TrustCo Delivers Once Again With Second Quarter Results Net Interest Margin Up 3.7% on Loan Growth of 3.8%

Rhea-AI Summary

TrustCo Bank Corp NY (NASDAQ: TRST) reported second quarter 2024 net income of $12.6 million or $0.66 diluted earnings per share, compared to $16.4 million or $0.86 per share in Q2 2023. Key highlights include:

- Average loan growth of 3.8% year-over-year
- Net interest income increased to $37.8 million, up 3.3% from Q1 2024
- Net interest margin improved to 2.53%, up 9 basis points from Q1 2024
- Strong asset quality with NPLs at 0.38% of total loans
- Book value per share increased to $34.46, up 5.5% year-over-year

The company also reported a $1.4 million gain from exchanging Visa Class B-1 shares for Class B-2 and Class C shares.

Positive

• Average loan portfolio grew by 3.8% year-over-year
• Net interest income increased by 3.3% quarter-over-quarter to $37.8 million
• Net interest margin improved to 2.53%, up 9 basis points from Q1 2024
• Book value per share increased by 5.5% year-over-year to $34.46
• Recorded a $1.4 million gain from Visa share exchange
• Strong asset quality maintained with NPLs at 0.38% of total loans

Negative

• Net income decreased from $16.4 million in Q2 2023 to $12.6 million in Q2 2024
• Diluted earnings per share dropped from $0.86 in Q2 2023 to $0.66 in Q2 2024
• Non-interest expenses increased by $1.6 million over the prior quarter

Insights

Financial Analyst

The financial performance of TrustCo Bank Corp NY for the second quarter of 2024 indicates robust growth and strategic financial management. The net income of $12.6 million shows an improvement from the previous quarter, signifying effective cost management and revenue generation strategies. However, it is lower compared to the second quarter of 2023. This decline is something stakeholders should watch closely, as it could signal underlying challenges.

Loan growth of 3.8% is a positive indicator of the bank's lending capacity and market demand. The net interest margin increase of 3.7% suggests effective management of lending and borrowing rates. An increase in average deposits by 1.5% points to a growing customer base and trust in the bank's stability.

However, the rise in non-interest expenses primarily due to higher salaries and benefits needs close monitoring. While it's vital to retain talent, escalating costs could suppress profit margins. The provision for credit losses also indicates prudent risk management, reflecting a cautious approach in an uncertain economic environment.

Overall, the financial health of TrustCo appears solid, but investors should remain vigilant regarding cost controls and potential impacts on profitability from economic conditions.

Market Research Analyst

From a market perspective, TrustCo Bank Corp's performance this quarter is encouraging. The company's focus on residential and home equity lending has borne fruit, as shown by the substantial growth in these segments. The decision to retain and mark to market the Visa Class C common stock shares has also positively impacted their financial standing, demonstrating strategic foresight in asset management.

The increase in commercial loans by 12.7% is noteworthy, reflecting a diversified approach in lending, which can help mitigate risks associated with economic downturns in any single sector. Additionally, the uptick in average deposits signifies growing consumer confidence and a strong brand presence in the market.

However, the decline in net income from the previous year should be noted by investors. This drop, although offset by growth in other areas, could be indicative of increasing competition or market saturation. The ongoing adjustments to deposit rates and the Federal Reserve's interest rate decisions will also play a important role in TrustCo's future performance.

In summary, TrustCo is well-positioned, but external economic factors and internal cost management will be key to sustaining growth.

Tech Expert

While the core news does not directly pertain to technology advancements, the financial sector's digital evolution is important to consider. TrustCo's growth in loan and deposit metrics suggests a robust underlying technological infrastructure supporting these operations. Efficient management of loan portfolios and deposit handling often relies on advanced fintech solutions to streamline processes, enhance customer experiences and minimize operational risks.

The performance data reflect TrustCo's ability to leverage technology for operational efficiency. For instance, the increase in net interest margin highlights effective use of financial analytics to manage interest rates proactively. Furthermore, the strategic sale and marking to market of Visa shares may involve sophisticated trading algorithms and decision-making tools.

Investors should look into TrustCo's investments in technology, particularly in areas like AI-driven risk management, blockchain for secure transactions and customer relationship management systems that can offer an enhanced, seamless banking experience. Continual investment in these tech areas could provide TrustCo with a competitive edge and further strengthen its market position.

Executive Snapshot:

• Average Loan portfolio continues to grow:
  • On average, total loans were up $182.2 million or 3.8% for the second quarter 2024 compared to the second quarter 2023

• Continued solid financial results:
  • Key metrics for second quarter 2024:
    • Net income of $12.6 million versus $12.1 million for the first quarter 2024
    • Net interest income of $37.8 million, up from $36.6 million compared to the first quarter of 2024
    • Return on average assets (ROAA) of 0.82% compared to 0.80% to the first quarter of 2024
    • Return on average equity (ROAE) of 7.76% versus 7.54% for the first quarter 2024
    • Book value per share as of June 30, 2024 was $34.46, up from $34.12 compared to March 31, 2024
      
      
• Superior asset quality:
  
  • Nonperforming loans (NPLs) were $19.2 million as of June 30, 2024, down from $19.4 million as of June 30, 2023, and generally continue to remain at low levels
  • NPLs to total loans were 0.38% as of June 30, 2024 compared to 0.40% as of June 30, 2023
  • Nonperforming assets (NPAs) to total assets was 0.35% as of June 30, 2024 compared to 0.34% as of June 30, 2023

• Capital continues to grow:
  • Consolidated equity to assets increased 4.9% to 10.73% as of June 30, 2024 from 10.23% as of June 30, 2023

GLENVILLE, N.Y., July 22, 2024 (GLOBE NEWSWIRE) --

TrustCo Bank Corp NY (TrustCo, NASDAQ: TRST) today announced second quarter 2024 net income of $12.6 million or $0.66 diluted earnings per share, compared to net income of $16.4 million or $0.86 diluted earnings per share for the second quarter 2023; and net income of $24.7 million or $1.30 diluted earnings per share for the six months ended June 30, 2024, compared to net income of $34.1 million or $1.79 diluted earnings per share for the six months ended June 30, 2023. Average loan growth increased $182.2 million or 3.8% for the second quarter 2024 over the same period in 2023.

During the second quarter of 2024, Visa Inc. accepted the Company’s tender of its 6,528 shares of Visa Class B-1 common stock in exchange for a combination of Visa Class B-2 common stock and Visa Class C common stock. As a result of the exchange, the Company marked its Visa Class C common stock to fair value and recorded a gain of $1.4 million based on the conversion privilege of the Visa Class C common stock and the closing price of Visa Class A common stock on June 28, 2024 of $262.47 per share. The Company’s Visa Class C shares are expected to continue to be marked to fair value on a recurring basis using the Visa Class A shares as evidence of orderly transactions between market participants for similar securities issued by Visa. The Company originally obtained the shares in 2008. The strategic decision to retain those shares and not sell them sooner, allowed the Company to avoid commissions and other expenses thus recognizing the full market value. Further, it is anticipated that there could be future opportunities to exchange Class B-2 shares.

Overview

Chairman, President, and CEO, Robert J. McCormick said “Our success this quarter arises directly from our commitment to the core principles of Trustco Bank: competitive pricing and exceptional customer service. This clear mission focus enabled us to reach yet another milestone in our loan portfolio, as our residential, home equity, and commercial offerings all grew significantly over this time last year, reaching an all-time high for total loans. With all revenue streams producing, we realized a 4% increase in net income. By employing a sharp focus on loan pricing and resisting upward pressure on deposit rates, we realized a 3.7% increase in net interest margin. All this was accomplished as we not only maintained, but grew capital. In true Trustco fashion, credit quality remains stellar. We believe that this momentum positions us well for the remainder of the year.”

Details

Average loans were up $182.2 million or 3.8% in the second quarter 2024 over the same period in 2023. Average residential loans and home equity lines of credit, our primary lending focus, were up $89.9 million, or 2.1%, and $61.1 million, or 20.1%, respectively, in the second quarter 2024 over the same period in 2023. Average commercial loans also increased $31.5 million, or 12.7%, in the second quarter 2024 over the same period in 2023. Average deposits were up $77.4 million, or 1.5% for the second quarter 2024 over the same period in 2023. We believe the increase in time deposits compared to the prior year 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.

Net interest income was $37.8 million for the second quarter 2024, an increase of $1.2 million, or 3.3%, compared to the prior quarter, driven by loan growth at higher interest rates, an increase in interest on federal funds sold and other short-term investments, and lower cost of deposits, partially offset by lower investment earnings. The net interest margin for the second quarter 2024 was 2.53%, up 9 basis points from 2.44% in the first quarter of 2024. The yield on interest earnings assets increased to 4.06%, up 7 basis points from 3.99% in the first quarter of 2024. The cost of interest bearing liabilities decreased to 1.97% in the second quarter 2024 from 1.99% in the first quarter 2024. The Bank has seen success in managing deposits by lowering the rates on time deposits and retaining deposit balances, while still being competitive in the markets we serve. The Federal Reserve’s decision regarding whether to cut or hold rates in the upcoming meetings will have an effect on our ability to continue to decrease deposit costs which should help margin in future quarters, and consequently, should bring down the cost of deposits over time. Non-interest expense increased $1.6 million over the prior quarter primarily as a result of higher salaries and employee benefits costs.

Asset quality remains strong and has been consistent over the past twelve months. The Company recorded a provision for credit losses of $500 thousand in the second quarter of 2024, which is the result of a provision for credit losses on loans of $500 thousand, and there was no change in unfunded commitments. The ratio of allowance for credit losses on loans to total loans was 0.99% and 0.96% as of June 30, 2024 and 2023, respectively. The allowance for credit losses on loans was $49.8 million at June 30, 2024, compared to $46.9 million at June 30, 2023. NPLs were $19.2 million at June 30, 2024, compared to $19.4 million at June 30, 2023. NPLs were 0.38% and 0.40% of total loans at June 30, 2024 and 2023, respectively. The coverage ratio, or allowance for credit losses on loans to NPLs, was 259.4% at June 30, 2024, compared to 241.6% at June 30, 2023. NPAs were $21.5 million at June 30, 2024, compared to $20.8 million at June 30, 2023.  

At June 30, 2024, our equity to asset ratio was 10.73%, compared to 10.23% at June 30, 2023. Book value per share at June 30, 2024 was $34.46, up 5.5% compared to $32.66 a year earlier.

A conference call to discuss second quarter 2024 results will be held at 9:00 a.m. Eastern Time on July 23, 2024. Those wishing to participate in the call may dial toll-free for the United States at 1-833-470-1428, and for Canada at 1-833-950-0062, Access code 332275. A replay of the call will be available for thirty days by dialing toll-free for the United States at 1-866-813-9403, Access code 270896. The call will also be audio webcast at https://events.q4inc.com/attendee/723112639, and will be available for one year.

About TrustCo Bank Corp NY

TrustCo Bank Corp NY is a $6.1 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 138 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at June 30, 2024.

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

Forward-Looking Statements

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

Subsidiary: Trustco Bank

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

TRUSTCO BANK CORP NY
GLENVILLE, NY
FINANCIAL HIGHLIGHTS
(dollars in thousands, except per share data)
(Unaudited)
		Three months ended
		6/30/2024				3/31/2024					6/30/2023
Summary of operations
Net interest income		$	37,788			$	36,578			$	44,052
Provision (Credit) for credit losses			500				600				(500	)
Unrealized gains recognized on equity securities			1,360				-				-
Noninterest income, excluding unrealized gains recognized on equity securities			4,291				4,843				4,598
Noninterest expense			26,459				24,903				27,327
Net income			12,551				12,126				16,372
Per share
Net income per share:
- Basic		$	0.66			$	0.64			$	0.86
- Diluted			0.66				0.64				0.86
Cash dividends			0.36				0.36				0.36
Book value at period end			34.46				34.12				32.66
Market price at period end			28.77				28.16				28.61
At period end
Full time equivalent employees			753				761				791
Full service banking offices			138				139				143
Performance ratios
Return on average assets			0.82		%		0.80		%		1.09		%
Return on average equity			7.76				7.54				10.61
Efficiency ratio (1)			62.84				59.94				55.87
Net interest spread			2.09				2.00				2.74
Net interest margin			2.53				2.44				2.98
Dividend payout ratio			54.57				56.48				41.83
Capital ratios at period end
Consolidated equity to assets			10.73		%		10.51		%		10.23		%
Consolidated tangible equity to tangible assets (2)			10.72		%		10.50		%		10.22		%
Asset quality analysis at period end
Nonperforming loans to total loans			0.38		%		0.37		%		0.40
Nonperforming assets to total assets			0.35				0.33				0.34
Allowance for credit losses on loans to total loans			0.99				0.98				0.96
Coverage ratio (3)			2.6x				2.7x				2.4x
(1) Non-GAAP measure; calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income (excluding unrealized gains recognized on equity securities). See Non-GAAP Financial Measures Reconciliation.
(2) Non-GAAP measure; calculated as total shareholders' equity less $553 of intangible assets divided by total assets less $553 of intangible assets. See Non-GAAP Financial Measures Reconciliation.
(3) Calculated as allowance for credit losses on loans divided by total nonperforming loans.
FINANCIAL HIGHLIGHTS, Continued
(dollars in thousands, except per share data)
(Unaudited)
		Six Months Ended
			06/30/24				06/30/23
Summary of operations
Net interest income	$		74,366				91,017
Provision (Credit) for credit losses			1,100				(200	)
Unrealized gains recognized on equity securities			1,360				-
Noninterest income, excluding unrealized gains recognized on equity securities			9,134				9,267
Noninterest expense			51,362				55,006
Net income			24,677				34,118
Per share
Net income per share:
- Basic	$		1.30				1.79
- Diluted			1.30				1.79
Cash dividends			0.72				0.72
Book value at period end			34.46				32.66
Market price at period end			28.77				28.61
Performance ratios
Return on average assets			0.81		%		1.14
Return on average equity			7.65				11.22
Efficiency ratio (1)			61.40				54.48
Net interest spread			2.05				2.90
Net interest margin			2.48				3.10
Dividend payout ratio			55.51				40.15
(1) Non-GAAP measure; calculated as noninterest expense (excluding ORE income/expense) divided by taxable
equivalent net interest income plus noninterest income (excluding unrealized gains recognized on equity securities).
See Non-GAAP Financial Measures Reconciliation.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
(Unaudited)
		Three months ended
			6/30/2024				3/31/2024				12/31/2023				9/30/2023				6/30/2023
Interest and dividend income:
Interest and fees on loans		$	50,660			$	49,804			$	49,201			$	47,921			$	46,062
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises			909				906				750				672				691
State and political subdivisions			1				-				1				-				1
Mortgage-backed securities and collateralized mortgage
obligations - residential			1,451				1,494				1,533				1,485				1,543
Corporate bonds			362				476				477				473				516
Small Business Administration - guaranteed
participation securities			94				100				102				107				111
Other securities			2				3				3				2				3
Total interest and dividends on securities available for sale			2,819				2,979				2,866				2,739				2,865
Interest on held to maturity securities:
Mortgage-backed securities and collateralized mortgage
obligations - residential			65				68				70				73				75
Total interest on held to maturity securities			65				68				70				73				75
Federal Home Loan Bank stock			147				152				149				131				110
Interest on federal funds sold and other short-term investments			6,894				6,750				6,354				6,688				6,970
Total interest income			60,585				59,753				58,640				57,552				56,082
Interest expense:
Interest on deposits:
Interest-bearing checking			288				240				165				102				49
Savings			675				712				707				639				655
Money market deposit accounts			2,228				2,342				2,500				2,384				1,756
Time deposits			19,400				19,677				16,460				11,962				9,291
Interest on short-term borrowings			206				204				201				244				279
Total interest expense			22,797				23,175				20,033				15,331				12,030
Net interest income			37,788				36,578				38,607				42,221				44,052
Less: Provision (Credit) for credit losses			500				600				1,350				100				(500	)
Net interest income after provision (credit) for credit losses			37,288				35,978				37,257				42,121				44,552
Noninterest income:
Trustco Financial Services income			1,609				1,816				1,612				1,627				1,412
Fees for services to customers			2,399				2,745				2,563				2,590				2,847
Unrealized gains recognized on equity securities			1,360				-				-				-				-
Other			283				282				299				357				339
Total noninterest income			5,651				4,843				4,474				4,574				4,598
Noninterest expenses:
Salaries and employee benefits			12,520				11,427				12,444				12,393				13,122
Net occupancy expense			4,375				4,611				4,209				4,358				4,262
Equipment expense			1,990				1,738				1,852				1,923				1,873
Professional services			1,570				1,460				1,561				1,717				1,360
Outsourced services			2,755				2,501				2,532				2,720				2,491
Advertising expense			466				408				384				586				518
FDIC and other insurance			797				1,094				1,085				1,078				1,085
Other real estate expense (income), net			16				74				(12	)			163				148
Other			1,970				1,590				4,776				2,522				2,468
Total noninterest expenses			26,459				24,903				28,831				27,460				27,327
Income before taxes			16,480				15,918				12,900				19,235				21,823
Income taxes			3,929				3,792				3,052				4,555				5,451
Net income		$	12,551			$	12,126			$	9,848			$	14,680			$	16,372
Net income per common share:
- Basic		$	0.66			$	0.64			$	0.52			$	0.77			$	0.86
- Diluted			0.66				0.64				0.52				0.77				0.86
Average basic shares (in thousands)			19,022				19,024				19,024				19,024				19,024
Average diluted shares (in thousands)			19,033				19,032				19,026				19,024				19,024
CONSOLIDATED STATEMENTS OF INCOME, Continued
(dollars in thousands, except per share data)
(Unaudited)
		Six Months Ended
			06/30/24				06/30/23
Interest and dividend income:
Interest and fees on loans	$		100,464				90,334
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises			1,815				1,383
State and political subdivisions			1				1
Mortgage-backed securities and collateralized mortgage
obligations - residential			2,945				3,128
Corporate bonds			838				1,037
Small Business Administration - guaranteed
participation securities			194				228
Other securities			5				5
Total interest and dividends on securities available for sale			5,798				5,782
Interest on held to maturity securities:
Mortgage-backed securities-residential			133				153
Total interest on held to maturity securities			133				153
Federal Home Loan Bank stock			299				220
Interest on federal funds sold and other short-term investments			13,644				13,525
Total interest income			120,338				110,014
Interest expense:
Interest on deposits:
Interest-bearing checking			528				115
Savings			1,387				1,185
Money market deposit accounts			4,570				2,570
Time deposits			39,077				14,563
Interest on short-term borrowings			410				564
Total interest expense			45,972				18,997
Net interest income			74,366				91,017
Less: Provision (Credit) for credit losses			1,100				(200	)
Net interest income after provision (credit) for credit losses			73,266				91,217
Noninterest income:
Trustco Financial Services income			3,425				3,186
Fees for services to customers			5,144				5,495
Unrealized gains recognized on equity securities			1,360				-
Other			565				586
Total noninterest income			10,494				9,267
Noninterest expenses:
Salaries and employee benefits			23,947				26,405
Net occupancy expense			8,986				8,860
Equipment expense			3,728				3,835
Professional services			3,030				2,967
Outsourced services			5,256				4,787
Advertising expense			874				908
FDIC and other insurance			1,891				2,137
Other real estate expense, net			90				373
Other			3,560				4,734
Total noninterest expenses			51,362				55,006
Income before taxes			32,398				45,478
Income taxes			7,721				11,360
Net income	$		24,677				34,118
Net income per common share:
- Basic	$		1.30				1.79
- Diluted			1.30				1.79
Average basic shares (in thousands)			19,023				19,024
Average diluted shares (in thousands)			19,033				19,025
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)
(Unaudited)
			6/30/2024				3/31/2024				12/31/2023				9/30/2023				6/30/2023
ASSETS:
Cash and due from banks		$	42,193			$	44,868			$	49,274			$	45,940			$	55,662
Federal funds sold and other short term investments			493,920				564,815				528,730				461,321				547,695
Total cash and cash equivalents			536,113				609,683				578,004				507,261				603,357
Securities available for sale:
U. S. government sponsored enterprises			106,796				128,854				118,668				121,474				113,570
States and political subdivisions			26				26				26				34				34
Mortgage-backed securities and collateralized mortgage
obligations - residential			218,311				227,078				237,677				233,719				243,444
Small Business Administration - guaranteed
participation securities			15,592				16,260				17,186				17,316				18,382
Corporate bonds			53,764				53,341				78,052				76,935				76,618
Other securities			688				682				680				657				656
Total securities available for sale			395,177				426,241				452,289				450,135				452,704
Held to maturity securities:
Mortgage-backed securities and collateralized mortgage
obligations-residential			5,921				6,206				6,458				6,724				7,043
Total held to maturity securities			5,921				6,206				6,458				6,724				7,043
Federal Reserve Bank and Federal Home Loan Bank stock			6,507				6,203				6,203				6,203				6,203
Loans:
Commercial			282,441				279,092				273,515				268,642				251,434
Residential mortgage loans			4,370,640				4,354,369				4,365,063				4,343,006				4,310,005
Home equity line of credit			370,063				355,879				347,415				332,028				308,976
Installment loans			15,168				16,166				16,886				16,605				16,396
Loans, net of deferred net costs			5,038,312				5,005,506				5,002,879				4,960,281				4,886,811
Less: Allowance for credit losses on loans			49,772				49,220				48,578				47,226				46,914
Net loans			4,988,540				4,956,286				4,954,301				4,913,055				4,839,897
Bank premises and equipment, net			33,466				33,423				34,007				32,135				32,351
Operating lease right-of-use assets			38,376				39,647				40,542				41,475				43,113
Other assets			102,544				101,881				96,387				97,310				90,957
Total assets		$	6,106,644			$	6,179,570			$	6,168,191			$	6,054,298			$	6,075,625
LIABILITIES:
Deposits:
Demand		$	745,227			$	742,997			$	754,532			$	773,293			$	791,353
Interest-bearing checking			1,029,606				1,020,136				1,015,213				1,033,898				1,082,989
Savings accounts			1,144,427				1,155,517				1,179,241				1,235,658				1,315,893
Money market deposit accounts			517,445				532,611				565,767				610,012				625,253
Time deposits			1,840,262				1,903,908				1,836,024				1,581,504				1,442,959
Total deposits			5,276,967				5,355,169				5,350,777				5,234,365				5,258,447
Short-term borrowings			89,720				94,374				88,990				103,110				113,765
Operating lease liabilities			42,026				43,438				44,471				45,418				47,172
Accrued expenses and other liabilities			42,763				37,399				38,668				47,479				34,852
Total liabilities			5,451,476				5,530,380				5,522,906				5,430,372				5,454,236
SHAREHOLDERS' EQUITY:
Capital stock			20,058				20,058				20,058				20,058				20,058
Surplus			257,490				257,335				257,181				257,078				257,078
Undivided profits			436,048				430,346				425,069				422,082				414,251
Accumulated other comprehensive loss, net of tax			(14,268	)			(14,763	)			(13,237	)			(31,506	)			(26,212	)
Treasury stock at cost			(44,160	)			(43,786	)			(43,786	)			(43,786	)			(43,786	)
Total shareholders' equity			655,168				649,190				645,285				623,926				621,389
Total liabilities and shareholders' equity		$	6,106,644			$	6,179,570			$	6,168,191			$	6,054,298			$	6,075,625
Outstanding shares (in thousands)			19,010				19,024				19,024				19,024				19,024

NONPERFORMING ASSETS
(dollars in thousands)
(Unaudited)
			6/30/2024			3/31/2024			12/31/2023			9/30/2023			6/30/2023
Nonperforming Assets
New York and other states*
Loans in nonaccrual status:
Commercial		$	741		$	532		$	536		$	540		$	545
Real estate mortgage - 1 to 4 family			14,992			14,359			14,375			14,633			16,260
Installment			131			149			151			93			124
Total non-accrual loans			15,864			15,040			15,062			15,266			16,929
Other nonperforming real estate mortgages - 1 to 4 family			-			-			3			5			7
Total nonperforming loans			15,864			15,040			15,065			15,271			16,936
Other real estate owned			2,334			2,334			194			1,185			1,412
Total nonperforming assets		$	18,198		$	17,374		$	15,259		$	16,456		$	18,348
Florida
Loans in nonaccrual status:
Commercial		$	314		$	314		$	314		$	314		$	314
Real estate mortgage - 1 to 4 family			2,985			2,921			2,272			2,228			2,170
Installment			22			-			15			65			-
Total non-accrual loans			3,321			3,235			2,601			2,607			2,484
Other nonperforming real estate mortgages - 1 to 4 family			-			-			-			-			-
Total nonperforming loans			3,321			3,235			2,601			2,607			2,484
Other real estate owned			-			-			-			-			-
Total nonperforming assets		$	3,321		$	3,235		$	2,601		$	2,607		$	2,484
Total
Loans in nonaccrual status:
Commercial		$	1,055		$	846		$	850		$	854		$	859
Real estate mortgage - 1 to 4 family			17,977			17,280			16,647			16,861			18,430
Installment			153			149			166			158			124
Total non-accrual loans			19,185			18,275			17,663			17,873			19,413
Other nonperforming real estate mortgages - 1 to 4 family			-			-			3			5			7
Total nonperforming loans			19,185			18,275			17,666			17,878			19,420
Other real estate owned			2,334			2,334			194			1,185			1,412
Total nonperforming assets		$	21,519		$	20,609		$	17,860		$	19,063		$	20,832
Quarterly Net (Recoveries) Chargeoffs
New York and other states*
Commercial		$	-		$	-		$	-		$	-		$	(129	)
Real estate mortgage - 1 to 4 family			(74	)		(78	)		219			(26	)		(161	)
Installment			(2	)		36			23			14			21
Total net (recoveries) chargeoffs		$	(76	)	$	(42	)	$	242		$	(12	)	$	(269	)
Florida
Commercial		$	-		$	-		$	-		$	-		$	-
Real estate mortgage - 1 to 4 family			17			-			-			-			-
Installment			7			-			6			-			40
Total net (recoveries) chargeoffs		$	24		$	-		$	6		$	-		$	40
Total
Commercial		$	-		$	-		$	-		$	-		$	(129	)
Real estate mortgage - 1 to 4 family			(57	)		(78	)		219			(26	)		(161	)
Installment			5			36			29			14			61
Total net (recoveries) chargeoffs		$	(52	)	$	(42	)	$	248		$	(12	)	$	(229	)
Asset Quality Ratios
Total nonperforming loans (1)		$	19,185		$	18,275		$	17,666		$	17,878		$	19,420
Total nonperforming assets (1)			21,519			20,609			17,860			19,063			20,832
Total net (recoveries) chargeoffs (2)			(52	)		(42	)		248			(12	)		(229	)
Allowance for credit losses on loans (1)			49,772			49,220			48,578			47,226			46,914
Nonperforming loans to total loans			0.38	%		0.37	%		0.35	%		0.36	%		0.40	%
Nonperforming assets to total assets			0.35	%		0.33	%		0.29	%		0.31	%		0.34	%
Allowance for credit losses on loans to total loans			0.99	%		0.98	%		0.97	%		0.95	%		0.96	%
Coverage ratio (1)			259.4	%		269.3	%		275.0	%		264.2	%		241.6	%
Annualized net (recoveries) chargeoffs to average loans (2)			0.00	%		0.00	%		0.02	%		0.00	%		-0.02	%
Allowance for credit losses on loans to annualized net chargeoffs (2)		N/A			N/A			49.0x			N/A			N/A
* Includes New York, New Jersey, Vermont and Massachusetts.
(1) At period-end
(2) For the three-month period ended

DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY -
INTEREST RATES AND INTEREST DIFFERENTIAL
(dollars in thousands)
(Unaudited)		Three months ended									Three months ended
		June 30, 2024									June 30, 2023
		Average				Interest		Average			Average				Interest		Average
		Balance						Rate			Balance						Rate
Assets
Securities available for sale:
U. S. government sponsored enterprises		$	113,844			$	909	3.20	%		$	120,646			$	691	2.29	%
Mortgage backed securities and collateralized mortgage
obligations - residential			250,517				1,451	2.30				278,367				1,543	2.20
State and political subdivisions			26				1	6.75				34				1	6.74
Corporate bonds			55,065				362	2.63				85,344				516	2.42
Small Business Administration - guaranteed
participation securities			17,436				94	2.15				20,724				111	2.15
Other			694				2	1.15				686				3	1.75
Total securities available for sale			437,582				2,819	2.58				505,801				2,865	2.27
Federal funds sold and other short-term Investments			506,493				6,894	5.48				551,087				6,970	5.07
Held to maturity securities:
Mortgage backed securities and collateralized mortgage
obligations - residential			6,054				65	4.28				7,204				75	4.17
Total held to maturity securities			6,054				65	4.28				7,204				75	4.17
Federal Home Loan Bank stock			6,340				147	9.27				5,868				110	7.50
Commercial loans			280,559				3,765	5.37				249,040				3,295	5.29
Residential mortgage loans			4,359,232				40,819	3.75				4,269,295				37,992	3.56
Home equity lines of credit			364,210				5,814	6.42				303,134				4,533	6.00
Installment loans			15,395				262	6.86				15,734				242	6.16
Loans, net of unearned income			5,019,396				50,660	4.04				4,837,203				46,062	3.81
Total interest earning assets			5,975,865			$	60,585	4.06				5,907,163			$	56,082	3.80
Allowance for credit losses on loans			(49,454	)								(47,060	)
Cash & non-interest earning assets			181,688									172,821
Total assets		$	6,108,099								$	6,032,924
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts		$	1,009,048			$	288	0.11	%		$	1,083,795			$	49	0.02	%
Money market accounts			524,068				2,228	1.71				613,204				1,756	1.15
Savings			1,145,922				675	0.24				1,352,181				655	0.19
Time deposits			1,873,139				19,400	4.17				1,372,248				9,291	2.72
Total interest bearing deposits			4,552,177				22,591	2.00				4,421,428				11,751	1.07
Short-term borrowings			93,703				206	0.89				124,089				279	0.90
Total interest bearing liabilities			4,645,880			$	22,797	1.97				4,545,517			$	12,030	1.06
Demand deposits			735,262									788,654
Other liabilities			76,258									79,839
Shareholders' equity			650,699									618,914
Total liabilities and shareholders' equity		$	6,108,099								$	6,032,924
Net interest income, GAAP and non-GAAP tax equivalent (1)						$	37,788								$	44,052
Net interest spread, GAAP and non-GAAP tax equivalent (1)								2.09	%								2.74	%
Net interest margin (net interest income to total interest earning assets), GAAP and non-GAAP tax equivalent (1)								2.53	%								2.98	%
Tax equivalent adjustment (1)							-									-
Net interest income						$	37,788								$	44,052
(1) Tax equivalent adjustment to a measure results in a non-GAAP financial measure. See Non-GAAP Financial Measures Reconciliation.
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY -
INTEREST RATES AND INTEREST DIFFERENTIAL, Continued
(dollars in thousands)
(Unaudited)		Six Months Ended									Six Months Ended
		June 30, 2024									June 30, 2023
		Average				Interest		Average			Average				Interest		Average
		Balance						Rate			Balance						Rate
Assets
Securities available for sale:
U. S. government sponsored enterprises	$		119,908		$		1,815	3.03	%	$		120,669		$		1,383	2.29	%
Mortgage backed securities and collateralized mortgage
obligations - residential			254,665				2,945	2.31				282,683				3,128	2.21
State and political subdivisions			26				1	6.82				34				1	6.74
Corporate bonds			64,345				838	2.60				85,460				1,037	2.43
Small Business Administration - guaranteed
participation securities			17,830				194	2.18				21,423				228	2.13
Other			695				5	1.44				686				5	1.46
Total securities available for sale			457,469				5,798	2.53				510,955				5,782	2.26
Federal funds sold and other short-term Investments			502,072				13,644	5.47				563,938				13,525	4.84
Held to maturity securities:
Mortgage backed securities and collateralized mortgage
obligations - residential			6,192				133	4.29				7,372				153	4.16
Total held to maturity securities			6,192				133	4.29				7,372				153	4.16
Federal Home Loan Bank stock			6,271				299	9.54				5,833				220	7.54
Commercial loans			278,871				7,425	5.33				243,983				6,319	5.18
Residential mortgage loans			4,359,351				81,236	3.73				4,241,207				74,906	3.54
Home equity lines of credit			358,607				11,277	6.32				297,262				8,652	5.87
Installment loans			15,761				526	6.72				14,535				457	6.35
Loans, net of unearned income			5,012,590				100,464	4.01				4,796,987				90,334	3.77
Total interest earning assets			5,984,594		$		120,338	4.03				5,885,085		$		110,014	3.75
Allowance for credit losses on loans			(49,139	)								(46,677	)
Cash & non-interest earning assets			188,364									173,990
Total assets	$		6,123,819							$		6,012,398
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts	$		999,589				528	0.11	%	$		1,108,452				115	0.02	%
Money market accounts			534,378				4,570	1.72				607,064				2,570	0.85
Savings			1,152,241				1,387	0.24				1,403,924				1,185	0.17
Time deposits			1,881,535				39,077	4.18				1,267,193				14,563	2.32
Total interest bearing deposits			4,567,743				45,562	2.01				4,386,633				18,433	0.85
Short-term borrowings			93,510				410	0.88				127,957				564	0.89
Total interest bearing liabilities			4,661,253		$		45,972	1.98				4,514,590		$		18,997	0.85
Demand deposits			730,781									802,533
Other liabilities			83,105									81,954
Shareholders' equity			648,680									613,321
Total liabilities and shareholders' equity	$		6,123,819							$		6,012,398
Net interest income, GAAP and non-GAAP tax equivalent (1)					$		74,366							$		91,017
Net interest spread, GAAP and non-GAAP tax equivalent (1)								2.05	%								2.90	%
Net interest margin (net interest income to total interest earning assets), GAAP and non-GAAP tax equivalent (1)								2.48	%								3.10	%
Tax equivalent adjustment (1)							-									-
Net interest income					$		74,366							$		91,017
(1) Tax equivalent adjustment to a measure results in a non-GAAP financial measure. See Non-GAAP Financial Measures Reconciliation.

Non-GAAP Financial Measures Reconciliation

Tangible book value per share is a non-GAAP financial measure derived from GAAP-based amounts. We calculate tangible book value by excluding the balance of intangible assets from total shareholders’ equity divided by shares outstanding. We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios. Additionally, we believe that this measure is important to many investors in the marketplace who are interested in relative changes from period to period in equity exclusive of changes in intangible assets.

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

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

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

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

NON-GAAP FINANCIAL MEASURES RECONCILIATION
(dollars in thousands)
(Unaudited)
		6/30/2024			3/31/2024			6/30/2023
Tangible Book Value Per Share
Equity (GAAP)	$	655,168		$	649,190		$	621,389
Less: Intangible assets		553			553			553
Tangible equity (Non-GAAP)	$	654,615		$	648,637		$	620,836
Shares outstanding		19,010			19,024			19,024
Tangible book value per share		34.44			34.10			32.63
Book value per share		34.46			34.12			32.66
Tangible Equity to Tangible Assets
Total Assets (GAAP)	$	6,106,644		$	6,179,570		$	6,075,625
Less: Intangible assets		553			553			553
Tangible assets (Non-GAAP)	$	6,106,091		$	6,179,017		$	6,075,072
Tangible Equity to Tangible Assets (Non-GAAP)		10.72	%		10.50	%		10.22	%
Equity to Assets (GAAP)		10.73	%		10.51	%		10.23	%
	Three months ended											Six Months Ended
Efficiency Ratio		6/30/2024			3/31/2024			6/30/2023					6/30/2024			6/30/2023
Net interest income (GAAP)	$	37,788		$	36,578		$	44,052				$	74,366		$	91,017
Taxable equivalent adjustment		-			-			-					-			-
Net interest income (fully taxable equivalent) (Non-GAAP)		37,788			36,578			44,052					74,366			91,017
Non-interest income (GAAP)		5,651			4,843			4,598					10,494			9,267
Less: Unrealized gains recognized on equity securities		1,360			-			-					1,360			-
Revenue used for efficiency ratio (Non-GAAP)	$	42,079		$	41,421		$	48,650				$	83,500		$	100,284
Total noninterest expense (GAAP)	$	26,459		$	24,903		$	27,327				$	51,362		$	55,006
Less: Other real estate expense, net		16			74			148					90			373
Expense used for efficiency ratio (Non-GAAP)	$	26,443		$	24,829		$	27,179				$	51,272		$	54,633
Efficiency Ratio		62.84	%		59.94	%		55.87	%				61.40	%		54.48	%

FAQ

What was TrustCo's (TRST) net income for Q2 2024?

TrustCo Bank Corp NY (TRST) reported a net income of $12.6 million for the second quarter of 2024.

How did TrustCo's (TRST) average loan portfolio perform in Q2 2024?

TrustCo's average loan portfolio grew by $182.2 million or 3.8% in Q2 2024 compared to the same period in 2023.

What was TrustCo's (TRST) net interest margin in Q2 2024?

TrustCo's net interest margin for Q2 2024 was 2.53%, up 9 basis points from 2.44% in Q1 2024.

How did TrustCo's (TRST) asset quality perform in Q2 2024?

TrustCo maintained strong asset quality with nonperforming loans (NPLs) at 0.38% of total loans as of June 30, 2024.

What was TrustCo's (TRST) book value per share as of June 30, 2024?

TrustCo's book value per share was $34.46 as of June 30, 2024, up 5.5% from $32.66 a year earlier.