Executive Snapshot:
- Continued solid financial results:
- Key metrics for second quarter 2023:
- Net income of $16.4 million in the second quarter 2023
- Net interest income of $44.1 million up 2.3% compared to $43.1 million in the second quarter of 2022
- Return on average assets (ROAA) of 1.09% in the second quarter 2023
- Return on average equity (ROAE) of 10.61% in the second quarter 2023
- Book value at period end was $32.66, up from $31.06 compared to June 30, 2022
- Loan portfolio reaches all-time high:
- Total loans were up $346.3 million or 7.6% for the second quarter 2023 compared to second quarter of 2022
- At $4.9 billion as of June 30, 2023, loans continue to set new all-time highs
- Quarter over quarter deposit growth:
- Total deposits as of June 30, 2023 increased $46.0 million to $5.3 billion from March 31, 2023
- Time deposits increased $162.7 million or 12.7% up from March 31, 2023
- Superior asset quality:
- Nonperforming loans (NPLs) were $19.4 million for the second quarter of 2023 and continue to remain at low levels
- NPLs to total loans improved to 0.40% compared to 0.41% at June 30, 2022
- Quarterly net recoveries were $229 thousand in the second quarter 2023, resulting in six consecutive quarters of net recoveries
- Capital continues to grow:
- Consolidated equity to assets increased to 10.23% at June 30, 2023 from 9.55% at June 30, 2022
GLENVILLE, N.Y., July 24, 2023 (GLOBE NEWSWIRE) --
TrustCo Bank Corp NY (TrustCo, TRST) today announced second quarter 2023 net income of $16.4 million or $0.86 diluted earnings per share, compared to net income of $17.9 million or $0.93 diluted earnings per share for the second quarter 2022; and net income of $34.1 million or $1.79 diluted earnings per share for the six months ended June 30, 2023, compared to net income of $35.0 million or $1.82 diluted earnings per share for the six months ended June 30, 2022. Total loan growth increased $346.3 million or 7.6% for the second quarter 2023 over the same period in 2022.
Overview
Chairman, President, and CEO, Robert J. McCormick said, “The value of business fundamentals in corporate success cannot be overstated. At Trustco Bank, our fundamental goals are to achieve strength and stability. At the management level, we accomplish this by taking a long view on balance sheet management, avoiding trends and costly quick fixes. Our team then applies the fruit of that effort to deliver industry-leading deposit products that allow us to build customer relationships that endure over time and survive economic ups and downs. The results announced today offer proof of the success of that work. In a time when other banks are experiencing loss of deposits to non-bank investment products, through strong customer relationships we have seen deposit growth since year end. We have taken a careful approach to pricing and moderated downward pressure on net interest margin. Additionally, our industry best loan products continue to retain existing customers and attract new ones. All loan categories have grown each successive quarter since the same period in the prior year and have grown by $346 million year over year. Once again, where others have faltered, Trustco Bank has excelled. This success allows us to satisfy our driving goal – to provide our owners with a long-term, top-tier return on their investment.”
TrustCo continued to see deposit balances rebound from the end of the year with net deposit inflows during both the first and second quarters of 2023. Loan growth continued in the second quarter 2023 compared to the prior year’s second quarter, 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 the existing loan portfolio. The Federal Reserve’s decision to raise the target Federal Funds rate multiple times since March 2022 has contributed to our results in the second quarter 2023, as our cash position and other variable rate products continue to reprice upward, and are likely to continue to do so to the extent there are additional rate increases. We also note that current mortgage rates significantly exceed the yield on our existing portfolio of mortgages, which, if sustained, should be positive to net interest margin going forward. TrustCo’s strong liquidity position continues to allow us to take advantage of opportunities as they arise.
Details
Average loans were up $336.0 million or 7.5% in the second quarter 2023 over the same period in 2022. Average residential loans, our primary lending focus, were up $220.0 million, or 5.4%, in the second quarter 2023 over the same period in 2022. Average commercial loans and home equity lines of credit also increased $50.1 million or 25.2% and $59.5 million or 24.4%, respectively, in the second quarter 2023 over the same period in 2022.
We are actively retaining deposits, which is evident in the quarter over quarter results. Total deposits as of June 30, 2023 increased $46.0 million to $5.3 billion from March 31, 2023. 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 big 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 the depositors would start to absorb the funds. This gave us flexibility to strategically price deposits while retaining core customers.
Net interest income was $44.1 million for the second quarter 2023, an increase of $991 thousand or 2.3% compared to the same period in 2022, driven by a strong cash balance at the Federal Reserve Bank, loan growth, investment income, and the increases in the Federal Funds target rate over the past year. The net interest margin for the second quarter 2023 was 2.98%, up 15 basis points from 2.83% in the second quarter of 2022. The yield on interest earnings assets increased to 3.80%, up 90 basis points from 2.90% in the second quarter of 2022. The cost of interest bearing liabilities increased to 1.06% in the second quarter 2023 from 0.10% in the second quarter 2022. The increase in net interest income is primarily a result of our ability to maintain a $551.1 million average cash balance at the Federal Reserve Bank during the second quarter of 2023, continued strong loan volume, and being able to retain deposit balances at competitive market rates.
Asset quality remains strong and has been consistent over the past twelve months. The Company recorded a benefit for credit losses of $500 thousand in the second quarter of 2023, which is the result of a benefit for credit losses on unfunded commitments of $500 thousand as a result of a corresponding decrease in unfunded loan commitments. There was no provision for credit losses on loans during the second quarter of 2023. The ratio of allowance for credit losses on loans to total loans was 0.96% and 1.00% as of June 30, 2023 and 2022, respectively. The allowance for credit losses on loans was $46.9 million at June 30, 2023, compared to $45.3 million at June 30, 2022. Nonperforming loans (NPLs) were $19.4 million at June 30, 2023, compared to $18.7 million at June 30, 2022. NPLs were 0.40% and 0.41% of total loans at June 30, 2023 and 2022, respectively. The coverage ratio, or allowance for credit losses on loans to NPLs, was 241.6% at June 30, 2023, compared to 242.0% at June 30, 2022. Nonperforming assets (NPAs) were $20.8 million at June 30, 2023, compared to $19.4 million at June 30, 2022. Additionally, we have also had minimal charge-offs, and have been in a net recovery position for the past six quarters.
At June 30, 2023 our equity to asset ratio was 10.23%, compared to 9.55% at June 30, 2022. Book value per share at June 30, 2023 was $32.66, up 5.2% compared to $31.06 a year earlier.
A conference call to discuss second quarter 2023 results will be held at 9:00 a.m. Eastern Time on July 25, 2023. 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 775800. A replay of the call will be available for thirty days by dialing toll-free for the United States and Canada at 1-866-813-9403, Access code 419365. The call will also be audio webcast at https://events.q4inc.com/attendee/812116418, and will be available for one year.
About TrustCo Bank Corp NY
TrustCo Bank Corp NY is a $6.1 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 143 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at June 30, 2023.
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.
Forward-Looking Statements
All statements in this news release that are not historical are forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future development, results or periods. Examples of forward-looking statements include, among others, statements we make regarding our expectations for our performance during 2023, including our expectations regarding the effects of the economic environment on our financial results, our ability to retain customers and the amount of customers’ business, including deposit balances, with us, the impact of the Federal Reserve’s actions regarding interest rates, the growth of loans and deposits throughout our branch network, the increase in residential mortgage rates, and our ability to capitalize on economic changes in the areas in which we operate. Forward-looking statements are based on management’s current expectations as well as certain assumptions and estimates made by, and information available to, management at the time the statements are made. Such forward-looking statements are subject to factors and uncertainties that could cause actual results to differ materially for TrustCo from the views, beliefs and projections expressed in such statements, and many of the risks and uncertainties are heightened by or may, in the future, be heightened by volatility in financial markets 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: changes in interest rates, including recent and possible future increases fueled by inflation; inflationary pressures and rising 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; the COVID-19 pandemic; the soundness of other financial institutions; 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 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 risk of data breaches and cyber-attacks; the risk of an unauthorized disclosure of sensitive or confidential client or customer information; the impact of any expansion by us into new lines of business or new products and services; the impact of severe weather events and climate change on us and the communities we serve, including societal responses to climate change; 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 6/30/2023 3/31/2023 6/30/2022 Summary of operations Net interest income $44,052 $46,965 $43,060 (Credit) Provision for credit losses (500) 300 (491) Noninterest income 4,598 4,669 4,916 Noninterest expense 27,327 27,679 25,005 Net income 16,372 17,746 17,871 Per share Net income per share: - Basic $0.86 $0.93 $0.93 - Diluted 0.86 0.93 0.93 Cash dividends 0.36 0.36 0.35 Book value at period end 32.66 32.31 31.06 Market price at period end 28.61 31.94 30.84 At period end Full time equivalent employees 791 776 793 Full service banking offices 143 143 144 Performance ratios Return on average assets 1.09 % 1.20 % 1.15 % Return on average equity 10.61 11.84 12.08 Efficiency ratio (1) 55.87 53.17 51.97 Net interest spread 2.74 3.06 2.80 Net interest margin 2.98 3.21 2.83 Dividend payout ratio 41.83 38.59 37.46 Capital ratios at period end Consolidated equity to assets 10.23 % 10.17 % 9.55 % Consolidated tangible equity to tangible assets (2) 10.22 % 10.16 % 9.54 % Asset quality analysis at period end Nonperforming loans to total loans 0.40 % 0.40 % 0.41 % Nonperforming assets to total assets 0.34 0.35 0.31 Allowance for credit losses on loans to total loans 0.96 0.97 1.00 Coverage ratio (3) 2.4x 2.4x 2.4x (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 $553 of intangible assets. See Non-GAAP Financial Measures Reconciliation. (3) Calculated as allowance for credit losses on loans divided by total nonperforming loans. FINANCIAL HIGHLIGHTS, Continued (dollars in thousands, except per share data) (Unaudited) Six months ended 06/30/23 06/30/22 Summary of operations Net interest income$ 91,017 83,156 (Credit) Provision for credit losses (200) (691) Noninterest income 9,267 10,099 Noninterest expense 55,006 47,770 Net income 34,118 34,960 Per share Net income per share: - Basic$ 1.79 1.82 - Diluted 1.79 1.82 Cash dividends 0.72 0.70 Book value at period end 32.66 31.06 Market price at period end 28.61 30.84 Performance ratios Return on average assets 1.14 % 1.13 Return on average equity 11.22 11.84 Efficiency ratio (1) 54.48 51.28 Net interest spread 2.90 2.72 Net interest margin 3.10 2.74 Dividend payout ratio 40.15 38.39 (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. CONSOLIDATED STATEMENTS OF INCOME (dollars in thousands, except per share data) (Unaudited) Three months ended 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 Interest and dividend income: Interest and fees on loans $46,062 $44,272 $42,711 $40,896 $39,604 Interest and dividends on securities available for sale: U. S. government sponsored enterprises 691 692 693 479 147 State and political subdivisions 1 - - 1 - Mortgage-backed securities and collateralized mortgage obligations - residential 1,543 1,585 1,606 1,617 1,367 Corporate bonds 516 521 523 526 522 Small Business Administration - guaranteed participation securities 111 117 124 133 140 Other securities 3 2 2 3 2 Total interest and dividends on securities available for sale 2,865 2,917 2,948 2,759 2,178 Interest on held to maturity securities: Mortgage-backed securities and collateralized mortgage obligations - residential 75 78 81 85 87 Total interest on held to maturity securities 75 78 81 85 87 Federal Home Loan Bank stock 110 110 98 80 65 Interest on federal funds sold and other short-term investments 6,970 6,555 6,246 5,221 2,253 Total interest income 56,082 53,932 52,084 49,041 44,187 Interest expense: Interest on deposits: Interest-bearing checking 49 66 61 43 42 Savings 655 530 401 200 163 Money market deposit accounts 1,756 814 389 237 210 Time deposits 9,291 5,272 1,839 646 536 Interest on short-term borrowings 279 285 208 122 176 Total interest expense 12,030 6,967 2,898 1,248 1,127 Net interest income 44,052 46,965 49,186 47,793 43,060 Less: (Credit) Provision for credit losses (500) 300 50 300 (491) Net interest income after (credit) provision for loan losses 44,552 46,665 49,136 47,493 43,551 Noninterest income: Trustco Financial Services income 1,412 1,774 1,773 1,435 1,996 Fees for services to customers 2,847 2,648 2,783 2,705 2,658 Other 339 247 219 246 262 Total noninterest income 4,598 4,669 4,775 4,386 4,916 Noninterest expenses: Salaries and employee benefits 13,122 13,283 13,067 12,134 11,464 Net occupancy expense 4,262 4,598 4,261 4,483 4,254 Equipment expense 1,873 1,962 1,700 1,532 1,667 Professional services 1,360 1,607 1,251 1,375 1,484 Outsourced services 2,491 2,296 2,102 2,328 2,500 Advertising expense 518 390 532 508 389 FDIC and other insurance 1,085 1,052 770 773 804 Other real estate expense, net 148 225 101 124 74 Other 2,468 2,266 2,621 2,887 2,369 Total noninterest expenses 27,327 27,679 26,405 26,144 25,005 Income before taxes 21,823 23,655 27,506 25,735 23,462 Income taxes 5,451 5,909 6,596 6,371 5,591 Net income $16,372 $17,746 $20,910 $19,364 $17,871 Net income per common share: - Basic $0.86 $0.93 $1.10 $1.01 $0.93 - Diluted 0.86 0.93 1.10 1.01 0.93 Average basic shares (in thousands) 19,024 19,024 19,045 19,111 19,153 Average diluted shares (in thousands) 19,024 19,028 19,050 19,112 19,153 CONSOLIDATED STATEMENTS OF INCOME, Continued (dollars in thousands, except per share data) (Unaudited) Six months ended 06/30/23 06/30/22 Interest and dividend income: Interest and fees on loans$ 90,334 78,607 Interest and dividends on securities available for sale: U. S. government sponsored enterprises 1,383 233 State and political subdivisions 1 1 Mortgage-backed securities and collateralized mortgage obligations - residential 3,128 2,454 Corporate bonds 1,037 755 Small Business Administration - guaranteed participation securities 228 294 Other securities 5 4 Total interest and dividends on securities available for sale 5,782 3,741 Interest on held to maturity securities: Mortgage-backed securities-residential 153 177 Total interest on held to maturity securities 153 177 Federal Home Loan Bank stock 220 127 Interest on federal funds sold and other short-term investments 13,525 2,825 Total interest income 110,014 85,477 Interest expense: Interest on deposits: Interest-bearing checking 115 86 Savings 1,185 319 Money market deposit accounts 2,570 424 Time deposits 14,563 1,082 Interest on short-term borrowings 564 410 Total interest expense 18,997 2,321 Net interest income 91,017 83,156 Less: (Credit) Provision for credit losses (200) (691) Net interest income after provision for loan losses 91,217 83,847 Noninterest income: Trustco Financial Services income 3,186 3,829 Fees for services to customers 5,495 5,459 Other 586 811 Total noninterest income 9,267 10,099 Noninterest expenses: Salaries and employee benefits 26,405 20,703 Net occupancy expense 8,860 8,783 Equipment expense 3,835 3,255 Professional services 2,967 2,951 Outsourced services 4,787 4,780 Advertising expense 908 1,006 FDIC and other insurance 2,137 1,616 Other real estate expense, net 373 85 Other 4,734 4,591 Total noninterest expenses 55,006 47,770 Income before taxes 45,478 46,176 Income taxes 11,360 11,216 Net income$ 34,118 34,960 Net income per common share: - Basic$ 1.79 1.82 - Diluted 1.79 1.82 Average basic shares (in thousands) 19,024 19,184 Average diluted shares (in thousands) 19,025 19,185 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (dollars in thousands) (Unaudited) 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 ASSETS: Cash and due from banks $55,662 $47,595 $43,429 $46,236 $46,611 Federal funds sold and other short term investments 547,695 589,389 607,170 795,028 999,573 Total cash and cash equivalents 603,357 636,984 650,599 841,264 1,046,184 Securities available for sale: U. S. government sponsored enterprises 113,570 119,132 118,187 102,779 101,100 States and political subdivisions 34 34 34 41 41 Mortgage-backed securities and collateralized mortgage obligations - residential 243,444 255,556 260,316 261,242 287,450 Small Business Administration - guaranteed participation securities 18,382 19,821 20,977 22,498 25,428 Corporate bonds 76,618 81,464 81,346 81,002 87,740 Other securities 656 652 653 657 656 Total securities available for sale 452,704 476,659 481,513 468,219 502,415 Held to maturity securities: Mortgage-backed securities and collateralized mortgage obligations-residential 7,043 7,382 7,707 8,091 8,544 Total held to maturity securities 7,043 7,382 7,707 8,091 8,544 Federal Reserve Bank and Federal Home Loan Bank stock 6,203 5,797 5,797 5,797 5,797 Loans: Commercial 251,434 246,307 231,011 217,120 199,886 Residential mortgage loans 4,310,005 4,241,459 4,203,451 4,132,365 4,076,657 Home equity line of credit 308,976 296,490 286,432 269,341 253,758 Installment loans 16,396 15,326 12,307 10,665 10,258 Loans, net of deferred net costs 4,886,811 4,799,582 4,733,201 4,629,491 4,540,559 Less: Allowance for credit losses on loans 46,914 46,685 46,032 45,517 45,285 Net loans 4,839,897 4,752,897 4,687,169 4,583,974 4,495,274 Bank premises and equipment, net 32,351 32,305 32,556 31,931 32,381 Operating lease right-of-use assets 43,113 43,478 44,727 45,733 47,343 Other assets 90,957 90,306 89,984 94,485 88,853 Total assets $6,075,625 $6,045,808 $6,000,052 $6,079,494 $6,226,791 LIABILITIES: Deposits: Demand $791,353 $806,075 $838,147 $859,829 $851,573 Interest-bearing checking 1,082,989 1,124,785 1,183,321 1,188,790 1,208,159 Savings accounts 1,315,893 1,400,887 1,521,473 1,562,564 1,577,034 Money market deposit accounts 625,253 600,410 621,106 716,319 760,338 Time deposits 1,442,959 1,280,301 1,028,763 954,352 999,737 Total deposits 5,258,447 5,212,458 5,192,810 5,281,854 5,396,841 Short-term borrowings 113,765 134,293 122,700 124,932 147,282 Operating lease liabilities 47,172 47,643 48,980 50,077 51,777 Accrued expenses and other liabilities 34,852 36,711 35,575 33,625 36,259 Total liabilities 5,454,236 5,431,105 5,400,065 5,490,488 5,632,159 SHAREHOLDERS' EQUITY: Capital stock 20,058 20,058 20,058 20,046 20,046 Surplus 257,078 257,078 257,078 256,661 256,661 Undivided profits 414,251 404,728 393,831 379,769 367,100 Accumulated other comprehensive loss, net of tax (26,212) (23,375) (27,194) (25,209) (9,422) Treasury stock at cost (43,786) (43,786) (43,786) (42,261) (39,753) Total shareholders' equity 621,389 614,703 599,987 589,006 594,632 Total liabilities and shareholders' equity $6,075,625 $6,045,808 $6,000,052 $6,079,494 $6,226,791 Outstanding shares (in thousands) 19,024 19,024 19,024 19,052 19,127 NONPERFORMING ASSETS (dollars in thousands)(Unaudited) 6/30/20233/31/202312/31/20229/30/20226/30/2022Nonperforming Assets New York and other states* Loans in nonaccrual status: Commercial $545 $560 $219 $179 $203 Real estate mortgage - 1 to 4 family 16,260 15,722 14,949 16,295 16,259 Installment 124 59 23 29 40 Total non-accrual loans 16,929 16,341 15,191 16,503 16,502 Other nonperforming real estate mortgages - 1 to 4 family 7 8 10 12 14 Total nonperforming loans 16,936 16,349 15,201 16,515 16,516 Other real estate owned 1,412 1,869 2,061 682 644 Total nonperforming assets $18,348 $18,218 $17,262 $17,197 $17,160 Florida Loans in nonaccrual status: Commercial $314 $314 $314 $- $- Real estate mortgage - 1 to 4 family 2,170 2,437 1,895 2,104 2,192 Installment - 62 83 65 5 Total non-accrual loans 2,484 2,813 2,292 2,169 2,197 Other nonperforming real estate mortgages - 1 to 4 family - - - - - Total nonperforming loans 2,484 2,813 2,292 2,169 2,197 Other real estate owned - - - - - Total nonperforming assets $2,484 $2,813 $2,292 $2,169 $2,197 Total Loans in nonaccrual status: Commercial $859 $874 $533 $179 $203 Real estate mortgage - 1 to 4 family 18,430 18,159 16,844 18,399 18,451 Installment 124 121 106 94 45 Total non-accrual loans 19,413 19,154 17,483 18,672 18,699 Other nonperforming real estate mortgages - 1 to 4 family 7 8 10 12 14 Total nonperforming loans 19,420 19,162 17,493 18,684 18,713 Other real estate owned 1,412 1,869 2,061 682 644 Total nonperforming assets $20,832 $21,031 $19,554 $19,366 $19,357 Quarterly Net (Recoveries) Chargeoffs New York and other states* Commercial $(129)$- $- $- $- Real estate mortgage - 1 to 4 family (161) (53) (46) (164) (119)Installment 21 (6) 31 34 12 Total net (recoveries) chargeoffs $(269)$(59)$(15)$(130)$(107) Florida Commercial $- $- $- $- $- Real estate mortgage - 1 to 4 family - (25) - - - Installment 40 31 - (2) - Total net (recoveries) chargeoffs $40 $6 $- $(2)$- Total Commercial $(129)$- $- $- $- Real estate mortgage - 1 to 4 family (161) (78) (46) (164) (119)Installment 61 25 31 32 12 Total net (recoveries) chargeoffs $(229)$(53)$(15)$(132)$(107) Asset Quality Ratios Total nonperforming loans (1) $19,420 $19,162 $17,493 $18,684 $18,713 Total nonperforming assets (1) 20,832 21,031 19,554 19,366 19,357 Total net (recoveries) chargeoffs (2) (229) (53) (15) (132) (107) Allowance for credit losses on loans (1) 46,914 46,685 46,032 45,517 45,285 Nonperforming loans to total loans 0.40% 0.40% 0.37% 0.40% 0.41% Nonperforming assets to total assets 0.34% 0.35% 0.33% 0.32% 0.31% Allowance for credit losses on loans to total loans 0.96% 0.97% 0.97% 0.98% 1.00% Coverage ratio (1) 241.6% 243.6% 263.1% 243.6% 242.0% Annualized net (recoveries) chargeoffs to average loans (2) -0.02% 0.00% 0.00% -0.01% -0.01% Allowance for credit losses on loans to annualized net (recoveries) chargeoffs (2) N/A 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 June 30, 2023 June 30, 2022 Average InterestAverage Average InterestAverage Balance Rate Balance Rate Assets Securities available for sale: U. S. government sponsored enterprises $120,646 $6912.29% $71,409 $1470.83%Mortgage backed securities and collateralized mortgage obligations - residential 278,367 1,5432.20 282,800 1,3671.92 State and political subdivisions 34 16.74 41 0- Corporate bonds 85,344 5162.42 87,556 5222.38 Small Business Administration - guaranteed participation securities 20,724 1112.15 27,512 1402.04 Other 686 31.75 686 21.17 Total securities available for sale 505,801 2,8652.27 470,004 2,1781.85 Federal funds sold and other short-term Investments 551,087 6,9705.07 1,101,489 2,2530.82 Held to maturity securities: Mortgage backed securities and collateralized mortgage obligations - residential 7,204 754.17 8,859 873.93 Total held to maturity securities 7,204 754.17 8,859 873.93 Federal Home Loan Bank stock 5,868 1107.50 5,797 654.49 Commercial loans 249,040 3,2955.29 198,972 2,4024.83 Residential mortgage loans 4,269,295 37,9923.56 4,049,271 34,7713.43 Home equity lines of credit 303,134 4,5336.00 243,648 2,2693.74 Installment loans 15,734 2426.16 9,321 1626.98 Loans, net of unearned income 4,837,203 46,0623.81 4,501,212 39,6043.52 Total interest earning assets 5,907,163 $56,0823.80 6,087,361 $44,1872.90 Allowance for credit losses on loans (47,060) (46,411) Cash & non-interest earning assets 172,821 193,099 Total assets $6,032,924 $6,234,049 Liabilities and shareholders' equity Deposits: Interest bearing checking accounts $1,083,795 $490.02% $1,210,554 $420.01%Money market accounts 613,204 1,7561.15 777,860 2100.11 Savings 1,352,181 6550.19 1,564,454 1630.04 Time deposits 1,372,248 9,2912.72 968,560 5360.22 Total interest bearing deposits 4,421,428 11,7511.07 4,521,428 9510.08 Short-term borrowings 124,089 2790.90 197,259 1760.36 Total interest bearing liabilities 4,545,517 $12,0301.06 4,718,687 $1,1270.10 Demand deposits 788,654 842,487 Other liabilities 79,839 79,431 Shareholders' equity 618,914 593,444 Total liabilities and shareholders' equity $6,032,924 $6,234,049 Net interest income, GAAP and non-GAAP tax equivalent (1) $44,052 $43,060 Net interest spread, GAAP and non-GAAP tax equivalent (1) 2.74% 2.80% Net interest margin (net interest income to total interest earning assets), GAAP and non-GAAP tax equivalent (1) 2.98% 2.83% Tax equivalent adjustment (1) - - Net interest income $44,052 $43,060 (1) Tax equivalent adjustment to a measure results in a non-GAAP financial measure. See Non-GAAP Financial Measures Reconciliation. DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY -INTEREST RATES AND INTEREST DIFFERENTIAL, Continued (dollars in thousands) (Unaudited) Six months ended Six months ended June 30, 2023 June 30, 2022 Average InterestAverage Average InterestAverage Balance Rate Balance Rate Assets Securities available for sale: U. S. government sponsored enterprises $120,669 1,3832.29% $66,609 2330.70%Mortgage backed securities and collateralized mortgage obligations - residential 282,683 3,1282.21 272,022 2,4541.80 State and political subdivisions 34 16.74 41 16.73 Corporate bonds 85,460 1,0372.43 70,362 7552.15 Small Business Administration - guaranteed participation securities 21,423 2282.13 28,685 2942.05 Other 686 50.73 686 41.17 Total securities available for sale 510,955 5,7821.13 438,405 3,7411.71 Federal funds sold and other short-term Investments 563,938 13,5254.84 1,144,108 2,8250.50 Held to maturity securities: Mortgage backed securities and collateralized mortgage obligations - residential 7,372 1534.16 9,198 1773.86 Total held to maturity securities 7,372 1534.16 9,198 1773.86 Federal Home Loan Bank stock 5,833 2203.77 5,701 1274.46 Commercial loans 243,983 6,3195.18 196,991 4,9285.00 Residential mortgage loans 4,241,207 74,9063.54 4,028,667 68,9683.43 Home equity lines of credit 297,262 8,6525.87 238,122 4,3933.72 Installment loans 14,535 4576.35 9,148 3187.00 Loans, net of unearned income 4,796,987 90,3343.77 4,472,928 78,6073.52 Total interest earning assets 5,885,085 110,0143.75 6,070,340 85,4772.82 Allowance for credit losses on loans (46,677) (46,584) Cash & non-interest earning assets 173,990 200,193 Total assets $6,012,398 $6,223,949 Liabilities and shareholders' equity Deposits: Interest bearing checking accounts $1,108,452 1150.02% $1,201,078 860.01%Money market accounts 607,064 2,5700.85 784,737 4240.11 Savings 1,403,924 1,1850.17 1,546,316 3190.04 Time deposits 1,267,193 14,5632.32 966,372 1,0820.23 Total interest bearing deposits 4,386,633 18,4330.85 4,498,503 1,9110.09 Short-term borrowings 127,957 5640.89 222,755 4100.37 Total interest bearing liabilities 4,514,590 18,9970.85 4,721,258 2,3210.10 Demand deposits 802,533 825,685 Other liabilities 81,954 81,520 Shareholders' equity 613,321 595,486 Total liabilities and shareholders' equity $6,012,398 $6,223,949 Net interest income, GAAP and non-GAAP tax equivalent (1) 91,017 83,156 Net interest spread, GAAP and non-GAAP tax equivalent (1) 2.90% 2.72% Net interest margin (net interest income to total interest earning assets), GAAP and non-GAAP tax equivalent (1) 3.10% 2.74% Tax equivalent adjustment (1) - - Net interest income 91,017 83,156 (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 equity as a percentage of tangible assets at period end is a non-GAAP financial measure derived from GAAP-based amounts. We calculate tangible equity and tangible assets by excluding the balance of intangible assets from total shareholders’ equity and total assets, respectively. We calculate tangible equity as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end. We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios. Additionally, we believe that this measure is important to many investors in the marketplace who are interested in relative changes from period to period in equity and total assets, each exclusive of changes in intangible assets.
Net interest income is commonly presented on a taxable equivalent basis. That is, to the extent that some component of the institution’s net interest income will be exempt from taxation (e.g., was received by the institution as a result of its holdings of state or municipal obligations), an amount equal to the tax benefit derived from that component is added back to the net interest income total. Management considers this adjustment helpful to investors in comparing one financial institution’s net interest income (pre- tax) to that of another institution, as each will have a different proportion of tax-exempt items in their portfolios. Moreover, net interest income is itself a component of another financial measure commonly used by financial institutions, net interest margin, which is the ratio of net interest income to average interest earning assets. Additionally, management and many financial institutions also present net interest spread, which is the average yield on interest earning assets minus the average rate paid on interest bearing liabilities. For purposes of these measures as well, taxable equivalent net interest income is generally used by financial institutions, again to provide investors with a better basis of comparison from institution to institution. We calculate taxable equivalent net interest margin by dividing net interest income, adjusted to include the benefit of non-taxable interest income, by average interest earning assets. We calculate taxable equivalent net interest spread as the difference between average yield on interest earning assets, adjusted to include the benefit of non-taxable interest income, and the average rate paid on interest bearing liabilities.
The efficiency ratio is a non-GAAP measure of expense control relative to revenue from net interest income and non-interest fee income. We calculate the efficiency ratio by dividing total noninterest expenses as determined under GAAP, excluding other real estate expense, net, by net interest income (fully taxable equivalent) and total noninterest income as determined under GAAP, excluding 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 equity as a percentage of tangible assets, and efficiency ratio to the most directly comparable GAAP measures is set forth below. We have not presented a reconciliation of taxable equivalent net interest income, taxable equivalent net interest margin or taxable equivalent net interest spread to the most directly comparable GAAP measure, as there was no difference between the taxable equivalent measure and comparable GAAP measure for any period presented in this release.
NON-GAAP FINANCIAL MEASURES RECONCILIATION (dollars in thousands) (Unaudited) 6/30/20233/31/20236/30/2022 Tangible Book Value Per Share Equity (GAAP) $621,389 $614,703 $594,632 Less: Intangible assets 553 553 553 Tangible equity (Non-GAAP) $620,836 $614,150 $594,079 Shares outstanding 19,024 19,024 19,127 Tangible book value per share 32.63 32.28 31.06 Book value per share 32.66 32.31 31.06 Tangible Equity to Tangible Assets Total Assets (GAAP) $6,075,625 $6,045,808 $6,226,791 Less: Intangible assets 553 553 553 Tangible assets (Non-GAAP) $6,075,072 $6,045,255 $6,226,238 Tangible Equity to Tangible Assets (Non-GAAP) 10.22% 10.16% 9.54% Equity to Assets (GAAP) 10.23% 10.17% 9.55% Three months ended Six months endedEfficiency Ratio 6/30/20233/31/20236/30/2022 6/30/20236/30/2022 Net interest income (GAAP) $44,052 $46,965 $43,060 $91,017 $83,156 Taxable equivalent adjustment - - - - - Net interest income (fully taxable equivalent) (Non-GAAP) 44,052 46,965 43,060 91,017 83,156 Non-interest income (GAAP) 4,598 4,669 4,916 9,267 10,099 Less: Net gain on sale of building - - - - 268 Revenue used for efficiency ratio (Non-GAAP) $48,650 $51,634 $47,976 $100,284 $92,987 Total noninterest expense (GAAP) $27,327 $27,679 $25,005 $55,006 $47,770 Less: Other real estate expense, net 148 225 74 373 85 Expense used for efficiency ratio (Non-GAAP) $27,179 $27,454 $24,931 $54,633 $47,685 Efficiency Ratio 55.87% 53.17% 51.97% 54.48% 51.28%
Subsidiary: Trustco Bank Contact:Robert Leonard Executive Vice President (518) 381-3693
