TrustCo is Pleased to Report Fourth Quarter and Full Year 2020 Results

GLENVILLE, N.Y., Jan. 21, 2021 (GLOBE NEWSWIRE) — TrustCo Bank Corp NY (TrustCo, NASDAQ: TRST) today announced full year 2020 net income of $52.5 million or $0.543 diluted earnings per share, and net income of $13.8 million or $0.143 diluted earnings per share for the fourth quarter of 2020. Average residential loan growth increased 5.9% or $209.1 million to a record $3.8 billion for the fourth quarter 2020.
Summary
Robert J. McCormick, Chairman, President and Chief Executive Officer noted, “As a bank built upon Home Town values, we continue to prioritize strengthening our communities and adapting our offerings to address the changing needs of our customers during the COVID-19 pandemic. TrustCo’s commitment to supporting its communities and front line workers remains steadfast. In an effort to ensure families had a safe place to celebrate the holidays, Trustco Bank launched the “Home for the Holidays” program, donating $40,000 to local housing agencies and community loan funds across New York, New Jersey and Florida. This is just one example of ways we have prioritized giving back. In addition, TrustCo partnered with local communities to offer custom merchant loan programs to help small businesses stay afloat during the pandemic. Lastly, TrustCo donated over 2,000 turkeys to food banks in New York and Florida to help ensure families who experienced economic challenges had a warm meal for Thanksgiving.”We also continue to closely monitor the impact of the pandemic on our business and results of operations. As of December 31, 2020, we had 8 residential loans in deferral totaling $2 million, and no installment or commercial loans in deferral. This represents 0.04% of total outstanding loans. As of September 30, 2020, we had 24 residential and installment loans in deferral totaling $5 million, and 6 commercial loans in deferral totaling $2 million. This represented 0.2% of total outstanding loans. As of June 30, 2020, we had 668 residential and installment loans in deferral totaling $145 million, and 84 commercial loans in deferral totaling $45 million. This represented 4.5% of total outstanding loans. We have been encouraged to see that most of our residential and commercial borrowers who had payment deferral arrangements with us have returned to making regular loan payments. Additionally, the Bank had funded 663 Paycheck Protection Program (“PPP”) loans totaling $46 million, as of December 31, 2020, 514 PPP loans totaling $29 million remain outstanding.The fourth quarter of 2020 saw continued loan and deposit growth. Our focus on traditional lending criteria and conservative balance sheet management has produced consistent earnings while maintaining strong liquidity and growing capital. This approach allowed us to continue to expand our business and take advantage of changes in market and competitive conditions. As mentioned in prior quarters, the pandemic has created an uncertain future, and we believe we continue to be well-positioned to help our customers through this economic disruption and turmoil. We also continue to hire across our locations for all levels of staff. As we enter the new year, management views the Bank as well-positioned to deploy its existing liquidity into our residential loan portfolio, and we will continue to closely monitor how the current market conditions change.DetailsAverage loans were up $214.9 million or 5.3% in the fourth quarter 2020 over the same period in 2019. Average residential loans, our primary lending focus, were up $209.1 million, or 5.9%, in the fourth quarter 2020 over the same period in 2019. Average deposits were up $494.1 million or 11.1% for the fourth quarter 2020 over the same period a year earlier. The increase in deposits was the result of a $632.1 million or 21.0% increase total average core deposit accounts, which consist of interest bearing and non-interest bearing checking, savings and money market deposits, offset by a decrease in average time deposits of $138.0 million or 9.7%, for the fourth quarter 2020 over the same period in 2019. Within the core deposits, checking balances were up $357.6 million or 27.1% (including interest bearing and non-interest bearing checking balances), money market balances were up $127.1 million or 21.8%, and savings balances were up $147.4 million or 13.3%. We believe the increase in core deposits continues to reflect the desire of customers to have additional funds in the safety and security offered by TrustCo’s long history of conservative banking. As we move forward, the objective is to encourage customers to retain these additional funds in the expanded product offerings of the Bank through aggressive marketing and product differentiation.  The cost of interest bearing liabilities decreased to 0.35% in the fourth quarter 2020 from 0.90% in the fourth quarter 2019. A significant portion of our CD portfolio (time deposits) repriced during 2020, which resulted in a decrease in average rates to 0.95% in the fourth quarter of 2020 from 2.10% in the fourth quarter of 2019, as a result of the ongoing market conditions. The net interest margin for the fourth quarter 2020 was 2.79%, down 23 basis points from 3.02% in the fourth quarter of 2019. This was primarily due to the decrease in market rates over the same period resulting in less interest earned on our short-term funds, residential and variable rate loans.The Bank continued to demonstrate its ability to grow shareholders’ equity as average equity was up $33.5 million or 6.3% in the fourth quarter of 2020 compared to the same period in 2019. Return on average assets and return on average equity for the fourth quarter 2020 were 0.95% and 9.75%, respectively, compared to 1.06% and 10.41% for the fourth quarter 2019. Improving efficiencies to reduce costs continues to remain a key area of focus.Asset quality and loan loss reserve measures have stayed consistent. Nonperforming loans (NPLs) were $21.1 million at December 31, 2020, compared to $20.9 million at December 31, 2019. NPLs were 0.50% of total loans at December 31, 2020, compared to 0.51% at December 31, 2019. The coverage ratio, or allowance for loan losses to NPLs, was 235.2% at December 31, 2020, compared to 212.4% at December 31, 2019. Nonperforming assets (NPAs) were $21.6 million at December 31, 2020, compared to $22.4 million at December 31, 2019. The ratio of allowance for loan losses to total loans was 1.17% as of December 31, 2020, compared to 1.09% at December 31, 2019. The allowance for loan losses was $49.6 million at December 31, 2020, compared to $44.3 million at December 31, 2019. The provision for loan losses increased to $600 thousand for the fourth quarter 2020 compared to $200 thousand in the same period in the prior year, primarily driven by the continued uncertainty in the current economic environment resulting from COVID-19. The Company had previously elected to delay its adoption of Accounting Standards Update 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“CECL”), as provided by the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) until the date on which the National Emergency concerning COVID-19 was terminated or December 31, 2020, whichever occurred first.  The December 31, 2020 adoption date under the CARES Act was extended to January 1, 2022 as a part of the COVID-19 Relief Bill, which became law in December 2020, and therefore the Company now intends to adopt CECL on January 1, 2022.Net chargeoffs for the fourth quarter 2020 were $128 thousand versus net chargeoffs in the fourth quarter 2019 of $212 thousand. The annualized net chargeoffs ratio was 0.01% and 0.02% for the fourth quarter 2020 and 2019, respectively.At December 31, 2020 the tangible equity to tangible asset ratio was 9.62%, compared to 10.30% at December 31, 2019. Book value per share at December 31, 2020 was $5.89, up 6.1% compared to $5.55 a year earlier.TrustCo Bank Corp NY is a $5.9 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 December 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 fourth quarter 2020 results will be held at 9:00 a.m. Eastern Time on January 22, 2021. 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 10151410. The call will also be audio webcast at: https://services.choruscall.com/links/trst210122.html, and will be available for one year.Safe Harbor Statement
All statements in this news release that are not historical are forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended. Forward-looking statements can be identified by words such as “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding our expectations for our performance during 2020, including our expectations regarding the effects of COVID-19 on our financial results and our ability to assist our customers in addressing the effects of COVID-19, our expectations with respect to our online and mobile banking product offerings, our expectations for the repricing of our CD portfolio, the impact of Federal Reserve actions regarding interest rates and the growth of loans and deposits throughout our branch network and our ability to capitalize on economic changes in the areas in which we operate. Such forward-looking statements are subject to factors that could cause actual results to differ materially for TrustCo from those discussed, and many of the risks and uncertainties are heightened by or may, in the future, be heightened by the effects of the COVID-19 pandemic. TrustCo wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The following important factors, among others, in some cases have affected and in the future could affect TrustCo’s actual results and could cause TrustCo’s actual financial performance to differ materially from that expressed in any forward-looking statement: the effect of the COVID-19 pandemic on our business, financial condition, liquidity and results of operations; the impact of the actions taken by governmental authorities to contain COVID-19 or address the impact of COVID-19 on the economy, and the effect of all of such items on our operations, liquidity and capital position, and on the financial condition of our borrowers and other customers; future business strategies related to the implementation of CECL; 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 ReconciliationTangible 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 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
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