TrustCo Announces Record Earnings for Third Quarter 2021; Net Income of $16.8 million up 19.1% over the prior year quarter, Expands Lending Areas in Key Markets, Adds New Director

Rhea-AI Summary

TrustCo Bank Corp NY (TRST) announced a strong third quarter for 2021, reporting a net income of $16.8 million or $0.871 diluted earnings per share, up from $14.1 million or $0.730 per share in the same quarter of 2020. For the nine months ending September 30, 2021, net income reached $45.3 million or $2.349 per share, compared to $38.6 million or $2.001 per share last year. Average loans and deposits increased by 4.2% and 7.1%, respectively, showcasing growth in mortgage products and core deposits.

Positive

• Net income rose to $16.8 million in Q3 2021, up 19.1% YoY.
• Diluted EPS increased to $0.871, reflecting strong profitability.
• Average loans increased by $176.4 million or 4.2% YoY.
• Average deposits grew by $348.2 million or 7.1% YoY.
• Nonperforming loans decreased to $20.2 million, improving asset quality.
• Return on average assets rose to 1.08% compared to 0.98% YoY.

Negative

• Net interest margin declined to 2.65%, down 8 basis points YoY.
• Equity to asset ratio decreased from 9.77% to 9.56% YoY.
• Average time deposits fell by $202.9 million or 15.0% YoY.

GLENVILLE, N.Y., Oct. 21, 2021 (GLOBE NEWSWIRE) -- TrustCo Bank Corp NY (TrustCo, NASDAQ: TRST) today announced third quarter 2021 net income of $16.8 million or $0.871 diluted earnings per share, compared to net income of $14.1 million or $0.730 diluted earnings per share for the third quarter 2020; and net income of $45.3 million or $2.349 diluted earnings per share for the nine months ended September 30, 2021, compared to net income of $38.6 million or $2.001 diluted earnings per share for the nine months ended September 30, 2020.   For all periods presented, share and per share information has been adjusted for the 1 for 5 reverse stock split which occurred on May 28, 2021.                      

Overview

Robert J. McCormick, Chairman, President and Chief Executive Officer noted, “Our continued strong financial results announced today are the foundation upon which we continue to build. With an always-sharp focus on new business opportunities, we have identified increasing demand for our hallmark mortgage products and have expanded our lending areas in Northern New Jersey and on both coasts of Florida. As part of these initiatives, we deployed a new mortgage loan originator in New Jersey, opened a new full-service branch location in Palm Coast, Florida, and are launching a new channel for the delivery of our core lending products by opening a loan origination office in Naples, Florida.”

In September, the Company announced the addition of Curtis N. Powell to the boards of directors of TrustCo and its subsidiary, Trustco Bank. Mr. Powell is Vice President for Human Resources and Environmental Health, Safety, and Risk Management at Rensselaer Polytechnic Institute in Troy, New York. Mr. Powell adds depth to our board talent pool in the areas of human capital and risk management. Chairman McCormick said “Our success-oriented approach extends from our business lines to our boardroom. Curtis Powell shares our commitment to excellence, and we have every confidence that he will be a tremendous asset as the Company navigates the highly dynamic labor market that we now see across our entire business footprint.”

Mr. McCormick also congratulated the employees of Trustco Bank on receiving well-deserved recognition. He said “Our management team knows that our people are the best in the business, but recently Trustco Bank has been rated ‘Best Of’ in several categories by local media outlets. Our team members can be justifiably proud of this recognition.” Trustco Bank also celebrated 65 years of success at its Mayfair Branch in Glenville, New York and, for the 15^th straight year, turned out a formidable team for the Workforce Team Challenge with 75 entrants in the annual 3.5 mile race, held this year in Altamont, New York.

Details

Average loans were up $176.4 million or 4.2% in the third quarter 2021 over the same period in 2020. Average residential loans, our primary lending focus, were up $218.2 million, or 5.9%, in the third quarter 2021 over the same period in 2020. As of September 30, 2021, loans in deferral were not material. Additionally, the Bank had funded 663 Paycheck Protection Program (“PPP”) loans totaling $46 million in 2020, and an additional 344 loans totaling $23 million in 2021. As of September 30, 2021, 349 PPP loans totaling $21 million remain outstanding. Average deposits were up $348.2 million or 7.1% for the third quarter 2021 over the same period a year earlier. The increase in deposits was the result of a $551.2 million or 15.5% increase in total average core deposit accounts, which consist of interest bearing and non-interest bearing checking, savings and money market deposits, offset by a decrease in average time deposits of $202.9 million or 15.0%, for the third quarter 2021 over the same period in 2020. Within the core deposits, checking balances were up $287.2 million or 17.4% (including interest bearing and non-interest bearing checking balances), money market balances were up $56.3 million or 8.3%, and savings balances were up $207.6 million or 17.0%.   We believe the increase in core deposits continues to reflect the desire of 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.  

The cost of interest bearing liabilities decreased to 0.15% in the third quarter 2021 from 0.52% in the third quarter 2020. A significant portion of our CD portfolio (time deposits) repriced during the last year, which resulted in lower rates as a result of the ongoing market conditions. The net interest margin for the third quarter 2021 was 2.65%, down 8 basis points from 2.73% in the third quarter of 2020. Net interest income (TE) increased by 4.5% or $1.7 million over the same period last year.   

The Bank continued to demonstrate its ability to grow shareholders’ equity as average equity was up $25.8 million or 4.6% in the third quarter of 2021 compared to the same period in 2020. Return on average assets and return on average equity for the third quarter 2021 were 1.08% and 11.40%, respectively, compared to 0.98% and 10.04% for the third quarter 2020. Improving efficiencies to reduce costs continues to remain a key area of focus. As a result, full time equivalent employees decreased from the prior year and quarter partially due to a strategic realignment and the impact of COVID-19 on the labor market. The Bank also purchased 50 thousand shares of stock in the third quarter of 2021 under the previously announced stock repurchase plan. Additionally, on May 28, 2021, the reverse split of the Company’s Common Stock at a ratio of 1 for 5 was implemented on the Nasdaq Global Select Market. All prior period share and per share information, and common stock and surplus amounts have been split adjusted. The board of directors believes that the Reverse Stock Split will likely result in a higher per share trading price, which is intended to generate greater investor interest in TrustCo and improve the marketability of the shares to a broader range of investors. The board of directors also believes that the Reverse Stock Split will result in a number of our shares of outstanding common stock that is similar to the number of outstanding shares of common stock of comparable financial institutions.   

Asset quality and loan loss reserve measures have continued to improve as a result of low levels of nonperforming assets and chargeoffs. Nonperforming loans (NPLs) were $20.2 million at September 30, 2021, compared to $21.8 million at September 30, 2020. NPLs were 0.46% and 0.52% of total loans at September 30, 2021 and 2020, respectively. The coverage ratio, or allowance for loan losses to NPLs, was 234.7% at September 30, 2021, compared to 225.4% at September 30, 2020. Nonperforming assets (NPAs) were $20.7 million at September 30, 2021, compared to $22.2 million at September 30, 2020. The ratio of allowance for loan losses to total loans was 1.08% as of September 30, 2021 compared to 1.17% as of September 30, 2020. The allowance for loan losses was $47.4 million at September 30, 2021, compared to $49.1 million at September 30, 2020. During 2020, management increased certain allowance qualitative factors based on its assessment of the impact of the current pandemic on local, national, and global economic conditions as well as the perceived risks inherent in specific industries and credit characteristics. Based on this approach, the Company adjusted the pandemic specific provision for the third quarter of 2021. Provision for loan losses for the third quarter of 2021 was a credit of $2.8 million compared to a provision for loan losses for the third quarter of 2020 of $1.0 million. The decrease from the prior year is due to the sustained improvement in asset quality trends and economic conditions during the third quarter. The Company had previously elected to delay its adoption of Accounting Standards Update 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“CECL”), as provided by the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) until the date on which the National Emergency concerning COVID-19 was terminated or December 31, 2020, whichever occurred first.  The December 31, 2020 adoption date under the CARES Act was extended to January 1, 2022 as a part of the COVID-19 relief legislation, which became law in December 2020, and therefore the Company intends to adopt CECL on January 1, 2022.

Net chargeoffs for the third quarter 2021 were $5 thousand versus net chargeoffs in the third quarter 2020 of $21 thousand. The annualized net chargeoffs ratio was 0.00% for the third quarter 2021 and 2020.

At September 30, 2021 the equity to asset ratio was 9.56%, compared to 9.77% at September 30, 2020. Book value per share at September 30, 2021 was $30.50, up 5.1% compared to $29.03 a year earlier.

TrustCo Bank Corp NY is a $6.1 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 147 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at September 30, 2021.

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.

Those wishing to participate in the call may dial toll-free for the United States at 1-844-200-6205, for Canada at 1-833-950-0062, and all other locations at 1-929-526-1599, Access code 817092. A replay of the call will be available for thirty days by dialing toll-free for the United States at 1-866-813-9403, for Canada at 1-226-828-7578, and all other locations at +44-204-525-0658, Access code 539783.   The call will also be audio webcast at https://services.choruscall.com/links/trst211022.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 2021, 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 expansion initiatives in New Jersey and Florida, our ability to retain customers, 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; future business strategies related to the implementation of CECL; 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.

Subsidiary:	Trustco Bank
Contact:	Robert Leonard Executive Vice President and         Chief Risk Officer (518) 381-3693

TRUSTCO BANK CORP NY
GLENVILLE, NY
FINANCIAL HIGHLIGHTS
(dollars in thousands, except per share data)
(Unaudited)
		Three months ended
		9/30/2021			6/30/2021			9/30/2020
Summary of operations
Net interest income (TE)	$	39,888			40,122			38,166
(Credit) Provision for loan losses		(2,800	)		-			1,000
Noninterest income		4,295			4,688			4,341
Noninterest expense		24,697			25,440			22,674
Net income		16,762			14,433			14,071
Per share (4)
Net income per share:
- Basic	$	0.871			0.749			0.730
- Diluted		0.871			0.748			0.730
Cash dividends		0.341			0.341			0.341
Book value at period end		30.50			30.00			29.03
Market price at period end		31.97			34.38			26.10
At period end
Full time equivalent employees		743			769			771
Full service banking offices		147			147			148
Performance ratios
Return on average assets		1.08		%	0.95			0.98
Return on average equity		11.40			10.05			10.04
Efficiency (1)		55.82			56.91			53.61
Net interest spread (TE)		2.62			2.66			2.63
Net interest margin (TE)		2.65			2.70			2.73
Dividend payout ratio		39.13			45.51			46.68
Capital ratios at period end
Consolidated tangible equity to tangible assets (2)		9.55		%	9.44			9.76
Consolidated equity to assets		9.56		%	9.45			9.77
Asset quality analysis at period end
Nonperforming loans to total loans		0.46			0.48			0.52
Nonperforming assets to total assets		0.34			0.34			0.39
Allowance for loan losses to total loans		1.08			1.15			1.17
Coverage ratio (3)		2.3x			2.4x			2.3x
(1) Non-GAAP measure; calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income. See Non-GAAP Financial Measures Reconciliation.
(2) Non-GAAP measure; calculated as total 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 loan losses divided by total nonperforming loans.
(4) All periods presented have been adjusted for the 1 for 5 reverse stock split which occurred on May 28, 2021.
TE = Taxable equivalent
FINANCIAL HIGHLIGHTS, Continued
(dollars in thousands, except per share data)
(Unaudited)
		Nine months ended
		09/30/21			09/30/20
Summary of operations
Net interest income (TE)	$	120,117			114,401
(Credit) Provision for loan losses		(2,450	)		5,000
Net gain on securities transactions		-			1,155
Noninterest income, excluding net gain on securities transactions		13,411			11,946
Noninterest expense		75,472			70,874
Net income		45,278			38,638
Per share (2)
Net income per share:
- Basic	$	2.349			2.002
- Diluted		2.349			2.001
Cash dividends		1.022			1.022
Book value at period end		30.50			29.03
Market price at period end		31.97			26.10
Performance ratios
Return on average assets		1.00			0.94
Return on average equity		10.50			9.38
Efficiency (1)		56.36			56.06
Net interest spread (TE)		2.67			2.74
Net interest margin (TE)		2.71			2.86
Dividend payout ratio		43.50			51.03
(1) Calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income. See Non-GAAP Financial Measures Reconciliation.
(2) All periods presented have been adjusted for the 1 for 5 reverse stock split which occurred on May 28, 2021.
TE = Taxable equivalent.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
(Unaudited)
		Three months ended
		9/30/2021			6/30/2021			3/31/2021			12/31/2020			9/30/2020
Interest and dividend income:
Interest and fees on loans	$	39,488			39,808			40,217			40,906			41,330
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises		91			97			50			27			14
State and political subdivisions		1			-			1			2			1
Mortgage-backed securities and collateralized mortgage obligations - residential		1,038			1,167			1,237			1,172			1,319
Corporate bonds		220			323			316			349			646
Small Business Administration - guaranteed participation securities		181			193			206			212			216
Other securities		5			5			6			7			5
Total interest and dividends on securities available for sale		1,536			1,785			1,816			1,769			2,201
Interest on held to maturity securities:
Mortgage-backed securities and collateralized mortgage obligations - residential		104			111			123			129			138
Total interest on held to maturity securities		104			111			123			129			138
Federal Reserve Bank and Federal Home Loan Bank stock		64			65			69			70			77
Interest on federal funds sold and other short-term investments		470			286			270			246			242
Total interest income		41,662			42,055			42,495			43,120			43,988
Interest expense:
Interest on deposits:
Interest-bearing checking		38			46			52			51			55
Savings		154			162			159			156			161
Money market deposit accounts		202			236			283			447			637
Time deposits		1,149			1,261			1,666			3,053			4,749
Interest on short-term borrowings		232			228			228			232			221
Total interest expense		1,775			1,933			2,388			3,939			5,823
Net interest income		39,887			40,122			40,107			39,181			38,165
Less: (Credit) Provision for loan losses		(2,800	)		-			350			600			1,000
Net interest income after provision for loan losses		42,687			40,122			39,757			38,581			37,165
Noninterest income:
Trustco Financial Services income		1,558			1,999			2,035			1,527			1,784
Fees for services to customers		2,531			2,486			2,204			2,365			2,292
Other		206			203			189			177			265
Total noninterest income		4,295			4,688			4,428			4,069			4,341
Noninterest expenses:
Salaries and employee benefits		11,909			12,403			12,425			11,727			10,899
Net occupancy expense		4,259			4,328			4,586			4,551			4,277
Equipment expense		1,628			1,600			1,631			1,621			1,607
Professional services		1,483			1,614			1,432			1,644			1,311
Outsourced services		2,015			2,169			2,250			1,925			1,875
Advertising expense		310			549			354			527			305
FDIC and other insurance		746			777			707			657			660
Other real estate (income) expense, net		32			(60	)		239			45			(115	)
Other		2,315			2,060			1,711			2,133			1,855
Total noninterest expenses		24,697			25,440			25,335			24,830			22,674
Income before taxes		22,285			19,370			18,850			17,820			18,832
Income taxes		5,523			4,937			4,767			4,006			4,761
Net income	$	16,762			14,433			14,083			13,814			14,071
Net income per common share (1):
- Basic	$	0.871			0.749			0.730			0.716			0.730
- Diluted		0.871			0.748			0.730			0.716			0.730
Average basic shares (in thousands) (1)		19,249			19,281			19,287			19,287			19,287
Average diluted shares (in thousands) (1)		19,252			19,290			19,293			19,288			19,288
Note: Taxable equivalent net interest income	$	39,888			40,122			40,107			39,182			38,166
(1) All periods presented have been adjusted for the 1 for 5 reverse stock split which occurred on May 28, 2021.
CONSOLIDATED STATEMENTS OF INCOME, Continued
(dollars in thousands, except per share data)
(Unaudited)
		Nine months ended
		09/30/21			09/30/20
Interest and dividend income:
Interest and fees on loans	$	119,513			125,058
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises		238			541
State and political subdivisions		2			4
Mortgage-backed securities and collateralized mortgage obligations - residential		3,442			4,959
Corporate bonds		859			1,372
Small Business Administration - guaranteed participation securities		580			690
Other securities		16			16
Total interest and dividends on securities available for sale		5,137			7,582
Interest on held to maturity securities:
Mortgage-backed securities-residential		338			475
Total interest on held to maturity securities		338			475
Federal Reserve Bank and Federal Home Loan Bank stock		198			351
Interest on federal funds sold and other short-term investments		1,026			1,702
Total interest income		126,212			135,168
Interest expense:
Interest on deposits:
Interest-bearing checking		136			97
Savings		475			560
Money market deposit accounts		721			2,595
Time deposits		4,076			16,739
Interest on short-term borrowings		688			778
Total interest expense		6,096			20,769
Net interest income		120,116			114,399
Less: (Credit) Provision for loan losses		(2,450	)		5,000
Net interest income after provision for loan losses		122,566			109,399
Noninterest income:
Trustco Financial Services income		5,592			4,752
Fees for services to customers		7,221			6,414
Net gain on securities transactions		-			1,155
Other		598			780
Total noninterest income		13,411			13,101
Noninterest expenses:
Salaries and employee benefits		36,737			33,920
Net occupancy expense		13,173			12,968
Equipment expense		4,859			5,015
Professional services		4,529			3,974
Outsourced services		6,434			5,825
Advertising expense		1,213			1,394
FDIC and other insurance		2,230			1,563
Other real estate expense, net		211			47
Other		6,086			6,168
Total noninterest expenses		75,472			70,874
Income before taxes		60,505			51,626
Income taxes		15,227			12,988
Net income	$	45,278			38,638
Net income per common share (1):
- Basic	$	2.349			2.002
- Diluted		2.349			2.001
Average basic shares (in thousands) (1)		19,272			19,306
Average diluted shares (in thousands) (1)		19,278			19,308
Note: Taxable equivalent net interest income	$	120,117			114,401
(1) All periods presented have been adjusted for the 1 for 5 reverse stock split which occurred on May 28, 2021.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)
(Unaudited)
		9/30/21			6/30/21			3/31/21			12/31/20			9/30/20
ASSETS:
Cash and due from banks	$	45,486			47,766			45,493			47,196			47,703
Federal funds sold and other short term investments		1,147,853			1,134,622			1,094,880			1,059,903			908,616
Total cash and cash equivalents		1,193,339			1,182,388			1,140,373			1,107,099			956,319
Securities available for sale:
U. S. government sponsored enterprises		59,749			74,579			74,465			19,968			29,996
States and political subdivisions		48			48			48			103			111
Mortgage-backed securities and collateralized mortgage obligations - residential		293,585			315,656			348,317			316,158			309,768
Small Business Administration - guaranteed participation securities		34,569			37,199			39,232			42,217			44,070
Corporate bonds		45,915			54,647			64,839			59,939			70,113
Other securities		686			686			686			686			685
Total securities available for sale		434,552			482,815			527,587			439,071			454,743
Held to maturity securities:
Mortgage-backed securities and collateralized mortgage obligations-residential		10,701			11,665			12,729			13,824			15,094
Total held to maturity securities		10,701			11,665			12,729			13,824			15,094
Federal Reserve Bank and Federal Home Loan Bank stock		5,604			5,604			5,506			5,506			5,506
Loans:
Commercial		204,679			214,164			217,021			212,492			231,663
Residential mortgage loans		3,951,285			3,892,351			3,807,837			3,780,167			3,724,746
Home equity line of credit		231,314			234,214			235,644			242,194			248,320
Installment loans		9,451			8,638			8,670			9,617			9,826
Loans, net of deferred net costs		4,396,729			4,349,367			4,269,172			4,244,470			4,214,555
Less: Allowance for loan losses		47,350			50,155			49,991			49,595			49,123
Net loans		4,349,379			4,299,212			4,219,181			4,194,875			4,165,432
Bank premises and equipment, net		33,233			33,691			34,012			34,412			34,417
Operating lease right-of-use assets		45,836			45,825			46,614			47,885			47,174
Other assets		62,191			61,378			60,455			59,124			57,244
Total assets	$	6,134,835			6,122,578			6,046,457			5,901,796			5,735,929
LIABILITIES:
Deposits:
Demand	$	790,663			765,193			718,343			652,756			635,345
Interest-bearing checking		1,148,593			1,152,901			1,141,595			1,086,558			1,024,290
Savings accounts		1,433,130			1,409,556			1,362,141			1,285,501			1,235,259
Money market deposit accounts		744,051			732,963			719,580			716,005			699,132
Time deposits		1,124,581			1,169,907			1,231,263			1,296,373			1,305,024
Total deposits		5,241,018			5,230,520			5,172,922			5,037,193			4,899,050
Short-term borrowings		230,770			237,791			229,950			214,755			193,455
Operating lease liabilities		50,515			50,586			51,449			52,784			52,125
Accrued expenses and other liabilities		25,849			25,088			21,105			28,903			30,771
Total liabilities		5,548,152			5,543,985			5,475,426			5,333,635			5,175,401
SHAREHOLDERS' EQUITY:
Capital stock (1)		20,042			20,041			20,044			20,041			20,041
Surplus (1)		256,565			256,536			256,674			256,606			256,605
Undivided profits		339,554			329,350			321,486			313,974			306,741
Accumulated other comprehensive income, net of tax		7,304			7,840			7,268			11,936			11,537
Treasury stock at cost		(36,782	)		(35,174	)		(34,441	)		(34,396	)		(34,396	)
Total shareholders' equity		586,683			578,593			571,031			568,161			560,528
Total liabilities and shareholders' equity	$	6,134,835			6,122,578			6,046,457			5,901,796			5,735,929
Outstanding shares (in thousands) (1)		19,216			19,265			19,288			19,287			19,287
(1) All periods presented have been adjusted for the 1 for 5 reverse stock split which occurred on May 28, 2021.

NONPERFORMING ASSETS
(dollars in thousands)
(Unaudited)
		9/30/2021		6/30/2021		3/31/2021		12/31/2020		9/30/2020
Nonperforming Assets
New York and other states*
Loans in nonaccrual status:
Commercial	$	176		150		125		452		491
Real estate mortgage - 1 to 4 family		17,878		18,466		19,826		19,379		19,977
Installment		32		43		32		43		49
Total non-accrual loans		18,086		18,659		19,983		19,874		20,517
Other nonperforming real estate mortgages - 1 to 4 family		19		20		22		23		25
Total nonperforming loans		18,105		18,679		20,005		19,897		20,542
Other real estate owned		511		251		420		541		423
Total nonperforming assets	$	18,616		18,930		20,425		20,438		20,965
Florida
Loans in nonaccrual status:
Commercial	$	-		-		-		-		-
Real estate mortgage - 1 to 4 family		2,066		2,142		1,626		1,187		1,254
Installment		-		-		-		-		-
Total non-accrual loans		2,066		2,142		1,626		1,187		1,254
Other nonperforming real estate mortgages - 1 to 4 family		-		-		-		-		-
Total nonperforming loans		2,066		2,142		1,626		1,187		1,254
Other real estate owned		-		-		-		-		-
Total nonperforming assets	$	2,066		2,142		1,626		1,187		1,254
Total
Loans in nonaccrual status:
Commercial	$	176		150		125		452		491
Real estate mortgage - 1 to 4 family		19,944		20,608		21,452		20,566		21,231
Installment		32		43		32		43		49
Total non-accrual loans		20,152		20,801		21,609		21,061		21,771
Other nonperforming real estate mortgages - 1 to 4 family		19		20		22		23		25
Total nonperforming loans		20,171		20,821		21,631		21,084		21,796
Other real estate owned		511		251		420		541		423
Total nonperforming assets	$	20,682		21,072		22,051		21,625		22,219
Quarterly Net (Recoveries) Chargeoffs
New York and other states*
Commercial	$	30		-		(32	)	32		(1	)
Real estate mortgage - 1 to 4 family		(39	)	(136	)	(2	)	(27	)	4
Installment		14		(27	)	(14	)	109		18
Total net chargeoffs (recoveries)	$	5		(163	)	(48	)	114		21
Florida
Commercial	$	-		-		-		-		-
Real estate mortgage - 1 to 4 family		-		(1	)	-		(1	)	-
Installment		-		-		2		15		-
Total net chargeoffs (recoveries)	$	-		(1	)	2		14		-
Total
Commercial	$	30		-		(32	)	32		(1	)
Real estate mortgage - 1 to 4 family		(39	)	(137	)	(2	)	(28	)	4
Installment		14		(27	)	(12	)	124		18
Total net chargeoffs (recoveries)	$	5		(164	)	(46	)	128		21
Asset Quality Ratios
Total nonperforming loans (1)	$	20,171		20,821		21,631		21,084		21,796
Total nonperforming assets (1)		20,682		21,072		22,051		21,625		22,219
Total net chargeoffs (recoveries) (2)		5		(164	)	(46	)	128		21
Allowance for loan losses (1)		47,350		50,155		49,991		49,595		49,123
Nonperforming loans to total loans		0.46	%	0.48	%	0.51	%	0.50	%	0.52	%
Nonperforming assets to total assets		0.34	%	0.34	%	0.36	%	0.37	%	0.39	%
Allowance for loan losses to total loans		1.08	%	1.15	%	1.17	%	1.17	%	1.17	%
Coverage ratio (1)		234.7	%	240.9	%	231.1	%	235.2	%	225.4	%
Annualized net chargeoffs (recoveries) to average loans (2)		0.00	%	-0.02	%	0.00	%	0.01	%	0.00	%
Allowance for loan losses to annualized net chargeoffs (recoveries) (2)		2367.5	x	N/A		N/A		96.9	x	584.8	x
* 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, 2021								September 30, 2020
		Average			Interest		Average			Average			Interest		Average
		Balance					Rate			Balance					Rate
Assets
Securities available for sale:
U. S. government sponsored enterprises	$	68,505			91		0.53	%	$	12,391			14		0.45	%
Mortgage backed securities and collateralized mortgage obligations - residential		300,765			1,038		1.38			313,296			1,319		1.68
State and political subdivisions		48			2		6.66			110			2		7.90
Corporate bonds		48,543			220		1.81			59,555			646		4.33
Small Business Administration - guaranteed
participation securities		34,578			181		2.09			43,282			216		1.99
Other		686			5		2.92			685			5		2.92
Total securities available for sale		453,125			1,537		1.36			429,319			2,202		2.05
Federal funds sold and other short-term Investments		1,166,679			470		0.16			938,087			242		0.10
Held to maturity securities:
Mortgage backed securities and collateralized mortgage obligations - residential		11,168			104		3.72			15,759			138		3.52
Total held to maturity securities		11,168			104		3.72			15,759			138		3.52
Federal Reserve Bank and Federal Home Loan Bank stock		5,604			64		4.57			5,506			77		5.59
Commercial loans		210,825			2,649		5.03			231,517			2,625		4.54
Residential mortgage loans		3,920,903			34,532		3.52			3,702,680			36,020		3.89
Home equity lines of credit		231,269			2,152		3.69			251,459			2,515		3.98
Installment loans		8,669			155		7.10			9,632			170		7.02
Loans, net of unearned income		4,371,666			39,488		3.61			4,195,288			41,330		3.94
Total interest earning assets		6,008,242			41,663		2.77			5,583,959			43,989		3.15
Allowance for loan losses		(50,160	)							(48,483	)
Cash & non-interest earning assets		195,902								201,018
Total assets	$	6,153,984							$	5,736,494
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts	$	1,153,812			38		0.01	%	$	1,024,455			55		0.02	%
Money market accounts		738,662			202		0.11			682,319			637		0.37
Savings		1,430,558			154		0.04			1,222,956			161		0.05
Time deposits		1,152,298			1,149		0.40			1,355,244			4,749		1.39
Total interest bearing deposits		4,475,330			1,543		0.14			4,284,974			5,602		0.52
Short-term borrowings		240,183			232		0.38			193,765			221		0.45
Total interest bearing liabilities		4,715,513			1,775		0.15			4,478,739			5,823		0.52
Demand deposits		780,163								622,313
Other liabilities		75,116								78,093
Shareholders' equity		583,192								557,349
Total liabilities and shareholders' equity	$	6,153,984							$	5,736,494
Net interest income, tax equivalent					39,888								38,166
Net interest spread							2.62	%							2.63	%
Net interest margin (net interest income to total interest earning assets)							2.65	%							2.73	%
Tax equivalent adjustment					(1	)							(1	)
Net interest income					39,887								38,165
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, 2021								September 30, 2020
		Average			Interest		Average			Average			Interest		Average
		Balance					Rate			Balance					Rate
Assets
Securities available for sale:
U. S. government sponsored enterprises	$	65,103			238		0.49	%	$	42,573			541		1.69	%
Mortgage backed securities and collateralized mortgage obligations - residential		318,472			3,442		1.44			339,300			4,959		1.95
State and political subdivisions		49			3		8.16			111			6		7.79
Corporate bonds		56,245			859		2.04			46,508			1,372		3.93
Small Business Administration - guaranteed
participation securities		36,981			580		2.09			45,313			690		2.03
Other		686			16		3.11			685			16		3.11
Total securities available for sale		477,536			5,138		1.43			474,490			7,584		2.13
Federal funds sold and other short-term Investments		1,108,018			1,026		0.12			693,286			1,702		0.33
Held to maturity securities:
Mortgage backed securities and collateralized mortgage obligations - residential		12,199			338		3.70			17,029			475		3.72
Total held to maturity securities		12,199			338		3.70			17,029			475		3.72
Federal Reserve Bank and Federal Home Loan Bank stock		5,570			198		4.74			7,998			351		5.85
Commercial loans		212,832			8,203		5.14			217,573			7,778		4.77
Residential mortgage loans		3,852,960			104,219		3.61			3,652,766			108,845		3.97
Home equity lines of credit		234,682			6,622		3.77			258,956			7,898		4.07
Installment loans		8,608			469		7.28			10,129			537		7.08
Loans, net of unearned income		4,309,082			119,513		3.70			4,139,424			125,058		4.03
Total interest earning assets		5,912,405			126,213		2.85			5,332,227			135,170		3.38
Allowance for loan losses		(50,101	)							(46,618	)
Cash & non-interest earning assets		196,876								196,835
Total assets	$	6,059,180							$	5,482,444
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts	$	1,129,480			136		0.02	%	$	949,909			97		0.01	%
Money market accounts		731,171			721		0.13			646,170			2,595		0.54
Savings		1,376,494			475		0.05			1,169,316			560		0.06
Time deposits		1,203,708			4,076		0.45			1,372,369			16,739		1.63
Total interest bearing deposits		4,440,853			5,408		0.16			4,137,764			19,991		0.65
Short-term borrowings		232,532			688		0.40			173,497			778		0.60
Total interest bearing liabilities		4,673,385			6,096		0.17			4,311,261			20,769		0.64
Demand deposits		735,495								543,279
Other liabilities		73,689								77,568
Shareholders' equity		576,611								550,336
Total liabilities and shareholders' equity	$	6,059,180							$	5,482,444
Net interest income, tax equivalent					120,117								114,401
Net interest spread							2.67	%							2.74	%
Net interest margin (net interest income to total interest earning assets)							2.71	%							2.86	%
Tax equivalent adjustment					(1	)							(2	)
Net interest income					120,116								114,399

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)
		9/30/2021		6/30/2021		9/30/2020
Tangible Equity to Tangible Assets
Total Assets (GAAP)	$	6,134,835		6,122,578		5,735,929
Less: Intangible assets		553		553		553
Tangible assets (Non-GAAP)		6,134,282		6,122,025		5,735,376
Equity (GAAP)		586,683		578,593		560,528
Less: Intangible assets		553		553		553
Tangible equity (Non-GAAP)		586,130		578,040		559,975
Tangible Equity to Tangible Assets (Non-GAAP)		9.55	%	9.44	%	9.76	%
Equity to Assets (GAAP)		9.56	%	9.45	%	9.77	%
		Three months ended								Nine months ended
Efficiency Ratio		9/30/2021		6/30/2021		9/30/2020				9/30/2021		9/30/2020
Net interest income (fully taxable equivalent) (Non-GAAP)	$	39,888		40,122		38,166			$	120,117		114,401
Non-interest income (GAAP)		4,295		4,688		4,341				13,411		13,101
Less: Net gain on securities		-		-		-				-		1,155
Revenue used for efficiency ratio (Non-GAAP)		44,183		44,810		42,507				133,528		126,347
Total noninterest expense (GAAP)		24,697		25,440		22,674				75,472		70,874
Less: Other real estate expense (income), net		32		(60	)	(115	)			211		47
Expense used for efficiency ratio (Non-GAAP)		24,665		25,500		22,789				75,261		70,827
Efficiency Ratio		55.82	%	56.91	%	53.61	%			56.36	%	56.06	%

FAQ

What were TrustCo's Q3 2021 earnings results?

TrustCo reported a net income of $16.8 million for Q3 2021, translating to $0.871 diluted EPS.

How did TrustCo's average loans perform in Q3 2021?

Average loans increased by $176.4 million or 4.2% compared to Q3 2020.

What is TrustCo's outlook after the recent earnings report?

TrustCo continues to focus on expanding its mortgage products and core deposit offerings.

What was the change in TrustCo's net interest margin in Q3 2021?

The net interest margin decreased to 2.65%, down from 2.73% in Q3 2020.

How much did TrustCo's deposits increase in Q3 2021?

Average deposits grew by $348.2 million or 7.1% year-over-year.