Trustco Reports Third Quarter 2024 Net Income of $12.9 Million; Skillful Application of Strong Fundamentals Produce Solid Results
Executive Snapshot:
Average Loan portfolio continues to grow:
On average, total loans were up $127.0 million or 2.6% for the third quarter 2024 compared to the third quarter 2023
Continued solid financial results:
Key metrics for third quarter 2024:
Net income of $12.9 million versus $12.6 million for the second quarter 2024
Net interest income of $38.7 million, up from $37.8 million compared to the second quarter of 2024
Return on average equity (ROAE) of 7.74% versus 7.76% for the second quarter 2024
Capital continues to grow:
Consolidated equity to assets increased 6.2% to 10.95% as of September 30, 2024 from 10.31% as of September 30, 2023
Book value per share as of September 30, 2024 was $35.19, up from $34.46 compared to June 30, 2024
GLENVILLE, N.Y., Oct. 21, 2024 (GLOBE NEWSWIRE) --
TrustCo Bank Corp NY ((TrustCo, NASDAQ:TRST) today announced third quarter 2024 net income of $12.9 million or $0.68 diluted earnings per share, compared to net income of $14.7 million or $0.77 diluted earnings per share for the third quarter 2023; and net income of $37.6 million or $1.97 diluted earnings per share for the nine months ended September 30, 2024, compared to net income of $48.9 million or $2.57 diluted earnings per share for the nine months ended September 30, 2023. Average loans increased $127.0 million or 2.6% for the third quarter 2024 over the same period in 2023. TrustCo was able to increase the balances of home equity lines of credit (HECLs) outstanding through an aggressive campaign to encourage existing customers to utilize their HECLs in place of the higher rates on other products. The objective was to meet customer needs and encourage increased utilization through existing HECLs.
Overview
Chairman, President, and CEO, Robert J. McCormick said "Hard, consistent work on the fundamentals of banking once again have served the Trustco Bank team well and enabled us to post strong results under challenging circumstances. Our bankers posted one modest success after another, which accumulated into solid performance. We continued to hold the line on demand accounts and capitalized on strong customer relationships which enabled us to direct the flow into competitively-priced CDs, rather than to non-bank investment products. Not having to purchase expensive deposits or pay excessive rates, helped keep interest expense down, contributing to increased net interest income. We have continued to sell home equity products at favorable rates where origination of purchase mortgages lagged due to lack of sales volume. We booked these new loans at higher interest rates, also boosting net interest margin. Once again, loans reached a new all-time high. All of these efforts by our team resulted in net income of $12.9 million for the quarter."
Details
Average loans were up $127.0 million or 2.6% in the third quarter 2024 over the same period in 2023. Average residential loans and home equity lines of credit, our primary lending focus, were up $50.4 million, or 1.2%, and $60.0 million, or 18.7%, respectively, in the third quarter 2024 over the same period in 2023. Average commercial loans also increased $18.1 million, or 6.9%, in the third quarter 2024 over the same period in 2023. Average deposits were up $15.3 million, or 0.3% for the third quarter 2024 over the same period in 2023. We believe the increase in time deposits compared to the prior year 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, while earning a competitive interest rate. As we move forward, the objective is to encourage customers to retain these additional funds in the expanded product offerings of Trustco Bank (the "Bank") through aggressive marketing and product differentiation.
Net interest income was $38.7 million for the third quarter 2024, an increase of $883 thousand, or 2.3%, compared to the prior quarter, driven by loan growth at higher interest rates and lower cost of deposits, partially offset by lower investment earnings and a decrease in interest on federal funds sold and other short-term investments. The net interest margin for the third quarter 2024 was 2.61%, up 8 basis points from 2.53% in the second quarter of 2024. The yield on interest earnings assets increased to 4.11%, up 5 basis points from 4.06% in the second quarter of 2024. The cost of interest bearing liabilities decreased to 1.94% in the third quarter 2024 from 1.97% in the second quarter 2024. The Bank has seen success in retaining deposits while lowering the rates on time deposits, and still being competitive in the markets it serves. The Federal Reserve's decision regarding whether to cut or hold rates in upcoming meetings will have an effect on the Bank's ability to continue to manage deposit costs. Further reductions should help margin expansion in future quarters. Non-interest expense decreased $259 thousand over the prior quarter as a result of the Bank's ongoing efforts to control expenses.
Asset quality remains strong and has been consistent over the past twelve months. The Company recorded a provision for credit losses of $500 thousand in the third quarter of 2024, which is the result of a provision for credit losses on loans of $400 thousand, and provision for credit losses on unfunded commitments of $100 thousand. The ratio of allowance for credit losses on loans to total loans was 0.99% and 0.95% as of September 30, 2024 and 2023, respectively. The allowance for credit losses on loans was $50.0 million at September 30, 2024, compared to $47.2 million at September 30, 2023. Nonperforming loans (NPLs) were $19.4 million at September 30, 2024, compared to $17.9 million at September 30, 2023. NPLs were 0.38% and 0.36% of total loans at September 30, 2024 and 2023, respectively. The coverage ratio, or allowance for credit losses on loans to NPLs, was 256.9% at September 30, 2024, compared to 264.2% at September 30, 2023. Nonperforming assets (NPAs) were $21.9 million at September 30, 2024, compared to $19.1 million at September 30, 2023.
At September 30, 2024, our equity to asset ratio was 10.95%, compared to 10.31% at September 30, 2023. Book value per share at September 30, 2024 was $35.19, up 7.3% compared to $32.80 a year earlier.
A conference call to discuss third quarter 2024 results will be held at 9:00 a.m. Eastern Time on October 22, 2024. Those wishing to participate in the call may dial toll-free for the United States at 1-833-470-1428, and for Canada at 1-833-950-0062, Access code 034120. A replay of the call will be available for thirty days by dialing toll-free for the United States at 1-866-813-9403, Access code 285814. The call will also be audio webcast at https://events.q4inc.com/attendee/854762065, 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 138 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at September 30, 2024.
In addition, the Bank's Wealth Management Department offers a full range of investment services, retirement planning and trust and estate administration services. The common shares of TrustCo are traded on the NASDAQ Global Select Market under the symbol TRST.
Forward-Looking Statements
All statements in this news release that are not historical are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future development, results or periods. Examples of forward-looking statements include, among others, statements we make regarding our expectations for our future performance, including our expectations regarding the effects of the economic environment on our financial results, our ability to retain customers and the amount of customers' business, including deposit balances, with us, the impact of the Federal Reserve's actions regarding interest rates, and the growth of loans and deposits throughout our branch network. Forward-looking statements are based on management's current expectations as well as certain assumptions and estimates made by, and information available to, management at the time the statements are made. Such forward-looking statements are subject to factors and uncertainties that could cause actual results to differ materially for TrustCo from the views, beliefs and projections expressed in such statements, and many of the risks and uncertainties are heightened by or may, in the future, be heightened by volatility in financial markets and macroeconomic or geopolitical concerns related to inflation, continued elevated interest rates and ongoing armed conflicts (including the Russia/Ukraine conflict and the conflict in Israel and surrounding areas). TrustCo wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The following important factors, among others, in some cases have affected and in the future could affect TrustCo's actual results and could cause TrustCo's actual financial performance to differ materially from that expressed in any forward-looking statement: future changes in interest rates; ongoing inflationary pressures and continued elevated prices; exposure to credit risk in our lending activities; our increasing commercial loan portfolio; 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 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; increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our environmental, social and governance practices; 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 soundness of other financial institutions; U.S. government shutdowns, credit rating downgrades, or failure to increase the debt ceiling; 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, including changes in cybersecurity or privacy regulations; restrictions on data collection and use; our compliance with the USA PATRIOT Act, Bank Secrecy Act, and other laws and regulations that could result in material fines or sanctions; changes in tax laws; limitations on our ability to pay dividends; TrustCo Realty Corp.'s ability to qualify as a real estate investment trust; changes in accounting standards; competition within our market areas; consumers and businesses' use of non-banks to complete financial transactions; our reliance on third-party service providers; the impact of data breaches and cyber-attacks; the impact of a failure in or breach of our operational or security systems or infrastructure, or those of third parties; the impact of an unauthorized disclosure of sensitive or confidential client or customer information; the impact of interruptions in the effective operation of our computer systems; the impact of anti-takeover provisions in our organizational documents; the impact of the manner in which we allocate capital; 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
9/30/2024
6/30/2024
9/30/2023
Summary of operations
Net interest income
$
38,671
$
37,788
$
42,221
Provision for credit losses
500
500
100
Net gains on equity securities
23
1,360
-
Noninterest income, excluding net gains on equity securities
4,908
4,291
4,574
Noninterest expense
26,200
26,459
27,460
Net income
12,875
12,551
14,680
Per share
Net income per share:
- Basic
$
0.68
$
0.66
$
0.77
- Diluted
0.68
0.66
0.77
Cash dividends
0.36
0.36
0.36
Book value at period end
35.19
34.46
32.80
Market price at period end
33.07
28.77
27.29
At period end
Full time equivalent employees
735
753
764
Full service banking offices
138
138
143
Performance ratios
Return on average assets
0.84
%
0.82
%
0.96
%
Return on average equity
7.74
7.76
9.32
Efficiency ratio (1)
59.65
62.84
58.33
Net interest spread
2.17
2.09
2.55
Net interest margin
2.61
2.53
2.85
Dividend payout ratio
53.16
54.57
46.65
Capital ratios at period end
Consolidated equity to assets
10.95
%
10.73
%
10.31
%
Consolidated tangible equity to tangible assets (2)
10.94
%
10.72
%
10.30
%
Asset quality analysis at period end
Nonperforming loans to total loans
0.38
%
0.38
%
0.36
%
Nonperforming assets to total assets
0.36
0.35
0.31
Allowance for credit losses on loans to total loans
0.99
0.99
0.95
Coverage ratio (3)
2.6x
2.6x
2.6x
(1) Non-GAAP measure; calculated as noninterest expense (excluding ORE expense) divided by taxable equivalent net interest income plus noninterest income (excluding net gains on equity securities).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)
Nine Months Ended
09/30/24
09/30/23
Summary of operations
Net interest income
$
113,037
133,238
Provision (Credit) for credit losses
1,600
(100
)
Net gains on equity securities
1,383
-
Noninterest income, excluding net gains on equity securities
14,042
13,841
Noninterest expense
77,562
82,466
Net income
37,552
48,798
Per share
Net income per share:
- Basic
$
1.97
2.57
- Diluted
1.97
2.57
Cash dividends
1.08
1.08
Book value at period end
35.19
32.80
Market price at period end
33.07
27.29
Performance ratios
Return on average assets
0.82
%
1.08
Return on average equity
7.68
10.57
Efficiency ratio (1)
60.80
55.70
Net interest spread
2.08
2.78
Net interest margin
2.52
3.01
Dividend payout ratio
54.70
42.11
(1) Non-GAAP measure; calculated as noninterest expense (excluding ORE expense) divided by taxable equivalent net interest income plus noninterest income (excluding net gains on equity securities).See Non-GAAP Financial Measures Reconciliation.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
(Unaudited)
Three months ended
9/30/2024
6/30/2024
3/31/2024
12/31/2023
9/30/2023
Interest and dividend income:
Interest and fees on loans
$
52,112
$
50,660
$
49,804
$
49,201
$
47,921
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises
718
909
906
750
672
State and political subdivisions
-
1
-
1
-
Mortgage-backed securities and collateralized mortgage
obligations - residential
1,397
1,451
1,494
1,533
1,485
Corporate bonds
361
362
476
477
473
Small Business Administration - guaranteed
participation securities
90
94
100
102
107
Other securities
2
2
3
3
2
Total interest and dividends on securities available for sale
2,568
2,819
2,979
2,866
2,739
Interest on held to maturity securities:
Mortgage-backed securities and collateralized mortgage
obligations - residential
62
65
68
70
73
Total interest on held to maturity securities
62
65
68
70
73
Federal Home Loan Bank stock
153
147
152
149
131
Interest on federal funds sold and other short-term investments
6,174
6,894
6,750
6,354
6,688
Total interest income
61,069
60,585
59,753
58,640
57,552
Interest expense:
Interest on deposits:
Interest-bearing checking
311
288
240
165
102
Savings
770
675
712
707
639
Money market deposit accounts
2,154
2,228
2,342
2,500
2,384
Time deposits
18,969
19,400
19,677
16,460
11,962
Interest on short-term borrowings
194
206
204
201
244
Total interest expense
22,398
22,797
23,175
20,033
15,331
Net interest income
38,671
37,788
36,578
38,607
42,221
Less: Provision for credit losses
500
500
600
1,350
100
Net interest income after provision for credit losses
38,171
37,288
35,978
37,257
42,121
Noninterest income:
Trustco Financial Services income
2,044
1,609
1,816
1,612
1,627
Fees for services to customers
2,482
2,399
2,745
2,563
2,590
Net gains on equity securities
23
1,360
-
-
-
Other
382
283
282
299
357
Total noninterest income
4,931
5,651
4,843
4,474
4,574
Noninterest expenses:
Salaries and employee benefits
12,134
12,520
11,427
12,444
12,393
Net occupancy expense
4,271
4,375
4,611
4,209
4,358
Equipment expense
1,757
1,990
1,738
1,852
1,923
Professional services
1,863
1,570
1,460
1,561
1,717
Outsourced services
2,551
2,755
2,501
2,532
2,720
Advertising expense
339
466
408
384
586
FDIC and other insurance
1,112
797
1,094
1,085
1,078
Other real estate expense (income), net
204
16
74
(12
)
163
Other
1,969
1,970
1,590
4,776
2,522
Total noninterest expenses
26,200
26,459
24,903
28,831
27,460
Income before taxes
16,902
16,480
15,918
12,900
19,235
Income taxes
4,027
3,929
3,792
3,052
4,555
Net income
$
12,875
$
12,551
$
12,126
$
9,848
$
14,680
Net income per common share:
- Basic
$
0.68
$
0.66
$
0.64
$
0.52
$
0.77
- Diluted
0.68
0.66
0.64
0.52
0.77
Average basic shares (in thousands)
19,010
19,022
19,024
19,024
19,024
Average diluted shares (in thousands)
19,036
19,033
19,032
19,026
19,024
CONSOLIDATED STATEMENTS OF INCOME, Continued
(dollars in thousands, except per share data)
(Unaudited)
Nine Months Ended
09/30/24
09/30/23
Interest and dividend income:
Interest and fees on loans
$
152,576
138,255
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises
2,533
2,055
State and political subdivisions
1
1
Mortgage-backed securities and collateralized mortgage
obligations - residential
4,342
4,613
Corporate bonds
1,199
1,510
Small Business Administration - guaranteed
participation securities
284
335
Other securities
7
7
Total interest and dividends on securities available for sale
8,366
