TrustCo Reports Another Record Quarter; Net Income of $19.4 Million up 15.5% over the Prior Year Quarter

Rhea-AI Summary

TrustCo Bank Corp NY (NASDAQ: TRST) reported a third quarter 2022 net income of $19.4 million, equating to $1.013 diluted EPS, up from $16.8 million or $0.871 EPS in Q3 2021. Year-to-date earnings stand at $54.3 million or $2.835 EPS, a 20% increase compared to last year. Loan growth was driven by residential mortgages, with average loans rising 4.9%. Deposits increased by $105.1 million or 2%. The net interest margin improved to 3.16%, a 51 basis points increase. TrustCo's strong liquidity position remains conducive for future opportunities.

Positive

• Record net income of $19.4 million for Q3 2022, up 15.4% year-over-year.
• Year-to-date net income increased by 20% to $54.3 million.
• Average loans rose by $213.5 million (4.9%) YoY.
• Total average deposits grew by $105.1 million (2.0%) YoY.
• Net interest income increased by $7.9 million (19.8%) YoY.
• Net interest margin improved to 3.16%, up 51 basis points YoY.
• Asset quality remains strong with nonperforming loans (NPLs) down to $18.7 million.

Negative

• Operating expenses rose by $1.4 million YoY.
• Decrease in average time deposits of $170.6 million (14.8%) YoY.

GLENVILLE, N.Y., Oct. 24, 2022 (GLOBE NEWSWIRE) -- TrustCo Bank Corp NY (TrustCo, NASDAQ: TRST) today announced third quarter 2022 net income of $19.4 million or $1.013 diluted earnings per share, compared to net income of $16.8 million or $0.871 diluted earnings per share for the third quarter 2021. On a year-to-date basis, net income of $54.3 million or $2.835 diluted earnings per share for the nine months ended September 30, 2022 was an increase of 20.0%, compared to net income of $45.3 million or $2.349 diluted earnings per share for the nine months ended September 30, 2021.

Overview

Chairman, President, and CEO, Robert J. McCormick said “First and foremost, we are very pleased to advise our shareholders that all of our people in Florida are safe following Hurricane Ian and that Trustco Bank has suffered only minor property damage. All Florida operations resumed in due course following the storm.” Mr. McCormick also said: “As to our performance this period, we are very pleased to report yet another record quarter for net income. Our record earnings, sustained now over several quarters, are the product of our effectively executed strategic vision for the company.   We expect a strong finish in 2022 and are optimistic about our prospects for 2023.”

TrustCo saw continued loan growth in the third quarter of 2022 compared to the prior year, led by an increase in residential mortgages. Loan portfolio expansion was funded by a combination of utilizing a portion of our strong cash balances and by cash flow from investments, as well as growth in funding from customers and expansion of earnings. The continued shift toward loans helped sustain margin expansion while the cost of funds actually decreased 4 basis points from the third quarter of 2021 to the third quarter 2022. In addition, total average deposits grew $105.1 million over the same period. The Federal Reserve decision to begin to raise the target Federal Funds rate has contributed to our results during 2022, as our cash position and other variable rate products repriced upward, and is likely to continue to do so during the remainder of 2022 to the extent there are additional rate increases. We also note that current mortgage rates significantly exceed the yield on our existing portfolio of mortgages, which, if sustained, should be a positive going forward. TrustCo’s strong liquidity position continues to allow us to take advantage of opportunities as they arise.

In response to Hurricane Ian, the Bank continues to assess the impact to the counties in Florida that we do business in. We are currently monitoring all customer contact in the affected counties and to date have not identified circumstances that would have a material adverse impact on the performance of our loan portfolio.

Details

Average loans were up $213.5 million or 4.9% in the third quarter 2022 over the same period in 2021. Average residential loans, our primary lending focus, were up $185.0 million, or 4.7%, in the third quarter 2022 over the same period in 2021. As mentioned above, average deposits were up $105.1 million or 2.0% for the third quarter 2022 over the same period a year earlier. The increase in deposits was the result of a $275.7 million or 6.7% increase in total average core deposit accounts, which consist of interest bearing and non-interest bearing checking, savings and money market deposits, offset by a decrease in average time deposits of $170.6 million or 14.8% for the third quarter 2022 over the same period in 2021. Within the core deposits, checking balances were up $120.5 million or 6.2% (including interest bearing and non-interest bearing checking balances), money market balances were up $6.2 million or 0.8%, and savings balances were up $149.0 million or 10.4%.   We believe the increase in core deposits continues to reflect the desire of customers to have additional funds in the safety and security offered by TrustCo’s long history of conservative banking. As we move forward, our objective is to continue 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, on a tax equivalent basis, was $47.8 million for the third quarter of 2022, an increase of $7.9 million or 19.8% compared to the same period in 2021, driven by solid liquidity, low cost core deposit base, and the recent increases in the Federal Funds target rate. The net interest margin for the third quarter 2022 was 3.16%, up 51 basis points from 2.65% in the third quarter of 2021. The cost of interest bearing liabilities decreased to 0.11% in the third quarter 2022 from 0.15% in the third quarter 2021. A significant portion of our CD portfolio (time deposits) repriced during the last year while interest rates remained low; however, the Bank continues to monitor the recent Federal Funds target rate increases and the effects it is having on deposit rates as we move forward. Continued increases in rates by the Federal Reserve Board will more than likely cause an increase in rates on interest bearing liabilities.      

For the third quarter of 2022, return on average assets and return on average equity were 1.24% and 12.78%, respectively, compared to 1.08% and 11.40% for the third quarter of 2021. As previously discussed, improving efficiencies to reduce costs continues to remain a key area of focus as we are proud of our efficiency ratio. The efficiency ratio was 49.87% for the third quarter of 2022, a decrease compared to 55.82% for the third quarter of 2021. Total operating expenses increased by $1.4 million in the third quarter of 2022 as compared to the third quarter of 2021, with increases in salary and employee benefits, occupancy, outsourced services and the other expense categories, partly offset by declines in the equipment and the professional services categories. The modest increase in expenses was more than offset by an $8 million increase in revenue (net interest income plus non-interest income) and resulted in a notable improvement in the bottom line.  
  
Asset quality remains strong and loan loss reserve measures are consistent over the past twelve months. The Company recorded a provision for credit losses of $300 thousand in the third quarter of 2022, which includes a provision for credit losses on loans of $100 thousand and a provision for credit losses on unfunded commitments of $200 thousand as a result of a corresponding increase in unfunded loan commitments. The ratio of allowance for credit losses on loans to total loans was 0.98% and 1.08% as of September 30, 2022 and 2021, respectively. The allowance for credit losses on loans was $45.5 million at September 30, 2022, compared to $47.4 million at September 30, 2021.   Nonperforming loans (NPLs) were $18.7 million at September 30, 2022, compared to $20.2 million at September 30, 2021. NPLs were 0.40% and 0.46% of total loans at September 30, 2022 and 2021, respectively. The coverage ratio, or allowance for credit losses on loans to NPLs, was 243.6% at September 30, 2022, compared to 234.7% at September 30, 2021. Nonperforming assets (NPAs) were $19.4 million at September 30, 2022, compared to $20.7 million at September 30, 2021. As mentioned in the prior quarters, the Company adopted Accounting Standards Update 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“CECL”) effective January 1, 2022. TrustCo recorded a net decrease to retained earnings of $3.5 million upon adoption of the new accounting standard. The transition adjustment at January 1, 2022 included a $2.4 million increase in the allowance for credit losses on loans, a $2.3 million increase in the allowance for estimated credit losses on unfunded off-balance sheet credit exposures, and a corresponding increase in deferred tax assets of $1.2 million.

At September 30, 2022 our equity to asset ratio was 9.69%, compared to 9.56% at September 30, 2021. Book value per share at September 30, 2022 was $30.89, up 1.3% compared to $30.50 a year earlier.

TrustCo Bank Corp NY is a $6.1 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 144 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at September 30, 2022.

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

A conference call to discuss third quarter 2022 results will be held at 9:00 a.m. Eastern Time on October 25, 2022. Those wishing to participate in the call may dial toll-free for the United States at 1-833-927-1758, for Canada at 1-833-950-0062, and all other locations at 1-929-526-1599, Access code 903558. A replay of the call will be available for thirty days by dialing toll-free for the United States at 1-866-813-9403, for Canada at 1-226-828-7578, and all other locations at +44-204-525-0658, Access code 380809. The call will also be audio webcast at https://events.q4inc.com/attendee/510776782, and will be available at that web address 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 2022, 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 Federal Reserve decision to raise Federal funds target rate, as well as other actions regarding interest rates and the growth of loans and deposits throughout our branch network, the increase in residential mortgage rates and our ability to capitalize on economic changes in the areas in which we operate. 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 and macroeconomic or geopolitical concerns related to inflation, rising interest rates and the war in Ukraine. TrustCo wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The following important factors, among others, in some cases have affected and in the future could affect TrustCo’s actual results and could cause TrustCo’s actual financial performance to differ materially from that expressed in any forward-looking statement: the effects of inflation and inflationary pressures and changes in monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board; the impact of the actions taken by governmental authorities to contain the COVID-19 pandemic or address the impact of the pandemic on the economy, and the effect of all of such items on our operations, liquidity and capital position, and on the financial condition of our borrowers and other customers; changes in and uncertainty related to benchmark interest rates used to price loans and deposits; future business strategies related to the implementation of CECL; credit risks and risks from concentrations (by geographic area and by loan product) within our loan portfolio; changes in local market areas and general business and economic trends, as well as changes in consumer spending and savings habits; and our ability to assess and react effectively to such changes; our ability to continue to originate a significant volume of one-to-four family mortgage loans in our market areas; our ability to continue to maintain noninterest expense and other overhead costs at reasonable levels relative to income; our ability to make accurate assumptions and judgments regarding the credit risks associated with lending and investing activities; restrictions or conditions imposed by our regulators on our operations that may make it more difficult for us to achieve our goals; the future earnings and capital levels of us and Trustco Bank and the continued receipt of approvals from our primary federal banking regulators under regulatory rules to distribute capital to TrustCo, which could affect our ability to pay dividends; results of supervisory monitoring or examinations of Trustco Bank and TrustCo by our respective regulators; adverse conditions in the securities markets that lead to impairment in the value of securities in our investment portfolio; the perceived overall value of our products and services by users, including in comparison to competitors’ products and services and the willingness of current and prospective customers to substitute competitors’ products and services for our products and services; 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; our success at managing the risks involved in the foregoing and managing our business; and other risks and uncertainties under the heading “Risk Factors” in our most recent annual report on Form 10-K and, if any, in our subsequent quarterly reports on Form 10-Q or other securities filings.

TRUSTCO BANK CORP NY
GLENVILLE, NY
FINANCIAL HIGHLIGHTS
(dollars in thousands, except per share data)
(Unaudited)
		Three months ended
		9/30/2022			6/30/2022			9/30/2021
Summary of operations
Net interest income (TE)	$	47,793			43,060			39,888
Provision (Credit) for credit losses		300			(491	)		(2,800	)
Noninterest income		4,386			4,916			4,295
Noninterest expense		26,144			25,005			24,697
Net income		19,364			17,871			16,762
Per share
Net income per share:
- Basic	$	1.013			0.933			0.871
- Diluted		1.013			0.933			0.871
Cash dividends		0.350			0.350			0.341
Book value at period end		30.89			31.06			30.50
Market price at period end		31.42			30.84			31.97
At period end
Full time equivalent employees		753			793			743
Full service banking offices		144			144			147
Performance ratios
Return on average assets		1.24		%	1.15			1.08
Return on average equity		12.78			12.08			11.40
Efficiency ratio (1)		49.87			51.97			55.82
Net interest spread (TE)		3.13			2.80			2.62
Net interest margin (TE)		3.16			2.83			2.65
Dividend payout ratio		34.57			37.46			39.13
Capital ratios at period end
Consolidated tangible equity to tangible assets (2)		9.68		%	9.54			9.55
Consolidated equity to assets		9.69		%	9.55			9.56
Asset quality analysis at period end
Nonperforming loans to total loans		0.40			0.41			0.46
Nonperforming assets to total assets		0.32			0.31			0.34
Allowance for credit losses on loans to total loans		0.98			1.00			1.08
Coverage ratio (3)		2.4x			2.4x			2.3x
(1) Non-GAAP measure; calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income. See Non-GAAP Financial Measures Reconciliation.
(2) Non-GAAP measure; calculated as total 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)
		Nine months ended
		09/30/22			09/30/21
Summary of operations
Net interest income (TE)	$	130,949			120,117
(Credit) Provision for credit losses		(391	)		(2,450	)
Noninterest income		14,485			13,411
Noninterest expense		73,914			75,472
Net income		54,324			45,278
Per share
Net income per share:
- Basic	$	2.835			2.349
- Diluted		2.835			2.349
Cash dividends		1.050			1.022
Book value at period end		30.89			30.50
Market price at period end		31.42			31.97
Performance ratios
Return on average assets		1.17		%	1.00
Return on average equity		12.16			10.50
Efficiency ratio (1)		50.77			56.36
Net interest spread (TE)		2.86			2.67
Net interest margin (TE)		2.88			2.71
Dividend payout ratio		37.03			43.50
(1) Non-GAAP measure; calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income. See Non-GAAP Financial Measures Reconciliation.
TE = Taxable equivalent.

CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
(Unaudited)
		Three months ended
		9/30/2022			6/30/2022			3/31/2022			12/31/2021			9/30/2021
Interest and dividend income:
Interest and fees on loans	$	40,896			39,604			39,003			39,655			39,488
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises		479			147			86			76			91
State and political subdivisions		1			-			1			-			1
Mortgage-backed securities and collateralized mortgage
obligations - residential		1,617			1,367			1,087			1,073			1,038
Corporate bonds		526			522			233			206			220
Small Business Administration - guaranteed
participation securities		133			140			154			165			181
Other securities		3			2			2			4			5
Total interest and dividends on securities available for sale		2,759			2,178			1,563			1,524			1,536
Interest on held to maturity securities:
Mortgage-backed securities and collateralized mortgage
obligations - residential		85			87			90			97			104
Total interest on held to maturity securities		85			87			90			97			104
Federal Home Loan Bank stock		80			65			62			62			64
Interest on federal funds sold and other short-term investments		5,221			2,253			572			432			470
Total interest income		49,041			44,187			41,290			41,770			41,662
Interest expense:
Interest on deposits:
Interest-bearing checking		43			42			44			42			38
Savings		200			163			156			149			154
Money market deposit accounts		237			210			214			201			202
Time deposits		646			536			546			865			1,149
Interest on short-term borrowings		122			176			234			221			232
Total interest expense		1,248			1,127			1,194			1,478			1,775
Net interest income		47,793			43,060			40,096			40,292			39,887
Less: Provision (Credit) for credit losses		300			(491	)		(200	)		(3,000	)		(2,800	)
Net interest income after provision for loan losses		47,493			43,551			40,296			43,292			42,687
Noninterest income:
Trustco Financial Services income		1,435			1,996			1,833			1,766			1,558
Fees for services to customers		2,705			2,658			2,801			2,578			2,531
Other		246			262			549			182			206
Total noninterest income		4,386			4,916			5,183			4,526			4,295
Noninterest expenses:
Salaries and employee benefits		12,134			11,464			9,239			11,984			11,909
Net occupancy expense		4,483			4,254			4,529			4,569			4,259
Equipment expense		1,532			1,667			1,588			1,758			1,628
Professional services		1,375			1,484			1,467			1,579			1,483
Outsourced services		2,328			2,500			2,280			1,950			2,015
Advertising expense		508			389			617			762			310
FDIC and other insurance		773			804			812			780			746
Other real estate expense (income), net		124			74			11			(28	)		32
Other		2,887			2,369			2,222			2,836			2,315
Total noninterest expenses		26,144			25,005			22,765			26,190			24,697
Income before taxes		25,735			23,462			22,714			21,628			22,285
Income taxes		6,371			5,591			5,625			5,387			5,523
Net income	$	19,364			17,871			17,089			16,241			16,762
Net income per common share:
- Basic	$	1.013			0.933			0.890			0.845			0.871
- Diluted		1.013			0.933			0.890			0.845			0.871
Average basic shares (in thousands)		19,111			19,153			19,209			19,216			19,249
Average diluted shares (in thousands)		19,112			19,153			19,210			19,218			19,252
Note: Taxable equivalent net interest income	$	47,793			43,060			40,096			40,292			39,888

CONSOLIDATED STATEMENTS OF INCOME, Continued
(dollars in thousands, except per share data)
(Unaudited)
		Nine months ended
		09/30/22			09/30/21
Interest and dividend income:
Interest and fees on loans	$	119,503			119,513
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises		712			238
State and political subdivisions		2			2
Mortgage-backed securities and collateralized mortgage
obligations - residential		4,071			3,442
Corporate bonds		1,281			859
Small Business Administration - guaranteed
participation securities		427			580
Other securities		7			16
Total interest and dividends on securities available for sale		6,500			5,137
Interest on held to maturity securities:
Mortgage-backed securities-residential		262			338
Total interest on held to maturity securities		262			338
Federal Home Loan Bank stock		207			198
Interest on federal funds sold and other short-term investments		8,046			1,026
Total interest income		134,518			126,212
Interest expense:
Interest on deposits:
Interest-bearing checking		129			136
Savings		519			475
Money market deposit accounts		661			721
Time deposits		1,728			4,076
Interest on short-term borrowings		532			688
Total interest expense		3,569			6,096
Net interest income		130,949			120,116
Less: (Credit) Provision for credit losses		(391	)		(2,450	)
Net interest income after provision for loan losses		131,340			122,566
Noninterest income:
Trustco Financial Services income		5,264			5,592
Fees for services to customers		8,164			7,221
Other		1,057			598
Total noninterest income		14,485			13,411
Noninterest expenses:
Salaries and employee benefits		32,837			36,737
Net occupancy expense		13,266			13,173
Equipment expense		4,787			4,859
Professional services		4,326			4,529
Outsourced services		7,108			6,434
Advertising expense		1,514			1,213
FDIC and other insurance		2,389			2,230
Other real estate expense, net		209			211
Other		7,478			6,086
Total noninterest expenses		73,914			75,472
Income before taxes		71,911			60,505
Income taxes		17,587			15,227
Net income	$	54,324			45,278
Net income per common share:
- Basic	$	2.835			2.349
- Diluted		2.835			2.349
Average basic shares (in thousands)		19,160			19,272
Average diluted shares (in thousands)		19,160			19,278
Note: Taxable equivalent net interest income	$	130,949			120,117

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)
(Unaudited)
		9/30/2022			6/30/2022			3/31/2022			12/31/2021			9/30/2021
ASSETS:
Cash and due from banks	$	46,236			46,611			47,526			48,357			45,486
Federal funds sold and other short term investments		795,028			999,573			1,225,022			1,171,113			1,147,853
Total cash and cash equivalents		841,264			1,046,184			1,272,548			1,219,470			1,193,339
Securities available for sale:
U. S. government sponsored enterprises		102,779			101,100			62,059			59,179			59,749
States and political subdivisions		41			41			41			41			48
Mortgage-backed securities and collateralized mortgage
obligations - residential		261,242			287,450			244,045			270,798			293,585
Small Business Administration - guaranteed
participation securities		22,498			25,428			28,086			31,674			34,569
Corporate bonds		81,002			87,740			74,089			45,337			45,915
Other securities		657			656			671			684			686
Total securities available for sale		468,219			502,415			408,991			407,713			434,552
Held to maturity securities:
Mortgage-backed securities and collateralized mortgage
obligations-residential		8,091			8,544			9,183			9,923			10,701
Total held to maturity securities		8,091			8,544			9,183			9,923			10,701
Federal Home Loan Bank stock		5,797			5,797			5,604			5,604			5,604
Loans:
Commercial		217,120			199,886			192,408			200,200			204,679
Residential mortgage loans		4,132,365			4,076,657			4,026,434			3,998,187			3,951,285
Home equity line of credit		269,341			253,758			236,117			230,976			231,314
Installment loans		10,665			10,258			9,395			9,416			9,451
Loans, net of deferred net costs		4,629,491			4,540,559			4,464,354			4,438,779			4,396,729
Less: Allowance for credit losses on loans		45,517			45,285			46,178			44,267			47,350
Net loans		4,583,974			4,495,274			4,418,176			4,394,512			4,349,379
Bank premises and equipment, net		31,931			32,381			32,644			33,027			33,233
Operating lease right-of-use assets		45,733			47,343			48,569			48,090			45,836
Other assets		94,485			88,853			86,158			78,207			62,191
Total assets	$	6,079,494			6,226,791			6,281,873			6,196,546			6,134,835
LIABILITIES:
Deposits:
Demand	$	859,829			851,573			835,281			794,878			790,663
Interest-bearing checking		1,188,790			1,208,159			1,225,093			1,191,304			1,148,593
Savings accounts		1,562,564			1,577,034			1,553,152			1,504,554			1,433,130
Money market deposit accounts		716,319			760,338			796,275			782,079			744,051
Time deposits		954,352			999,737			940,215			995,314			1,124,581
Total deposits		5,281,854			5,396,841			5,350,016			5,268,129			5,241,018
Short-term borrowings		124,932			147,282			248,371			244,686			230,770
Operating lease liabilities		50,077			51,777			53,094			52,720			50,515
Accrued expenses and other liabilities		33,625			36,259			37,497			29,883			25,849
Total liabilities		5,490,488			5,632,159			5,688,978			5,595,418			5,548,152
SHAREHOLDERS' EQUITY:
Capital stock		20,046			20,046			20,046			20,046			20,042
Surplus		256,661			256,661			256,661			256,661			256,565
Undivided profits		379,769			367,100			355,948			349,056			339,554
Accumulated other comprehensive (loss) income, net of tax		(25,209	)		(9,422	)		(2,369	)		12,147			7,304
Treasury stock at cost		(42,261	)		(39,753	)		(37,391	)		(36,782	)		(36,782	)
Total shareholders' equity		589,006			594,632			592,895			601,128			586,683
Total liabilities and shareholders' equity	$	6,079,494			6,226,791			6,281,873			6,196,546			6,134,835
Outstanding shares (in thousands)		19,052			19,127			19,202			19,220			19,216

NONPERFORMING ASSETS
(dollars in thousands)
(Unaudited)
		9/30/2022		6/30/2022		3/31/2022		12/31/2021		9/30/2021
Nonperforming Assets
New York and other states*
Loans in nonaccrual status:
Commercial	$	179		203		187		112		176
Real estate mortgage - 1 to 4 family		16,295		16,259		17,065		16,574		17,878
Installment		29		40		33		37		32
Total non-accrual loans		16,503		16,502		17,285		16,723		18,086
Other nonperforming real estate mortgages - 1 to 4 family		12		14		16		17		19
Total nonperforming loans		16,515		16,516		17,301		16,740		18,105
Other real estate owned		682		644		269		362		511
Total nonperforming assets	$	17,197		17,160		17,570		17,102		18,616
Florida
Loans in nonaccrual status:
Commercial	$	-		-		-		-		-
Real estate mortgage - 1 to 4 family		2,104		2,192		2,109		2,016		2,066
Installment		65		5		8		-		-
Total non-accrual loans		2,169		2,197		2,117		2,016		2,066
Other nonperforming real estate mortgages - 1 to 4 family		-		-		-		-		-
Total nonperforming loans		2,169		2,197		2,117		2,016		2,066
Other real estate owned		-		-		-		-		-
Total nonperforming assets	$	2,169		2,197		2,117		2,016		2,066
Total
Loans in nonaccrual status:
Commercial	$	179		203		187		112		176
Real estate mortgage - 1 to 4 family		18,399		18,451		19,174		18,590		19,944
Installment		94		45		41		37		32
Total non-accrual loans		18,672		18,699		19,402		18,739		20,152
Other nonperforming real estate mortgages - 1 to 4 family		12		14		16		17		19
Total nonperforming loans		18,684		18,713		19,418		18,756		20,171
Other real estate owned		682		644		269		362		511
Total nonperforming assets	$	19,366		19,357		19,687		19,118		20,682
Quarterly Net (Recoveries) Chargeoffs
New York and other states*
Commercial	$	-		-		36		-		30
Real estate mortgage - 1 to 4 family		(164	)	(119	)	(97	)	52		(39	)
Installment		34		12		3		31		14
Total net (recoveries) chargeoffs	$	(130	)	(107	)	(58	)	83		5
Florida
Commercial	$	-		-		-		-		-
Real estate mortgage - 1 to 4 family		-		-		-		-		-
Installment		(2	)	-		-		-		-
Total net (recoveries) chargeoffs	$	(2	)	-		-		-		-
Total
Commercial	$	-		-		36		-		30
Real estate mortgage - 1 to 4 family		(164	)	(119	)	(97	)	52		(39	)
Installment		32		12		3		31		14
Total net (recoveries) chargeoffs	$	(132	)	(107	)	(58	)	83		5
Asset Quality Ratios
Total nonperforming loans (1)	$	18,684		18,713		19,418		18,756		20,171
Total nonperforming assets (1)		19,366		19,357		19,687		19,118		20,682
Total net (recoveries) chargeoffs (2)		(132	)	(107	)	(58	)	83		5
Allowance for credit losses on loans (1)		45,517		45,285		46,178		44,267		47,350
Nonperforming loans to total loans		0.40	%	0.41	%	0.43	%	0.42	%	0.46	%
Nonperforming assets to total assets		0.32	%	0.31	%	0.31	%	0.31	%	0.34	%
Allowance for credit losses on loans to total loans		0.98	%	1.00	%	1.03	%	1.00	%	1.08	%
Coverage ratio (1)		243.6	%	242.0	%	237.8	%	236.0	%	234.7	%
Annualized net (recoveries) chargeoffs to average loans (2)		-0.01	%	-0.01	%	-0.01	%	0.01	%	0.00	%
Allowance for credit losses on loans to annualized net (recoveries) chargeoffs (2)		N/A		N/A		N/A		133.3x		2367.5x
* 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
		September 30, 2022							September 30, 2021
		Average			Interest	Average			Average			Interest		Average
		Balance				Rate			Balance					Rate
Assets
Securities available for sale:
U. S. government sponsored enterprises	$	104,633			479	1.83	%	$	68,505			91		0.53	%
Mortgage backed securities and collateralized mortgage
obligations - residential		302,886			1,617	2.13			300,765			1,038		1.38
State and political subdivisions		41			1	8.12			48			2		6.66
Corporate bonds		86,965			526	2.42			48,543			220		1.81
Small Business Administration - guaranteed
participation securities		25,533			133	2.08			34,578			181		2.09
Other		686			3	1.75			686			5		2.92
Total securities available for sale		520,744			2,759	2.12			453,125			1,537		1.36
Federal funds sold and other short-term Investments		918,909			5,221	2.25			1,166,679			470		0.16
Held to maturity securities:
Mortgage backed securities and collateralized mortgage
obligations - residential		8,306			85	4.08			11,168			104		3.72
Total held to maturity securities		8,306			85	4.08			11,168			104		3.72
Federal Home Loan Bank stock		5,797			80	5.52			5,604			64		4.57
Commercial loans		207,477			2,484	4.79			210,825			2,649		5.03
Residential mortgage loans		4,105,859			35,342	3.44			3,920,903			34,532		3.52
Home equity lines of credit		261,575			2,896	4.39			231,269			2,152		3.69
Installment loans		10,213			174	6.75			8,669			155		7.10
Loans, net of unearned income		4,585,124			40,896	3.57			4,371,666			39,488		3.61
Total interest earning assets		6,038,880			49,041	3.24			6,008,242			41,663		2.77
Allowance for credit losses on loans		(45,519	)						(50,160	)
Cash & non-interest earning assets		188,672							195,902
Total assets	$	6,182,033						$	6,153,984
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts	$	1,195,370			43	0.01	%	$	1,153,812			38		0.01	%
Money market accounts		744,868			237	0.13			738,662			202		0.11
Savings		1,579,513			200	0.05			1,430,558			154		0.04
Time deposits		981,704			646	0.26			1,152,298			1,149		0.40
Total interest bearing deposits		4,501,455			1,126	0.10			4,475,330			1,543		0.14
Short-term borrowings		138,105			122	0.35			240,183			232		0.38
Total interest bearing liabilities		4,639,560			1,248	0.11			4,715,513			1,775		0.15
Demand deposits		859,122							780,163
Other liabilities		82,290							75,116
Shareholders' equity		601,061							583,192
Total liabilities and shareholders' equity	$	6,182,033						$	6,153,984
Net interest income, tax equivalent					47,793							39,888
Net interest spread						3.13	%							2.62	%
Net interest margin (net interest income to
total interest earning assets)						3.16	%							2.65	%
Tax equivalent adjustment					-							(1	)
Net interest income					47,793							39,887
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY -
INTEREST RATES AND INTEREST DIFFERENTIAL, Continued
(dollars in thousands)
(Unaudited)		Nine months ended							Nine months ended
		September 30, 2022							September 30, 2021
		Average			Interest	Average			Average			Interest		Average
		Balance				Rate			Balance					Rate
Assets
Securities available for sale:
U. S. government sponsored enterprises	$	79,423			712	1.19	%	$	65,103			238		0.49	%
Mortgage backed securities and collateralized mortgage
obligations - residential		282,423			4,071	1.92			318,472			3,442		1.44
State and political subdivisions		41			2	6.73			49			3		8.16
Corporate bonds		75,957			1,281	2.25			56,245			859		2.04
Small Business Administration - guaranteed
participation securities		27,623			427	2.06			36,981			580		2.09
Other		686			7	2.04			686			16		3.11
Total securities available for sale		466,153			6,500	2.79			477,536			5,138		1.43
Federal funds sold and other short-term Investments		1,068,217			8,046	1.01			1,108,018			1,026		0.12
Held to maturity securities:
Mortgage backed securities and collateralized mortgage
obligations - residential		8,897			262	3.93			12,199			338		3.70
Total held to maturity securities		8,897			262	3.93			12,199			338		3.70
Federal Home Loan Bank stock		5,734			207	7.22			5,570			198		4.74
Commercial loans		200,525			7,412	4.93			212,832			8,203		5.14
Residential mortgage loans		4,054,657			104,310	3.43			3,852,960			104,219		3.61
Home equity lines of credit		246,026			7,289	3.96			234,682			6,622		3.77
Installment loans		9,507			492	6.91			8,608			469		7.28
Loans, net of unearned income		4,510,715			119,503	3.53			4,309,082			119,513		3.70
Total interest earning assets		6,059,716			134,518	2.96			5,912,405			126,213		2.85
Allowance for credit losses on loans		(46,225	)						(50,101	)
Cash & non-interest earning assets		196,333							196,876
Total assets	$	6,209,824						$	6,059,180
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts	$	1,199,154			129	0.01	%	$	1,129,480			136		0.02	%
Money market accounts		771,301			661	0.11			731,171			721		0.13
Savings		1,557,503			519	0.04			1,376,494			475		0.05
Time deposits		971,539			1,728	0.24			1,203,708			4,076		0.45
Total interest bearing deposits		4,499,497			3,037	0.09			4,440,853			5,408		0.16
Short-term borrowings		194,228			532	0.37			232,532			688		0.40
Total interest bearing liabilities		4,693,725			3,569	0.10			4,673,385			6,096		0.17
Demand deposits		836,953							735,495
Other liabilities		81,780							73,689
Shareholders' equity		597,366							576,611
Total liabilities and shareholders' equity	$	6,209,824						$	6,059,180
Net interest income, tax equivalent					130,949							120,117
Net interest spread						2.86	%							2.67	%
Net interest margin (net interest income to
total interest earning assets)						2.88	%							2.71	%
Tax equivalent adjustment					-							(1	)
Net interest income					130,949							120,116

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

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

NON-GAAP FINANCIAL MEASURES RECONCILIATION
(dollars in thousands)
(Unaudited)
		9/30/2022		6/30/2022		9/30/2021
Tangible Equity to Tangible Assets
Total Assets (GAAP)	$	6,079,494		6,226,791		6,134,835
Less: Intangible assets		553		553		553
Tangible assets (Non-GAAP)		6,078,941		6,226,238		6,134,282
Equity (GAAP)		589,006		594,632		586,683
Less: Intangible assets		553		553		553
Tangible equity (Non-GAAP)		588,453		594,079		586,130
Tangible Equity to Tangible Assets (Non-GAAP)		9.68	%	9.54	%	9.55	%
Equity to Assets (GAAP)		9.69	%	9.55	%	9.56	%
		Three months ended								Nine months ended
Efficiency Ratio		9/30/2022		6/30/2022		9/30/2021				9/30/2022		9/30/2021
Net interest income (fully taxable equivalent) (Non-GAAP)	$	47,793		43,060		39,888			$	130,949		120,117
Non-interest income (GAAP)		4,386		4,916		4,295				14,485		13,411
Less: Net gain on sale of building		-		-		-				268		-
Revenue used for efficiency ratio (Non-GAAP)		52,179		47,976		44,183				145,166		133,528
Total noninterest expense (GAAP)		26,144		25,005		24,697				73,914		75,472
Less: Other real estate (income) expense, net		124		74		32				209		211
Expense used for efficiency ratio (Non-GAAP)		26,020		24,931		24,665				73,705		75,261
Efficiency Ratio		49.87	%	51.97	%	55.82	%			50.77	%	56.36	%

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

FAQ

What were TrustCo's Q3 2022 earnings results?

TrustCo reported net income of $19.4 million or $1.013 diluted EPS for Q3 2022.

How did TrustCo's net income change in 2022?

Year-to-date net income increased by 20% to $54.3 million for the first nine months of 2022.

What is the current loan growth for TrustCo?

TrustCo saw average loans increase by $213.5 million or 4.9% in Q3 2022 compared to Q3 2021.

What impact did Hurricane Ian have on TrustCo?

TrustCo's operations in Florida experienced only minor damage, and there were no material adverse impacts on the loan portfolio.

What are the key financial metrics for TrustCo in Q3 2022?

TrustCo reported a net interest margin of 3.16% and a return on average assets of 1.24%.