TrustCo’s Total Loans Surpass $5 Billion – Reach All-Time High; Nonperforming Assets to Total Assets at 0.29%, Lowest in 17 Years

TrustCo’s Total Loans Surpass  Billion – Reach All-Time High; Nonperforming Assets to Total Assets at 0.29%, Lowest in 17 Years

Executive Snapshot:

  • Loan portfolio reaches all-time high:
    • At $5.0 billion as of December 31, 2023, loans continued to set new all-time highs
    • On average, total loans were up $309.9 million or 6.6% for the fourth quarter 2023 compared to fourth quarter 2022
  • Continued solid financial results:
    • Key metrics for 2023:
      • Net income of $58.6 million
      • Net interest income of $171.8 million
      • Return on average assets (ROAA) of 0.97%
      • Return on average equity (ROAE) of 9.46%
      • Book value per share at period end was $33.92, up from $31.54 compared to December 31, 2022
  • Superior asset quality:
    • Nonperforming loans (NPLs) were $17.7 million as of December 31, 2023, up slightly from December 31, 2022, and continue to remain at low levels
    • NPLs to total loans improved to 0.35% compared to 0.37% at December 31, 2022
    • Nonperforming assets (NPAs) to total assets improved to 0.29% compared to 0.33% at December 31, 2022
  • Capital continues to grow:
    • Consolidated equity to assets increased to 10.46% at December 31, 2023 from 10.00% at December 31, 2022

GLENVILLE, N.Y., Jan. 22, 2024 (GLOBE NEWSWIRE) —

TrustCo Bank Corp NY (TrustCo, NASDAQ: TRST) today announced full year 2023 net income of $58.6 million or $3.08 diluted earnings per share, compared to net income of $75.2 million or $3.93 diluted earnings per share for the full year 2022; and net income of $9.8 million or $0.52 diluted earnings per share for the three months ended December 31, 2023, compared to net income of $20.9 million or $1.10 diluted earnings per share for the three months ended December 31, 2022. Total loan growth increased on average by $309.9 million, or 6.6% for the fourth quarter 2023 over the same period in 2022.

Overview

Chairman, President, and CEO, Robert J. McCormick, said, “The economic environment in 2023 presented challenges not previously seen. In trademark fashion, however, the TrustCo team navigated the adverse circumstances and delivered solid results. Total loans exceeded $5 billion for the first time in our history while credit quality remained exceptional – nonperforming assets to total assets ended the year at 0.29%, the best in 17 years. We are proud to say that this loan growth was funded without brokered deposits or borrowings. Likewise, we sustained our century-long commitment to the payment of a meaningful dividend to our shareholders. The point from which this good work springs is our strong capital position, developed over time and grown through the application of sound strategy. The interest-rate environment in 2024 could unfold in a number of different ways, but no matter how it plays out, we are positioned to capitalize upon the opportunities presented.”

TrustCo saw deposit balances rebound from the end of the prior year with net deposit inflows during the year. Loan growth continued across all categories year over year, led by an increase in residential mortgages. Loan portfolio expansion was funded by a combination of utilizing a portion of our strong cash balances and by cash flow from investments, deposit inflows, and cash flow from the existing loan portfolio. The Federal Reserve’s decision to raise the target Federal Funds rate multiple times from March 2022 through July 2023 has contributed to our results in the fourth quarter and full year 2023. Our cash position has allowed the Bank to be judicious in deposit pricing and created a buffer for the need to seek high cost funding alternatives, while other variable rate products have continued to reprice upward. Similarly, deposit costs continue to increase while we are also experiencing a shift in deposits to Time Accounts. Furthermore, we continue to deploy aggressive marketing efforts to retain and grow 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 expanded net interest margin going forward. We believe that TrustCo’s strong liquidity position continues to allow us to take advantage of opportunities as they arise.

Details

Average loans were up $309.9 million or 6.6% in the fourth quarter 2023 over the same period in 2022. Average residential loans, our primary lending focus, were up $192.2 million, or 4.6%, in the fourth quarter 2023 over the same period in 2022. Average commercial loans and home equity lines of credit also increased $50.5 million, or 22.6%, and $61.8 million, or 22.2%, respectively, in the fourth quarter 2023 over the same period in 2022.

We have been proactive in retaining deposits through pricing and aggressive marketing, which has resulted in increased balances since December 31, 2022. Total deposits as of December 31, 2023 increased $158.0 million to $5.35 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 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 $38.6 million for the fourth quarter 2023, a decrease of $10.6 million, or 21.5%, 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 at higher interest rates. The net interest margin for the fourth quarter 2023 was 2.60%, down 74 basis points from 3.34% in the fourth quarter of 2022. The yield on interest earnings assets increased to 3.93%, up 39 basis points from 3.54% in the fourth quarter of 2022. The cost of interest bearing liabilities increased to 1.72% in the fourth quarter 2023 from 0.26% in the fourth quarter 2022. Non-interest expense increased $2.4 million over the prior year period primarily as a result of a legal settlement and the closure of several branch locations. Other non-interest expense are expected to return to more normalized levels next quarter. The Bank does expect branch related savings in the future quarters due to the decreased number of branch locations.

Asset quality remains strong and has been consistent over the past twelve months. The Company recorded a provision for credit losses of $1.4 million in the fourth quarter of 2023, which is the result of a provision for credit losses on loans of $1.6 million, offset by a benefit for credit losses on unfunded commitments of $250 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 0.97% as of December 31, 2023 and 2022. The allowance for credit losses on loans was $48.6 million at December 31, 2023, compared to $46.0 million at December 31, 2022. NPLs were $17.7 million at December 31, 2023, compared to $17.5 million at December 31, 2022. NPLs were 0.35% and 0.37% of total loans at December 31, 2023 and 2022, respectively. The coverage ratio, or allowance for credit losses on loans to NPLs, was 275.0% at December 31, 2023, compared to 263.1% at December 31, 2022. NPAs were $17.9 million at December 31, 2023, compared to $19.6 million at December 31, 2022. Additionally, we had minimal charge-offs and were in a net recovery position for the year.

At December 31, 2023, our equity to asset ratio was 10.46%, compared to 10.00% at December 31, 2022. Book value per share at December 31, 2023 was $33.92, up 7.5% compared to $31.54 a year earlier.

A conference call to discuss fourth quarter 2023results will be held at 9:00 a.m. Eastern Time on January 23, 2024. 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 813290. A replay of the call will be available for thirty days by dialing toll-free for the United States at 1-866-813-9403, Access code 303906. The call will also be audio webcast at https://events.q4inc.com/attendee/827223195, and will be available for one year.

About TrustCo Bank Corp NY

TrustCo Bank Corp NY is a $6.2 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 140 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at December 31, 2023.

In addition, the Bank’s Wealth Management 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, continued elevated 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 credit rating downgrades, or failure to increase the debt ceiling; the impact of elevated interest rates; future changes in interest rates; inflationary pressures and elevated 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 material 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        
    12/31/2023   9/30/2023   12/31/2022        
Summary of operations                    
Net interest income   $ 38,607     $ 42,221     $ 49,186              
Provision for credit losses     1,350       100       50          
Noninterest income     4,474       4,574       4,775          
Noninterest expense     28,831       27,460       26,405          
Net income     9,848       14,680       20,910          
                     
Per share                    
Net income per share:                    
– Basic   $ 0.52     $ 0.77     $ 1.10          
– Diluted     0.52       0.77       1.10          
Cash dividends     0.36       0.36       0.36          
Book value at period end     33.92       32.80       31.54              
Market price at period end     31.05       27.29       37.59          
                     
At period end                    
Full time equivalent employees     750       764       750          
Full service banking offices     140       143       143          
                     
Performance ratios                    
Return on average assets     0.64 %     0.96 %     1.38 %        
Return on average equity     6.21       9.32       13.91          
Efficiency ratio (1)     60.16       58.33       48.75          
Net interest spread     2.21       2.55       3.28          
Net interest margin     2.60       2.85       3.34          
Dividend payout ratio     69.54       46.65       32.81              
                         
Capital ratios at period end                        
Consolidated equity to assets     10.46 %     10.31 %     10.00 %        
Consolidated tangible equity to tangible assets (2)     10.45 %     10.30 %     9.99 %        
                     
Asset quality analysis at period end                    
Nonperforming loans to total loans     0.35 %     0.36 %     0.37 %        
Nonperforming assets to total assets     0.29       0.31       0.33          
Allowance for credit losses on loans to total loans     0.97       0.95       0.97          
Coverage ratio (3)     2.7 x     2.6 x     2.6 x        
                     
(1) Non-GAAP measure; calculated as noninterest expense (excluding ORE income/expense and non-recurring expenses) divided by taxable equivalent net interest income plus noninterest income (excluding non-recurring loss). 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)                    
    Year ended            
    12/31/23   12/31/22            
Summary of operations                    
Net interest income $   171,845       180,135              
Provision (Credit) for credit losses     1,250       (341 )            
Noninterest income     18,315       19,260              
Noninterest expense     111,297       100,319              
Net income     58,646       75,234              
                     
Per share                    
Net income per share:                    
– Basic $   3.08       3.93              
– Diluted     3.08       3.93              
Cash dividends     1.44       1.41              
Book value at period end     33.92       31.54              
Market price at period end     31.05       37.59              
                     
Performance ratios                    
Return on average assets     0.97 %     1.22              
Return on average equity     9.46       12.60                  
Efficiency ratio (1)     56.72       50.22                  
Net interest spread     2.64       2.96                  
Net interest margin     2.91       2.99                  
Dividend payout ratio     46.71       35.86                  
                         
(1) Non-GAAP measure; calculated as noninterest expense (excluding ORE income/expense and non-recurring expenses) divided by taxable equivalent net interest income plus noninterest income (excluding non-recurring loss). See Non-GAAP Financial Measures Reconciliation.          
                     
                     
                     
CONSOLIDATED STATEMENTS OF INCOME
                     
(dollars in thousands, except per share data)                    
(Unaudited)                    
    Three months ended
    12/31/2023   9/30/2023   6/30/2023   3/31/2023   12/31/2022
Interest and dividend income:                    
Interest and fees on loans   $ 49,201     $ 47,921     $ 46,062     $ 44,272     $ 42,711  
Interest and dividends on securities available for sale:                    
U. S. government sponsored enterprises     750       672       691       692       693  
State and political subdivisions     1             1              
Mortgage-backed securities and collateralized mortgage obligations – residential     1,533       1,485       1,543       1,585       1,606  
Corporate bonds     477       473       516       521       523  
Small Business Administration – guaranteed participation securities     102       107       111       117       124  
Other securities     3       2       3       2       2  
Total interest and dividends on securities available for sale     2,866       2,739       2,865       2,917       2,948  
                     
Interest on held to maturity securities:                    
Mortgage-backed securities and collateralized mortgage obligations – residential     70       73       75       78       81  
Total interest on held to maturity securities     70       73       75       78       81  
                     
Federal Home Loan Bank stock     149       131       110       110       98  
                     
Interest on federal funds sold and other short-term investments     6,354       6,688       6,970       6,555       6,246  
Total interest income     58,640       57,552       56,082       53,932       52,084  
                     
Interest expense:                    
Interest on deposits:                    
Interest-bearing checking     165       102       49       66       61  
Savings     707       639       655       530       401  
Money market deposit accounts     2,500       2,384       1,756       814       389  
Time deposits     16,460       11,962       9,291       5,272       1,839  
Interest on short-term borrowings     201       244       279       285       208  
Total interest expense     20,033       15,331       12,030       6,967       2,898  
                     
Net interest income     38,607       42,221       44,052       46,965       49,186  
                     
Less: Provision (Credit) for credit losses     1,350       100       (500 )     300       50  
Net interest income after provision (credit) for credit losses     37,257       42,121       44,552       46,665       49,136  
                     
Noninterest income:                    
Trustco Financial Services income     1,612       1,627       1,412       1,774       1,773  
Fees for services to customers     2,563       2,590       2,847       2,648       2,783  
Other     299       357       339       247       219  
Total noninterest income     4,474       4,574       4,598       4,669       4,775  
                     
Noninterest expenses:                    
Salaries and employee benefits     12,444       12,393       13,122       13,283       13,067  
Net occupancy expense     4,209       4,358       4,262       4,598       4,261  
Equipment expense     1,852       1,923       1,873       1,962       1,700  
Professional services     1,561       1,717       1,360       1,607       1,251  
Outsourced services     2,532       2,720       2,491       2,296       2,102  
Advertising expense     384       586       518       390       532  
FDIC and other insurance     1,085       1,078       1,085       1,052       770  
Other real estate (income) expense, net     (12 )     163       148       225       101  
Other     4,776       2,522       2,468       2,266       2,621  
Total noninterest expenses     28,831       27,460       27,327       27,679       26,405  
                     
Income before taxes     12,900       19,235       21,823       23,655       27,506  
Income taxes     3,052       4,555       5,451       5,909       6,596  
                     
Net income   $ 9,848     $ 14,680     $ 16,372     $ 17,746     $ 20,910  
                     
Net income per common share:                    
– Basic   $ 0.52     $ 0.77     $ 0.86     $ 0.93     $ 1.10  
                     
– Diluted     0.52       0.77       0.86       0.93       1.10  
                     
Average basic shares (in thousands)     19,024       19,024       19,024       19,024       19,045  
Average diluted shares (in thousands)     19,026       19,024       19,024       19,027       19,050  
                     
                     
                     
CONSOLIDATED STATEMENTS OF INCOME, Continued          
           
(dollars in thousands, except per share data)          
(Unaudited)          
    Year ended            
    12/31/23   12/31/22            
Interest and dividend income:                    
Interest and fees on loans $   187,456       162,214              
Interest and dividends on securities available for sale:                    
U. S. government sponsored enterprises     2,805       1,405              
State and political subdivisions     2       2                  
Mortgage-backed securities and collateralized mortgage obligations – residential     6,146       5,677              
Corporate bonds     1,987       1,804              
Small Business Administration – guaranteed participation securities     437       551              
Other securities     10       9              
Total interest and dividends on securities available for sale     11,387       9,448              
                     
Interest on held to maturity securities:                    
Mortgage-backed securities-residential     296       343              
Total interest on held to maturity securities     296       343              
                     
Federal Home Loan Bank stock     500       305                      
                     
Interest on federal funds sold and other short-term investments     26,567       14,292              
Total interest income     226,206       186,602              
                     
Interest expense:                    
Interest on deposits:                    
Interest-bearing checking     382       190          
Savings     2,531       920              
Money market deposit accounts     7,454       1,050              
Time deposits     42,985       3,567              
Interest on short-term borrowings     1,009       740              
Total interest expense     54,361       6,467              
                     
Net interest income     171,845       180,135              
                     
Less: Provision (Credit) for credit losses     1,250       (341 )            
Net interest income after provision (credit) for credit losses     170,595       180,476              
                     
Noninterest income:                    
Trustco Financial Services income     6,425       7,037                  
Fees for services to customers     10,648       10,947                  
Other     1,242       1,276                  
Total noninterest income     18,315       19,260                  
Noninterest expenses:                    
Salaries and employee benefits     51,242       45,904                  
Net occupancy expense     17,427       17,527                  
Equipment expense     7,610       6,487                  
Professional services     6,245       5,577                  
Outsourced services     10,039       9,210                  
Advertising expense     1,878       2,046                  
FDIC and other insurance     4,300       3,159                  
Other real estate expense, net     524       310                  
Other     12,032       10,099                  
Total noninterest expenses     111,297       100,319                  
                     
Income before taxes     77,613       99,417              
Income taxes     18,967       24,183              
                     
Net income $   58,646       75,234                      
                         
Net income per common share:                    
– Basic $   3.08       3.93              
                     
– Diluted     3.08       3.93              
                     
Average basic shares (in thousands)     19,024       19,131              
Average diluted shares (in thousands)     19,025       19,133              
                     
                     
                     
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 
(dollars in thousands)
(Unaudited)
    12/31/2023   9/30/2023   6/30/2023   3/31/2023   12/31/2022
ASSETS:                    
                     
Cash and due from banks   $ 49,274     $ 45,940     $ 55,662     $ 47,595     $ 43,429  
Federal funds sold and other short term investments     528,730       461,321       547,695       589,389       607,170  
Total cash and cash equivalents     578,004       507,261       603,357       636,984       650,599  
                   
Securities available for sale:                  
U. S. government sponsored enterprises     118,668       121,474       113,570       119,132       118,187  
States and political subdivisions     26       34       34       34       34  
Mortgage-backed securities and collateralized mortgage obligations – residential     237,677       233,719       243,444       255,556       260,316  
Small Business Administration – guaranteed participation securities     17,186       17,316       18,382       19,821       20,977  
Corporate bonds     78,052       76,935       76,618       81,464       81,346  
Other securities     680       657       656       652       653  
Total securities available for sale     452,289       450,135       452,704       476,659       481,513  
                     
Held to maturity securities:                    
Mortgage-backed securities and collateralized mortgage obligations-residential     6,458       6,724       7,043       7,382       7,707  
Total held to maturity securities     6,458       6,724       7,043       7,382       7,707  
                     
Federal Reserve Bank and Federal Home Loan Bank stock     6,203       6,203       6,203       5,797       5,797  
                   
Loans:                  
Commercial     273,515       268,642       251,434       246,307       231,011  
Residential mortgage loans     4,365,063       4,343,006       4,310,005       4,241,459       4,203,451  
Home equity line of credit     347,415       332,028       308,976       296,490       286,432  
Installment loans     16,886       16,605       16,396       15,326       12,307  
Loans, net of deferred net costs     5,002,879       4,960,281       4,886,811       4,799,582       4,733,201  
                   
Less: Allowance for credit losses on loans     48,578       47,226       46,914       46,685       46,032  
Net loans     4,954,301       4,913,055       4,839,897       4,752,897       4,687,169  
                     
Bank premises and equipment, net     34,007       32,135       32,351       32,305       32,556  
Operating lease right-of-use assets     40,542       41,475       43,113       43,478       44,727  
Other assets     96,387       97,310       90,957       90,306       89,984  
                   
Total assets   $ 6,168,191     $ 6,054,298     $ 6,075,625     $ 6,045,808     $ 6,000,052  
                   
LIABILITIES:                  
Deposits:                  
Demand   $ 754,532     $ 773,293     $ 791,353     $ 806,075     $ 838,147  
Interest-bearing checking     1,015,213       1,033,898       1,082,989       1,124,785       1,183,321  
Savings accounts     1,179,241       1,235,658       1,315,893       1,400,887       1,521,473  
Money market deposit accounts     565,767       610,012       625,253       600,410       621,106  
Time deposits     1,836,024       1,581,504       1,442,959       1,280,301       1,028,763  
Total deposits     5,350,777       5,234,365       5,258,447       5,212,458       5,192,810  
                   
Short-term borrowings     88,990       103,110       113,765       134,293       122,700  
Operating lease liabilities     44,471       45,418       47,172       47,643       48,980  
Accrued expenses and other liabilities     38,668       47,479       34,852       36,711       35,575  
                   
Total liabilities     5,522,906       5,430,372       5,454,236       5,431,105       5,400,065  
                   
SHAREHOLDERS’ EQUITY:                  
Capital stock     20,058       20,058       20,058       20,058       20,058  
Surplus     257,181       257,078       257,078       257,078       257,078  
Undivided profits     425,069       422,082       414,251       404,728       393,831  
Accumulated other comprehensive loss, net of tax     (13,237 )     (31,506 )     (26,212 )     (23,375 )     (27,194 )
Treasury stock at cost     (43,786 )     (43,786 )     (43,786 )     (43,786 )     (43,786 )
                   
Total shareholders’ equity     645,285       623,926       621,389       614,703       599,987  
                     
Total liabilities and shareholders’ equity   $ 6,168,191     $ 6,054,298     $ 6,075,625     $ 6,045,808     $ 6,000,052  
                     
Outstanding shares (in thousands)     19,024       19,024       19,024       19,024       19,024  
                     

 

NONPERFORMING ASSETS
             
(dollars in thousands)
(Unaudited)
    12/31/2023

  9/30/2023

  6/30/2023

  3/31/2023

  12/31/2022

Nonperforming Assets            
             
New York and other states*            
Loans in nonaccrual status:            
Commercial   $ 536     $ 540     $ 545     $ 560     $ 219  
Real estate mortgage – 1 to 4 family     14,375       14,633       16,260       15,722       14,949  
Installment     151       93       124       59       23  
Total non-accrual loans     15,062       15,266       16,929       16,341       15,191  
Other nonperforming real estate mortgages – 1 to 4 family     3       5       7       8       10  
Total nonperforming loans     15,065       15,271       16,936       16,349       15,201  
Other real estate owned     194       1,185       1,412       1,869       2,061  
Total nonperforming assets   $ 15,259     $ 16,456     $ 18,348     $ 18,218     $ 17,262  
                                         
Florida                                        
Loans in nonaccrual status:                                        
Commercial   $ 314     $ 314     $ 314     $ 314     $ 314  
Real estate mortgage – 1 to 4 family     2,272       2,228       2,170       2,437       1,895  
Installment     15       65             62       83  
Total non-accrual loans     2,601       2,607       2,484       2,813       2,292  
Other nonperforming real estate mortgages – 1 to 4 family                              
Total nonperforming loans     2,601       2,607       2,484       2,813       2,292  
Other real estate owned                              
Total nonperforming assets   $ 2,601     $ 2,607     $ 2,484     $ 2,813     $ 2,292  
                                         
Total                                        
Loans in nonaccrual status:                                        
Commercial   $ 850     $ 854     $ 859     $ 874     $ 533  
Real estate mortgage – 1 to 4 family     16,647       16,861       18,430       18,159       16,844  
Installment     166       158       124       121       106  
Total non-accrual loans     17,663       17,873       19,413       19,154       17,483  
Other nonperforming real estate mortgages – 1 to 4 family     3       5       7       8       10  
Total nonperforming loans     17,666       17,878       19,420       19,162       17,493  
Other real estate owned     194       1,185       1,412       1,869       2,061  
Total nonperforming assets   $ 17,860     $ 19,063     $ 20,832     $ 21,031     $ 19,554  
                                         
                                         
Quarterly Net (Recoveries) Chargeoffs                                        
                                         
New York and other states*                                        
Commercial   $     $     $ (129 )   $     $  
Real estate mortgage – 1 to 4 family     219       (26 )     (161 )     (53 )     (46 )
Installment     23       14       21       (6 )     31  
Total net chargeoffs (recoveries)   $ 242     $ (12 )   $ (269 )   $ (59 )   $ (15 )
                                         
Florida                                        
Commercial   $     $     $     $     $  
Real estate mortgage – 1 to 4 family                       (25 )      
Installment     6             40       31        
Total net chargeoffs (recoveries)   $ 6     $     $ 40     $ 6     $  
                                         
Total                                        
Commercial   $     $     $ (129 )   $     $  
Real estate mortgage – 1 to 4 family     219       (26 )     (161 )     (78 )     (46 )
Installment     29       14       61       25       31  
Total net chargeoffs (recoveries)   $ 248     $ (12 )   $ (229 )   $ (53 )   $ (15 )
                                         
                                         
Asset Quality Ratios                                        
                                         
Total nonperforming loans (1)   $ 17,666     $ 17,878     $ 19,420     $ 19,162     $ 17,493  
Total nonperforming assets (1)     17,860       19,063       20,832       21,031       19,554  
Total net chargeoffs (recoveries) (2)     248       (12 )     (229 )     (53 )     (15 )
                                         
Allowance for credit losses on loans (1)     48,578       47,226       46,914       46,685       46,032  
                                         
Nonperforming loans to total loans     0.35 %     0.36 %     0.40 %     0.40 %     0.37 %
Nonperforming assets to total assets     0.29 %     0.31 %     0.34 %     0.35 %     0.33 %
Allowance for credit losses on loans to total loans     0.97 %     0.95 %     0.96 %     0.97 %     0.97 %
Coverage ratio (1)     275.0 %     264.2 %     241.6 %     243.6 %     263.1 %
Annualized net chargeoffs (recoveries) to average loans (2)     0.02 %     0.00 %     -0.02 %     0.00 %     0.00 %
Allowance for credit losses on loans to annualized net chargeoffs (recoveries) (2)   49.0 x     N/A       N/A       N/A       N/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  
    December 31, 2023     December 31, 2022  
    Average   Interest Average     Average   Interest Average  
    Balance     Rate     Balance     Rate  
Assets                        
                         
Securities available for sale:                        
U. S. government sponsored enterprises   $ 125,572     $ 750 2.39 %   $ 120,415     $ 693   2.30 %
Mortgage backed securities and collateralized mortgage obligations – residential     267,341       1,533 2.28       292,845       1,606   2.18  
State and political subdivisions     32       1 6.62       40       1   7.81  
Corporate bonds     80,207       477 2.38       85,701       523   2.44  
Small Business Administration – guaranteed participation securities     18,990       102 2.15       23,805       124   2.10  
Other     689       3 1.74       686       2   1.17  
                         
Total securities available for sale     492,831       2,866 2.33       523,492       2,949   2.25  
                         
Federal funds sold and other short-term Investments     461,889       6,354 5.46       669,280       6,246   3.70  
                         
Held to maturity securities:                        
Mortgage backed securities and collateralized mortgage obligations – residential     6,591       70 4.25       7,886       81   4.12  
                         
Total held to maturity securities     6,591       70 4.25       7,886       81   4.12  
                         
Federal Home Loan Bank stock     6,203       149 9.61       5,797       98   6.76  
                         
Commercial loans     273,622       3,589 5.25       223,164       2,756   4.94  
Residential mortgage loans     4,353,660       40,009 3.68       4,161,481       36,109   3.47  
Home equity lines of credit     340,670       5,338 6.22       278,853       3,661   5.21  
Installment loans     16,359       265 6.44       10,886       185   6.74  
                         
Loans, net of unearned income     4,984,311       49,201 3.94       4,674,384       42,711   3.65  
                         
Total interest earning assets     5,951,825     $ 58,640 3.93       5,880,839     $ 52,085   3.54  
                         
Allowance for credit losses on loans     (47,458 )             (45,722 )        
Cash & non-interest earning assets     169,791               171,921          
                         
                         
Total assets   $ 6,074,158             $ 6,007,038          
                         
                         
Liabilities and shareholders’ equity                        
                         
Deposits:                        
Interest bearing checking accounts   $ 1,004,744     $ 165 0.07 %   $ 1,164,178     $ 61   0.02 %
Money market accounts     586,025       2,500 1.69       668,537       389   0.23  
Savings     1,205,388       707 0.23       1,540,163       401   0.10  
Time deposits     1,720,871       16,460 3.79       983,590       1,839   0.74  
                         
Total interest bearing deposits     4,517,028       19,832 1.74       4,356,468       2,690   0.25  
Short-term borrowings     92,529       201 0.86       126,562       208   0.65  
                         
Total interest bearing liabilities     4,609,557     $ 20,033 1.72       4,483,030     $ 2,898   0.26  
                         
Demand deposits     754,078               845,493          
Other liabilities     81,297               82,085          
Shareholders’ equity     629,226               596,430          
                         
Total liabilities and shareholders’ equity   $ 6,074,158             $ 6,007,038          
                         
Net interest income, GAAP and non-GAAP tax equivalent (1)       $ 38,607           $ 49,187      
                         
Net interest spread, GAAP and non-GAAP tax equivalent (1)         2.21 %         3.28 %
                         
                         
Net interest margin (net interest income to total interest earning assets), GAAP and non-GAAP tax equivalent (1)       2.60 %         3.34 %
                         
Tax equivalent adjustment (1)                     (1 )    
                         
                         
Net interest income       $ 38,607           $ 49,186      
                         
(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)   Year ended     Year ended  
    December 31, 2023     December 31, 2022  
    Average   Interest Average     Average   Interest Average  
    Balance     Rate     Balance     Rate  
Assets                        
                         
Securities available for sale:                        
U. S. government sponsored enterprises $   121,574       2,805 2.31 % $   89,557       1,405   1.57 %
Mortgage backed securities and collateralized mortgage obligations – residential     275,565       6,146 2.23       284,901       5,677   1.99  
State and political subdivisions     33       2 6.71       41       3   6.66  
Corporate bonds     82,865       1,987 2.40       78,266       1,804   2.31  
Small Business Administration – guaranteed participation securities     20,410       437 2.14       26,679       551   2.07  
Other     686       10 1.46       686       9   1.31  
                         
Total securities available for sale     501,133       11,387 2.27       480,130       9,449   1.97  
                         
Federal funds sold and other short-term Investments     521,021       26,567 5.10       969,043       14,292   1.47  
                         
Held to maturity securities:                        
Mortgage backed securities and collateralized mortgage obligations – residential     7,053       296 4.20       8,647       343   3.97  
                         
Total held to maturity securities     7,053       296 4.20       8,647       343   3.97  
                         
Federal Home Loan Bank stock     6,018       500 8.31       5,749       305   5.31  
                         
Commercial loans     255,666       13,306 5.20       206,144       10,168   4.93  
Residential mortgage loans     4,290,241       154,235 3.60       4,081,120       140,420   3.44  
Home equity lines of credit     313,914       18,936 6.03       254,168       10,950   4.31  
Installment loans     15,345       979 6.38       9,849       676   6.87  
                         
Loans, net of unearned income     4,875,166       187,456 3.84       4,551,281       162,214   3.56  
                         
Total interest earning assets     5,910,391       226,206 3.83       6,014,850       186,603   3.10  
                         
Allowance for credit losses on loans     (46,971 )             (46,124 )        
Cash & non-interest earning assets     172,641               190,278          
                         
                         
Total assets $   6,036,061           $   6,159,004          
                         
                         
Liabilities and shareholders’ equity                        
                         
Deposits:                        
Interest bearing checking accounts $   1,067,972       382 0.04 % $   1,190,337       190   0.02 %
Money market accounts     606,230       7,454 1.23       745,714       1,050   0.14  
Savings     1,323,995       2,531 0.19       1,553,016       920   0.06  
Time deposits     1,437,336       42,985 2.99       974,428       3,567   0.37  
                         
Total interest bearing deposits     4,435,533       53,352 1.20       4,463,495       5,727   0.13  
Short-term borrowings     114,639       1,009 0.88       177,599       740   0.42  
                         
Total interest bearing liabilities     4,550,172       54,361 1.19       4,641,094       6,467   0.14  
                         
Demand deposits     784,021               838,944          
Other liabilities     81,658               81,880          
Shareholders’ equity     620,212               597,086          
                         
Total liabilities and shareholders’ equity $   6,036,063           $   6,159,004          
                         
Net interest income, GAAP and non-GAAP tax equivalent (1)         171,845             180,136      
                         
Net interest spread, GAAP and non-GAAP tax equivalent (1)         2.64 %         2.96 %
                         
                         
Net interest margin (net interest income to total interest earning assets), GAAP and non-GAAP tax equivalent (1)       2.91 %         2.99 %
                         
Tax equivalent adjustment (1)                     (1 )    
                         
                         
Net interest income         171,845             180,135      
                         
(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 book value per share is a non-GAAP financial measure derived from GAAP-based amounts. We calculate tangible book value by excluding the balance of intangible assets from total shareholders’ equity divided by shares outstanding. 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 exclusive of changes in intangible assets.

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, strategic branch closing costs, and a non-recurring expense related to the settlement of a class action lawsuit, by net interest income (fully taxable equivalent) and total noninterest income as determined under GAAP, excluding gain/loss on the disposal of assets from strategic branch closures 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)                
    12/31/2023 9/30/2023 12/31/2022        
Tangible Book Value Per Share                
                 
Equity (GAAP)   $ 645,285   $ 623,926   $ 599,987          
Less: Intangible assets     553     553     553          
Tangible equity (Non-GAAP)   $ 644,732   $ 623,373   $ 599,434          
                 
Shares outstanding     19,024     19,024     19,024          
Tangible book value per share     33.89     32.77     31.51          
Book value per share     33.92     32.80     31.54          
                 
Tangible Equity to Tangible Assets                
Total Assets (GAAP)   $ 6,168,191   $ 6,054,298   $ 6,000,052          
Less: Intangible assets     553     553     553          
Tangible assets (Non-GAAP)   $ 6,167,638   $ 6,053,745   $ 5,999,499          
                 
Tangible Equity to Tangible Assets (Non-GAAP)     10.45 %   10.30 %   9.99 %        
Equity to Assets (GAAP)     10.46 %   10.31 %   10.00 %        
                 
    Three months ended     Year ended
Efficiency Ratio   12/31/2023 9/30/2023 12/31/2022     12/31/2023 12/31/2022
                 
Net interest income (GAAP)   $ 38,607   $ 42,221   $ 49,186       $ 171,845   $ 180,135  
Taxable equivalent adjustment             1             1  
Net interest income (fully taxable equivalent) (Non-GAAP)     38,607     42,221     49,187         171,845     180,136  
Non-interest income (GAAP)     4,474     4,574     4,775         18,315     19,260  
Add: Non-recurring loss (1)     101                 101      
Less: Net gain on sale of building                         268  
Revenue used for efficiency ratio (Non-GAAP)   $ 43,182   $ 46,795   $ 53,962       $ 190,261   $ 199,128  
                 
Total noninterest expense (GAAP)   $ 28,831   $ 27,460   $ 26,405       $ 111,297   $ 100,319  
Less: Branch closure expense     114                 114      
Less: Non-recurring expenses (1)     2,750                 2,750      
Less: Other real estate (income) expense, net     (12 )   163     101         524     310  
Expense used for efficiency ratio (Non-GAAP)   $ 25,979   $ 27,297   $ 26,304       $ 107,909   $ 100,009  
                 
Efficiency Ratio     60.16 %   58.33 %   48.75 %       56.72 %   50.22 %
                 
(1) There were no non-recurring losses or expenses in the prior period.
Subsidiary:   Trustco Bank
     
Contact:    Robert Leonard
    Executive Vice President
    (518) 381-3693

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About Caroline Vega 228 Articles
Caroline Vega combines over a decade of digital strategy expertise with a deep passion for journalism, originating from her academic roots at Louisiana State University. As an editor based in New Orleans, she directs the editorial narrative at Commercial Lending News, where she crafts compelling content on commercial lending. Her unique approach weaves her background in finance and digital marketing into stories that not only inform but also drive industry conversations forward.