TRST
$6.54
Trustco Bank Corp NY
$.31
4.98%
Earnings Details
3rd Quarter September 2020
Wednesday, October 21, 2020 4:00:00 PM
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Summary

Trustco Bank Corp NY (TRST) Recent Earnings

Trustco Bank Corp NY (TRST) reported 3rd Quarter September 2020 earnings of $0.15 per share on revenue of $48.3 million. The consensus earnings estimate was $0.12 per share on revenue of $42.5 million. Revenue fell 9.6% compared to the same quarter a year ago.

Trustco Bank Corp N Y is a savings and loan holding company. It operates 144 community banking offices and 156 Automatic Teller Machines throughout the Bank’s market areas through its principal subsidiary.

Results
Reported Earnings
$0.15
Earnings Whisper
-
Consensus Estimate
$0.12
Reported Revenue
$48.3 Mil
Revenue Estimate
$42.5 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

TrustCo is Pleased to Report Third Quarter 2020 Results; Net Income of $14.1 Million and 6.9% Average Residential Loan Growth Year over Year

GLENVILLE, N.Y., Oct. 21, 2020 (GLOBE NEWSWIRE) -- TrustCo Bank Corp NY (TrustCo, NASDAQ: TRST) · TrustCo Bank Corp NY today announced third quarter 2020 net income of $14.1 million or $0.146 diluted earnings per share, and $38.6 million or $0.400 diluted earnings per share for the nine months ended September 30, 2020.

Summary

Robert J. McCormick, Chairman, President and Chief Executive Officer noted, “We continue to keep a pulse on the best ways to adapt to the changing needs of our customers in light of the ongoing impact of the pandemic. Our unparalleled dedication to customer service positions us as a stable partner to our customers as they seek updated information, support and advice in a volatile time. In response to these changing needs, we made a significant investment in our online and mobile banking offerings, rolling out a completely updated experience for customers that includes real-time account alerts, secure messaging, enhanced billpay and more. We also recently introduced ClickSwitch, an automated tool that allows new customers to change direct deposits and recurring payments in just a few minutes, creating new business opportunities for the Bank. We expect to see more activity and interest in these offerings and have an exciting plan for ongoing updates and new innovations.”

Trustco’s commitment to supporting its communities and front line workers remains steadfast. In an effort to bolster our students and schools during an unpredictable back to school period, we donated more than 450 backpacks and contributed financially to the elementary school near our newly renovated Mont Pleasant Branch. This is just one example of ways we have prioritized giving back in addition to our designated Coronavirus (“COVID-19”) Fund, donating time and financial support to front line organizations across the communities, and the COVID-19 Financial Relief Program, providing support to our borrowers experiencing economic hardships in various ways.

We also continue to closely monitor the impact of the pandemic on our business and results of operations. As of September 30, 2020, we had 24 residential loans in deferral totaling $5 million, and 6 commercial loans in deferral totaling $2 million. This represents 0.2% of total outstanding loans. As of June 30, 2020, we had 668 residential loans in deferral totaling $145 million, and 90 commercial loans in deferral totaling $45 million. This represented 4.5% of total outstanding loans. We are encouraged to see that most of our residential and commercial borrowers who had payment deferral arrangements with us have returned to making regular loan payments. Additionally, the Bank has funded 663 Paycheck Protection Program (“PPP”) loans totaling $46 million.

The third quarter of 2020 saw continued loan and deposit growth. Our focus on traditional lending criteria and conservative balance sheet management has produced consistent earnings while maintaining strong liquidity and growing capital. This approach allowed us to continue to expand our business and take advantage of changes in market and competitive conditions. As mentioned in prior quarters, the pandemic has created an uncertain future, and we believe we continue to be well-positioned to help our customers through this economic disruption and turmoil. We also continue to hire across our locations for all levels of staff. As we enter the fourth quarter of 2020 and beyond, management views the Bank as well-positioned to deploy its existing liquidity into our residential loan portfolio, and we will continue to closely monitor how the current market conditions change.

TrustCo saw average loans grow 6.5% in the third quarter of 2020 compared to the third quarter of 2019. Year over year, loan portfolio expansion was funded by a combination of utilizing a portion of our strong cash balances, cash flow from investments, and the growth in funding from customer deposits. Total average deposits are up $442.3 million or 9.9% in the third quarter 2020 compared to the prior year.

Details

Average loans were up $254.6 million or 6.5% in the third quarter 2020 over the same period in 2019. Average residential loans, our primary lending focus, were up $237.6 million, or 6.9%, in the third quarter 2020 over the same period in 2019. Average deposits are up $442.3 million or 9.9% for the third quarter 2020 over the same period a year earlier. The increase in deposits was the result of a $544.6 million or 18.1% increase total average core deposit accounts, which consist of interest bearing and non-interest bearing checking, savings and money market deposits, for the third quarter 2020 compared to the third quarter 2019. Within core, checking balances were up $333.8 million or 25.4% (including interest bearing and non-interest bearing checking balances). The increase in core deposits reflects the desire by customers to have additional funds in the safety and security offered by TrustCo’s long history of conservative banking. As we move forward, the objective is to encourage customers to retain these additional funds in the expanded product offerings of the Bank through aggressive marketing and product differentiation. Average time deposits decreased $102.3 million or 7.0% for the third quarter 2020 compared to the third quarter 2019.

The cost of interest bearing liabilities decreased to 0.52% in the third quarter 2020 from 0.94% in the third quarter 2019. A significant portion of our CD portfolio repriced during the last half of 2019 and the first nine months of 2020, which resulted in lower rates due to market conditions. The net interest margin for the third quarter 2020 was 2.73%, down 31 basis points from 3.04% in the third quarter of 2019 primarily due to the decrease in market rates over the same period resulting in less interest earned on our short-term funds and variable rate loans. Additionally, because we offered competitive shorter term rates on our time deposits in the past, we expect the cost of interest bearing liabilities to continue to decrease as time deposits reprice at lower rates.

The Bank continued to demonstrate its ability to grow shareholders’ equity as average equity was up $35.8 million or 6.9% in the third quarter of 2020 compared to the same period in 2019. Return on average assets and return on average equity for the third quarter 2020 were 0.98% and 10.04%, respectively, compared to 1.12% and 11.19% for the third quarter 2019. Improving efficiencies to reduce costs continues to remain a key area of focus. Total operating expenses decreased by $1.4 million or 5.8% in the third quarter 2020 as compared to the third quarter 2019, driven by decreases in almost all expense categories, with the exception of increases in occupancy expense and FDIC and other insurance expense.

Asset quality and loan loss reserve measures have stayed consistent. Nonperforming loans (NPLs) were $21.8 million at September 30, 2020, compared to $21.0 million at September 30, 2019. NPLs were 0.52% of total loans at September 30, 2020, compared to 0.53% at September 30, 2019. The coverage ratio, or allowance for loan losses to NPLs, was 225.4% at September 30, 2020, compared to 210.9% at September 30, 2019. Nonperforming assets (NPAs) were $22.2 million at September 30, 2020, compared to $23.4 million at September 30, 2019. The ratio of allowance for loan losses to total loans was 1.17% as of September 30, 2020, compared to 1.11% at September 30, 2019. The allowance for loan losses was $49.1 million at September 30, 2020, compared to $44.3 million at September 30, 2019. The provision for loan losses increased to $1.0 million for the third quarter 2020 compared to $-0- in the same period in the prior year, primarily driven by the uncertainty in the current economic environment resulting from COVID-19. The Bank did not adopt “FASB Accounting Standards Update 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“CECL”) as of January 1, 2020 as allowed by the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The Bank will adopt CECL as required by the CARES Act at the earlier of the termination of the National Emergency concerning COVID-19 or December 31, 2020. Net chargeoffs for the third quarter 2020 were $21 thousand versus net chargeoffs in the third quarter 2019 of $36 thousand. The annualized net chargeoffs ratio was 0.00% for the third quarter 2020 and 2019.

At September 30, 2020 the tangible equity to tangible asset ratio was 9.76%, compared to 10.07% at September 30, 2019. Book value per share at September 30, 2020 was $5.81, up 7.2% compared to $5.42 a year earlier.

TrustCo Bank Corp NY is a $5.7 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 148 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at September 30, 2020.

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

A conference call to discuss third quarter 2020 results will be held at 9:00 a.m. Eastern Time on October 22, 2020. Those wishing to participate in the call may dial toll-free 1-888-339-0764. International callers must dial 1-412-902-4195. Please ask to be joined into the TrustCo Bank Corp NY / TRST call. A replay of the call will be available for thirty days by dialing 1-877-344-7529 (1-412-317-0088 for international callers), Conference Number 10149050. The call will also be audio webcast at: https://services.choruscall.com/links/trst201022.html, and will be available for one year.

Safe Harbor Statement
All statements in this news release that are not historical are forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended. Forward-looking statements can be identified by words such as “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding our expectations for our performance during 2020, including our expectations regarding the effects of COVID-19 on our financial results and our ability to assist our customers in addressing the effects of COVID-19, our expectations with respect to our online and mobile banking product offerings, our expectations for the repricing of our CD portfolio, the impact of Federal Reserve actions regarding interest rates and the growth of loans and deposits throughout our branch network and our ability to capitalize on economic changes in the areas in which we operate. Such forward-looking statements are subject to factors that could cause actual results to differ materially for TrustCo from those discussed, and many of the risks and uncertainties are heightened by or may, in the future, be heightened by the effects of the COVID-19 pandemic. TrustCo wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The following important factors, among others, in some cases have affected and in the future could affect TrustCo’s actual results and could cause TrustCo’s actual financial performance to differ materially from that expressed in any forward-looking statement: the effect of the COVID-19 pandemic on our business, financial condition, liquidity and results of operations; the impact of the actions taken by governmental authorities to contain COVID-19 or address the impact of COVID-19 on the economy, and the effect of all of such items on our operations, liquidity and capital position, and on the financial condition of our borrowers and other customers; our ability to continue to originate a significant volume of one-to-four family mortgage loans in our market areas; our ability to continue to maintain noninterest expense and other overhead costs at reasonable levels relative to income; our ability to make accurate assumptions and judgments regarding the credit risks associated with lending and investing activities; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board, inflation, interest rates, market and monetary fluctuations; restrictions or conditions imposed by our regulators on our operations that may make it more difficult for us to achieve our goals; the future earnings and capital levels of us and Trustco Bank and the continued receipt of approvals from our primary federal banking regulators under regulatory rules to distribute capital to TrustCo, which could affect our ability to pay dividends; results of supervisory monitoring or examinations of Trustco Bank and TrustCo by our respective regulators; adverse conditions in the securities markets that lead to impairment in the value of securities in our investment portfolio; unanticipated effects from the Tax Cut and Jobs Act that may limit its benefits or adversely impact our business; the perceived overall value of our products and services by users, including in comparison to competitors’ products and services and the willingness of current and prospective customers to substitute competitors’ products and services for our products and services; changes in consumer spending, borrowing and saving habits; the effect of changes in financial services laws and regulations and the impact of other governmental initiatives affecting the financial services industry; changes in management personnel; real estate and collateral values; changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the FASB or PCAOB; disruptions, security breaches, or other adverse events affecting the third-party vendors who perform several of our critical processing functions; technological changes and electronic, cyber and physical security breaches; changes in local market areas and general business and economic trends, as well as changes in consumer spending and saving habits; our success at managing the risks involved in the foregoing and managing our business; and other risks and uncertainties under the heading “Risk Factors” in our most recent annual report on Form 10-K and, if any, in our subsequent quarterly reports on Form 10-Q or other securities filings.

TRUSTCO BANK CORP NY    
GLENVILLE, NY    
     
FINANCIAL HIGHLIGHTS    
     
(dollars in thousands, except per share data)    
(Unaudited)    
  Three months ended    
  9/30/2020 6/30/2020 9/30/2019    
Summary of operations          
Net interest income (TE)$38,166  37,681  38,644     
Provision for loan losses 1,000  2,000  -     
Noninterest income, excluding net gain on securities transactions 4,341  3,426  4,925     
Noninterest expense 22,674  23,932  24,070     
Net income 14,071  11,254  14,708     
           
Per common share          
Net income per share:          
- Basic$0.146  0.117  0.152     
- Diluted 0.146  0.117  0.152     
Cash dividends 0.068  0.068  0.068     
Book value at period end 5.81  5.73  5.42      
Market price at period end 5.22  6.33  8.15     
           
At period end          
Full time equivalent employees 771  806  823     
Full service banking offices 148  148  148     
           
Performance ratios          
Return on average assets 0.98 %0.82  1.12     
Return on average equity 10.04  8.21  11.19     
Efficiency (1) 53.61  58.30  55.17     
Net interest spread (TE) 2.63  2.69  2.88     
Net interest margin (TE) 2.73  2.81  3.04     
Dividend payout ratio 46.68  58.37  44.85     
           
Capital ratios at period end          
Consolidated tangible equity to tangible assets (2) 9.76 %9.74  10.07     
Consolidated equity to assets 9.77 %9.75  10.07     
           
Asset quality analysis at period end          
Nonperforming loans to total loans 0.52  0.52  0.53     
Nonperforming assets to total assets 0.39  0.40  0.45     
Allowance for loan losses to total loans 1.17  1.15  1.11     
Coverage ratio (3) 2.3x  2.2x  2.1x     
           
(1) Non-GAAP measure; calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income.
(2) Non-GAAP measure; calculated as total equity less $553 of intangible assets divided by total assets less $553 of intangible assets.
(3) Calculated as allowance for loan losses divided by total nonperforming loans.   
    
TE = Taxable equivalent   
           
           
           
FINANCIAL HIGHLIGHTS, Continued   
    
(dollars in thousands, except per share data)   
(Unaudited)   
  Nine months ended      
  9/30/2020 9/30/2019      
Summary of operations          
Net interest income (TE)$114,401  117,569       
Provision (Credit) for loan losses 5,000  (41)      
Net gain on securities transactions 1,155  -       
Noninterest income, excluding net gain on securities transactions 11,946  14,476       
Noninterest expense 70,874  73,839       
Net income 38,638  43,933       
           
Per common share          
Net income per share:          
- Basic$0.400  0.454       
- Diluted 0.400  0.453       
Cash dividends 0.204  0.204       
Book value at period end 5.81  5.42       
Market price at period end 5.22  8.15       
           
Performance ratios          
Return on average assets 0.94  1.14       
Return on average equity 9.38  11.56       
Efficiency (1) 56.06  55.75       
Net interest spread (TE) 2.74  2.98       
Net interest margin (TE) 2.86  3.13       
Dividend payout ratio 51.03  45.00       
           
(1) Non-GAAP measure; calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income (excluding net gain on securities transactions).  
           
TE = Taxable equivalent.  
           
           
CONSOLIDATED STATEMENTS OF INCOME
           
(dollars in thousands, except per share data)          
(Unaudited)          
  Three months ended
  9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019
Interest and dividend income:          
Interest and fees on loans$41,330  41,665  42,063  42,002  41,923 
Interest and dividends on securities available for sale:          
U. S. government sponsored enterprises 14  106  421  609  996 
State and political subdivisions 1  2  1  2  2 
Mortgage-backed securities and collateralized mortgage          
obligations - residential 1,319  1,527  2,113  2,334  2,178 
Corporate bonds 646  488  238  295  321 
Small Business Administration - guaranteed          
participation securities 216  229  245  253  282 
Other securities 5  5  6  6  6 
Total interest and dividends on securities available for sale 2,201  2,357  3,024  3,499  3,785 
           
Interest on held to maturity securities:          
Mortgage-backed securities and collateralized mortgage          
obligations - residential 138  162  175  184  187 
Total interest on held to maturity securities 138  162  175  184  187 
           
Federal Reserve Bank and Federal Home Loan Bank stock 77  192  82  203  81 
           
Interest on federal funds sold and other short-term investments 242  193  1,267  1,635  2,552 
Total interest income 43,988  44,569  46,611  47,523  48,528 
           
Interest expense:          
Interest on deposits:          
Interest-bearing checking 55  26  16  21  52 
Savings 161  166  233  271  323 
Money market deposit accounts 637  862  1,096  1,175  1,177 
Time deposits 4,749  5,599  6,391  7,468  7,974 
Interest on short-term borrowings 221  235  322  347  359 
Total interest expense 5,823  6,888  8,058  9,282  9,885 
           
Net interest income 38,165  37,681  38,553  38,241  38,643 
           
Less: Provision for loan losses 1,000  2,000  2,000  200  - 
Net interest income after provision for loan losses 37,165  35,681  36,553  38,041  38,643 
           
Noninterest income:          
Trustco Financial Services income 1,784  1,368  1,600  1,454  1,517 
Fees for services to customers 2,292  1,807  2,315  2,377  2,602 
Net gain on securities transactions -  -  1,155  -  - 
Other 265  251  264  284  806 
Total noninterest income 4,341  3,426  5,334  4,115  4,925 
           
Noninterest expenses:          
Salaries and employee benefits 10,899  11,648  11,373  11,743  11,725 
Net occupancy expense 4,277  4,385  4,306  4,399  4,094 
Equipment expense 1,607  1,606  1,802  1,768  1,689 
Professional services 1,311  1,182  1,481  1,449  1,507 
Outsourced services 1,875  1,875  2,075  1,925  1,875 
Advertising expense 305  601  488  464  494 
FDIC and other insurance 660  609  294  259  282 
Other real estate (income) expense, net (115) (32) 194  (385) 33 
Other 1,855  2,058  2,255  2,269  2,371 
Total noninterest expenses 22,674  23,932  24,268  23,891  24,070 
           
Income before taxes 18,832  15,175  17,619  18,265  19,498 
Income taxes 4,761  3,921  4,306  4,358  4,790 
           
Net income$14,071  11,254  13,313  13,907  14,708 
           
Net income per common share:          
- Basic$0.146  0.117  0.138  0.143  0.152 
           
- Diluted 0.146  0.117  0.138  0.143  0.152 
           
Average basic shares (in thousands) 96,433  96,433  96,727  96,919  96,907 
Average diluted shares (in thousands) 96,440  96,437  96,750  97,015  96,977 
           
Note: Taxable equivalent net interest income$38,166  37,681  38,554  38,243  38,644 
           
           
CONSOLIDATED STATEMENTS OF INCOME, Continued     
      
(dollars in thousands, except per share data)     
(Unaudited)     
  Nine months ended      
  9/30/2020 9/30/2019      
Interest and dividend income:          
Interest and fees on loans$125,058  124,608       
Interest and dividends on securities available for sale:          
U. S. government sponsored enterprises 541  2,600       
State and political subdivisions 4  6       
Mortgage-backed securities and collateralized mortgage          
obligations - residential 4,959  5,885       
Corporate bonds 1,372  801       
Small Business Administration - guaranteed          
participation securities 690  868       
Other securities 16  16       
Total interest and dividends on securities available for sale 7,582  10,176       
           
Interest on held to maturity securities:          
Mortgage-backed securities-residential 475  613       
Total interest on held to maturity securities 475  613       
           
Federal Reserve Bank and Federal Home Loan Bank stock 351  365       
           
Interest on federal funds sold and other short-term investments 1,702  8,843       
Total interest income 135,168  144,605       
           
Interest expense:          
Interest on deposits:          
Interest-bearing checking 97  267       
Savings 560  1,067       
Money market deposit accounts 2,595  3,122       
Time deposits 16,739  21,462       
Interest on short-term borrowings 778  1,121       
Total interest expense 20,769  27,039       
           
Net interest income 114,399  117,566       
           
Less: Provision (Credit) for loan losses 5,000  (41)      
Net interest income after provision for loan losses 109,399  117,607       
           
Noninterest income:          
Trustco Financial Services income 4,752  4,933       
Fees for services to customers 6,414  7,733       
Net gain on securities transactions 1,155  -       
Other 780  1,810       
Total noninterest income 13,101  14,476       
           
Noninterest expenses:          
Salaries and employee benefits 33,920  34,887       
Net occupancy expense 12,968  12,267       
Equipment expense 5,015  5,300       
Professional services 3,974  4,725       
Outsourced services 5,825  5,675       
Advertising expense 1,394  2,057       
FDIC and other insurance 1,563  1,528       
Other real estate expense, net 47  219       
Other 6,168  7,181       
Total noninterest expenses 70,874  73,839       
           
Income before taxes 51,626  58,244       
Income taxes 12,988  14,311       
           
Net income$38,638  43,933       
           
Net income per common share:          
- Basic$0.400  0.454       
           
- Diluted 0.400  0.453       
           
Average basic shares (in thousands) 96,531  96,825       
Average diluted shares (in thousands) 96,542  96,897       
           
Note: Taxable equivalent net interest income$114,401  117,569       
           
           
           
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 
(dollars in thousands)
(Unaudited)
  9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019
ASSETS:          
           
Cash and due from banks$47,703  44,726  43,362  48,198  49,526 
Federal funds sold and other short term investments 908,616  908,110  492,691  408,648  401,151 
Total cash and cash equivalents 956,319  952,836  536,053  456,846  450,677 
           
Securities available for sale:          
U. S. government sponsored enterprises 29,996  -  54,970  104,512  164,490 
States and political subdivisions 111  111  112  162  169 
Mortgage-backed securities and collateralized mortgage          
obligations - residential 309,768  331,469  352,067  389,517  406,166 
Small Business Administration - guaranteed          
participation securities 44,070  45,998  46,768  48,511  50,970 
Corporate bonds 70,113  54,439  48,564  30,436  40,281 
Other securities 685  685  685  685  683 
Total securities available for sale 454,743  432,702  503,166  573,823  662,759 
           
Held to maturity securities:          
Mortgage-backed securities and collateralized mortgage          
obligations-residential 15,094  16,633  17,720  18,618  19,705 
Total held to maturity securities 15,094  16,633  17,720  18,618  19,705 
           
Federal Reserve Bank and Federal Home Loan Bank stock 5,506  5,506  9,183  9,183  9,183 
           
Loans:          
Commercial 231,663  231,212  195,805  199,499  192,443 
Residential mortgage loans 3,724,746  3,681,898  3,627,121  3,583,774  3,508,647 
Home equity line of credit 248,320  254,445  265,753  267,922  273,526 
Installment loans 9,826  10,006  10,713  11,001  10,703 
Loans, net of deferred net costs 4,214,555  4,177,561  4,099,392  4,062,196  3,985,319 
           
Less: Allowance for loan losses 49,123  48,144  46,155  44,317  44,329 
Net loans 4,165,432  4,129,417  4,053,237  4,017,879  3,940,990 
           
Bank premises and equipment, net 34,417  34,042  34,428  34,622  34,168 
Operating lease right-of-use assets 47,174  48,712  49,955  51,475  49,618 
Other assets 57,244  57,155  52,905  58,876  55,369 
           
Total assets$5,735,929  5,677,003  5,256,647  5,221,322  5,222,469 
           
LIABILITIES:          
Deposits:          
Demand$635,345  612,960  480,255  463,858  453,439 
Interest-bearing checking 1,024,290  1,001,592  895,254  875,672  869,101 
Savings accounts 1,235,259  1,191,682  1,122,116  1,113,146  1,110,947 
Money market deposit accounts 699,132  666,304  617,198  599,163  570,457 
Time deposits 1,305,024  1,392,769  1,367,005  1,398,177  1,457,223 
Total deposits 4,899,050  4,865,307  4,481,828  4,450,016  4,461,167 
           
Short-term borrowings 193,455  177,278  148,090  148,666  151,095 
Operating lease liabilities 52,125  53,710  54,998  56,553  54,731 
Accrued expenses and other liabilities 30,771  27,287  23,546  27,830  29,313 
           
Total liabilities 5,175,401  5,123,582  4,708,462  4,683,065  4,696,306 
           
SHAREHOLDERS’ EQUITY:          
Capital stock 100,205  100,205  100,205  100,205  100,200 
Surplus 176,441  176,437  176,431  176,427  176,395 
Undivided profits 306,741  299,239  294,553  288,067  280,542 
Accumulated other comprehensive income (loss), net of tax 11,537  11,936  11,392  4,461  (71)
Treasury stock at cost (34,396) (34,396) (34,396) (30,903) (30,903)
           
Total shareholders’ equity 560,528  553,421  548,185  538,257  526,163 
           
Total liabilities and shareholders’ equity$5,735,929  5,677,003  5,256,647  5,221,322  5,222,469 
           
Outstanding shares (in thousands) 96,433  96,433  96,433  96,922  96,917 


NONPERFORMING ASSETS
       
(dollars in thousands)
(Unaudited)
  9/30/20206/30/20203/31/202012/31/20199/30/2019
Nonperforming Assets      
       
New York and other states*      
Loans in nonaccrual status:      
Commercial$491 571 630 816 888 
Real estate mortgage - 1 to 4 family 19,977 20,215 18,570 18,407 18,275 
Installment 49 6 24 3 13 
Total non-accrual loans 20,517 20,792 19,224 19,226 19,176 
Other nonperforming real estate mortgages - 1 to 4 family 25 26 27 29 30 
Total nonperforming loans 20,542 20,818 19,251 19,255 19,206 
Other real estate owned 423 830 1,284 1,579 2,409 
Total nonperforming assets$20,965 21,648 20,535 20,834 21,615 
       
Florida      
Loans in nonaccrual status:      
Commercial$- - - - - 
Real estate mortgage - 1 to 4 family 1,254 1,111 1,492 1,614 1,809 
Installment - - - - - 
Total non-accrual loans 1,254 1,111 1,492 1,614 1,809 
Other nonperforming real estate mortgages - 1 to 4 family - - - - - 
Total nonperforming loans 1,254 1,111 1,492 1,614 1,809 
Other real estate owned - - - - - 
Total nonperforming assets$1,254 1,111 1,492 1,614 1,809 
       
Total      
Loans in nonaccrual status:      
Commercial$491 571 630 816 888 
Real estate mortgage - 1 to 4 family 21,231 21,326 20,062 20,021 20,084 
Installment 49 6 24 3 13 
Total non-accrual loans 21,771 21,903 20,716 20,840 20,985 
Other nonperforming real estate mortgages - 1 to 4 family 25 26 27 29 30 
Total nonperforming loans 21,796 21,929 20,743 20,869 21,015 
Other real estate owned 423 830 1,284 1,579 2,409 
Total nonperforming assets$22,219 22,759 22,027 22,448 23,424 
       
       
Quarterly Net (Recoveries) Chargeoffs      
       
New York and other states*      
Commercial$(1)(6)1 (1)(28)
Real estate mortgage - 1 to 4 family 4 (27)140 146 39 
Installment 18 44 4 67 9 
Total net (recoveries) chargeoffs$21 11 145 212 20 
       
Florida      
Commercial$- - - - - 
Real estate mortgage - 1 to 4 family - - (2)(1)- 
Installment - - 19 1 16 
Total net (recoveries) chargeoffs$- - 17 - 16 
       
Total      
Commercial$(1)(6)1 (1)(28)
Real estate mortgage - 1 to 4 family 4 (27)138 145 39 
Installment 18 44 23 68 25 
Total net (recoveries) chargeoffs$21 11 162 212 36 
       
       
Asset Quality Ratios      
       
Total nonperforming loans (1)$21,796 21,929 20,743 20,869 21,015 
Total nonperforming assets (1) 22,219 22,759 22,027 22,448 23,424 
Total net (recoveries) chargeoffs (2) 21 11 162 212 36 
       
Allowance for loan losses (1) 49,123 48,144 46,155 44,317 44,329 
       
Nonperforming loans to total loans 0.52%0.52%0.51%0.51%0.53%
Nonperforming assets to total assets 0.39%0.40%0.42%0.43%0.45%
Allowance for loan losses to total loans 1.17%1.15%1.13%1.09%1.11%
Coverage ratio (1) 225.4%219.5%222.5%212.4%210.9%
Annualized net chargeoffs to average loans (2) 0.00%0.00%0.02%0.02%0.00%
Allowance for loan losses to annualized net chargeoffs (2) 584.8x1094.2x71.2x52.3x307.8x
 
* Includes New York, New Jersey, Vermont and Massachusetts.
(1) At period-end
(2) For the period ended


DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY -
INTEREST RATES AND INTEREST DIFFERENTIAL
 
(dollars in thousands)            
(Unaudited) Three months ended  Three months ended 
  September 30, 2020  September 30, 2019 
  Average InterestAverage  Average InterestAverage 
  Balance  Rate  Balance  Rate 
Assets            
             
Securities available for sale:            
U. S. government sponsored enterprises$12,391  14 0.45%$183,580  996 2.17%
Mortgage backed securities and collateralized mortgage            
obligations - residential 313,296  1,319 1.68  370,808  2,178 2.35 
State and political subdivisions 110  2 7.90  166  3 7.23 
Corporate bonds 59,555  646 4.33  40,231  321 3.19 
Small Business Administration - guaranteed            
participation securities 43,282  216 1.99  51,988  282 2.17 
Other 685  5 2.92  685  6 3.50 
             
Total securities available for sale 429,319  2,202 2.05  647,458  3,786 2.34 
             
Federal funds sold and other short-term Investments 938,087  242 0.10  465,251  2,552 2.19 
             
Held to maturity securities:            
Mortgage backed securities and collateralized mortgage            
obligations - residential 15,759  138 3.52  20,197  187 3.70 
             
Total held to maturity securities 15,759  138 3.52  20,197  187 3.70 
             
Federal Reserve Bank and Federal Home Loan Bank stock 5,506  77 5.59  9,183  81 3.53 
             
Commercial loans 231,517  2,625 4.54  190,538  2,596 5.45 
Residential mortgage loans 3,702,680  36,020 3.89  3,465,102  35,743 4.13 
Home equity lines of credit 251,459  2,515 3.98  275,047  3,401 4.95 
Installment loans 9,632  170 7.02  9,967  183 7.34 
             
Loans, net of unearned income 4,195,288  41,330 3.94  3,940,654  41,923 4.26 
             
Total interest earning assets 5,583,959  43,989 3.15  5,082,743  48,529 3.82 
             
Allowance for loan losses (48,483)     (44,448)    
Cash & non-interest earning assets 201,018      188,528     
             
             
Total assets$5,736,494     $5,226,823     
             
             
Liabilities and shareholders’ equity            
             
Deposits:            
Interest bearing checking accounts$1,024,455  55 0.02%$874,179  52 0.02%
Money market accounts 682,319  637 0.37  567,554  1,177 0.83 
Savings 1,222,956  161 0.05  1,126,935  323 0.11 
Time deposits 1,355,244  4,749 1.39  1,457,510  7,974 2.19 
             
Total interest bearing deposits 4,284,974  5,602 0.52  4,026,178  9,526 0.95 
Short-term borrowings 193,765  221 0.45  160,162  359 0.90 
             
Total interest bearing liabilities 4,478,739  5,823 0.52  4,186,340  9,885 0.94 
             
Demand deposits 622,313      438,789     
Other liabilities 78,093      80,188     
Shareholders’ equity 557,349      521,506     
             
Total liabilities and shareholders’ equity$5,736,494     $5,226,823     
             
Net interest income, tax equivalent   38,166      38,644   
             
Net interest spread    2.63%    2.88%
             
             
Net interest margin (net interest income to            
total interest earning assets)    2.73%    3.04%
             
Tax equivalent adjustment   (1)     (1)  
             
             
Net interest income   38,165      38,643   
             
             
             
             
             
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, 2020  September 30, 2019 
  Average InterestAverage  Average InterestAverage 
  Balance  Rate  Balance  Rate 
Assets            
             
Securities available for sale:            
U. S. government sponsored enterprises$42,573  541 1.69%$166,119  2,600 2.09%
Mortgage backed securities and collateralized mortgage            
obligations - residential 339,300  4,959 1.95  329,188  5,885 2.38 
State and political subdivisions 111  6 7.79  167  9 7.19 
Corporate bonds 46,508  1,372 3.93  33,678  801 3.17 
Small Business Administration - guaranteed            
participation securities 45,313  690 2.03  54,414  868 2.13 
Other 685  16 3.11  685  16 3.11 
             
Total securities available for sale 474,490  7,584 2.13  584,251  10,179 2.32 
             
Federal funds sold and other short-term Investments 693,286  1,702 0.33  504,512  8,843 2.34 
             
Held to maturity securities:            
Mortgage backed securities and collateralized mortgage            
obligations - residential 17,029  475 3.72  21,123  613 3.87 
             
Total held to maturity securities 17,029  475 3.72  21,123  613 3.87 
             
Federal Reserve Bank and Federal Home Loan Bank stock 7,998  351 5.85  9,104  365 5.35 
             
Commercial loans 217,573  7,778 4.77  191,370  7,725 5.38 
Residential mortgage loans 3,652,766  108,845 3.97  3,412,411  105,786 4.13 
Home equity lines of credit 258,956  7,898 4.07  280,248  10,441 4.97 
Installment loans 10,129  537 7.08  10,718  656 8.16 
             
Loans, net of unearned income 4,139,424  125,058 4.03  3,894,747  124,608 4.27 
             
Total interest earning assets 5,332,227  135,170 3.38  5,013,737  144,608 3.85 
             
Allowance for loan losses (46,618)     (44,744)    
Cash & non-interest earning assets 196,835      180,568     
             
             
Total assets$5,482,444     $5,149,561     
             
             
Liabilities and shareholders’ equity            
             
Deposits:            
Interest bearing checking accounts$949,909  97 0.01%$878,106  267 0.04%
Money market accounts 646,170  2,595 0.54  546,601  3,122 0.76 
Savings 1,169,316  560 0.06  1,141,607  1,067 0.12 
Time deposits 1,372,369  16,739 1.63  1,416,306  21,462 2.02 
             
Total interest bearing deposits 4,137,764  19,991 0.65  3,982,620  25,918 0.87 
Short-term borrowings 173,497  778 0.60  160,647  1,121 0.93 
             
Total interest bearing liabilities 4,311,261  20,769 0.64  4,143,267  27,039 0.87 
             
Demand deposits 543,279      418,327     
Other liabilities 77,568      79,937     
Shareholders’ equity 550,336      508,030     
             
Total liabilities and shareholders’ equity$5,482,444     $5,149,561     
             
Net interest income, tax equivalent   114,401      117,569   
             
Net interest spread    2.74%    2.98%
             
             
Net interest margin (net interest income to            
total interest earning assets)    2.86%    3.13%
             
Tax equivalent adjustment   (2)     (3)  
             
             
Net interest income   114,399      117,566   
             

Non-GAAP Financial Measures Reconciliation

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

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

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

NON-GAAP FINANCIAL MEASURES RECONCILIATION
 
(dollars in thousands, except per share amounts)
(Unaudited)
  9/30/20206/30/20209/30/2019    
         
Tangible Equity to Tangible Assets        
Total Assets (GAAP)$5,735,929 5,677,003 5,222,469     
Less: Intangible assets 553 553 553     
Tangible assets (Non-GAAP) 5,735,376 5,676,450 5,221,916     
         
Equity (GAAP) 560,528 553,421 526,163     
Less: Intangible assets 553 553 553     
Tangible equity (Non-GAAP) 559,975 552,868 525,610     
Tangible Equity to Tangible Assets (Non-GAAP) 9.76%9.74%10.07%    
Equity to Assets (GAAP) 9.77%9.75%10.07%    
         
  Three months ended  Nine months ended
Efficiency Ratio 9/30/20206/30/20209/30/2019  9/30/20209/30/2019
         
Net interest income (fully taxable equivalent) (Non-GAAP)$38,166 37,681 38,644  $114,401 117,569 
Non-interest income (GAAP) 4,341 3,426 4,925   13,101 14,476 
Less: Net gain on securities - - -   1,155 - 
Revenue used for efficiency ratio (Non-GAAP) 42,507 41,107 43,569   126,347 132,045 
         
Total noninterest expense (GAAP) 22,674 23,932 24,070   70,874 73,839 
Less: Other real estate (income) expense, net (115)(32)33   47 219 
Expense used for efficiency ratio (Non-GAAP) 22,789 23,964 24,037   70,827 73,620 
         
Efficiency Ratio 53.61%58.30%55.17%  56.06%55.75%

Subsidiary: TrustCo Bank

Contact:

Robert Leonard
Executive Vice President and
Chief Risk Officer
(518) 381-3693


 


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Source: TrustCo Bank Corp N