TrustCo’s Total Loans Surpass $5 Billion - Reach All-Time High; Nonperforming Assets to Total Assets at 0.29%, Lowest in 17 Years
*Executive Snapshot:*· *Loan portfolio reaches all-time high:*
· At $5.0 billion as of December 31, 2023, loans continued to set new all-time highs
· On average, total loans were up $309.9 million or 6.6% for the fourth quarter 2023 compared to fourth quarter 2022· *Continued solid financial results:* · Key metrics for 2023:
· Net income of $58.6 million
· Net interest income of $171.8 million
· Return on average assets (ROAA) of 0.97%
· Return on average equity (ROAE) of 9.46%
· Book value per share at period end was $33.92, up from $31.54 compared to December 31, 2022· *Superior asset quality:* · Nonperforming loans (NPLs) were $17.7 million as of December 31, 2023, up slightly from December 31, 2022, and continue to remain at low levels
· NPLs to total loans improved to 0.35% compared to 0.37% at December 31, 2022
· Nonperforming assets (NPAs) to total assets improved to 0.29% compared to 0.33% at December 31, 2022
· *Capital continues to grow:*
· Consolidated equity to assets increased to 10.46% at December 31, 2023 from 10.00% at December 31, 2022
GLENVILLE, N.Y., Jan. 22, 2024 (GLOBE NEWSWIRE) --
TrustCo Bank Corp NY (*TrustCo, NASDAQ: TRST*) today announced full year 2023 net income of $58.6 million or $3.08 diluted earnings per share, compared to net income of $75.2 million or $3.93 diluted earnings per share for the full year 2022; and net income of $9.8 million or $0.52 diluted earnings per share for the three months ended December 31, 2023, compared to net income of $20.9 million or $1.10 diluted earnings per share for the three months ended December 31, 2022. Total loan growth increased on average by $309.9 million, or 6.6% for the fourth quarter 2023 over the same period in 2022.*Overview *
Chairman, President, and CEO, Robert J. McCormick, said, “The economic environment in 2023 presented challenges not previously seen. In trademark fashion, however, the TrustCo team navigated the adverse circumstances and delivered solid results. Total loans exceeded $5 billion for the first time in our history while credit quality remained exceptional – nonperforming assets to total assets ended the year at 0.29%, the best in 17 years. We are proud to say that this loan growth was funded without brokered deposits or borrowings. Likewise, we sustained our century-long commitment to the payment of a meaningful dividend to our shareholders. The point from which this good work springs is our strong capital position, developed over time and grown through the application of sound strategy. The interest-rate environment in 2024 could unfold in a number of different ways, but no matter how it plays out, we are positioned to capitalize upon the opportunities presented.”
TrustCo saw deposit balances rebound from the end of the prior year with net deposit inflows during the year. Loan growth continued across all categories year over 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, deposit inflows, and cash flow from the existing loan portfolio. The Federal Reserve’s decision to raise the target Federal Funds rate multiple times from March 2022 through July 2023 has contributed to our results in the fourth quarter and full year 2023. Our cash position has allowed the Bank to be judicious in deposit pricing and created a buffer for the need to seek high cost funding alternatives, while other variable rate products have continued to reprice upward. Similarly, deposit costs continue to increase while we are also experiencing a shift in deposits to Time Accounts. Furthermore, we continue to deploy aggressive marketing efforts to retain and grow our deposit balances. We also note that current mortgage rates significantly exceed the yield on our existing portfolio of mortgages, which, if sustained, should result in expanded net interest margin going forward. We believe that TrustCo’s strong liquidity position continues to allow us to take advantage of opportunities as they arise.
*Details*
Average loans were up $309.9 million or 6.6% in the fourth quarter 2023 over the same period in 2022. Average residential loans, our primary lending focus, were up $192.2 million, or 4.6%, in the fourth quarter 2023 over the same period in 2022. Average commercial loans and home equity lines of credit also increased $50.5 million, or 22.6%, and $61.8 million, or 22.2%, respectively, in the fourth quarter 2023 over the same period in 2022.
We have been proactive in retaining deposits through pricing and aggressive marketing, which has resulted in increased balances since December 31, 2022. Total deposits as of December 31, 2023 increased $158.0 million to $5.35 billion from December 31, 2022. As we move forward, our objective is to continue to encourage customers to retain these funds in the expanded product offerings of the Bank through aggressive marketing and product differentiation. We understood the inflows of deposits during the pandemic were temporary and that is why we did not invest that liquidity into securities or loans, but we instead retained that liquidity on the balance sheet for when depositors would start to absorb the funds. This gave us flexibility to strategically price deposits while retaining core customers.
Net interest income was $38.6 million for the fourth quarter 2023, a decrease of $10.6 million, or 21.5%, compared to the same period in 2022, driven by a higher cost of deposits, partially offset by the increased yield on the cash balance at the Federal Reserve Bank due to the increases in the Federal Funds target rate over the past year, and loan growth at higher interest rates. The net interest margin for the fourth quarter 2023 was 2.60%, down 74 basis points from 3.34% in the fourth quarter of 2022. The yield on interest earnings assets increased to 3.93%, up 39 basis points from 3.54% in the fourth quarter of 2022. The cost of interest bearing liabilities increased to 1.72% in the fourth quarter 2023 from 0.26% in the fourth quarter 2022. Non-interest expense increased $2.4 million over the prior year period primarily as a result of a legal settlement and the closure of several branch locations. Other non-interest expense are expected to return to more normalized levels next quarter. The Bank does expect branch related savings in the future quarters due to the decreased number of branch locations.
Asset quality remains strong and has been consistent over the past twelve months. The Company recorded a provision for credit losses of $1.4 million in the fourth quarter of 2023, which is the result of a provision for credit losses on loans of $1.6 million, offset by a benefit for credit losses on unfunded commitments of $250 thousand as a result of a corresponding decrease in unfunded loan commitments. The ratio of allowance for credit losses on loans to total loans was 0.97% as of December 31, 2023 and 2022. The allowance for credit losses on loans was $48.6 million at December 31, 2023, compared to $46.0 million at December 31, 2022. NPLs were $17.7 million at December 31, 2023, compared to $17.5 million at December 31, 2022. NPLs were 0.35% and 0.37% of total loans at December 31, 2023 and 2022, respectively. The coverage ratio, or allowance for credit losses on loans to NPLs, was 275.0% at December 31, 2023, compared to 263.1% at December 31, 2022. NPAs were $17.9 million at December 31, 2023, compared to $19.6 million at December 31, 2022. Additionally, we had minimal charge-offs and were in a net recovery position for the year.
At December 31, 2023, our equity to asset ratio was 10.46%, compared to 10.00% at December 31, 2022. Book value per share at December 31, 2023 was $33.92, up 7.5% compared to $31.54 a year earlier.
A conference call to discuss fourth quarter 2023 results will be held at 9:00 a.m. Eastern Time on January 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 813290. 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 303906. The call will also be audio webcast at https://events.q4inc.com/attendee/827223195, and will be available for one year.
*About TrustCo Bank Corp NY*
TrustCo Bank Corp NY is a $6.2 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 140 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at December 31, 2023.
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, the increase in residential mortgage rates, and our ability to capitalize on economic changes in the areas in which we operate. Forward-looking statements are based on management’s current expectations as well as certain assumptions and estimates made by, and information available to, management at the time the statements are made. Such forward-looking statements are subject to factors and uncertainties that could cause actual results to differ materially for TrustCo from the views, beliefs and projections expressed in such statements, and many of the risks and uncertainties are heightened by or may, in the future, be heightened by 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: the soundness of other financial institutions; U.S. government shutdowns credit rating downgrades, or failure to increase the debt ceiling; the impact of elevated interest rates; future changes in interest rates; inflationary pressures and elevated prices; exposure to credit risk in our lending activities; 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 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; 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; 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 any expansion by us into new lines of business or new products and services; the impact of anti-takeover provisions in our organizational documents; the impact of the manner in which we allocate capital; the impact of severe weather events and climate change on us and the communities we serve, including societal responses to climate change; and other risks and uncertainties under the heading “Risk Factors” in our most recent annual report on Form 10-K and, if any, in our subsequent quarterly reports on Form 10-Q or other securities filings. The forward-looking statements contained in this news release represent TrustCo management’s judgment as of the date of this news release. TrustCo disclaims, however, any intent or obligation to update forward-looking statements, either as a result of future developments, new information or otherwise, except as may be required by law.
*TRUSTCO BANK CORP NY*
*GLENVILLE, NY*
*FINANCIAL HIGHLIGHTS*
*(dollars in thousands, except per share data)*
*(Unaudited)* *Three months ended* *12/31/2023* *9/30/2023* *12/31/2022*
Summary of operations
Net interest income $ 38,607 $ 42,221 $ 49,186
Provision for credit losses 1,350 100 50
Noninterest income 4,474 4,574 4,775
Noninterest expense 28,831 27,460 26,405
Net income 9,848 14,680 20,910
Per share
Net income per share:
- Basic $ 0.52 $ 0.77 $ 1.10
- Diluted 0.52 0.77 1.10
Cash dividends 0.36 0.36 0.36
Book value at period end 33.92 32.80 31.54
Market price at period end 31.05 27.29 37.59
At period end
Full time equivalent employees 750 764 750
Full service banking offices 140 143 143
Performance ratios
Return on average assets 0.64 % 0.96 % 1.38 %
Return on average equity 6.21 9.32 13.91
Efficiency ratio (1) 60.16 58.33 48.75
Net interest spread 2.21 2.55 3.28
Net interest margin 2.60 2.85 3.34
Dividend payout ratio 69.54 46.65 32.81
Capital ratios at period end
Consolidated equity to assets 10.46 % 10.31 % 10.00 %
Consolidated tangible equity to tangible assets (2) 10.45 % 10.30 % 9.99 %
Asset quality analysis at period end
Nonperforming loans to total loans 0.35 % 0.36 % 0.37 %
Nonperforming assets to total assets 0.29 0.31 0.33
Allowance for credit losses on loans to total loans 0.97 0.95 0.97
Coverage ratio (3) 2.7 x 2.6 x 2.6 x
(1) Non-GAAP measure; calculated as noninterest expense (excluding ORE income/expense and non-recurring expenses) divided by taxable equivalent net interest income plus noninterest income (excluding non-recurring loss). 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)* *Year ended* *12/31/23* *12/31/22*
Summary of operations
Net interest income $ 171,845 180,135
Provision (Credit) for credit losses 1,250 (341 )
Noninterest income 18,315 19,260
Noninterest expense 111,297 100,319
Net income 58,646 75,234
Per share
Net income per share:
- Basic $ 3.08 3.93
- Diluted 3.08 3.93
Cash dividends 1.44 1.41
Book value at period end 33.92 31.54
Market price at period end 31.05 37.59
Performance ratios
Return on average assets 0.97 % 1.22
Return on average equity 9.46 12.60
Efficiency ratio (1) 56.72 50.22
Net interest spread 2.64 2.96
Net interest margin 2.91 2.99
Dividend payout ratio 46.71 35.86
(1) Non-GAAP measure; calculated as noninterest expense (excluding ORE income/expense and non-recurring expenses) divided by taxable equivalent net interest income plus noninterest income (excluding non-recurring loss). See Non-GAAP Financial Measures Reconciliation.
*CONSOLIDATED STATEMENTS OF INCOME*
*(dollars in thousands, except per share data)*
*(Unaudited)* *Three months ended* *12/31/2023* *9/30/2023* *6/30/2023* *3/31/2023* *12/31/2022*
Interest and dividend income:
Interest and fees on loans $ 49,201 $ 47,921 $ 46,062 $ 44,272 $ 42,711
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises 750 672 691 692 693
State and political subdivisions 1 - 1 - -
Mortgage-backed securities and collateralized mortgage obligations - residential 1,533 1,485 1,543 1,585 1,606
Corporate bonds 477 473 516 521 523
Small Business Administration - guaranteed participation securities 102 107 111 117 124
Other securities 3 2 3 2 2
Total interest and dividends on securities available for sale 2,866 2,739 2,865 2,917 2,948
Interest on held to maturity securities:
Mortgage-backed securities and collateralized mortgage obligations - residential 70 73 75 78 81
Total interest on held to maturity securities 70 73 75 78 81
Federal Home Loan Bank stock 149 131 110 110 98
Interest on federal funds sold and other short-term investments 6,354 6,688 6,970 6,555 6,246
Total interest income 58,640 57,552 56,082 53,932 52,084
Interest expense:
Interest on deposits:
Interest-bearing checking 165 102 49 66 61
Savings 707 639 655 530 401
Money market deposit accounts 2,500 2,384 1,756 814 389
Time deposits 16,460 11,962 9,291 5,272 1,839
Interest on short-term borrowings 201 244 279 285 208
Total interest expense 20,033 15,331 12,030 6,967 2,898
Net interest income 38,607 42,221 44,052 46,965 49,186
Less: Provision (Credit) for credit losses 1,350 100 (500 ) 300 50
Net interest income after provision (credit) for credit losses 37,257 42,121 44,552 46,665 49,136
Noninterest income:
Trustco Financial Services income 1,612 1,627 1,412 1,774 1,773
Fees for services to customers 2,563 2,590 2,847 2,648 2,783
Other 299 357 339 247 219
Total noninterest income 4,474 4,574 4,598 4,669 4,775
Noninterest expenses:
Salaries and employee benefits 12,444 12,393 13,122 13,283 13,067
Net occupancy expense 4,209 4,358 4,262 4,598 4,261
Equipment expense 1,852 1,923 1,873 1,962 1,700
Professional services 1,561 1,717 1,360 1,607 1,251
Outsourced services 2,532 2,720 2,491 2,296 2,102
Advertising expense 384 586 518 390 532
FDIC and other insurance 1,085 1,078 1,085 1,052 770
Other real estate (income) expense, net (12 ) 163 148 225 101
Other 4,776 2,522 2,468 2,266 2,621
Total noninterest expenses 28,831 27,460 27,327 27,679 26,405
Income before taxes 12,900 19,235 21,823 23,655 27,506
Income taxes 3,052 4,555 5,451 5,909 6,596
Net income $ 9,848 $ 14,680 $ 16,372 $ 17,746 $ 20,910
Net income per common share:
- Basic $ 0.52 $ 0.77 $ 0.86 $ 0.93 $ 1.10
- Diluted 0.52 0.77 0.86 0.93 1.10
Average basic shares (in thousands) 19,024 19,024 19,024 19,024 19,045
Average diluted shares (in thousands) 19,026 19,024 19,024 19,027 19,050
*CONSOLIDATED STATEMENTS OF INCOME, Continued*
*(dollars in thousands, except per share data)*
*(Unaudited)* *Year ended* *12/31/23* *12/31/22*
Interest and dividend income:
Interest and fees on loans $ 187,456 162,214
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises 2,805 1,405
State and political subdivisions 2 2
Mortgage-backed securities and collateralized mortgage obligations - residential 6,146 5,677
Corporate bonds 1,987 1,804
Small Business Administration - guaranteed participation securities 437 551
Other securities 10 9
Total interest and dividends on securities available for sale 11,387 9,448
Interest on held to maturity securities:
Mortgage-backed securities-residential 296 343
Total interest on held to maturity securities 296 343
Federal Home Loan Bank stock 500 305
Interest on federal funds sold and other short-term investments 26,567 14,292
Total interest income 226,206 186,602
Interest expense:
Interest on deposits:
Interest-bearing checking 382 190
Savings 2,531 920
Money market deposit accounts 7,454 1,050
Time deposits 42,985 3,567
Interest on short-term borrowings 1,009 740
Total interest expense 54,361 6,467
Net interest income 171,845 180,135
Less: Provision (Credit) for credit losses 1,250 (341 )
Net interest income after provision (credit) for credit losses 170,595 180,476
Noninterest income:
Trustco Financial Services income 6,425 7,037
Fees for services to customers 10,648 10,947
Other 1,242 1,276
Total noninterest income 18,315 19,260
Noninterest expenses:
Salaries and employee benefits 51,242 45,904
Net occupancy expense 17,427 17,527
Equipment expense 7,610 6,487
Professional services 6,245 5,577
Outsourced services 10,039 9,210
Advertising expense 1,878 2,046
FDIC and other insurance 4,300 3,159
Other real estate expense, net 524 310
Other 12,032 10,099
Total noninterest expenses 111,297 100,319
Income before taxes 77,613 99,417
Income taxes 18,967 24,183
Net income $ 58,646 75,234
Net income per common share:
- Basic $ 3.08 3.93
- Diluted 3.08 3.93
Average basic shares (in thousands) 19,024 19,131
Average diluted shares (in thousands) 19,025 19,133
*CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION*
*(dollars in thousands)*
*(Unaudited)* *12/31/2023* *9/30/2023* *6/30/2023* *3/31/2023* *12/31/2022*
*ASSETS:*
Cash and due from banks $ 49,274 $ 45,940 $ 55,662 $ 47,595 $ 43,429
Federal funds sold and other short term investments 528,730 461,321 547,695 589,389 607,170
Total cash and cash equivalents 578,004 507,261 603,357 636,984 650,599
Securities available for sale:
U. S. government sponsored enterprises 118,668 121,474 113,570 119,132 118,187
States and political subdivisions 26 34 34 34 34
Mortgage-backed securities and collateralized mortgage obligations - residential 237,677 233,719 243,444 255,556 260,316
Small Business Administration - guaranteed participation securities 17,186 17,316 18,382 19,821 20,977
Corporate bonds 78,052 76,935 76,618 81,464 81,346
Other securities 680 657 656 652 653
Total securities available for sale 452,289 450,135 452,704 476,659 481,513
Held to maturity securities:
Mortgage-backed securities and collateralized mortgage obligations-residential 6,458 6,724 7,043 7,382 7,707
Total held to maturity securities 6,458 6,724 7,043 7,382 7,707
Federal Reserve Bank and Federal Home Loan Bank stock 6,203 6,203 6,203 5,797 5,797
Loans:
Commercial 273,515 268,642 251,434 246,307 231,011
Residential mortgage loans 4,365,063 4,343,006 4,310,005 4,241,459 4,203,451
Home equity line of credit 347,415 332,028 308,976 296,490 286,432
Installment loans 16,886 16,605 16,396 15,326 12,307
Loans, net of deferred net costs 5,002,879 4,960,281 4,886,811 4,799,582 4,733,201
Less: Allowance for credit losses on loans 48,578 47,226 46,914 46,685 46,032
Net loans 4,954,301 4,913,055 4,839,897 4,752,897 4,687,169
Bank premises and equipment, net 34,007 32,135 32,351 32,305 32,556
Operating lease right-of-use assets 40,542 41,475 43,113 43,478 44,727
Other assets 96,387 97,310 90,957 90,306 89,984
Total assets $ 6,168,191 $ 6,054,298 $ 6,075,625 $ 6,045,808 $ 6,000,052
*LIABILITIES:*
Deposits:
Demand $ 754,532 $ 773,293 $ 791,353 $ 806,075 $ 838,147
Interest-bearing checking 1,015,213 1,033,898 1,082,989 1,124,785 1,183,321
Savings accounts 1,179,241 1,235,658 1,315,893 1,400,887 1,521,473
Money market deposit accounts 565,767 610,012 625,253 600,410 621,106
Time deposits 1,836,024 1,581,504 1,442,959 1,280,301 1,028,763
Total deposits 5,350,777 5,234,365 5,258,447 5,212,458 5,192,810
Short-term borrowings 88,990 103,110 113,765 134,293 122,700
Operating lease liabilities 44,471 45,418 47,172 47,643 48,980
Accrued expenses and other liabilities 38,668 47,479 34,852 36,711 35,575
Total liabilities 5,522,906 5,430,372 5,454,236 5,431,105 5,400,065
*SHAREHOLDERS' EQUITY:*
Capital stock 20,058 20,058 20,058 20,058 20,058
Surplus 257,181 257,078 257,078 257,078 257,078
Undivided profits 425,069 422,082 414,251 404,728 393,831
Accumulated other comprehensive loss, net of tax (13,237 ) (31,506 ) (26,212 ) (23,375 ) (27,194 )
Treasury stock at cost (43,786 ) (43,786 ) (43,786 ) (43,786 ) (43,786 )
Total shareholders' equity 645,285 623,926 621,389 614,703 599,987
Total liabilities and shareholders' equity $ 6,168,191 $ 6,054,298 $ 6,075,625 $ 6,045,808 $ 6,000,052
Outstanding shares (in thousands) 19,024 19,024 19,024 19,024 19,024
*NONPERFORMING ASSETS*
*(dollars in thousands)*
*(Unaudited)* *12/31/2023**
**
* *9/30/2023**
**
* *6/30/2023**
**
* *3/31/2023**
**
* *12/31/2022**
**
*
*Nonperforming Assets*
*New York and other states**
Loans in nonaccrual status:
Commercial $ 536 $ 540 $ 545 $ 560 $ 219
Real estate mortgage - 1 to 4 family 14,375 14,633 16,260 15,722 14,949
Installment 151 93 124 59 23
Total non-accrual loans 15,062 15,266 16,929 16,341 15,191
Other nonperforming real estate mortgages - 1 to 4 family 3 5 7 8 10
Total nonperforming loans 15,065 15,271 16,936 16,349 15,201
Other real estate owned 194 1,185 1,412 1,869 2,061
Total nonperforming assets $ 15,259 $ 16,456 $ 18,348 $ 18,218 $ 17,262
*Florida*
Loans in nonaccrual status:
Commercial $ 314 $ 314 $ 314 $ 314 $ 314
Real estate mortgage - 1 to 4 family 2,272 2,228 2,170 2,437 1,895
Installment 15 65 - 62 83
Total non-accrual loans 2,601 2,607 2,484 2,813 2,292
Other nonperforming real estate mortgages - 1 to 4 family - - - - -
Total nonperforming loans 2,601 2,607 2,484 2,813 2,292
Other real estate owned - - - - -
Total nonperforming assets $ 2,601 $ 2,607 $ 2,484 $ 2,813 $ 2,292
*Total*
Loans in nonaccrual status:
Commercial $ 850 $ 854 $ 859 $ 874 $ 533
Real estate mortgage - 1 to 4 family 16,647 16,861 18,430 18,159 16,844
Installment 166 158 124 121 106
Total non-accrual loans 17,663 17,873 19,413 19,154 17,483
Other nonperforming real estate mortgages - 1 to 4 family 3 5 7 8 10
Total nonperforming loans 17,666 17,878 19,420 19,162 17,493
Other real estate owned 194 1,185 1,412 1,869 2,061
Total nonperforming assets $ 17,860 $ 19,063 $ 20,832 $ 21,031 $ 19,554
*Quarterly Net (Recoveries) Chargeoffs*
*New York and other states**
Commercial $ - $ - $ (129 ) $ - $ -
Real estate mortgage - 1 to 4 family 219 (26 ) (161 ) (53 ) (46 )
Installment 23 14 21 (6 ) 31
Total net chargeoffs (recoveries) $ 242 $ (12 ) $ (269 ) $ (59 ) $ (15 )
*Florida*
Commercial $ - $ - $ - $ - $ -
Real estate mortgage - 1 to 4 family - - - (25 ) -
Installment 6 - 40 31 -
Total net chargeoffs (recoveries) $ 6 $ - $ 40 $ 6 $ -
*Total*
Commercial $ - $ - $ (129 ) $ - $ -
Real estate mortgage - 1 to 4 family 219 (26 ) (161 ) (78 ) (46 )
Installment 29 14 61 25 31
Total net chargeoffs (recoveries) $ 248 $ (12 ) $ (229 ) $ (53 ) $ (15 )
*Asset Quality Ratios*
Total nonperforming loans (1) $ 17,666 $ 17,878 $ 19,420 $ 19,162 $ 17,493
Total nonperforming assets (1) 17,860 19,063 20,832 21,031 19,554
Total net chargeoffs (recoveries) (2) 248 (12 ) (229 ) (53 ) (15 )
Allowance for credit losses on loans (1) 48,578 47,226 46,914 46,685 46,032
Nonperforming loans to total loans 0.35 % 0.36 % 0.40 % 0.40 % 0.37 %
Nonperforming assets to total assets 0.29 % 0.31 % 0.34 % 0.35 % 0.33 %
Allowance for credit losses on loans to total loans 0.97 % 0.95 % 0.96 % 0.97 % 0.97 %
Coverage ratio (1) 275.0 % 264.2 % 241.6 % 243.6 % 263.1 %
Annualized net chargeoffs (recoveries) to average loans (2) 0.02 % 0.00 % -0.02 % 0.00 % 0.00 %
Allowance for credit losses on loans to annualized net chargeoffs (recoveries) (2) 49.0 x N/A N/A 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 December 31, 2023 December 31, 2022 Average Interest Average Average Interest Average Balance Rate Balance Rate
Assets
Securities available for sale:
U. S. government sponsored enterprises $ 125,572 $ 750 2.39 % $ 120,415 $ 693 2.30 %
Mortgage backed securities and collateralized mortgage obligations - residential 267,341 1,533 2.28 292,845 1,606 2.18
State and political subdivisions 32 1 6.62 40 1 7.81
Corporate bonds 80,207 477 2.38 85,701 523 2.44
Small Business Administration - guaranteed participation securities 18,990 102 2.15 23,805 124 2.10
Other 689 3 1.74 686 2 1.17
Total securities available for sale 492,831 2,866 2.33 523,492 2,949 2.25
Federal funds sold and other short-term Investments 461,889 6,354 5.46 669,280 6,246 3.70
Held to maturity securities:
Mortgage backed securities and collateralized mortgage obligations - residential 6,591 70 4.25 7,886 81 4.12
Total held to maturity securities 6,591 70 4.25 7,886 81 4.12
Federal Home Loan Bank stock 6,203 149 9.61 5,797 98 6.76
Commercial loans 273,622 3,589 5.25 223,164 2,756 4.94
Residential mortgage loans 4,353,660 40,009 3.68 4,161,481 36,109 3.47
Home equity lines of credit 340,670 5,338 6.22 278,853 3,661 5.21
Installment loans 16,359 265 6.44 10,886 185 6.74
Loans, net of unearned income 4,984,311 49,201 3.94 4,674,384 42,711 3.65
Total interest earning assets 5,951,825 $ 58,640 3.93 5,880,839 $ 52,085 3.54
Allowance for credit losses on loans (47,458 ) (45,722 )
Cash & non-interest earning assets 169,791 171,921
Total assets $ 6,074,158 $ 6,007,038
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts $ 1,004,744 $ 165 0.07 % $ 1,164,178 $ 61 0.02 %
Money market accounts 586,025 2,500 1.69 668,537 389 0.23
Savings 1,205,388 707 0.23 1,540,163 401 0.10
Time deposits 1,720,871 16,460 3.79 983,590 1,839 0.74
Total interest bearing deposits 4,517,028 19,832 1.74 4,356,468 2,690 0.25
Short-term borrowings 92,529 201 0.86 126,562 208 0.65
Total interest bearing liabilities 4,609,557 $ 20,033 1.72 4,483,030 $ 2,898 0.26
Demand deposits 754,078 845,493
Other liabilities 81,297 82,085
Shareholders' equity 629,226 596,430
Total liabilities and shareholders' equity $ 6,074,158 $ 6,007,038
Net interest income, GAAP and non-GAAP tax equivalent (1) $ 38,607 $ 49,187
Net interest spread, GAAP and non-GAAP tax equivalent (1) 2.21 % 3.28 %
Net interest margin (net interest income to total interest earning assets), GAAP and non-GAAP tax equivalent (1) 2.60 % 3.34 %
Tax equivalent adjustment (1) - (1 )
Net interest income $ 38,607 $ 49,186
(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)* Year ended Year ended December 31, 2023 December 31, 2022 Average Interest Average Average Interest Average Balance Rate Balance Rate
Assets
Securities available for sale:
U. S. government sponsored enterprises $ 121,574 2,805 2.31 % $ 89,557 1,405 1.57 %
Mortgage backed securities and collateralized mortgage obligations - residential 275,565 6,146 2.23 284,901 5,677 1.99
State and political subdivisions 33 2 6.71 41 3 6.66
Corporate bonds 82,865 1,987 2.40 78,266 1,804 2.31
Small Business Administration - guaranteed participation securities 20,410 437 2.14 26,679 551 2.07
Other 686 10 1.46 686 9 1.31
Total securities available for sale 501,133 11,387 2.27 480,130 9,449 1.97
Federal funds sold and other short-term Investments 521,021 26,567 5.10 969,043 14,292 1.47
Held to maturity securities:
Mortgage backed securities and collateralized mortgage obligations - residential 7,053 296 4.20 8,647 343 3.97
Total held to maturity securities 7,053 296 4.20 8,647 343 3.97
Federal Home Loan Bank stock 6,018 500 8.31 5,749 305 5.31
Commercial loans 255,666 13,306 5.20 206,144 10,168 4.93
Residential mortgage loans 4,290,241 154,235 3.60 4,081,120 140,420 3.44
Home equity lines of credit 313,914 18,936 6.03 254,168 10,950 4.31
Installment loans 15,345 979 6.38 9,849 676 6.87
Loans, net of unearned income 4,875,166 187,456 3.84 4,551,281 162,214 3.56
Total interest earning assets 5,910,391 226,206 3.83 6,014,850 186,603 3.10
Allowance for credit losses on loans (46,971 ) (46,124 )
Cash & non-interest earning assets 172,641 190,278
Total assets $ 6,036,061 $ 6,159,004
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts $ 1,067,972 382 0.04 % $ 1,190,337 190 0.02 %
Money market accounts 606,230 7,454 1.23 745,714 1,050 0.14
Savings 1,323,995 2,531 0.19 1,553,016 920 0.06
Time deposits 1,437,336 42,985 2.99 974,428 3,567 0.37
Total interest bearing deposits 4,435,533 53,352 1.20 4,463,495 5,727 0.13
Short-term borrowings 114,639 1,009 0.88 177,599 740 0.42
Total interest bearing liabilities 4,550,172 54,361 1.19 4,641,094 6,467 0.14
Demand deposits 784,021 838,944
Other liabilities 81,658 81,880
Shareholders' equity 620,212 597,086
Total liabilities and shareholders' equity $ 6,036,063 $ 6,159,004
Net interest income, GAAP and non-GAAP tax equivalent (1) 171,845 180,136
Net interest spread, GAAP and non-GAAP tax equivalent (1) 2.64 % 2.96 %
Net interest margin (net interest income to total interest earning assets), GAAP and non-GAAP tax equivalent (1) 2.91 % 2.99 %
Tax equivalent adjustment (1) - (1 )
Net interest income 171,845 180,135
(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, strategic branch closing costs, and a non-recurring expense related to the settlement of a class action lawsuit, by net interest income (fully taxable equivalent) and total noninterest income as determined under GAAP, excluding gain/loss on the disposal of assets from strategic branch closures 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 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) *12/31/2023* *9/30/2023* *12/31/2022*
*Tangible Book Value Per Share*
Equity (GAAP) $ 645,285 $ 623,926 $ 599,987
Less: Intangible assets 553 553 553
Tangible equity (Non-GAAP) $ 644,732 $ 623,373 $ 599,434
Shares outstanding 19,024 19,024 19,024
Tangible book value per share 33.89 32.77 31.51
Book value per share 33.92 32.80 31.54
*Tangible Equity to Tangible Assets*
Total Assets (GAAP) $ 6,168,191 $ 6,054,298 $ 6,000,052
Less: Intangible assets 553 553 553
Tangible assets (Non-GAAP) $ 6,167,638 $ 6,053,745 $ 5,999,499
Tangible Equity to Tangible Assets (Non-GAAP) 10.45 % 10.30 % 9.99 %
Equity to Assets (GAAP) 10.46 % 10.31 % 10.00 % *Three months ended* *Year ended*
*Efficiency Ratio* *12/31/2023* *9/30/2023* *12/31/2022* *12/31/2023* *12/31/2022*
Net interest income (GAAP) $ 38,607 $ 42,221 $ 49,186 $ 171,845 $ 180,135
Taxable equivalent adjustment - - 1 - 1
Net interest income (fully taxable equivalent) (Non-GAAP) 38,607 42,221 49,187 171,845 180,136
Non-interest income (GAAP) 4,474 4,574 4,775 18,315 19,260
Add: Non-recurring loss (1) 101 - - 101 -
Less: Net gain on sale of building - - - - 268
Revenue used for efficiency ratio (Non-GAAP) $ 43,182 $ 46,795 $ 53,962 $ 190,261 $ 199,128
Total noninterest expense (GAAP) $ 28,831 $ 27,460 $ 26,405 $ 111,297 $ 100,319
Less: Branch closure expense 114 - - 114 -
Less: Non-recurring expenses (1) 2,750 - - 2,750 -
Less: Other real estate (income) expense, net (12 ) 163 101 524 310
Expense used for efficiency ratio (Non-GAAP) $ 25,979 $ 27,297 $ 26,304 $ 107,909 $ 100,009
Efficiency Ratio 60.16 % 58.33 % 48.75 % 56.72 % 50.22 %
(1) There were no non-recurring losses or expenses in the prior period.
*Subsidiary:* *Trustco Bank*
Contact: Robert Leonard Executive Vice President (518) 381-3693