TrustCo Caps Off 120th Anniversary Year, Reports Record Performance; Net Income of $75.2 Million up 22.3% over the prior year

GLENVILLE, N.Y., Jan. 23, 2023 (GLOBE NEWSWIRE) -- TrustCo Bank Corp NY (TrustCo, NASDAQ: TRST) today announced full year 2022 net income of $75.2 million or $3.93 diluted earnings per share, compared to net income of $61.5 million or $3.19 diluted earnings per share for the full year 2021; and net income of $20.9 million or $1.10 diluted earnings per share for the three months ended December 31, 2022 which is another record quarter, compared to net income of $16.2 million or $0.85 diluted earnings per share for the three months ended December 31, 2021.

Overview

Chairman, President, and CEO, Robert J. McCormick said, “For Trustco Bank, 2022 was a banner year marked by celebrations surrounding our 120^th Anniversary. There also is cause for celebration as the year ends and the Company’s performance is evaluated. A record fourth quarter caps off a year during which each successive quarter saw record earnings. As these records were set, the Company maintained strong liquidity and saw extraordinary loan growth. Throughout the year, we executed upon a strategy long in development that supported not only the completion of our stock buy-back program, but also a dividend increase – the third since 2018. As we look expectantly toward 2023, our team is ready to make the most of the expansion of the Bank’s areas of operation and opportunities as they develop.”

TrustCo saw continued loan growth in the fourth quarter of 2022 compared to the prior 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, as well as growth in funding from expansion of earnings. The Federal Reserve decision to raise the target Federal Funds rate has contributed to our results during 2022, as our cash position and other variable rate products repriced upward, and is likely to continue to do so to the extent there are additional rate increases. We also note that current mortgage rates significantly exceed the yield on our existing portfolio of mortgages, which, if sustained, should be positive to net interest margin going forward. TrustCo’s strong liquidity position continues to allow us to take advantage of opportunities as they arise.

Details

Average loans were up $253.2 million or 5.7% in the fourth quarter 2022 over the same period in 2021. Average residential loans, our primary lending focus, were up $181.8 million, or 4.6%, in the fourth quarter 2022 over the same period in 2021. Average deposits were down $25.4 million or 0.5% for the fourth quarter 2022 over the same period a year earlier. The decrease in deposits over the same period in 2021 was the result of a $72.2 million or 6.8% decrease in average time deposits, offset by an increase in total average core deposits of $46.8 million or 1.1%, which consist of interest bearing and non-interest bearing checking, savings and money market deposits. Within the core deposits, checking balances were up $62.7 million or 3.2% (including interest bearing and non-interest bearing checking balances), money market balances were down $94.5 million or 12.4%, and savings balances were up $78.6 million or 5.4%. 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.       

Net interest income and Net interest income on a tax equivalent basis, were both $49.2 million for the fourth quarter of 2022, an increase of $8.9 million or 22.1% compared to the same period in 2021, driven by solid liquidity and the recent increases in the Federal Funds target rate. The net interest margin for the fourth quarter 2022 was 3.34%, up 65 basis points from 2.69% in the fourth quarter of 2021. The cost of interest bearing liabilities increased to 0.26% in the fourth quarter 2022 from 0.13% in the fourth quarter 2021. As expected our CD portfolio (time deposits) repriced throughout the year at higher rates as the Bank continues to remain competitive due to the recent Federal Funds target rate increases. Continued repricing of the CD portfolio and increases in rates by the Federal Reserve Board will more than likely cause further increases in rates on interest bearing liabilities.      

For the fourth quarter of 2022, return on average assets and return on average equity were 1.38% and 13.91%, respectively, compared to 1.05% and 10.92% for the fourth quarter of 2021. As previously discussed, improving efficiencies to reduce costs continues to remain a key area of focus. The efficiency ratio was 48.75% for the fourth quarter of 2022, a decrease compared to 58.50% for the fourth quarter of 2021. Total operating expenses increased by $215 thousand in the fourth quarter of 2022 as compared to the fourth quarter of 2021, with increases in salary and employee benefits, outsourced services and the other real estate expense (income), partly offset by declines in the occupancy, equipment, professional services, advertising, and other expense categories.
  
Asset quality remains strong and loan loss reserve measures are consistent over the past twelve months. The Company recorded a provision for credit losses of $50 thousand in the fourth quarter of 2022, which includes a provision for credit losses on loans of $500 thousand and a benefit for credit losses on unfunded commitments of $450 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% and 1.00% as of December 31, 2022 and 2021, respectively. The allowance for credit losses on loans was $46.0 million at December 31, 2022, compared to $44.3 million at December 31, 2021. Nonperforming loans (NPLs) were $17.5 million at December 31, 2022, compared to $18.8 million at December 31, 2021. NPLs were 0.37% and 0.42% of total loans at December 31, 2022 and 2021, respectively. The coverage ratio, or allowance for credit losses on loans to NPLs, was 263.1% at December 31, 2022, compared to 236.0% at December 31, 2021. Nonperforming assets (NPAs) were $19.6 million at December 31, 2022, compared to $19.1 million at December 31, 2021. As mentioned in the prior quarters, the Company adopted Accounting Standards Update 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“CECL”) effective January 1, 2022. TrustCo recorded a net decrease to retained earnings of $3.5 million upon adoption of the new accounting standard. The transition adjustment at January 1, 2022 included a $2.4 million increase in the allowance for credit losses on loans, a $2.3 million increase in the allowance for estimated credit losses on unfunded off-balance sheet credit exposures, and a corresponding increase in deferred tax assets of $1.2 million.

At December 31, 2022 our equity to asset ratio was 10.00%, compared to 9.70% at December 31, 2021. Book value per share at December 31, 2022 was $31.54, up 0.8% compared to $31.28 a year earlier.

TrustCo Bank Corp NY is a $6.0 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 143 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at December 31, 2022.

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

A conference call to discuss fourth quarter 2022 results will be held at 9:00 a.m. Eastern Time on January 24, 2023. Those wishing to participate in the call may dial 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 485191.   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 756689. The call will also be audio webcast at https://events.q4inc.com/attendee/840065868, and will be available for one year.  

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 performance during 2023, 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 the effects of the COVID-19 pandemic and macroeconomic or geopolitical concerns related to inflation, rising interest rates and the war in Ukraine. 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 effects of inflation and inflationary pressures and changes in monetary and fiscal policies and laws, including increases in the Federal Funds target rate by, and interest rate policies of, the Federal Reserve Board; the geopolitical and macroeconomic impact of the war in Ukraine; the effects of the COVID-19 pandemic, including the impact of the actions taken by governmental authorities to contain the COVID-19 pandemic or address the impact of the pandemic 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; changes in and uncertainty related to benchmark interest rates used to price loans and deposits; future business strategies related to the implementation of CECL; changes in and uncertainty related to benchmark interest rates used to price loans and deposits; credit risks and risks from concentrations (by geographic area and by loan product) within our loan portfolio; changes in local market areas and general business and economic trends, as well as changes in consumer spending, borrowing and savings habits; our ability to assess and react effectively to such changes; 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; 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; 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; 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; the effects of changes in tax laws; 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; our success at managing the risks involved in the foregoing and managing our business; the impact of severe weather events and climate change on us and the communities we serve; 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
		12/31/2022		9/30/2022		12/31/2021
Summary of operations
Net interest income (TE) (1)	$	49,187		47,793		40,292
Provision (Credit) for credit losses		50		300		(3,000	)
Noninterest income		4,775		4,386		4,526
Noninterest expense		26,405		26,144		26,190
Net income		20,910		19,364		16,241
Per share
Net income per share:
- Basic	$	1.10		1.01		0.85
- Diluted		1.10		1.01		0.85
Cash dividends		0.360		0.350		0.350
Book value at period end		31.54		30.89		31.28
Market price at period end		37.59		31.42		33.31
At period end
Full time equivalent employees		750		753		759
Full service banking offices		143		144		147
Performance ratios
Return on average assets		1.38%		1.24		1.05
Return on average equity		13.91		12.78		10.92
Efficiency ratio (2)		48.75		49.87		58.50
Net interest spread (TE)		3.28		3.13		2.67
Net interest margin (TE)		3.34		3.16		2.69
Dividend payout ratio		32.81		34.57		41.42
Capital ratios at period end
Consolidated tangible equity to tangible assets (3)		9.99%		9.68		9.69
Consolidated equity to assets		10.00%		9.69		9.70
Asset quality analysis at period end
Nonperforming loans to total loans		0.37		0.40		0.42
Nonperforming assets to total assets		0.33		0.32		0.31
Allowance for credit losses on loans to total loans		0.97		0.98		1.00
Coverage ratio (4)		2.6x		2.4x		2.4x
(1) Non-GAAP measure; calculated as net interest income plus a taxable equivalent interest income adjustment.
(2) 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.
(3) 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.
(4) Calculated as allowance for credit losses on loans divided by total nonperforming loans.
TE = Taxable equivalent

FINANCIAL HIGHLIGHTS, Continued
(dollars in thousands, except per share data)
(Unaudited)
		Year ended
		12/31/22			12/31/21
Summary of operations
Net interest income (TE) (1)	$	180,136			160,409
(Credit) Provision for credit losses		(341	)		(5,450	)
Noninterest income		19,260			17,937
Noninterest expense		100,319			101,662
Net income		75,234			61,519
Per share
Net income per share:
- Basic	$	3.93			3.19
- Diluted		3.93			3.19
Cash dividends		1.410			1.372
Book value at period end		31.54			31.28
Market price at period end		37.59			33.31
Performance ratios
Return on average assets		1.22	%		1.01
Return on average equity		12.60			10.61
Efficiency ratio (2)		50.22			56.90
Net interest spread (TE)		2.96			2.67
Net interest margin (TE)		2.99			2.71
Dividend payout ratio		35.86			42.95
(1) Non-GAAP measure; calculated as net interest income plus a taxable equivalent interest income adjustment.
(2) 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.
TE = Taxable equivalent.

CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
(Unaudited)
		Three months ended
		12/31/2022			9/30/2022			6/30/2022			3/31/2022			12/31/2021
Interest and dividend income:
Interest and fees on loans	$	42,711			40,896			39,604			39,003			39,655
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises		693			479			147			86			76
State and political subdivisions		-			1			-			1			-
Mortgage-backed securities and collateralized mortgage
obligations - residential		1,606			1,617			1,367			1,087			1,073
Corporate bonds		523			526			522			233			206
Small Business Administration - guaranteed
participation securities		124			133			140			154			165
Other securities		2			3			2			2			4
Total interest and dividends on securities available for sale		2,948			2,759			2,178			1,563			1,524
Interest on held to maturity securities:
Mortgage-backed securities and collateralized mortgage
obligations - residential		81			85			87			90			97
Total interest on held to maturity securities		81			85			87			90			97
Federal Home Loan Bank stock		98			80			65			62			62
Interest on federal funds sold and other short-term investments		6,246			5,221			2,253			572			432
Total interest income		52,084			49,041			44,187			41,290			41,770
Interest expense:
Interest on deposits:
Interest-bearing checking		61			43			42			44			42
Savings		401			200			163			156			149
Money market deposit accounts		389			237			210			214			201
Time deposits		1,839			646			536			546			865
Interest on short-term borrowings		208			122			176			234			221
Total interest expense		2,898			1,248			1,127			1,194			1,478
Net interest income		49,186			47,793			43,060			40,096			40,292
Less: Provision (Credit) for credit losses		50			300			(491	)		(200	)		(3,000	)
Net interest income after provision for loan losses		49,136			47,493			43,551			40,296			43,292
Noninterest income:
Trustco Financial Services income		1,773			1,435			1,996			1,833			1,766
Fees for services to customers		2,783			2,705			2,658			2,801			2,578
Other		219			246			262			549			182
Total noninterest income		4,775			4,386			4,916			5,183			4,526
Noninterest expenses:
Salaries and employee benefits		13,067			12,134			11,464			9,239			11,984
Net occupancy expense		4,261			4,483			4,254			4,529			4,569
Equipment expense		1,700			1,532			1,667			1,588			1,758
Professional services		1,251			1,375			1,484			1,467			1,579
Outsourced services		2,102			2,328			2,500			2,280			1,950
Advertising expense		532			508			389			617			762
FDIC and other insurance		770			773			804			812			780
Other real estate expense (income), net		101			124			74			11			(28	)
Other		2,621			2,887			2,369			2,222			2,836
Total noninterest expenses		26,405			26,144			25,005			22,765			26,190
Income before taxes		27,506			25,735			23,462			22,714			21,628
Income taxes		6,596			6,371			5,591			5,625			5,387
Net income	$	20,910			19,364			17,871			17,089			16,241
Net income per common share:
- Basic	$	1.10			1.01			0.93			0.89			0.85
- Diluted		1.10			1.01			0.93			0.89			0.85
Average basic shares (in thousands)		19,045			19,111			19,153			19,209			19,216
Average diluted shares (in thousands)		19,050			19,112			19,153			19,210			19,218
Note: Taxable equivalent net interest income	$	49,187			47,793			43,060			40,096			40,292
CONSOLIDATED STATEMENTS OF INCOME, Continued
(dollars in thousands, except per share data)
(Unaudited)
		Year ended
		12/31/22			12/31/21
Interest and dividend income:
Interest and fees on loans	$	162,214			159,168
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises		1,405			314
State and political subdivisions		2			2
Mortgage-backed securities and collateralized mortgage
obligations - residential		5,677			4,515
Corporate bonds		1,804			1,065
Small Business Administration - guaranteed
participation securities		551			745
Other securities		9			20
Total interest and dividends on securities available for sale		9,448			6,661
Interest on held to maturity securities:
Mortgage-backed securities-residential		343			435
Total interest on held to maturity securities		343			435
Federal Home Loan Bank stock		305			260
Interest on federal funds sold and other short-term investments		14,292			1,458
Total interest income		186,602			167,982
Interest expense:
Interest on deposits:
Interest-bearing checking		190			178
Savings		920			624
Money market deposit accounts		1,050			922
Time deposits		3,567			4,941
Interest on short-term borrowings		740			909
Total interest expense		6,467			7,574
Net interest income		180,135			160,408
Less: (Credit) Provision for credit losses		(341	)		(5,450	)
Net interest income after provision for loan losses		180,476			165,858
Noninterest income:
Trustco Financial Services income		7,037			7,358
Fees for services to customers		10,947			9,799
Other		1,276			780
Total noninterest income		19,260			17,937
Noninterest expenses:
Salaries and employee benefits		45,904			48,721
Net occupancy expense		17,527			17,742
Equipment expense		6,487			6,617
Professional services		5,577			6,108
Outsourced services		9,210			8,384
Advertising expense		2,046			1,975
FDIC and other insurance		3,159			3,010
Other real estate expense, net		310			183
Other		10,099			8,922
Total noninterest expenses		100,319			101,662
Income before taxes		99,417			82,133
Income taxes		24,183			20,614
Net income	$	75,234			61,519
Net income per common share:
- Basic	$	3.93			3.19
- Diluted		3.93			3.19
Average basic shares (in thousands)		19,131			19,259
Average diluted shares (in thousands)		19,133			19,263
Note: Taxable equivalent net interest income	$	180,136			160,409
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)
(Unaudited)
		12/31/2022			9/30/2022			6/30/2022			3/31/2022			12/31/2021
ASSETS:
Cash and due from banks	$	43,429			46,236			46,611			47,526			48,357
Federal funds sold and other short term investments		607,170			795,028			999,573			1,225,022			1,171,113
Total cash and cash equivalents		650,599			841,264			1,046,184			1,272,548			1,219,470
Securities available for sale:
U. S. government sponsored enterprises		118,187			102,779			101,100			62,059			59,179
States and political subdivisions		34			41			41			41			41
Mortgage-backed securities and collateralized mortgage
obligations - residential		260,316			261,242			287,450			244,045			270,798
Small Business Administration - guaranteed
participation securities		20,977			22,498			25,428			28,086			31,674
Corporate bonds		81,346			81,002			87,740			74,089			45,337
Other securities		653			657			656			671			684
Total securities available for sale		481,513			468,219			502,415			408,991			407,713
Held to maturity securities:
Mortgage-backed securities and collateralized mortgage
obligations-residential		7,707			8,091			8,544			9,183			9,923
Total held to maturity securities		7,707			8,091			8,544			9,183			9,923
Federal Reserve Bank and Federal Home Loan Bank stock		5,797			5,797			5,797			5,604			5,604
Loans:
Commercial		231,011			217,120			199,886			192,408			200,200
Residential mortgage loans		4,203,451			4,132,365			4,076,657			4,026,434			3,998,187
Home equity line of credit		286,432			269,341			253,758			236,117			230,976
Installment loans		12,307			10,665			10,258			9,395			9,416
Loans, net of deferred net costs		4,733,201			4,629,491			4,540,559			4,464,354			4,438,779
Less: Allowance for credit losses on loans		46,032			45,517			45,285			46,178			44,267
Net loans		4,687,169			4,583,974			4,495,274			4,418,176			4,394,512
Bank premises and equipment, net		32,556			31,931			32,381			32,644			33,027
Operating lease right-of-use assets		44,727			45,733			47,343			48,569			48,090
Other assets		89,984			94,485			88,853			86,158			78,207
Total assets	$	6,000,052			6,079,494			6,226,791			6,281,873			6,196,546
LIABILITIES:
Deposits:
Demand	$	838,147			859,829			851,573			835,281			794,878
Interest-bearing checking		1,183,321			1,188,790			1,208,159			1,225,093			1,191,304
Savings accounts		1,521,473			1,562,564			1,577,034			1,553,152			1,504,554
Money market deposit accounts		621,106			716,319			760,338			796,275			782,079
Time deposits		1,028,763			954,352			999,737			940,215			995,314
Total deposits		5,192,810			5,281,854			5,396,841			5,350,016			5,268,129
Short-term borrowings		122,700			124,932			147,282			248,371			244,686
Operating lease liabilities		48,980			50,077			51,777			53,094			52,720
Accrued expenses and other liabilities		35,575			33,625			36,259			37,497			29,883
Total liabilities		5,400,065			5,490,488			5,632,159			5,688,978			5,595,418
SHAREHOLDERS' EQUITY:
Capital stock		20,058			20,046			20,046			20,046			20,046
Surplus		257,078			256,661			256,661			256,661			256,661
Undivided profits		393,831			379,769			367,100			355,948			349,056
Accumulated other comprehensive (loss) income, net of tax		(27,194	)		(25,209	)		(9,422	)		(2,369	)		12,147
Treasury stock at cost		(43,786	)		(42,261	)		(39,753	)		(37,391	)		(36,782	)
Total shareholders' equity		599,987			589,006			594,632			592,895			601,128
Total liabilities and shareholders' equity	$	6,000,052			6,079,494			6,226,791			6,281,873			6,196,546
Outstanding shares (in thousands)		19,024			19,052			19,127			19,202			19,220

NONPERFORMING ASSETS
(dollars in thousands)
(Unaudited)
		12/31/2022		9/30/2022		6/30/2022		3/31/2022		12/31/2021
Nonperforming Assets
New York and other states*
Loans in nonaccrual status:
Commercial	$	219		179		203		187		112
Real estate mortgage - 1 to 4 family		14,949		16,295		16,259		17,065		16,574
Installment		23		29		40		33		37
Total non-accrual loans		15,191		16,503		16,502		17,285		16,723
Other nonperforming real estate mortgages - 1 to 4 family		10		12		14		16		17
Total nonperforming loans		15,201		16,515		16,516		17,301		16,740
Other real estate owned		2,061		682		644		269		362
Total nonperforming assets	$	17,262		17,197		17,160		17,570		17,102
Florida
Loans in nonaccrual status:
Commercial	$	314		-		-		-		-
Real estate mortgage - 1 to 4 family		1,895		2,104		2,192		2,109		2,016
Installment		83		65		5		8		-
Total non-accrual loans		2,292		2,169		2,197		2,117		2,016
Other nonperforming real estate mortgages - 1 to 4 family		-		-		-		-		-
Total nonperforming loans		2,292		2,169		2,197		2,117		2,016
Other real estate owned		-		-		-		-		-
Total nonperforming assets	$	2,292		2,169		2,197		2,117		2,016
Total
Loans in nonaccrual status:
Commercial	$	533		179		203		187		112
Real estate mortgage - 1 to 4 family		16,844		18,399		18,451		19,174		18,590
Installment		106		94		45		41		37
Total non-accrual loans		17,483		18,672		18,699		19,402		18,739
Other nonperforming real estate mortgages - 1 to 4 family		10		12		14		16		17
Total nonperforming loans		17,493		18,684		18,713		19,418		18,756
Other real estate owned		2,061		682		644		269		362
Total nonperforming assets	$	19,554		19,366		19,357		19,687		19,118
Quarterly Net (Recoveries) Chargeoffs
New York and other states*
Commercial	$	-		-		-		36		-
Real estate mortgage - 1 to 4 family		(46	)	(164	)	(119	)	(97	)	52
Installment		31		34		12		3		31
Total net (recoveries) chargeoffs	$	(15	)	(130	)	(107	)	(58	)	83
Florida
Commercial	$	-		-		-		-		-
Real estate mortgage - 1 to 4 family		-		-		-		-		-
Installment		-		(2	)	-		-		-
Total net (recoveries) chargeoffs	$	-		(2	)	-		-		-
Total
Commercial	$	-		-		-		36		-
Real estate mortgage - 1 to 4 family		(46	)	(164	)	(119	)	(97	)	52
Installment		31		32		12		3		31
Total net (recoveries) chargeoffs	$	(15	)	(132	)	(107	)	(58	)	83
Asset Quality Ratios
Total nonperforming loans (1)	$	17,493		18,684		18,713		19,418		18,756
Total nonperforming assets (1)		19,554		19,366		19,357		19,687		19,118
Total net (recoveries) chargeoffs (2)		(15	)	(132	)	(107	)	(58	)	83
Allowance for credit losses on loans (1)		46,032		45,517		45,285		46,178		44,267
Nonperforming loans to total loans		0.37%		0.40%		0.41%		0.43%		0.42%
Nonperforming assets to total assets		0.33%		0.32%		0.31%		0.31%		0.31%
Allowance for credit losses on loans to total loans		0.97%		0.98%		1.00%		1.03%		1.00%
Coverage ratio (1)		263.1%		243.6%		242.0%		237.8%		236.0%
Annualized net (recoveries) chargeoffs to average loans (2)		0.00%		-0.01%		-0.01%		-0.01%		0.01%
Allowance for credit losses on loans to annualized net (recoveries) chargeoffs (2)		N/A		N/A		N/A		N/A		133.3x
* 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, 2022									December 31, 2021
		Average			Interest		Average				Average			Interest		Average
		Balance					Rate				Balance					Rate
Assets
Securities available for sale:
U. S. government sponsored enterprises	$	120,415			693		2.30	%		$	59,975			76		0.51	%
Mortgage backed securities and collateralized mortgage
obligations - residential		292,845			1,606		2.18				279,472			1,073		1.54
State and political subdivisions		40			1		7.81				46			0		-
Corporate bonds		85,701			523		2.44				45,858			206		1.79
Small Business Administration - guaranteed
participation securities		23,805			124		2.10				31,903			165		2.07
Other		686			2		1.17				680			4		2.35
Total securities available for sale		523,492			2,949		2.25				417,934			1,524		1.46
Federal funds sold and other short-term Investments		669,280			6,246		3.70				1,123,276			432		0.15
Held to maturity securities:
Mortgage backed securities and collateralized mortgage
obligations - residential		7,886			81		4.12				10,311			97		3.76
Total held to maturity securities		7,886			81		4.12				10,311			97		3.76
Federal Home Loan Bank stock		5,797			98		6.76				5,604			62		4.43
Commercial loans		223,164			2,756		4.94				202,092			2,704		5.35
Residential mortgage loans		4,161,481			36,109		3.47				3,979,645			34,602		3.48
Home equity lines of credit		278,853			3,661		5.21				230,408			2,192		3.77
Installment loans		10,886			185		6.74				9,068			157		6.87
Loans, net of unearned income		4,674,384			42,711		3.65				4,421,213			39,655		3.59
Total interest earning assets		5,880,839			52,085		3.54				5,978,338			41,770		2.79
Allowance for credit losses on loans		(45,722	)								(47,379	)
Cash & non-interest earning assets		171,921									197,382
Total assets	$	6,007,038								$	6,128,341
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts	$	1,164,178			61		0.02	%		$	1,151,704			42		0.01	%
Money market accounts		668,537			389		0.23				763,053			201		0.10
Savings		1,540,163			401		0.10				1,461,568			149		0.04
Time deposits		983,590			1,839		0.74				1,055,792			865		0.32
Total interest bearing deposits		4,356,468			2,690		0.25				4,432,117			1,257		0.11
Short-term borrowings		126,562			208		0.65				233,829			221		0.38
Total interest bearing liabilities		4,483,030			2,898		0.26				4,665,946			1,478		0.13
Demand deposits		845,493									795,258
Other liabilities		82,085									77,165
Shareholders' equity		596,430									589,972
Total liabilities and shareholders' equity	$	6,007,038								$	6,128,341
Net interest income, tax equivalent					49,187									40,292
Net interest spread							3.28	%								2.67	%
Net interest margin (net interest income to
total interest earning assets)							3.34	%								2.69	%
Tax equivalent adjustment					(1	)								-
Net interest income					49,186									40,292
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY -
INTEREST RATES AND INTEREST DIFFERENTIAL, Continued
(dollars in thousands)
(Unaudited)		Year ended									Year ended
		December 31, 2022									December 31, 2021
		Average			Interest		Average				Average			Interest		Average
		Balance					Rate				Balance					Rate
Assets
Securities available for sale:
U. S. government sponsored enterprises	$	89,557			1,405		1.57	%		$	63,743			314		0.49	%
Mortgage backed securities and collateralized mortgage
obligations - residential		284,901			5,677		1.99				308,777			4,515		1.46
State and political subdivisions		41			3		6.66				48			3		6.56
Corporate bonds		78,266			1,804		2.31				53,699			1,065		1.98
Small Business Administration - guaranteed
participation securities		26,679			551		2.07				35,723			745		2.09
Other		686			9		1.31				685			20		2.92
Total securities available for sale		480,130			9,449		1.97				462,675			6,662		1.44
Federal funds sold and other short-term Investments		969,043			14,292		1.47				1,111,257			1,458		0.13
Held to maturity securities:
Mortgage backed securities and collateralized mortgage
obligations - residential		8,647			343		3.97				11,733			435		3.71
Total held to maturity securities		8,647			343		3.97				11,733			435		3.71
Federal Home Loan Bank stock		5,749			305		5.31				5,578			260		4.66
Commercial loans		206,144			10,168		4.93				210,145			10,907		5.19
Residential mortgage loans		4,081,120			140,420		3.44				3,884,336			138,821		3.57
Home equity lines of credit		254,168			10,950		4.31				233,628			8,814		3.77
Installment loans		9,849			676		6.87				8,725			626		7.17
Loans, net of unearned income		4,551,281			162,214		3.56				4,336,834			159,168		3.67
Total interest earning assets		6,014,850			186,603		3.10				5,928,077			167,983		2.83
Allowance for credit losses on loans		(46,124	)								(49,421	)
Cash & non-interest earning assets		190,278									196,825
Total assets	$	6,159,004								$	6,075,481
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts	$	1,190,337			190		0.02	%		$	1,134,702			178		0.02	%
Money market accounts		745,714			1,050		0.14				739,139			922		0.12
Savings		1,553,016			920		0.06				1,397,432			624		0.04
Time deposits		974,428			3,567		0.37				1,166,963			4,941		0.42
Total interest bearing deposits		4,463,495			5,727		0.13				4,438,236			6,665		0.15
Short-term borrowings		177,599			740		0.42				232,815			909		0.39
Total interest bearing liabilities		4,641,094			6,467		0.14				4,671,051			7,574		0.16
Demand deposits		838,944									750,111
Other liabilities		81,880									74,396
Shareholders' equity		597,086									579,923
Total liabilities and shareholders' equity	$	6,159,004								$	6,075,481
Net interest income, tax equivalent					180,136									160,409
Net interest spread							2.96	%								2.67	%
Net interest margin (net interest income to
total interest earning assets)							2.99	%								2.71	%
Tax equivalent adjustment					(1	)								(1	)
Net interest income					180,135									160,408

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.

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

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

NON-GAAP FINANCIAL MEASURES RECONCILIATION
(dollars in thousands)
(Unaudited)
		12/31/2022		9/30/2022		12/31/2021
Tangible Book Value Per Share
Equity (GAAP)	$	599,987		589,006		601,128
Less: Intangible assets		553		553		553
Tangible equity (Non-GAAP)		599,434		588,453		600,575
Shares outstanding		19,024		19,052		19,220
Tangible book value per share		31.51		30.89		31.25
Book value per share		31.54		30.92		31.28
Tangible Equity to Tangible Assets
Total Assets (GAAP)		6,000,052		6,079,494		6,196,546
Less: Intangible assets		553		553		553
Tangible assets (Non-GAAP)		5,999,499		6,078,941		6,195,993
Tangible Equity to Tangible Assets (Non-GAAP)		9.99%		9.68%		9.69%
Equity to Assets (GAAP)		10.00%		9.69%		9.70%
		Three months ended								Year ended
Efficiency Ratio		12/31/2022		9/30/2022		12/31/2021				12/31/2022		12/31/2021
Net interest income (GAAP)	$	49,186		47,793		40,292			$	180,135		160,408
Taxable equivalent adjustment		1		0		0				1		1
Net interest income (fully taxable equivalent) (Non-GAAP)		49,187		47,793		40,292				180,136		160,409
Non-interest income (GAAP)		4,775		4,386		4,526				19,260		17,937
Less: Net gain on sale of building		-		-		-				268		-
Revenue used for efficiency ratio (Non-GAAP)		53,962		52,179		44,818				199,128		178,346
Total noninterest expense (GAAP)		26,405		26,144		26,190				100,319		101,662
Less: Other real estate (income) expense, net		101		124		(28	)			310		183
Expense used for efficiency ratio (Non-GAAP)		26,304		26,020		26,218				100,009		101,479
Efficiency Ratio		48.75%		49.87%		58.50%				50.22%		56.90%

 

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