TrustCo Announces Third Quarter 2019 Results; Net Income of $14.7 Million and 5.3% Average Residential Loan Growth Year over Year

/EIN News/ -- GLENVILLE, N.Y., Oct. 21, 2019 (GLOBE NEWSWIRE) -- TrustCo Bank Corp NY (TrustCo, NASDAQ: TRST) · TrustCo Bank Corp NY today announced third quarter 2019 net income of $14.7 million or $0.152 diluted earnings per share compared to $15.2 million or $0.157 diluted earnings per share in the third quarter of 2018 despite an increase of $4.7 million in interest expense during the same time period. Similar results were noted during the nine month period wherein net income was $43.9 million for the nine months ended September 30, 2019 versus $45.4 million for the same period in 2018 while total interest expense increased by $12.9 million.          

Summary

Robert J. McCormick, Chairman, President and Chief Executive Officer noted, “We are pleased to be able to report an increase in average residential loan growth of 5.3% or $175.6 million in the third quarter 2019 compared to the third quarter 2018.  Our focus on traditional lending criteria, conservative balance sheet management and expense control has enabled us to produce consistent earnings, maintain strong liquidity and capital, and allowed us to continue to grow our business and take advantage of changes in market and competitive conditions.  Our strong financial condition is evidenced by our continued recognition as a BauerFinancial, Inc. 5-Star Superior Bank Rating.”  Average deposits increased 5.6% for the third quarter of 2019 compared to the third quarter 2018.  Mr. McCormick further added “We continue to add core customer relationships, which ultimately drive future growth.  Loan growth and stabilizing cost of funds as a result of federal rate cuts have put us in a good position as we move forward.”

TrustCo saw solid loan growth in the third quarter of 2019 compared to the prior year led by an increase in residential mortgages.  Loan portfolio expansion was funded by a combination of utilizing our strong cash balances and growth in our deposit base.  TrustCo’s strong liquidity position continues to allow it to take advantage of opportunities when interest rate conditions change.

Details

Average loans were up $158.4 million or 4.2% in the third quarter 2019 over the same period in 2018.  Average residential loans, our primary lending focus, were up $175.6 million or 5.3% in the third quarter 2019, over the same period in 2018.  Average deposits are up $236.4 million or 5.6% for the third quarter 2019 over the same period a year earlier.  The increase in deposits was the result of a $301.1 million or 26.0% increase in average time deposits over the same period last year.  Excluding time deposits, total average core deposit accounts, which consist of checking, savings and money market deposits accounts, were down $64.7 million or 2.1% for the third quarter 2019 compared to the third quarter 2018. 

The cost of interest bearing liabilities increased to 0.94% in the third quarter 2019 from 0.52% in the third quarter 2018.  The cost of savings and interest bearing checking decreased slightly by 2 basis points and 3 basis points, respectively, from the third quarter 2018.  Money market deposits increased 41 basis points to 0.83% versus 0.42% from the third quarter 2018. A significant portion of our CD portfolio is expected to reprice during the fourth quarter which at current lower market rates will have a positive impact on net interest margin.  The net interest spread for the third quarter 2019 was 2.88%, down 38 basis points from 3.26% in the third quarter of 2018.  Net interest income (TE) decreased by 4.6% or $1.9 million over the same period last year.  Because we offered competitive shorter term rates, we expect margin to stabilize in the fourth quarter of 2019 as our shorter term time deposits could reprice lower and provide opportunity for increased margin expansion.

The Bank continued to demonstrate its ability to grow shareholders’ equity as average equity was up $46.5 million or 9.8% in the third quarter of 2019 compared to the same period in 2018.  On this expanded equity, return on average assets and return on average equity for the third quarter 2019 were 1.12% and 11.19%, respectively, compared to 1.24% and 12.84% for the third quarter 2018.  Improving efficiencies to reduce costs continues to remain a key area of focus.  Total operating expenses decreased by $474 thousand or 1.9% in the third quarter 2019 as compared to the third quarter 2018, driven by decreases in advertising expense, FDIC and other insurance expense, and other real estate expense, partially offset by an increase in salaries and employee benefits. The growth in salaries and benefit expense was the result of our targeted effort to hire and retain talent.

Asset quality and the resulting loan loss reserve measures continued to improve.  Nonperforming loans (NPLs) were $21.0 million at September 30, 2019, compared to $23.8 million at September 30, 2018.  NPLs were 0.53% of total loans at September 30, 2019, compared to 0.62% at September 30, 2018.  The coverage ratio, or allowance for loan losses to NPLs, was 210.9% at September 30, 2019, compared to 188.0% at September 30, 2018.  Nonperforming assets (NPAs) were $23.4 million at September 30, 2019 compared to $26.1 million at September 30, 2018.  The ratio of allowance for loan losses to total loans was 1.11% as of September 30, 2019, compared to 1.17% at September 30, 2018 which reflects both an improvement in asset quality and economic conditions in our lending areas.  The allowance for loan losses was $44.3 million at September 30, 2019 compared to $44.7 million at September 30, 2018.  Net chargeoffs for the third quarter 2019 were $36 thousand versus $67 thousand in the third quarter 2018.  As a result of the aforementioned loan growth and improvement in asset quality trends, the Company did not record a provision for loan losses during the third quarter 2019.

At September 30, 2019 the tangible equity to tangible asset ratio was 10.07%, compared to 9.76% at September 30, 2018.  As mentioned earlier, the Company is proud of its ability to grow shareholders’ equity.  Tangible book value per share at September 30, 2019 was $5.42, up 9.94% compared to $4.93 a year earlier.

TrustCo Bank Corp NY is a $5.2 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 September 30, 2019.

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

A conference call to discuss third quarter 2019 results will be held at 9:00 a.m. Eastern Time on October 22, 2019.  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 10135926.  The call will also be audio webcast at: https://services.choruscall.com/links/trst191022.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 2019, 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:  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.

 

TRUSTCO BANK CORP NY
GLENVILLE, NY
FINANCIAL HIGHLIGHTS
(dollars in thousands, except per share data)
(Unaudited)
		Three months ended
		9/30/2019		6/30/2019		9/30/2018
Summary of operations
Net interest income (TE)	$	38,644		39,192		40,526
(Credit) Provision for loan losses		-		(341	)	300
Noninterest income		4,925		4,914		4,455
Noninterest expense		24,070		24,902		24,544
Net income		14,708		14,667		15,199
Per common share
Net income per share:
- Basic	$	0.152		0.152		0.157
- Diluted		0.152		0.151		0.157
Cash dividends		0.068		0.068		0.068
Tangible Book value at period end		5.42		5.32		4.93
Market price at period end		8.15		7.92		8.50
At period end
Full time equivalent employees		823		858		807
Full service banking offices		148		148		148
Performance ratios
Return on average assets		1.12	%	1.14		1.24
Return on average equity		11.19		11.60		12.84
Efficiency (1)		55.17		55.98		53.39
Net interest spread (TE)		2.88		2.95		3.26
Net interest margin (TE)		3.04		3.11		3.35
Dividend payout ratio		44.85		44.94		43.29
Capital ratios at period end
Consolidated tangible equity to tangible assets (2)		10.07	%	9.85		9.76
Consolidated equity to assets		10.07	%	9.86		9.77
Asset quality analysis at period end
Nonperforming loans to total loans		0.53		0.57		0.62
Nonperforming assets to total assets		0.45		0.47		0.53
Allowance for loan losses to total loans		1.11		1.14		1.17
Coverage ratio (3)		2.1	x	2.0	x	1.9	x
(1)  Non-GAAP measure; calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income.
(2)  Non-GAAP measure; calculated as total equity less $553 of intangible assets divided by total assets less $553 of intangible assets.
(3)  Calculated as allowance for loan losses divided by total nonperforming loans.
TE = Taxable equivalent

FINANCIAL HIGHLIGHTS, Continued
(dollars in thousands, except per share data)
(Unaudited)
		Nine months ended
		09/30/19		09/30/18
Summary of operations
Net interest income (TE)	$	117,569		119,957
(Credit) Provision for loan losses		(41	)	900
Noninterest income		14,476		13,629
Noninterest expense		73,839		72,794
Net income		43,933		45,412
Per common share
Net income per share:
- Basic	$	0.454		0.471
- Diluted		0.453		0.470
Cash dividends		0.204		0.199
Tangible Book value at period end		5.42		4.93
Market price at period end		8.15		8.50
Performance ratios
Return on average assets		1.14		1.24
Return on average equity		11.56		13.00
Efficiency (1)		55.75		53.60
Net interest spread (TE)		2.98		3.24
Net interest margin (TE)		3.13		3.32
Dividend payout ratio		45.00		42.35
(1)  Calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income (excluding net securities transactions and gain on sale of building and nonperforming loans).
TE = Taxable equivalent.

CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
(Unaudited)
		Three months ended
		9/30/2019		6/30/2019		3/31/2019		12/31/2018		9/30/2018
Interest and dividend income:
Interest and fees on loans	$	41,923		41,432		41,253		41,184		40,073
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises		996		821		783		788		787
State and political subdivisions		2		3		1		2		7
Mortgage-backed securities and collateralized mortgage
obligations - residential		2,178		2,152		1,555		1,554		1,601
Corporate bonds		321		272		208		202		202
Small Business Administration - guaranteed
participation securities		282		289		297		329		325
Mortgage-backed securities and collateralized mortgage
obligations - commercial		-		-		-		-		-
Other securities		6		5		5		5		4
Total interest and dividends on securities available for sale		3,785		3,542		2,849		2,880		2,926
Interest on held to maturity securities:
Mortgage-backed securities and collateralized mortgage
obligations - residential		187		209		217		226		232
Total interest on held to maturity securities		187		209		217		226		232
Federal Reserve Bank and Federal Home Loan Bank stock		81		199		85		207		82
Interest on federal funds sold and other short-term investments		2,552		3,282		3,009		2,367		2,425
Total interest income		48,528		48,664		47,413		46,864		45,738
Interest expense:
Interest on deposits:
Interest-bearing checking		52		94		121		111		113
Savings		323		367		377		401		417
Money market deposit accounts		1,177		1,119		826		618		544
Time deposits		7,974		7,512		5,976		4,643		3,864
Interest on short-term borrowings		359		381		381		352		277
Total interest expense		9,885		9,473		7,681		6,125		5,215
Net interest income		38,643		39,191		39,732		40,739		40,523
Less: (Credit) Provision for loan losses		-		(341	)	300		500		300
Net interest income after provision for loan losses		38,643		39,532		39,432		40,239		40,223
Noninterest income:
Trustco Financial Services income		1,517		1,683		1,733		1,356		1,516
Fees for services to customers		2,602		2,611		2,520		2,897		2,693
Other		806		620		384		199		246
Total noninterest income		4,925		4,914		4,637		4,452		4,455
Noninterest expenses:
Salaries and employee benefits		11,725		11,711		11,451		10,183		10,761
Net occupancy expense		4,094		4,006		4,167		4,800		3,997
Equipment expense		1,689		1,709		1,902		1,741		1,783
Professional services		1,507		1,568		1,650		1,733		1,578
Outsourced services		1,875		1,875		1,925		1,875		1,875
Advertising expense		494		778		785		876		844
FDIC and other insurance		282		598		648		522		682
Other real estate (income) expense, net		33		210		(24	)	37		528
Other		2,371		2,447		2,363		3,152		2,496
Total noninterest expenses		24,070		24,902		24,867		24,919		24,544
Income before taxes		19,498		19,544		19,202		19,772		20,134
Income taxes		4,790		4,877		4,644		3,739		4,935
Net income	$	14,708		14,667		14,558		16,033		15,199
Net income per common share:
- Basic	$	0.152		0.152		0.150		0.166		0.157
- Diluted		0.152		0.151		0.150		0.166		0.157
Average basic shares (in thousands)		96,907		96,822		96,744		96,555		96,555
Average diluted shares (in thousands)		96,977		96,891		96,822		96,689		96,689
Note:  Taxable equivalent net interest income	$	38,644		39,192		39,733		40,740		40,526

CONSOLIDATED STATEMENTS OF INCOME, Continued
(dollars in thousands, except per share data)
(Unaudited)
		Nine months ended
		09/30/19			09/30/18
Interest and dividend income:
Interest and fees on loans	$	124,608			117,120
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises		2,600			2,324
State and political subdivisions		6			20
Mortgage-backed securities and collateralized mortgage
obligations - residential		5,885			5,039
Corporate bonds		801			485
Small Business Administration - guaranteed
participation securities		868			1,010
Mortgage-backed securities and collateralized mortgage
obligations - commercial		-			37
Other securities		16			13
Total interest and dividends on securities available for sale		10,176			8,928
Interest on held to maturity securities:
Mortgage-backed securities-residential		613			736
Total interest on held to maturity securities		613			736
Federal Reserve Bank and Federal Home Loan Bank stock		365			357
Interest on federal funds sold and other short-term investments		8,843			6,909
Total interest income		144,605			134,050
Interest expense:
Interest on deposits:
Interest-bearing checking		267			331
Savings		1,067			1,256
Money market deposit accounts		3,122			1,435
Time deposits		21,462			10,163
Interest on short-term borrowings		1,121			918
Total interest expense		27,039			14,103
Net interest income		117,566			119,947
Less: (Credit) Provision for loan losses		(41	)		900
Net interest income after provision for loan losses		117,607			119,047
Noninterest income:
Trustco Financial Services income		4,933			4,927
Fees for services to customers		7,733			8,015
Other		1,810			687
Total noninterest income		14,476			13,629
Noninterest expenses:
Salaries and employee benefits		34,887			31,924
Net occupancy expense		12,267			12,413
Equipment expense		5,300			5,327
Professional services		4,725			4,822
Outsourced services		5,675			5,625
Advertising expense		2,057			2,144
FDIC and other insurance		1,528			2,219
Other real estate expense, net		219			1,194
Other		7,181			7,126
Total noninterest expenses		73,839			72,794
Income before taxes		58,244			59,882
Income taxes		14,311			14,470
Net income	$	43,933			45,412
Net income per common share:
- Basic	$	0.454			0.471
- Diluted		0.453			0.470
Average basic shares (in thousands)		96,825			96,453
Average diluted shares (in thousands)		96,897			96,587
Note:  Taxable equivalent net interest income	$	117,569			119,957

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)
(Unaudited)
		9/30/2019		6/30/2019		3/31/2019		12/31/2018		9/30/2018
ASSETS:
Cash and due from banks	$	49,526		42,471		43,064		49,260		42,195
Federal funds sold and other short term investments		401,151		517,684		576,123		454,449		423,254
Total cash and cash equivalents		450,677		560,155		619,187		503,709		465,449
Securities available for sale:
U. S. government sponsored enterprises		164,490		184,448		148,292		152,160		150,053
States and political subdivisions		169		170		172		173		180
Mortgage-backed securities and collateralized mortgage
obligations - residential		406,166		354,679		312,946		262,032		269,093
Small Business Administration - guaranteed
participation securities		50,970		53,091		54,113		56,475		57,894
Corporate bonds		40,281		40,467		30,258		29,938		29,977
Other securities		683		685		685		685		685
Total securities available for sale		662,759		633,540		546,466		501,463		507,882
Held to maturity securities:
Mortgage-backed securities and collateralized mortgage
obligations-residential		19,705		20,667		21,609		22,501		23,462
Total held to maturity securities		19,705		20,667		21,609		22,501		23,462
Federal Reserve Bank and Federal Home Loan Bank stock		9,183		9,183		8,953		8,953		8,953
Loans:
Commercial		192,443		190,507		190,347		196,146		190,987
Residential mortgage loans		3,508,647		3,428,829		3,376,193		3,376,708		3,331,212
Home equity line of credit		273,526		277,559		282,034		289,540		293,750
Installment loans		10,703		9,514		12,579		11,702		9,967
Loans, net of deferred net costs		3,985,319		3,906,409		3,861,153		3,874,096		3,825,916
Less: Allowance for loan losses		44,329		44,365		44,671		44,766		44,736
Net loans		3,940,990		3,862,044		3,816,482		3,829,330		3,781,180
Bank premises and equipment, net		34,168		34,058		34,428		34,694		35,214
Operating lease right-of-use assets		49,618		51,097		51,559		-		-
Other assets		55,369		56,926		57,637		58,263		63,211
Total assets	$	5,222,469		5,227,670		5,156,321		4,958,913		4,885,351
LIABILITIES:
Deposits:
Demand	$	453,439		432,780		408,417		405,069		403,047
Interest-bearing checking		869,101		888,433		895,099		904,678		918,486
Savings accounts		1,110,947		1,132,308		1,150,329		1,182,683		1,221,127
Money market deposit accounts		570,457		562,318		538,043		507,311		501,270
Time deposits		1,457,223		1,446,428		1,421,181		1,274,506		1,155,994
Total deposits		4,461,167		4,462,267		4,413,069		4,274,247		4,199,924
Short-term borrowings		151,095		166,746		159,778		161,893		176,377
Operating lease liabilities		54,731		56,237		56,723		-		-
Accrued expenses and other liabilities		29,313		26,790		25,033		32,902		31,932
Total liabilities		4,696,306		4,712,040		4,654,603		4,469,042		4,408,233
SHAREHOLDERS' EQUITY:
Capital stock		100,200		100,180		100,180		100,175		100,175
Surplus		176,395		176,396		176,510		176,710		176,764
Undivided profits		280,542		272,433		264,364		256,397		246,965
Accumulated other comprehensive loss, net of tax		(71	)	(1,774	)	(7,011	)	(10,309	)	(13,000	)
Treasury stock at cost		(30,903	)	(31,605	)	(32,325	)	(33,102	)	(33,786	)
Total shareholders' equity		526,163		515,630		501,718		489,871		477,118
Total liabilities and shareholders' equity	$	5,222,469		5,227,670		5,156,321		4,958,913		4,885,351
Outstanding shares (in thousands)		96,917		96,822		96,746		96,659		96,586

NONPERFORMING ASSETS
(dollars in thousands)
(Unaudited)
		9/30/2019		6/30/2019		3/31/2019		12/31/2018		9/30/2018
Nonperforming Assets
New York and other states*
Loans in nonaccrual status:
Commercial	$	888		905		701		645		928
Real estate mortgage - 1 to 4 family		18,275		19,633		22,343		22,373		20,750
Installment		13		1		26		4		13
Total non-accrual loans		19,176		20,539		23,070		23,022		21,691
Other nonperforming real estate mortgages - 1 to 4 family		30		31		33		34		35
Total nonperforming loans		19,206		20,570		23,103		23,056		21,726
Other real estate owned		2,409		2,625		1,262		1,675		2,306
Total nonperforming assets	$	21,615		23,195		24,365		24,731		24,032
Florida
Loans in nonaccrual status:
Commercial	$	-		-		-		-		-
Real estate mortgage - 1 to 4 family		1,809		1,564		1,644		1,915		2,054
Installment		-		-		-		15		13
Total non-accrual loans		1,809		1,564		1,644		1,930		2,067
Other nonperforming real estate mortgages - 1 to 4 family		-		-		-		-		-
Total nonperforming loans		1,809		1,564		1,644		1,930		2,067
Other real estate owned		-		-		-		-		-
Total nonperforming assets	$	1,809		1,564		1,644		1,930		2,067
Total
Loans in nonaccrual status:
Commercial	$	888		905		701		645		928
Real estate mortgage - 1 to 4 family		20,084		21,197		23,987		24,288		22,804
Installment		13		1		26		19		26
Total non-accrual loans		20,985		22,103		24,714		24,952		23,758
Other nonperforming real estate mortgages - 1 to 4 family		30		31		33		34		35
Total nonperforming loans		21,015		22,134		24,747		24,986		23,793
Other real estate owned		2,409		2,625		1,262		1,675		2,306
Total nonperforming assets	$	23,424		24,759		26,009		26,661		26,099
Quarterly Net (Recoveries) Chargeoffs
New York and other states*
Commercial	$	(28	)	(1	)	4		99		(2	)
Real estate mortgage - 1 to 4 family		39		(54	)	318		323		(3	)
Installment		9		45		23		35		64
Total net chargeoffs (recoveries)	$	20		(10	)	345		457		59
Florida
Commercial	$	-		-		-		-		-
Real estate mortgage - 1 to 4 family		-		(25	)	19		(3	)	-
Installment		16		-		31		16		8
Total net chargeoffs (recoveries)	$	16		(25	)	50		13		8
Total
Commercial	$	(28	)	(1	)	4		99		(2	)
Real estate mortgage - 1 to 4 family		39		(79	)	337		320		(3	)
Installment		25		45		54		51		72
Total net chargeoffs (recoveries)	$	36		(35	)	395		470		67
Asset Quality Ratios
Total nonperforming loans (1)	$	21,015		22,134		24,747		24,986		23,793
Total nonperforming assets (1)		23,424		24,759		26,009		26,661		26,099
Total net chargeoffs (recoveries) (2)		36		(35	)	395		470		67
Allowance for loan losses (1)		44,329		44,365		44,671		44,766		44,736
Nonperforming loans to total loans		0.53	%	0.57	%	0.64	%	0.64	%	0.62	%
Nonperforming assets to total assets		0.45	%	0.47	%	0.50	%	0.54	%	0.53	%
Allowance for loan losses to total loans		1.11	%	1.14	%	1.16	%	1.16	%	1.17	%
Coverage ratio (1)		210.9	%	200.4	%	180.5	%	179.2	%	188.0	%
Annualized net chargeoffs to average loans (2)		0.00	%	0.00	%	0.04	%	0.05	%	0.01	%
Allowance for loan losses to annualized net chargeoffs (2)		307.8	x	-316.9	x	28.3	x	23.8	x	166.9	x
* Includes New York, New Jersey, Vermont and Massachusetts.
(1)  At period-end
(2)  For the period ended

DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY -
INTEREST RATES AND INTEREST DIFFERENTIAL
(dollars in thousands)
(Unaudited)		Three months ended									Three months ended
		September 30, 2019									September 30, 2018
		Average			Interest		Average				Average			Interest		Average
		Balance					Rate				Balance					Rate
Assets
Securities available for sale:
U. S. government sponsored enterprises	$	183,580			996		2.17	%		$	154,865			787		2.03	%
Mortgage backed securities and collateralized mortgage
obligations - residential		370,808			2,178		2.35				287,760			1,601		2.23
State and political subdivisions		166			3		7.23				453			10		8.88
Corporate bonds		40,231			321		3.19				30,110			202		2.68
Small Business Administration - guaranteed
participation securities		51,988			282		2.17				62,368			325		2.09
Mortgage backed securities and collateralized mortgage
obligations - commercial		-			-		-				-			-		-
Other		685			6		3.50				685			4		2.34
Total securities available for sale		647,458			3,786		2.34				536,241			2,929		2.18
Federal funds sold and other short-term Investments		465,251			2,552		2.19				486,552			2,425		1.98
Held to maturity securities:
Mortgage backed securities and collateralized mortgage
obligations - residential		20,197			187		3.70				24,080			232		3.86
Total held to maturity securities		20,197			187		3.70				24,080			232		3.86
Federal Reserve Bank and Federal Home Loan Bank stock		9,183			81		3.53				8,953			82		3.66
Commercial loans		190,538			2,596		5.45				188,757			2,480		5.25
Residential mortgage loans		3,465,102			35,743		4.13				3,289,534			33,949		4.13
Home equity lines of credit		275,047			3,401		4.95				294,518			3,418		4.60
Installment loans		9,967			183		7.34				9,447			226		9.51
Loans, net of unearned income		3,940,654			41,923		4.26				3,782,256			40,073		4.23
Total interest earning assets		5,082,743			48,529		3.82				4,838,082			45,741		3.78
Allowance for loan losses		(44,448	)								(44,770	)
Cash & non-interest earning assets		188,528									120,474
Total assets	$	5,226,823								$	4,913,786
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts	$	874,179			52		0.02	%		$	913,150			113		0.05	%
Money market accounts		567,554			1,177		0.83				508,795			544		0.42
Savings		1,126,935			323		0.11				1,244,889			417		0.13
Time deposits		1,457,510			7,974		2.19				1,156,422			3,864		1.33
Total interest bearing deposits		4,026,178			9,526		0.95				3,823,256			4,938		0.51
Short-term borrowings		160,162			359		0.90				183,796			277		0.60
Total interest bearing liabilities		4,186,340			9,885		0.94				4,007,052			5,215		0.52
Demand deposits		438,789									405,311
Other liabilities		80,188									26,429
Shareholders' equity		521,506									474,994
Total liabilities and shareholders' equity	$	5,226,823								$	4,913,786
Net interest income, tax equivalent					38,644									40,526
Net interest spread							2.88	%								3.26	%
Net interest margin (net interest income to
total interest earning assets)							3.04	%								3.35	%
Tax equivalent adjustment					(1	)								(3	)
Net interest income					38,643									40,523
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY -
INTEREST RATES AND INTEREST DIFFERENTIAL, Continued
(dollars in thousands)
(Unaudited)		Nine months ended									Nine months ended
		September 30, 2019									September 30, 2018
		Average			Interest		Average				Average			Interest		Average
		Balance					Rate				Balance					Rate
Assets
Securities available for sale:
U. S. government sponsored enterprises	$	166,119			2,600		2.09	%		$	155,434			2,324		1.99	%
Mortgage backed securities and collateralized mortgage
obligations - residential		329,188			5,885		2.38				300,645			5,039		2.23
State and political subdivisions		167			9		7.19				494			30		8.14
Corporate bonds		33,678			801		3.17				30,384			485		2.13
Small Business Administration - guaranteed
participation securities		54,414			868		2.13				64,769			1,010		2.08
Mortgage backed securities and collateralized mortgage
obligations - commercial		-			-		-				3,651			37		1.34
Other		685			16		3.11				685			13		2.53
Total securities available for sale		584,251			10,179		2.32				556,062			8,938		2.14
Federal funds sold and other short-term Investments		504,512			8,843		2.34				521,470			6,909		1.77
Held to maturity securities:
Mortgage backed securities and collateralized mortgage
obligations - residential		21,123			613		3.87				25,410			736		3.86
Total held to maturity securities		21,123			613		3.87				25,410			736		3.86
Federal Reserve Bank and Federal Home Loan Bank stock		9,104			365		5.35				8,893			357		5.35
Commercial loans		191,370			7,725		5.38				187,198			7,336		5.23
Residential mortgage loans		3,412,411			105,786		4.13				3,214,950			99,123		4.11
Home equity lines of credit		280,248			10,441		4.97				299,723			10,018		4.47
Installment loans		10,718			656		8.16				8,831			644		9.75
Loans, net of unearned income		3,894,747			124,608		4.27				3,710,702			117,120		4.21
Total interest earning assets		5,013,737			144,608		3.85				4,822,537			134,060		3.71
Allowance for loan losses		(44,744	)								(44,573	)
Cash & non-interest earning assets		180,568									123,134
Total assets	$	5,149,561								$	4,901,098
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts	$	878,106			267		0.04	%		$	899,319			331		0.05	%
Money market accounts		546,601			3,122		0.76				528,310			1,435		0.36
Savings		1,141,607			1,067		0.12				1,255,245			1,256		0.13
Time deposits		1,416,306			21,462		2.02				1,124,592			10,163		1.21
Total interest bearing deposits		3,982,620			25,918		0.87				3,807,466			13,185		0.46
Short-term borrowings		160,647			1,121		0.93				202,412			918		0.61
Total interest bearing liabilities		4,143,267			27,039		0.87				4,009,878			14,103		0.47
Demand deposits		418,327									396,288
Other liabilities		79,937									28,062
Shareholders' equity		508,030									466,870
Total liabilities and shareholders' equity	$	5,149,561								$	4,901,098
Net interest income, tax equivalent					117,569									119,957
Net interest spread							2.98	%								3.24	%
Net interest margin (net interest income to
total interest earning assets)							3.13	%								3.32	%
Tax equivalent adjustment					(3	)								(10	)
Net interest income					117,566									119,947

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.

NON-GAAP FINANCIAL MEASURES RECONCILIATION
(dollars in thousands, except per share amounts)
(Unaudited)
		9/30/2019		6/30/2019		9/30/2018
Tangible Equity to Tangible Assets
Total Assets	$	5,222,469		5,227,670		4,885,351
Less: Intangible assets		553		553		553
Tangible assets		5,221,916		5,227,117		4,884,798
Equity		526,163		515,630		477,118
Less: Intangible assets		553		553		553
Tangible equity		525,610		515,077		476,565
Tangible Equity to Tangible Assets		10.07	%	9.85	%	9.76	%
Equity to Assets		10.07	%	9.86	%	9.77	%
		Three months ended								Nine months ended
Efficiency Ratio		9/30/2019		6/30/2019		9/30/2018				9/30/2019		9/30/2018
Net interest income (fully taxable equivalent)	$	38,644		39,192		40,526			$	117,569		119,957
Non-interest income		4,925		4,914		4,455				14,476		13,629
Revenue used for efficiency ratio		43,569		44,106		44,981				132,045		133,586
Total noninterest expense		24,070		24,902		24,544				73,839		72,794
Less:  Other real estate (income) expense, net		33		210		528				219		1,194
Expense used for efficiency ratio		24,037		24,692		24,016				73,620		71,600
Efficiency Ratio		55.17	%	55.98	%	53.39	%			55.75	%	53.60	%

Subsidiary: Trustco Bank

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