TrustCo is Pleased to Report First Quarter 2020 Results; Net Income of $13.3 Million and 6.7% Average Residential Loan Growth Year over Year

GLENVILLE, N.Y., April 21, 2020 (GLOBE NEWSWIRE) -- TrustCo Bank Corp NY ((TrustCo, NASDAQ:TRST) today announced first quarter 2020 net income of $13.3 million or $0.138 diluted earnings per share.  Average residential loan growth increased 6.7% or $226.7 million for the first quarter 2020 compared to the first quarter 2019.  

Summary

Robert J. McCormick, Chairman, President and Chief Executive Officer noted, "First and foremost, I hope you and your families are healthy and safe during this difficult time.  Please know we are committed to being a pillar in our community for all.  Providing Home Town Service will always remain constant in this time of uncertainty.  It's been hard, but we are all in this together.  We are thankful to those on the front lines from medical centers to food banks that are providing the necessary services for those affected physically, emotionally, and financially by COVID-19."

TrustCo has created a "COVID-19 Fund" and will donate time and financial support to front line organizations across the communities we serve.  In addition, to support our borrowers experiencing economic hardships, we have launched a "COVID-19 Financial Relief Program." This program includes loan modifications, such as deferments on residential and commercial loans by request, and short-term reduced-rate personal loans of up to $5,000.  TrustCo is also working with the Small Business Administration to offer federal relief to our small business clients through the Paycheck Protection Program. 

The beginning of 2020 saw continued loan and deposit growth. Our focus on traditional lending criteria and conservative balance sheet management has produced consistent earnings while maintaining strong liquidity and growing capital. This approach allowed us to continue to expand our business and take advantage of changes in market and competitive conditions.  Though the pandemic has created an uncertain future, we are well-positioned to help our customers through this economic disruption and turmoil. We continue to hire across our locations for all levels of branch staff.  As we enter a traditionally busy season for residential lending, the Bank is well-positioned to deploy its existing liquidity into our residential loan portfolio and we will be paying close attention to how the market changes under current circumstances.  

TrustCo saw average loans grow 5.4% in the first quarter of 2020 compared to the first quarter of 2019.  Year over year, loan portfolio expansion was funded by a combination of utilizing a portion of our strong cash balances, cash flow from investments, and the growth in funding from customer deposits.  The continued shift in earning assets toward higher yielding loans has helped to manage margin compression driven by the higher cost of funds.  Total average deposits are up $121.0 million or 2.8% in the first quarter 2020 compared to the prior year.

Details

Average loans were up $209.1 million or 5.4% in the first quarter 2020 over the same period in 2019.  Average residential loans, our primary lending focus, were up $226.7 million or 6.7% in the first quarter 2020, over the same period in 2019.  Average deposits were up $121.0 million or 2.8% for the first quarter 2020 over the same period a year earlier.  The increase in deposits was primarily the result of a $96.2 million or 18.6% increase in average money market accounts versus prior year.  Excluding time deposits, total average core deposit accounts, which consist of checking, savings and money market deposits, were up $104.3 million or 3.5% for the first quarter 2020 compared to the first quarter 2019.  Within core, checking balances were up $51.6 million (including interest bearing and non‑interest bearing balances). 

The cost of interest bearing liabilities remained relatively flat in the first quarter 2020 from the first quarter 2019.  A significant portion of our CD portfolio repriced during 2019 and in the first quarter 2020 with additional still to reprice in the second quarter.  The net interest margin for the first quarter 2020 was 3.05%, down 19 basis points from 3.24% in the first quarter of 2019 primarily due to federal interest rate cuts over the same period resulting in less interest earned on our short-term funds and variable rate loans.  Our growth in deposits was primarily a result of core deposit growth while remaining at relatively the same cost.  Additionally, because we offered competitive shorter term rates on our time deposits in the past, we expect cost of interest bearing liabilities to continue to decrease as these reprice at lower rates.

The Bank continued to demonstrate its ability to grow and manage shareholders' equity.  Average equity was up $47.2 million or 9.5% in the first quarter of 2020 compared to the same period in 2019. On this expanded equity, return on average assets and return on average equity for the first quarter 2020 were 1.03% and 9.87%.  The Company also purchased 489 thousand shares of stock under the announced Stock Repurchase Plan.  Overall expense control continues to be a key area of focus.  Total operating expenses decreased by $599 thousand or 2.4% in the first quarter 2020 as compared to the first quarter 2019, driven by declines in professional services, advertising expense, and FDIC Insurance, partially offset by increases in outsourced services and ORE expenses, net.  

Asset quality measures have stayed consistent.  Nonperforming loans (NPLs) were $20.7 million at March 31, 2020, compared to $24.7 million at March 31, 2019.  NPLs were equal to 0.51% of total loans at March 31, 2020, compared to 0.64% at March 31, 2019.  The coverage ratio, or allowance for loan losses to NPLs, was 222.5% at March 31, 2020, compared to 180.5% at March 31, 2019.  Nonperforming assets (NPAs) were $22.0 million at March 31, 2020 compared to $26.0 million at March 31, 2019.  The ratio of allowance for loan losses to total loans was 1.13% as of March 31, 2020, compared to 1.09% at December 31, 2019.  The allowance for loan losses was $46.2 million at March 31, 2020 compared to $44.3 million at December 31, 2019.  The provision for loan losses increased $1.7 million to $2.0 million in the first quarter 2020 compared to the same period in the prior year, primarily driven by the uncertainty in the current economic environment resulting from COVID-19.  The Bank did not adopt "FASB Accounting Standards Update 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" ("CECL") as of January 1, 2020 as allowed by the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act").  The Bank will adopt CECL as required by the CARES Act at the earlier of the termination of the National Emergency concerning COVID-19 or December 31, 2020.  Net chargeoffs for the first quarter 2020 decreased versus the first quarter 2019, at $162 thousand from $395 thousand in the year earlier period, driven by a non performing loan sale in the prior year.  The annualized net chargeoff ratio was 0.02% for the first quarter 2020, compared to 0.04% in the first quarter 2019. 

At March 31, 2020 the equity to asset ratio was 10.43%, compared to 9.73% at March 31, 2019. As mentioned earlier the Bank is proud of its ability to grow shareholder value. Book value per share at March 31, 2020 was $5.68 up 9.7% compared to $5.18 a year earlier.

TrustCo Bank Corp NY is a $5.3 billion savings and loan holding company and through its subsidiary, TrustCo Bank, operated 148 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at March 31, 2020.

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

A conference call to discuss first quarter 2020 results will be held at 9:00 a.m. Eastern Time on April 22, 2020.  Those wishing to participate in the call may dial toll-free 1-888-339-0764.  International callers must dial 1-412-902-4195.  Please ask to be joined into the TrustCo Bank Corp NY / TRST call.  A replay of the call will be available for thirty days by dialing 1-877-344-7529 (1-412-317-0088 for international callers), Conference Number 10142447.  The call will also be audio webcast at: https://services.choruscall.com/links/trst200422.html, and will be available for one year. 

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

Non-GAAP Financial Measures Reconciliation

Tangible equity as a percentage of tangible assets at period end is a non-GAAP financial measure derived from GAAP-based amounts. We calculate tangible equity and tangible assets by excluding the balance of intangible assets from shareholders' equity and total assets, respectively. We calculate tangible equity as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end. We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios. 

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

We believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our financial results. Our management internally assesses our performance based, in part, on these measures.  However, these non-GAAP financial measures are supplemental and not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these measures, this presentation may not be comparable to other similarly titled measures reported by other companies. A reconciliation of the non-GAAP measures of tangible common equity, tangible book value per share, efficiency ratio, net income and net income per share to the underlying GAAP numbers is set forth below.

Subsidiary:    TrustCo Bank

Contact:

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