TrustCo Announces Second Quarter Earnings

GLENVILLE, N.Y., July 22, 2013 (GLOBE NEWSWIRE) -- TrustCo Bank Corp NY (TrustCo) (Nasdaq:TRST) today announced that net income rose to $9.8 million in the quarter ended June 30, 2013, up 7.7% from $9.1 million for the quarter ended June 30, 2012. Second quarter net income is up 25.7% over the same period two years ago and 81.5% over the same period four years ago.

TrustCo saw continued strong loan growth in the second quarter of 2013 along with an encouraging shift toward core deposits. Robert J. McCormick, President and Chief Executive Officer noted, "Our results for the first half of 2013 were solid both in terms of bottom line growth and in positioning our business for the balance of the year and beyond. In addition to the gain in net income, we continue to add profitable customer relationships on both the loan and deposit sides of the Bank. As we have noted, our highly liquid balance sheet allows us to fund loan growth without having to overpay for deposits. This enables us to manage our deposit mix during the last year; this should be a benefit going forward. We look forward to the second half of 2013 with optimism, though we note that our industry continues to face challenges as the economy remains fragile and interest rate environment remains mixed. We will continue to take advantage of opportunities as they are presented."

Mr. McCormick also noted, "We continue to see signs of economic improvement in the markets in which we operate, particularly Florida, although unemployment and other persistent issues continue to constrain any significant economic growth. We believe our long-term focus on traditional lending criteria and conservative balance sheet management has enabled us to maintain a strong balance sheet and continued profitability. As a result, we have been able to focus on conducting business, which has significantly enhanced our reputation and put us in a position to take advantage of changes in market and competitive conditions."

Return on average assets and return on average equity were 0.88% and 10.83%, respectively for the second quarter of 2013, compared to 0.83% and 10.49% for the second quarter of 2012. Earnings per share were $0.104 for the second quarter of 2013, up 7.1% from $0.097 for the second quarter of 2012. For the first half of 2013, TrustCo earned $18.9 million or $0.201 per share, compared to $18.0 million or $0.192 per share in the first half of 2012.

On a year-over-year basis, average loans were up $186.1 million in the second quarter of 2013, over the same period in 2012. Average deposits were actually down a nominal $3.4 million over the same period, but the deposit mix changed in a favorable way. Average core deposits were up $217.9 million, offset by a $221.3 million decline in time deposits. Core deposits typically represent longer term customer relationships and are generally lower cost than time deposits. Mr. McCormick noted that, "The year-over-year growth of our loans and the shift in our deposit base reflects the long term strategic focus of the Company. 

While some banks have backed away from branches, a customer friendly branch franchise continues to be the key to our long term plans. We recently celebrated the ten year anniversary of our expansion program, and have made significant progress expanding loans and deposits through our branches. We expect that trend to continue as the new branches continue to grow. We also note we have always designed our branches to be smaller, more cost effective than those built by many of our competitors, we have utilized open floor plans that help maximize the value of our branches. We remain mindful that fully achieving our goals for our newer branches will take time and continued hard work. We believe our success in growing customer relationships provides the basic building blocks that will help drive profit growth over the coming years."

Asset quality, reserve coverage of nonperforming loans (NPLs) and reserve coverage of net charge-offs all improved from December 31, 2012 to June 30, 2013. NPLs declined to $43.4 million at June 30, 2013, compared to $52.7 million at December 31, 2012 and nonperforming assets (NPAs) declined to $53.8 million from $61.4 million over the same period.  NPLs were equal to 1.57% of total loans at quarter-end, compared to 1.96% at year-end. For the second quarter of 2013 the allowance covered annualized second quarter net charge-offs by 5.8 times, compared to an annualized 3.4 times for the second quarter of 2012. The coverage ratio, or allowance for loan losses to NPLs, was 109.5% at June 30, 2013, compared to 91.0% at December 31, 2012. Overall, every asset quality indicator improved during the second quarter of 2013. Contributing to these improvements was the sale of 17 nonperforming residential loans with total net principal balances of $855 thousand for a gain of $50 thousand.

The net interest margin for the second quarter of 2013 was 3.10%, compared to 3.16% in the second quarter of 2012. 

At June 30, 2013 the tangible equity ratio was 7.83% compared to 7.90% at June 30, 2012 and 8.17% at March 31, 2013. Tangible book value per share ended the second quarter at $3.69 compared to $3.73 in the year-ago period.

TrustCo Bank Corp NY is a $4.4 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 June 30, 2013.

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 second quarter 2013 results will be held at 9:00 a.m. Eastern Time on July 23, 2013. Those wishing to participate in the call may dial toll-free 1-888-317-6016. International callers must dial + 1-412-317-6016.  A replay of the call will be available until October 23, 2013 by dialing 1-877-344-7529 (1-412-317-0088 for international callers), Conference Number 10031252. The call will also be audio webcast at: http://services.choruscall.com/links/trst130723.html, and will be available until July 23, 2014. 

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. The "forward-looking statements" may include statements regarding future events or performance and statements regarding TrustCo's ability to offer and sell securities under its shelf registration statement. 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: credit risk, the effects of and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System, inflation, interest rates, market and monetary fluctuations, competition, the effect of changes in financial services laws and regulations (including laws concerning taxation, banking and securities), real estate and collateral values, changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board ("FASB") or the Public Company Accounting Oversight Board; changes in local market areas and general business and economic trends and the matters described under the heading "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2012, as amended, and in our subsequent securities filings.

Non-GAAP Financial Measures Reconciliation

Tangible book value per share and tangible equity as a percentage of tangible assets at period end are non-GAAP financial measures 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 book value per share by dividing tangible equity by common shares outstanding, as compared to book value per common share, which we calculate by dividing shareholders' equity by common shares outstanding. 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 recurring revenue. We calculate the efficiency ratio by dividing total noninterest expenses as determined under GAAP, but excluding other real estate expense, net, which we refer to below as recurring expense, by net interest income (fully taxable equivalent) and total noninterest income as determined under GAAP, but excluding net gains on securities from this calculation, which we refer to below as recurring revenue. We believe that this provides one reasonable measure of core expenses relative to core revenue. 

We believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our financial position, results and ratios. Our management internally assesses our performance based, in part, on these measures. However, these non-GAAP financial measures are supplemental and are 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 and efficiency ratio to the underlying GAAP numbers is set forth below.