UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported):  January 22, 2024

TrustCo Bank Corp NY

(Exact name of registrant as specified in its charter)

5 SARNOWSKI DRIVE, GLENVILLE, New York 12302

(Address of principal executive offices)

(518) 377-3311

(Registrant’s Telephone Number,

Including Area Code)

NOT APPLICABLE

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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TrustCo Bank Corp NY

On January 22, 2024 TrustCo Bank Corp NY (“TrustCo”) issued a press release with results for the quarter ending December 31, 2023. Attached is a copy of the press release labeled as Exhibit 99(a).

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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5 Sarnowski Drive, Glenville, New York, 12302

FOR IMMEDIATE RELEASE:

TrustCo’s Total Loans Surpass $5 Billion - Reach All-Time High;

Nonperforming Assets to Total Assets at 0.29%, Lowest in 17 Years

Executive Snapshot:

Glenville, New York –January 22, 2024

TrustCo Bank Corp NY (TrustCo, NASDAQ: TRST) today announced full year 2023 net income of $58.6 million or $3.08 diluted earnings per share, compared to net income of $75.2 million or $3.93 diluted earnings per share for the full year 2022; and net income of $9.8 million or $0.52 diluted earnings per share for the three months ended December 31, 2023, compared to net income of $20.9 million or $1.10 diluted earnings per share for the three months ended December 31, 2022.  Total loan growth increased on average by $309.9 million, or 6.6% for the fourth quarter 2023 over the same period in 2022.

Overview

Chairman, President, and CEO, Robert J. McCormick said “The economic environment in 2023 presented challenges not previously seen. In trademark fashion, however, the TrustCo team navigated the adverse circumstances and delivered solid results. Total loans exceeded $5 billion for the first time in our history while credit quality remained exceptional – nonperforming assets to total assets ended the year at 0.29%, the best in 17 years. We are proud to say that this loan growth was funded without brokered deposits or borrowings. Likewise, we sustained our century-long commitment to the payment of a meaningful dividend to our shareholders. The point from which this good work springs is our strong capital position, developed over time and grown through the application of sound strategy. The interest-rate environment in 2024 could unfold in a number of different ways, but no matter how it plays out, we are positioned to capitalize upon the opportunities presented.”

TrustCo saw deposit balances rebound from the end of the prior year with net deposit inflows during the year.  Loan growth continued across all categories year over year, 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 cash flow from the existing loan portfolio.  The Federal Reserve’s decision to raise the target Federal Funds rate multiple times from March 2022 through July 2023 has contributed to our results in the fourth quarter and full year 2023.  Our cash position has allowed the Bank to be judicious in deposit pricing and created a buffer for the need to seek high cost funding alternatives, while other variable rate products have continued to reprice upward. Similarly, deposit costs continue to increase while we are also experiencing a shift in deposits to Time Accounts.  Furthermore, we continue to deploy aggressive marketing efforts to retain and grow our deposit balances.  We also note that current mortgage rates significantly exceed the yield on our existing portfolio of mortgages, which, if sustained, should result in expanded net interest margin going forward.  We believe that TrustCo’s strong liquidity position continues to allow us to take advantage of opportunities as they arise.

Details

Average loans were up $309.9 million or 6.6% in the fourth quarter 2023 over the same period in 2022.  Average residential loans, our primary lending focus, were up $192.2 million, or 4.6%, in the fourth quarter 2023 over the same period in 2022.  Average commercial loans and home equity lines of credit also increased $50.5 million, or 22.6%, and $61.8 million, or 22.2%, respectively, in the fourth quarter 2023 over the same period in 2022.

We have been proactive in retaining deposits through pricing and aggressive marketing, which has resulted in increased balances since December 31, 2022.  Total deposits as of December 31, 2023 increased $158.0 million to $5.35 billion from December 31, 2022.  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 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 depositors would start to absorb the funds.  This gave us flexibility to strategically price deposits while retaining core customers.

Net interest income was $38.6 million for the fourth quarter 2023, a decrease of $10.6 million, or 21.5%, compared to the same period in 2022, driven by a higher cost of deposits, partially offset by the increased yield on the cash balance at the Federal Reserve Bank due to the increases in the Federal Funds target rate over the past year, and loan growth at higher interest rates.  The net interest margin for the fourth quarter 2023 was 2.60%, down 74 basis points from 3.34% in the fourth quarter of 2022.  The yield on interest earnings assets increased to 3.93%, up 39 basis points from 3.54 % in the fourth quarter of 2022.  The cost of interest bearing liabilities increased to 1.72% in the fourth quarter 2023 from 0.26% in the fourth quarter 2022.  Non-interest expense increased $2.4 million over the prior year period primarily as a result of a legal settlement and the closure of several branch locations.  Other non-interest expense are expected to return to more normalized levels next quarter.  The Bank does expect branch related savings in the future quarters due to the decreased number of branch locations.

Asset quality remains strong and has been consistent over the past twelve months.  The Company recorded a provision for credit losses of $1.4 million in the fourth quarter of 2023, which is the result of a provision for credit losses on loans of $1.6 million, offset by a benefit for credit losses on unfunded commitments of $250 thousand as a result of a corresponding decrease in unfunded loan commitments.  The ratio of allowance for credit losses on loans to total loans was 0.97% as of December 31, 2023 and 2022.  The allowance for credit losses on loans was $48.6 million at December 31, 2023, compared to $46.0 million at December 31, 2022.  NPLs were $17.7 million at December 31, 2023, compared to $17.5 million at December 31, 2022.  NPLs were 0.35% and 0.37% of total loans at December 31, 2023 and 2022, respectively.  The coverage ratio, or allowance for credit losses on loans to NPLs, was 275.0% at December 31, 2023, compared to 263.1% at December 31, 2022.  NPAs were $17.9 million at December 31, 2023, compared to $19.6 million at December 31, 2022.  Additionally, we had minimal charge-offs and were in a net recovery position for the year.

At December 31, 2023, our equity to asset ratio was 10.46%, compared to 10.00% at December 31, 2022.  Book value per share at December 31, 2023 was $33.92, up 7.5% compared to $31.54 a year earlier.

About TrustCo Bank Corp NY

TrustCo Bank Corp NY is a $6.2 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 140 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at December 31, 2023.

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, 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, 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:  the soundness of other financial institutions; U.S. government shutdowns credit rating downgrades, or failure to increase the debt ceiling; the impact of elevated interest rates; future changes in interest rates; inflationary pressures and elevated 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; 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 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 any expansion by us into new lines of business or new products and services; the impact of anti-takeover provisions in our organizational documents; the impact of the manner in which we allocate capital; 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)

(1)	Non-GAAP measure; calculated as noninterest expense (excluding ORE income/expense and non-recurring expenses) divided by taxable equivalent net interest income plus noninterest income (excluding non-recurring loss). 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)

(1)	Non-GAAP measure; calculated as noninterest expense (excluding ORE income/expense and non-recurring expenses) divided by taxable equivalent net interest income plus noninterest income (excluding non-recurring loss). See Non-GAAP Financial Measures Reconciliation.

CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands, except per share data)

(Unaudited)

CONSOLIDATED STATEMENTS OF INCOME, Continued

(dollars in thousands, except per share data)

(Unaudited)

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(dollars in thousands)

(Unaudited)

NONPERFORMING ASSETS

(dollars in thousands)

(Unaudited)

DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY -

INTEREST RATES AND INTEREST DIFFERENTIAL