Trustco Caps Year of Efficiency, Strength, and Value - Reports Fourth Quarter 2024 Net Income of $11.3 Million; $48.8 Million for the Year

Chairman, President, and CEO, Robert J. McCormick said, "The story of Trustco Bank for 2024 is one of efficiency, strength, and shareholder value. For the year, we controlled costs, resisted the temptation to chase deposits with rate, improved our already strong capital position, and delivered a meaningful return to our owners in the form of dividends and price appreciation. Year over year, the Company's quarterly net income, net interest income, return on average assets, and return on average equity all grew. Likewise, credit quality remained impressive and, in classic Home Town Bank fashion, we leveraged customer relationships to create lending volume in the form of home equity loans. We come into 2025 well-capitalized, liquid, and ready to lend."

Details

Average loans were up $104.9 million, or 2.1%, in the fourth quarter 2024 over the same period in 2023. Average residential loans and home equity lines of credit, our primary lending focus, were up $34.9 million, or 0.8%, and $61.0 million, or 17.9%, respectively, in the fourth quarter 2024 over the same period in 2023. Average commercial loans also increased $11.7 million, or 4.3%, in the fourth quarter 2024 over the same period in 2023. Average deposits were up $31.7 million, or 0.6%, for the fourth quarter 2024 over the same period in 2023 primarily as a result of an increase in time deposits. We believe the increase in time deposits compared to the same period in 2023 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 $38.9 million for the fourth quarter 2024, an increase of $295 thousand, or 0.8%, compared to the fourth quarter of 2023, driven by loan growth at higher interest rates, partially offset by lower investment interest income and a decrease in interest on federal funds sold and other short-term investments. The net interest margin for the fourth quarter 2024 was 2.15%, down 6 basis points from 2.21% in the fourth quarter of 2023. The yield on interest earnings assets increased to 4.12%, up 1 basis point from 4.11% in the third quarter of 2024, and up 19 basis points from 3.93% in the fourth quarter of 2023. The cost of interest bearing liabilities increased to 1.97% in the fourth quarter 2024, up only 3 basis points from 1.94% in the third quarter of 2024, and up from 1.72% in the fourth quarter 2023. The Federal Reserve's decision 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 $666 thousand over the fourth quarter of 2023, consistent with the decline in FTE's over the last year.

Asset quality remains strong and has been consistent over the past twelve months. The Company recorded a provision for credit losses of $400 thousand in the fourth quarter of 2024, which is the result of a provision for credit losses on loans of $400 thousand. The ratio of allowance for credit losses on loans to total loans was 0.99% and 0.97% as of December 31, 2024 and 2023, respectively. The allowance for credit losses on loans was $50.2 million at December 31, 2024, compared to $48.6 million at December 31, 2023. Nonperforming loans (NPLs) were $18.8 million at December 31, 2024, compared to $17.7 million at December 31, 2023. NPLs were 0.37% and 0.35% of total loans at December 31, 2024 and 2023, respectively. The coverage ratio, or allowance for credit losses on loans to NPLs, was 267.3% at December 31, 2024, compared to 275.0% at December 31, 2023. Nonperforming assets (NPAs) were $21.0 million at December 31, 2024, compared to $21.9 million at September 30, 2024 and $17.9 million at December 31, 2023.  

At December 31, 2024, our equity to asset ratio was 10.84%, compared to 10.46% at December 31, 2023. Book value per share at December 31, 2024 was $35.56, up 4.8% compared to $33.92 a year earlier.

A conference call to discuss fourth quarter 2024 results will be held at 9:00 a.m. Eastern Time on January 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 645488. 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 619481.   The call will also be audio webcast at https://events.q4inc.com/attendee/773359679, and will be available for one year.

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 136 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at December 31, 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; an increase in the prevalence of fraud and other financial crimes; 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 adoption of artificial intelligence tools by us and/or our third-party vendors and service providers; 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, including our upcoming annual report on Form 10-K for fiscal 2024. 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.

Subsidiary: Trustco Bank

Contact:        
Robert Leonard
Executive Vice President
(518) 381-3693

Non-GAAP Financial Measures Reconciliation

Tangible book value per share is a non-GAAP financial measure derived from GAAP-based amounts. We calculate tangible book value by excluding the balance of intangible assets from total shareholders' equity divided by shares outstanding. 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. Additionally, we believe that this measure is important to many investors in the marketplace who are interested in relative changes from period to period in equity exclusive of changes in intangible assets.

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 total 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. Additionally, we believe that this measure is important to many investors in the marketplace who are interested in relative changes from period to period in equity and total assets, each exclusive of changes in intangible assets.

Net interest income is commonly presented on a taxable equivalent basis. That is, to the extent that some component of the institution's net interest income will be exempt from taxation (e.g., was received by the institution as a result of its holdings of state or municipal obligations), an amount equal to the tax benefit derived from that component is added back to the net interest income total. Management considers this adjustment helpful to investors in comparing one financial institution's net interest income (pre- tax) to that of another institution, as each will have a different proportion of tax-exempt items in their portfolios. Moreover, net interest income is itself a component of another financial measure commonly used by financial institutions, net interest margin, which is the ratio of net interest income to average interest earning assets. Additionally, management and many financial institutions also present net interest spread, which is the average yield on interest earning assets minus the average rate paid on interest bearing liabilities. For purposes of these measures as well, taxable equivalent net interest income is generally used by financial institutions, again to provide investors with a better basis of comparison from institution to institution. We calculate taxable equivalent net interest margin by dividing net interest income, adjusted to include the benefit of non-taxable interest income, by average interest earning assets. We calculate taxable equivalent net interest spread as the difference between average yield on interest earning assets, adjusted to include the benefit of non-taxable interest income, and the average rate paid on interest bearing liabilities.

The efficiency ratio and adjusted efficiency ratio are non-GAAP measures of expense control relative to revenue from net interest income and non-interest fee income. We calculate the efficiency ratio by dividing total non-interest expense by the sum of net interest income and total non-interest income. We calculate the adjusted efficiency ratio by dividing total noninterest expenses as determined under GAAP, excluding other real estate expense, net, strategic branch closing costs, and a non-recurring expense related to the settlement of a class action lawsuit, by net interest income and total noninterest income as determined under GAAP, excluding gain/loss on the disposal of assets from strategic branch closures from this calculation and net gains on equity securities. We believe that this provides a reasonable measure of primary banking expenses relative to primary banking revenue. Additionally, we believe this measure is important to investors looking for a measure of efficiency in our productivity measured by the amount of revenue generated for each dollar spent.

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 book value to shares outstanding, tangible equity as a percentage of tangible assets, and efficiency ratio to the most directly comparable GAAP measures is set forth below. We have not presented a reconciliation of taxable equivalent net interest income, taxable equivalent net interest margin or taxable equivalent net interest spread to the most directly comparable GAAP measure, as there was no difference between the taxable equivalent measure and comparable GAAP measure for any period presented in this release.