is commonly presented on a taxable equivalent basis. That is, to the extent that some component of the institution’s net interest income will be exempt from taxation (e.g., was received by the institution as a result of its holdings of state or municipal obligations), an amount equal to the tax benefit derived from that component is added back to the net interest income total. Management considers this adjustment helpful to investors in comparing one financial institution’s net interest income (pre- tax) to that of another institution, as each will have a different proportion of tax-exempt items in their portfolios. Moreover, net interest income is itself a component of another financial measure commonly used by financial institutions, net interest margin, which is the ratio of net interest income to average interest earning assets. Additionally, management and many financial institutions also present net interest spread, which is the average yield on interest earning assets minus the average rate paid on interest bearing liabilities. For purposes of these measures as well, taxable equivalent net interest income is generally used by financial institutions, again to provide investors with a better basis of comparison from institution to institution. We calculate taxable equivalent net interest margin by dividing net interest income, adjusted to include the benefit of non-taxable interest income, by average interest earning assets.   We calculate taxable equivalent net interest spread as the difference between average yield on interest earning assets, adjusted to include the benefit of non-taxable interest income, and the average rate paid on interest bearing liabilities.

The efficiency ratio is a non-GAAP measure of expense control relative to revenue from net interest income and non-interest fee income. We calculate the efficiency ratio by dividing total noninterest expenses as determined under GAAP, excluding other real estate expense, net, by net interest income (fully taxable equivalent) and total noninterest income as determined under GAAP, excluding non-routine items from this calculation. We believe that this provides a reasonable measure of primary banking expenses relative to primary banking revenue. Additionally, we believe this measure is important to investors looking for a measure of efficiency in our productivity measured by the amount of revenue generated for each dollar spent.

We believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our financial results. Our management internally assesses our performance based, in part, on these measures. However, these non-GAAP financial measures are supplemental and not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these measures, this presentation may not be comparable to other similarly titled measures reported by other companies. A reconciliation of the non-GAAP measures of tangible equity as a percentage of tangible assets, and efficiency ratio to the most directly comparable GAAP measures is set forth below. We have not presented a reconciliation of taxable equivalent net interest income, taxable equivalent net interest margin or taxable equivalent net interest spread to the most directly comparable GAAP measure, as there was no difference between the taxable equivalent measure and comparable GAAP measure for any period presented in this release.

NON-GAAP FINANCIAL MEASURES RECONCILIATION        
         
(dollars in thousands)        
(Unaudited)        
  9/30/20236/30/20239/30/2022    
Tangible Book Value Per Share        
         
Equity (GAAP) $623,926 $621,389 $589,006     
Less: Intangible assets  553  553  553     
Tangible equity (Non-GAAP) $623,373 $620,836 $588,453     
         
Shares outstanding  19,024  19,024  19,052     
Tangible book value per share  32.77  32.63  30.89     
Book value per share  32.80  32.66  30.92     
         
Tangible Equity to Tangible Assets        
Total Assets (GAAP) $6,054,298 $6,075,625 $6,079,494     
Less: Intangible assets  553  553  553     
Tangible assets (Non-GAAP) $6,053,745 $6,075,072 $6,078,941     
         
Tangible Equity to Tangible Assets (Non-GAAP)  10.30% 10.22% 9.68%    
Equity to Assets (GAAP)  10.31% 10.23% 9.69%    
         
  Three months ended  Nine months ended
Efficiency Ratio 9/30/20236/30/20239/30/2022  9/30/20239/30/2022
         
Net interest income (GAAP) $42,221 $44,052 $47,793   $133,238 $130,949 
Taxable equivalent adjustment  -  -  -    -  - 
Net interest income (fully taxable equivalent) (Non-GAAP)  42,221  44,052  47,793    133,238  130,949 
Non-interest income (GAAP)  4,574  4,598  4,386    13,841  14,485 
Less: Net gain on sale of building  -  -  -    -  268 
Revenue used for efficiency ratio (Non-GAAP) $46,795 $48,650 $52,179   $147,079 $145,166 
         
Total noninterest expense (GAAP) $27,460 $27,327  26,144   $82,466  73,914 
Less: Other real estate expense, net  163  148  124    536  209 
Expense used for efficiency ratio (Non-GAAP) $27,297 $27,179 $26,020   $81,930 $73,705 
         
Efficiency Ratio  58.33% 55.87% 49.87%   55.70% 50.77%
         

Contact: Robert LeonardExecutive Vice President(518) 381-3693

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Source: TrustCo Bank Corp NY

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