TrustCo is Pleased to Report Second Quarter 2020 Results; Net Income of $11.3 Million and 7.6% Average Residential Loan Growth Year over Year

Rhea-AI Summary

TrustCo Bank Corp NY (NASDAQ: TRST) reported a net income of $11.3 million or $0.117 diluted earnings per share for Q2 2020, and $24.6 million or $0.254 for the first half of the year. The bank supported communities during COVID-19 with a designated COVID-19 Fund and financial relief programs. Average loans increased by 7.0% year-over-year, while average deposits grew by 6.2%. The bank maintained a strong liquidity position and continued hiring. A conference call will be held on July 22, 2020, to discuss results.

GLENVILLE, N.Y., July 21, 2020 (GLOBE NEWSWIRE) -- TrustCo Bank Corp NY (TrustCo, NASDAQ: TRST) · TrustCo Bank Corp NY today announced second quarter 2020 net income of $11.3 million or $0.117 diluted earnings per share, and $24.6 million or $0.254 diluted earnings per share for the six months ended June 30, 2020.

Summary

Robert J. McCormick, Chairman, President and Chief Executive Officer noted, “As we continue to navigate COVID-19 and its effects on our families and neighbors, I’d like to reaffirm Trustco Bank’s commitment to serving our communities through careful financial management and high-quality service. This enduring mission guides us as we respond to this situation by providing you with the information, support, and advice you need to manage your finances in this market and plan for your future. We continue to remain thankful to those on the front lines from medical centers to food banks that are providing the essential services for those affected physically, emotionally, and financially by COVID-19.”

TrustCo’s designated Coronavirus (“COVID-19”) Fund, donating time and financial support to front line organizations across the communities, and the COVID-19 Financial Relief Program, providing support to our borrowers experiencing economic hardships by offering loan deferrals, continues to be an asset for our customers experiencing financial challenges during this time.

TrustCo is taking every precaution possible to keep our employees and customers safe during this time.  The bank continues to implement important policies, including minimizing contact between employees and customers by requiring face masks, installing clear barriers, and separating banking departments from one another. As recommended by the CDC, cleaning procedures continue to be augmented and protective sanitation items are always available.

We also continue to closely monitor the impact of the pandemic on our business and results of operations.    As of June 30, 2020, we had 668 residential loans in deferral totaling $145 million, and 90 commercial loans in deferral totaling $45 million.  This represents 4.5% of total outstanding loans.  We are encouraged to see that a number of residential and commercial loans had already re-started making regular loan payments prior to the end of the quarter.  Additionally, the bank has funded 663 Paycheck Protection Program (“PPP”) loans totaling $46 million.

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

TrustCo saw average loans grow 7.0% in the second quarter of 2020 compared to the second quarter of 2019.  Year over year, loan portfolio expansion was funded by a combination of utilizing a portion of our strong cash balances, cash flow from investments, and the  growth in funding from customer deposits.  Total average deposits are up $276.2 million or 6.2% in the second quarter 2020 compared to the prior year.

Details

Average loans were up $270.5 million or 7.0% in the second quarter 2020 over the same period in 2019.  Average residential loans, our primary lending focus, were up $257.2 million or 7.6% in the second quarter 2020, over the same period in 2019.  Average deposits are up $276.2 million or 6.2% for the second quarter 2020 over the same period a year earlier.  The increase in deposits was the result of a $321.2 million or 10.7% increase total average core deposit accounts, which consist of interest bearing and non-interest bearing checking, savings and money market deposits, for the second quarter 2020 compared to the second quarter 2019.  Within core, checking balances were up $203.5 million or 15.7% (including interest bearing checking and non-interest bearing balances).  Average time deposits decreased $45.0 million or 3.1% for the second quarter 2020 compared to the second quarter 2019.

The cost of interest bearing liabilities decreased to 0.64% in the second quarter 2020 from 0.91% in the second quarter 2019.  A significant portion of our CD portfolio repriced during the last half of 2019 and the first half of 2020, which resulted in lower rates due to market conditions. The net interest margin for the second quarter 2020 was 2.81%, down 30 basis points from 3.11% in the second quarter of 2019 primarily due to federal interest rate cuts over the same period resulting in less interest earned on our short-term funds and variable rate loans.  Additionally, because we offered competitive shorter term rates on our time deposits in the past, we expect cost of interest bearing liabilities to continue to decrease as these reprice at lower rates.

The Bank continued to demonstrate its ability to grow shareholders’ equity as average equity was up $44.1 million or 8.7% in the second quarter of 2020 compared to the same period in 2019.  Return on average assets and return on average equity for the second quarter 2020 were .82% and 8.21%, respectively, compared to 1.14% and 11.60% for the second quarter 2019.  Improving efficiencies to reduce costs continues to remain a key area of focus.  Total operating expenses decreased by $970 thousand or 3.9% in the second quarter 2020 as compared to the second quarter 2019, driven by decreases in almost all expense categories, with the exception of an increase in occupancy expense.

Asset quality and loan loss reserve measures continued to improve.  Nonperforming loans (NPLs) were $21.9 million at June 30, 2020, compared to $22.1 million at June 30, 2019.  NPLs were 0.52% of total loans at June 30, 2020, compared to 0.57% at June 30, 2019.  The coverage ratio, or allowance for loan losses to NPLs, was 219.5% at June 30, 2020, compared to 200.4% at June 30, 2019.  Nonperforming assets (NPAs) were $22.8 million at June 30, 2020 compared to $24.8 million at June 30, 2019.  The ratio of allowance for loan losses to total loans was 1.15% as of June 30, 2020, compared to 1.14% at June 30, 2019.  The allowance for loan losses was $48.1 million at June 30, 2020 compared to $44.4 million at June 30, 2019.  The provision for loan losses increased to $2.0 million for the second quarter 2020 compared to a credit of $341 thousand in the same period in the prior year, primarily driven by the uncertainty in the current economic environment resulting from COVID-19.  Additionally, in the second quarter of 2019 there was a credit to the provision of loan losses of $541 thousand related to the sale of our credit card portfolio.  The Bank did not adopt “FASB Accounting Standards Update 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“CECL”) as of January 1, 2020 as allowed by the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).  The Bank will adopt CECL as required by the CARES Act at the earlier of the termination of the National Emergency concerning COVID-19 or December 31, 2020.  Net chargeoffs for the second quarter 2020 were $11 thousand versus net recoveries in the second quarter 2019 of $35 thousand.  The annualized net chargeoffs ratio was 0.00% for the second quarter 2020 and 2019.

At June 30, 2020 the tangible equity to tangible asset ratio was 9.74%, compared to 9.85% at June 30, 2019.  Book value per share at June 30, 2020 was $5.73, up 7.7% compared to $5.32 a year earlier.

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

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

A conference call to discuss second quarter 2020 results will be held at 9:00 a.m. Eastern Time on July 22, 2020.  Those wishing to participate in the call may dial toll-free 1-888-339-0764.  International callers must dial 1-412-902-4195.  Please ask to be joined into the TrustCo Bank Corp NY / TRST call.  A replay of the call will be available for thirty days by dialing 1-877-344-7529 (1-412-317-0088 for international callers), Conference Number 10146338.  The call will also be audio webcast at: https://services.choruscall.com/links/trst200722.html, and will be available for one year. 

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

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TRUSTCO BANK CORP NY
GLENVILLE, NY
FINANCIAL HIGHLIGHTS
(dollars in thousands, except per share data)
(Unaudited)
		Three months ended
71%; width:71%; min-width:71%;">	1%; width:1%; min-width:1%;">	8%; width:8%; min-width:8%;">6/30/2020	1%; width:1%; min-width:1%;">	8%; width:8%; min-width:8%;">3/31/2020	1%; width:1%; min-width:1%;">	8%; width:8%; min-width:8%;">6/30/2019	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">
Summary of operations
Net interest income (TE)	$	37,681		38,554		39,192
Provision (Credit) for loan losses		2,000		2,000		(341	)
Net gain on securities transactions		-		1,155		-
Noninterest income, excluding net gain on securities transactions		3,426		4,179		4,914
Noninterest expense		23,932		24,268		24,902
Net income		11,254		13,313		14,667
Per common share
Net income per share:
- Basic	$	0.117		0.138		0.152
- Diluted		0.117		0.138		0.151
Cash dividends		0.068		0.068		0.068
Book value at period end		5.73		5.68		5.32
Market price at period end		6.33		5.41		7.92
At period end
Full time equivalent employees		806		813		858
Full service banking offices		148		148		148
Performance ratios
Return on average assets		0.82	%	1.03		1.14
Return on average equity		8.21		9.87		11.60
Efficiency (1)		58.30		56.34		55.98
Net interest spread (TE)		2.69		2.91		2.95
Net interest margin (TE)		2.81		3.05		3.11
Dividend payout ratio		58.37		49.41		44.94
Capital ratios at period end
Consolidated tangible equity to tangible assets (2)		9.74	%	10.42		9.85
Consolidated equity to assets		9.75	%	10.43		9.86
Asset quality analysis at period end
Nonperforming loans to total loans		0.52		0.51		0.57
Nonperforming assets to total assets		0.40		0.42		0.47
Allowance for loan losses to total loans		1.15		1.13		1.14
Coverage ratio (3)		2.2x		2.2x		2.0x
(1)  Non-GAAP measure; calculated as noninterest expense (excluding ORE income/expense) divided by taxable
equivalent net interest income plus noninterest income.
(2)  Non-GAAP measure; calculated as total equity less $553 of intangible assets divided by total assets less
$553 of intangible assets.
(3)  Calculated as allowance for loan losses divided by total nonperforming loans.
TE = Taxable equivalent

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FINANCIAL HIGHLIGHTS, Continued
(dollars in thousands, except per share data)
(Unaudited)
		Six months ended
79%; width:79%; min-width:79%;">	1%; width:1%; min-width:1%;">	9%; width:9%; min-width:9%;">06/30/20	1%; width:1%; min-width:1%;">	9%; width:9%; min-width:9%;">06/30/19	1%; width:1%; min-width:1%;">
Summary of operations
Net interest income (TE)	$	76,235		78,925
Provision (Credit) for loan losses		4,000		(41	)
Net gain on securities transactions		1,155		-
Noninterest income, excluding net gain on securities transactions		7,605		9,551
Noninterest expense		48,200		49,769
Net income		24,567		29,225
Per common share
Net income per share:
- Basic	$	0.254		0.302
- Diluted		0.254		0.302
Cash dividends		0.136		0.136
Tangible Book value at period end		5.73		5.32
Market price at period end		6.33		7.92
Performance ratios
Return on average assets		0.92		1.15
Return on average equity		9.04		11.76
Efficiency (1)		57.30		56.04
Net interest spread (TE)		2.80		3.03
Net interest margin (TE)		2.93		3.17
Dividend payout ratio		53.52		45.08
(1)  Calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income
plus noninterest income (excluding net securities transactions and gain on sale of building and nonperforming loans).
TE = Taxable equivalent.

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CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
(Unaudited)
		Three months ended
47%; width:47%; min-width:47%;">	1%; width:1%; min-width:1%;">	9%; width:9%; min-width:9%;">6/30/2020	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	9%; width:9%; min-width:9%;">3/31/2020	1%; width:1%; min-width:1%;">	9%; width:9%; min-width:9%;">12/31/2019	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	9%; width:9%; min-width:9%;">9/30/2019	1%; width:1%; min-width:1%;">	9%; width:9%; min-width:9%;">6/30/2019	1%; width:1%; min-width:1%;">
Interest and dividend income:
Interest and fees on loans	$	41,665			42,063		42,002			41,923		41,432
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises		106			421		609			996		821
State and political subdivisions		2			1		2			2		3
Mortgage-backed securities and collateralized mortgage
obligations - residential		1,527			2,113		2,334			2,178		2,152
Corporate bonds		488			238		295			321		272
Small Business Administration - guaranteed
participation securities		229			245		253			282		289
Other securities		5			6		6			6		5
Total interest and dividends on securities available for sale		2,357			3,024		3,499			3,785		3,542
Interest on held to maturity securities:
Mortgage-backed securities and collateralized mortgage
obligations - residential		162			175		184			187		209
Total interest on held to maturity securities		162			175		184			187		209
Federal Reserve Bank and Federal Home Loan Bank stock		192			82		203			81		199
Interest on federal funds sold and other short-term investments		193			1,267		1,635			2,552		3,282
Total interest income		44,569			46,611		47,523			48,528		48,664
Interest expense:
Interest on deposits:
Interest-bearing checking		26			16		21			52		94
Savings		166			233		271			323		367
Money market deposit accounts		862			1,096		1,175			1,177		1,119
Time deposits		5,599			6,391		7,468			7,974		7,512
Interest on short-term borrowings		235			322		347			359		381
Total interest expense		6,888			8,058		9,282			9,885		9,473
Net interest income		37,681			38,553		38,241			38,643		39,191
Less: Provision (Credit) for loan losses		2,000			2,000		200			-		(341	)
Net interest income after provision for loan losses		35,681			36,553		38,041			38,643		39,532
Noninterest income:
Trustco Financial Services income		1,368			1,600		1,454			1,517		1,683
Fees for services to customers		1,807			2,315		2,377			2,602		2,611
Net gain on securities transactions		-			1,155		-			-		-
Other		251			264		284			806		620
Total noninterest income		3,426			5,334		4,115			4,925		4,914
Noninterest expenses:
Salaries and employee benefits		11,648			11,373		11,743			11,725		11,711
Net occupancy expense		4,385			4,306		4,399			4,094		4,006
Equipment expense		1,606			1,802		1,768			1,689		1,709
Professional services		1,182			1,481		1,449			1,507		1,568
Outsourced services		1,875			2,075		1,925			1,875		1,875
Advertising expense		601			488		464			494		778
FDIC and other insurance		609			294		259			282		598
Other real estate (income) expense, net		(32	)		194		(385	)		33		210
Other		2,058			2,255		2,269			2,371		2,447
Total noninterest expenses		23,932			24,268		23,891			24,070		24,902
Income before taxes		15,175			17,619		18,265			19,498		19,544
Income taxes		3,921			4,306		4,358			4,790		4,877
Net income	$	11,254			13,313		13,907			14,708		14,667
Net income per common share:
- Basic	$	0.117			0.138		0.143			0.152		0.152
- Diluted		0.117			0.138		0.143			0.152		0.151
Average basic shares (in thousands)		96,433			96,727		96,919			96,907		96,822
Average diluted shares (in thousands)		96,437			96,750		97,015			96,977		96,891
Note:  Taxable equivalent net interest income	$	37,681			38,554		38,243			38,644		39,192

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CONSOLIDATED STATEMENTS OF INCOME, Continued
(dollars in thousands, except per share data)
(Unaudited)
		Six months ended
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Interest and dividend income:
Interest and fees on loans	$	83,728		82,685
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises		527		1,604
State and political subdivisions		3		4
Mortgage-backed securities and collateralized mortgage
obligations - residential		3,640		3,707
Corporate bonds		726		480
Small Business Administration - guaranteed
participation securities		474		586
Other securities		11		10
Total interest and dividends on securities available for sale		5,381		6,391
Interest on held to maturity securities:
Mortgage-backed securities-residential		337		426
Total interest on held to maturity securities		337		426
Federal Reserve Bank and Federal Home Loan Bank stock		274		284
Interest on federal funds sold and other short-term investments		1,460		6,291
Total interest income		91,180		96,077
Interest expense:
Interest on deposits:
Interest-bearing checking		42		215
Savings		399		744
Money market deposit accounts		1,958		1,945
Time deposits		11,990		13,488
Interest on short-term borrowings		557		762
Total interest expense		14,946		17,154
Net interest income		76,234		78,923
Less: (Credit) Provision for loan losses		4,000		(41	)
Net interest income after provision for loan losses		72,234		78,964
Noninterest income:
Trustco Financial Services income		2,968		3,416
Fees for services to customers		4,122		5,131
Net gain on securities transactions		1,155		-
Other		515		1,004
Total noninterest income		8,760		9,551
Noninterest expenses:
Salaries and employee benefits		23,021		23,162
Net occupancy expense		8,691		8,173
Equipment expense		3,408		3,611
Professional services		2,663		3,218
Outsourced services		3,950		3,800
Advertising expense		1,089		1,563
FDIC and other insurance		903		1,246
Other real estate expense, net		162		186
Other		4,313		4,810
Total noninterest expenses		48,200		49,769
Income before taxes		32,794		38,746
Income taxes		8,227		9,521
Net income	$	24,567		29,225
Net income per common share:
- Basic	$	0.254		0.302
- Diluted		0.254		0.302
Average basic shares (in thousands)		96,580		96,784
Average diluted shares (in thousands)		96,593		96,857
Note:  Taxable equivalent net interest income	$	76,235		78,925

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CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)
(Unaudited)
45%; width:45%; min-width:45%;">	1%; width:1%; min-width:1%;">	9%; width:9%; min-width:9%;">6/30/2020	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	9%; width:9%; min-width:9%;">3/31/2020	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	9%; width:9%; min-width:9%;">12/31/2019	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	9%; width:9%; min-width:9%;">9/30/2019	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	9%; width:9%; min-width:9%;">6/30/2019	1%; width:1%; min-width:1%;">
ASSETS:
Cash and due from banks	$	44,726			43,362			48,198			49,526			42,471
Federal funds sold and other short term investments		908,110			492,691			408,648			401,151			517,684
Total cash and cash equivalents		952,836			536,053			456,846			450,677			560,155
Securities available for sale:
U. S. government sponsored enterprises		-			54,970			104,512			164,490			184,448
States and political subdivisions		111			112			162			169			170
Mortgage-backed securities and collateralized mortgage
obligations - residential		331,469			352,067			389,517			406,166			354,679
Small Business Administration - guaranteed
participation securities		45,998			46,768			48,511			50,970			53,091
Corporate bonds		54,439			48,564			30,436			40,281			40,467
Other securities		685			685			685			683			685
Total securities available for sale		432,702			503,166			573,823			662,759			633,540
Held to maturity securities:
Mortgage-backed securities and collateralized mortgage
obligations-residential		16,633			17,720			18,618			19,705			20,667
Total held to maturity securities		16,633			17,720			18,618			19,705			20,667
Federal Reserve Bank and Federal Home Loan Bank stock		5,506			9,183			9,183			9,183			9,183
Loans:
Commercial		231,212			195,805			199,499			192,443			190,507
Residential mortgage loans		3,681,898			3,627,121			3,583,774			3,508,647			3,428,829
Home equity line of credit		254,445			265,753			267,922			273,526			277,559
Installment loans		10,006			10,713			11,001			10,703			9,514
Loans, net of deferred net costs		4,177,561			4,099,392			4,062,196			3,985,319			3,906,409
Less: Allowance for loan losses		48,144			46,155			44,317			44,329			44,365
Net loans		4,129,417			4,053,237			4,017,879			3,940,990			3,862,044
Bank premises and equipment, net		34,042			34,428			34,622			34,168			34,058
Operating lease right-of-use assets		48,712			49,955			51,475			49,618			51,097
Other assets		57,155			52,905			58,876			55,369			56,926
Total assets	$	5,677,003			5,256,647			5,221,322			5,222,469			5,227,670
LIABILITIES:
Deposits:
Demand	$	612,960			480,255			463,858			453,439			432,780
Interest-bearing checking		1,001,592			895,254			875,672			869,101			888,433
Savings accounts		1,191,682			1,122,116			1,113,146			1,110,947			1,132,308
Money market deposit accounts		666,304			617,198			599,163			570,457			562,318
Time deposits		1,392,769			1,367,005			1,398,177			1,457,223			1,446,428
Total deposits		4,865,307			4,481,828			4,450,016			4,461,167			4,462,267
Short-term borrowings		177,278			148,090			148,666			151,095			166,746
Operating lease liabilities		53,710			54,998			56,553			54,731			56,237
Accrued expenses and other liabilities		27,287			23,546			27,830			29,313			26,790
Total liabilities		5,123,582			4,708,462			4,683,065			4,696,306			4,712,040
SHAREHOLDERS' EQUITY:
Capital stock		100,205			100,205			100,205			100,200			100,180
Surplus		176,437			176,431			176,427			176,395			176,396
Undivided profits		299,239			294,553			288,067			280,542			272,433
Accumulated other comprehensive loss, net of tax		11,936			11,392			4,461			(71	)		(1,774	)
Treasury stock at cost		(34,396	)		(34,396	)		(30,903	)		(30,903	)		(31,605	)
Total shareholders' equity		553,421			548,185			538,257			526,163			515,630
Total liabilities and shareholders' equity	$	5,677,003			5,256,647			5,221,322			5,222,469			5,227,670
Outstanding shares (in thousands)		96,433			96,433			96,922			96,917			96,822

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NONPERFORMING ASSETS
(dollars in thousands)
(Unaudited)
49%; width:49%; min-width:49%;">	1%; width:1%; min-width:1%;">	9%; width:9%; min-width:9%;">6/30/2020	1%; width:1%; min-width:1%;">	9%; width:9%; min-width:9%;">3/31/2020	1%; width:1%; min-width:1%;">	9%; width:9%; min-width:9%;">12/31/2019	1%; width:1%; min-width:1%;">	9%; width:9%; min-width:9%;">9/30/2019	1%; width:1%; min-width:1%;">	9%; width:9%; min-width:9%;">6/30/2019	1%; width:1%; min-width:1%;">
Nonperforming Assets
New York and other states*
Loans in nonaccrual status:
Commercial	$	571		630		816		888		905
Real estate mortgage - 1 to 4 family		20,215		18,570		18,407		18,275		19,633
Installment		6		24		3		13		1
Total non-accrual loans		20,792		19,224		19,226		19,176		20,539
Other nonperforming real estate mortgages - 1 to 4 family		26		27		29		30		31
Total nonperforming loans		20,818		19,251		19,255		19,206		20,570
Other real estate owned		830		1,284		1,579		2,409		2,625
Total nonperforming assets	$	21,648		20,535		20,834		21,615		23,195
Florida
Loans in nonaccrual status:
Commercial	$	-		-		-		-		-
Real estate mortgage - 1 to 4 family		1,111		1,492		1,614		1,809		1,564
Installment		-		-		-		-		-
Total non-accrual loans		1,111		1,492		1,614		1,809		1,564
Other nonperforming real estate mortgages - 1 to 4 family		-		-		-		-		-
Total nonperforming loans		1,111		1,492		1,614		1,809		1,564
Other real estate owned		-		-		-		-		-
Total nonperforming assets	$	1,111		1,492		1,614		1,809		1,564
Total
Loans in nonaccrual status:
Commercial	$	571		630		816		888		905
Real estate mortgage - 1 to 4 family		21,326		20,062		20,021		20,084		21,197
Installment		6		24		3		13		1
Total non-accrual loans		21,903		20,716		20,840		20,985		22,103
Other nonperforming real estate mortgages - 1 to 4 family		26		27		29		30		31
Total nonperforming loans		21,929		20,743		20,869		21,015		22,134
Other real estate owned		830		1,284		1,579		2,409		2,625
Total nonperforming assets	$	22,759		22,027		22,448		23,424		24,759
Quarterly Net (Recoveries) Chargeoffs
New York and other states*
Commercial	$	(6	)	1		(1	)	(28	)	(1	)
Real estate mortgage - 1 to 4 family		(27	)	140		146		39		(54	)
Installment		44		4		67		9		45
Total net (recoveries) chargeoffs	$	11		145		212		20		(10	)
Florida
Commercial	$	-		-		-		-		-
Real estate mortgage - 1 to 4 family		-		(2	)	(1	)	-		(25	)
Installment		-		19		1		16		-
Total net (recoveries) chargeoffs	$	-		17		-		16		(25	)
Total
Commercial	$	(6	)	1		(1	)	(28	)	(1	)
Real estate mortgage - 1 to 4 family		(27	)	138		145		39		(79	)
Installment		44		23		68		25		45
Total net (recoveries) chargeoffs	$	11		162		212		36		(35	)
Asset Quality Ratios
Total nonperforming loans (1)	$	21,929		20,743		20,869		21,015		22,134
Total nonperforming assets (1)		22,759		22,027		22,448		23,424		24,759
Total net (recoveries) chargeoffs (2)		11		162		212		36		(35	)
Allowance for loan losses (1)		48,144		46,155		44,317		44,329		44,365
Nonperforming loans to total loans		0.52%		0.51%		0.51%		0.53%		0.57%
Nonperforming assets to total assets		0.40%		0.42%		0.43%		0.45%		0.47%
Allowance for loan losses to total loans		1.15%		1.13%		1.09%		1.11%		1.14%
Coverage ratio (1)		219.5%		222.5%		212.4%		210.9%		200.4%
Annualized net chargeoffs to average loans (2)		0.00%		0.02%		0.02%		0.00%		0.00%
Allowance for loan losses to annualized net chargeoffs (2)		1094.2x		71.2x		52.3x		307.8x		-316.9x
* Includes New York, New Jersey, Vermont and Massachusetts.
(1)  At period-end
(2)  For the period ended

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DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY -
INTEREST RATES AND INTEREST DIFFERENTIAL
(dollars in thousands)
(Unaudited)		Three months ended			Three months ended
		June 30, 2020			June 30, 2019
		Average		Interest	Average			Average		Interest	Average
		Balance			Rate			Balance			Rate
Assets
Securities available for sale:
43%; width:43%; min-width:43%;">U. S. government sponsored enterprises	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">23,291	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	8%; width:8%; min-width:8%;">106	8%; width:8%; min-width:8%;">1.83	1%; width:1%; min-width:1%;">%	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">160,197	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	8%; width:8%; min-width:8%;">821	1%; width:1%; min-width:1%;">	8%; width:8%; min-width:8%;">2.05	1%; width:1%; min-width:1%;">%
Mortgage backed securities and collateralized mortgage
obligations - residential		333,122			1,527	1.83			342,678			2,152		2.51
State and political subdivisions		110			2	7.90			168			4		9.52
Corporate bonds		51,494			488	3.79			33,793			272		3.22
Small Business Administration - guaranteed
participation securities		45,260			229	2.03			54,254			289		2.13
Other		685			5	2.92			686			5		2.92
Total securities available for sale		453,962			2,357	2.08			591,776			3,543		2.39
Federal funds sold and other short-term Investments		727,006			193	0.11			545,724			3,282		2.41
Held to maturity securities:
Mortgage backed securities and collateralized mortgage
obligations - residential		17,199			162	3.75			21,155			209		3.95
Total held to maturity securities		17,199			162	3.75			21,155			209		3.95
Federal Reserve Bank and Federal Home Loan Bank stock		9,332			192	8.23			9,173			199		8.68
Commercial loans		223,002			2,610	4.68			189,870			2,546		5.36
Residential mortgage loans		3,653,342			36,365	3.98			3,396,149			35,179		4.14
Home equity lines of credit		260,029			2,515	3.89			279,622			3,503		5.01
Installment loans		10,044			175	7.02			10,310			204		7.91
Loans, net of unearned income		4,146,417			41,665	4.02			3,875,951			41,432		4.28
Total interest earning assets		5,353,916			44,569	3.33			5,043,779			48,665		3.86
Allowance for loan losses		(46,832	)						(44,841	)
Cash & non-interest earning assets		195,815							177,019
Total assets	$	5,502,899						$	5,175,957
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts	$	953,299			26	0.01	%	$	879,732			94		0.04	%
Money market accounts		641,593			862	0.54			553,708			1,119		0.81
Savings		1,167,844			166	0.06			1,138,107			367		0.13
Time deposits		1,392,136			5,599	1.62			1,437,097			7,512		2.09
Total interest bearing deposits		4,154,872			6,653	0.64			4,008,644			9,092		0.91
Short-term borrowings		172,834			235	0.55			162,690			381		0.94
Total interest bearing liabilities		4,327,706			6,888	0.64			4,171,334			9,473		0.91
Demand deposits		548,178							418,215
Other liabilities		75,603							79,056
Shareholders' equity		551,412							507,352
Total liabilities and shareholders' equity	$	5,502,899						$	5,175,957
Net interest income, tax equivalent				37,681						39,192
Net interest spread					2.69	%					2.95	%
Net interest margin (net interest income to
total interest earning assets)					2.81	%					3.11	%
Tax equivalent adjustment				-						(1	)
Net interest income				37,681						39,191

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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, 2020			June 30, 2019
		Average		Interest	Average			Average		Interest	Average
		Balance			Rate			Balance			Rate
Assets
Securities available for sale:
42%; width:42%; min-width:42%;">U. S. government sponsored enterprises	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">57,830	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	8%; width:8%; min-width:8%;">527	1%; width:1%; min-width:1%;">	8%; width:8%; min-width:8%;">1.82	1%; width:1%; min-width:1%;">%	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">157,244	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	8%; width:8%; min-width:8%;">1,604	1%; width:1%; min-width:1%;">	8%; width:8%; min-width:8%;">2.04	1%; width:1%; min-width:1%;">%
Mortgage backed securities and collateralized mortgage
obligations - residential		352,445			3,640		2.07			308,034			3,707		2.41
State and political subdivisions		112			4		7.74			168			6		7.14
Corporate bonds		39,913			726		3.64			30,347			480		3.16
Small Business Administration - guaranteed
participation securities		46,339			474		2.05			55,648			586		2.11
Other		685			11		3.21			685			10		2.92
Total securities available for sale		497,324			5,382		2.16			552,126			6,393		2.32
Federal funds sold and other short-term Investments		569,541			1,460		0.52			524,468			6,291		2.40
Held to maturity securities:
Mortgage backed securities and collateralized mortgage
obligations - residential		17,671			337		3.81			21,594			426		3.95
Total held to maturity securities		17,671			337		3.81			21,594			426		3.95
Federal Reserve Bank and Federal Home Loan Bank stock		9,258			274		5.92			9,064			284		6.27
Commercial loans		210,524			5,152		4.89			191,793			5,129		5.35
Residential mortgage loans		3,627,535			72,826		4.02			3,385,628			70,043		4.14
Home equity lines of credit		262,745			5,383		4.12			282,892			7,040		4.98
Installment loans		10,380			367		7.11			11,099			473		8.52
Loans, net of unearned income		4,111,184			83,728		4.08			3,871,412			82,685		4.27
Total interest earning assets		5,204,978			91,181		3.51			4,978,664			96,079		3.86
Allowance for loan losses		(45,676	)						(44,894	)
Cash & non-interest earning assets		194,718							176,518
Total assets	$	5,354,020						$	5,110,288
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts	$	912,226			42		0.01	%	$	880,101			215		0.05	%
Money market accounts		627,897			1,958		0.63			535,950			1,945		0.73
Savings		1,142,201			399		0.07			1,149,064			744		0.13
Time deposits		1,381,025			11,990		1.75			1,395,361			13,488		1.93
Total interest bearing deposits		4,063,349			14,389		0.71			3,960,476			16,392		0.83
Short-term borrowings		163,251			557		0.69			160,893			762		0.95
Total interest bearing liabilities		4,226,600			14,946		0.71			4,121,369			17,154		0.83
Demand deposits		503,327							407,926
Other liabilities		77,303							79,814
Shareholders' equity		546,790							501,179
Total liabilities and shareholders' equity	$	5,354,020						$	5,110,288
Net interest income, tax equivalent				76,235							78,925
Net interest spread					2.80	%					3.03	%
Net interest margin (net interest income to
total interest earning assets)					2.93	%					3.17	%
Tax equivalent adjustment				(1	)						(2	)
Net interest income				76,234							78,923

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 nonperforming loans and 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.

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NON-GAAP FINANCIAL MEASURES RECONCILIATION
(dollars in thousands, except per share amounts)
(Unaudited)
		6/30/2020		3/31/2020		6/30/2019
Tangible Equity to Tangible Assets
Total Assets (GAAP)	$	5,677,003		5,256,647		5,227,670
Less: Intangible assets		553		553		553
Tangible assets (Non-GAAP)		5,676,450		5,256,094		5,227,117
Equity (GAAP)		553,421		548,185		515,630
Less: Intangible assets		553		553		553
Tangible equity (Non-GAAP)		552,868		547,632		515,077
Tangible Equity to Tangible Assets (Non-GAAP)		9.74%		10.42%		9.85%
Equity to Assets (GAAP)		9.75%		10.43%		9.86%
		Three months ended			Six months ended
47%; width:47%; min-width:47%;">Efficiency Ratio	1%; width:1%; min-width:1%;">	9%; width:9%; min-width:9%;">6/30/2020	1%; width:1%; min-width:1%;">	9%; width:9%; min-width:9%;">3/31/2020	1%; width:1%; min-width:1%;">	9%; width:9%; min-width:9%;">6/30/2019	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	9%; width:9%; min-width:9%;">6/30/2020	1%; width:1%; min-width:1%;">	9%; width:9%; min-width:9%;">6/30/2019	1%; width:1%; min-width:1%;">
Net interest income (fully taxable equivalent) (Non-GAAP)	$	37,681		38,554		39,192			$	76,235		78,925
Non-interest income (GAAP)		3,426		5,334		4,914				8,760		9,551
Less:  Net gain on securities		-		1,155		-				1,155		-
Revenue used for efficiency ratio (Non-GAAP)		41,107		42,733		44,106				83,840		88,476
Total noninterest expense (GAAP)		23,932		24,268		24,902				48,200		49,769
Less:  Other real estate expense (income), net		(32	)	194		210				162		186
Expense used for efficiency ratio (Non-GAAP)		23,964		24,074		24,692				48,038		49,583
Efficiency Ratio		58.30%		56.34%		55.98%				57.30%		56.04%

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

FAQ

What were TrustCo Bank's Q2 2020 earnings per share (TRST)?

TrustCo Bank reported diluted earnings per share of $0.117 for Q2 2020.

How much did TrustCo Bank earn in net income for the first half of 2020 (TRST)?

For the first half of 2020, TrustCo Bank's net income was $24.6 million.

What support did TrustCo Bank provide during COVID-19 (TRST)?

TrustCo Bank established a COVID-19 Fund and a Financial Relief Program for borrowers.

How much did average loans grow for TrustCo Bank in Q2 2020 compared to Q2 2019 (TRST)?

Average loans grew by 7.0% in Q2 2020 compared to the same period in 2019.

When is the conference call to discuss TrustCo Bank's Q2 2020 results (TRST)?

The conference call is scheduled for July 22, 2020, at 9:00 a.m. Eastern Time.