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                 5 Sarnowski Drive, Glenville, New York, 12302

(518) 377-3311  Fax:  (518) 381-3668

 

Subsidiary:  Trustco Bank

NASDAQ -- TRST

 

Contact:	Kevin T. Timmons
	Vice President/Treasurer
	(518) 381-3607

    

TrustCo Announces Solid Fourth Quarter 2015 Earnings;

Full Year Core Earnings Rise

 

Executive Snapshot:

·

Continued solid financial results:

o

Core net income for 2015 rose to $42.2 million from $41.5 million in 2014

o

Key metrics for fourth quarter of 2015 results:

§

Net income of $10.2 million in fourth quarter of 2015 compared to $10.7 million in fourth quarter of 2014

§

Operating expenses increased $868 thousand in the fourth quarter of 2015 compared to the fourth quarter of 2014

§

Return on average assets (ROA) of 0.86%

§

Return on average equity (ROE) of 9.75%

§

Efficiency ratio of 55.37%

·

Asset quality improvement:

o

Most asset quality measures continued to improve compared to both the fourth quarter of 2014 and the third quarter of 2015

o

Nonperforming assets (NPAs) fell by $5.7 million compared to December 31, 2014

o

NPAs to total assets improved from 0.87% to 0.73% compared to December 31, 2014

o

Quarterly net chargeoffs increased to 0.21% of average loans on an annualized basis, compared to 0.15% for the fourth quarter of 2014

·

Continued expansion of customer base:

o

Focus on capitalizing on opportunities presented by expanded branch network

o

Average deposits per branch grew $452 thousand from December 31, 2014 to December 31, 2015 on a same store basis

o

Average core deposits were $109 million higher in the fourth quarter of 2015 compared to the fourth quarter of 2014

·

Loan portfolio reaches all-time high:

o

Average loans were up $163 million for the fourth quarter of 2015 compared to fourth quarter of 2014

o

At $3.29 billion as of December 31, 2015, loans reached an all-time high

Note: See non-GAAP financial measures reconciliation on pages 13-14 for information on core income

 

FOR IMMEDIATE RELEASE:

 

TrustCo Announces Solid Fourth Quarter 2015 Earnings;

Full Year Core Earnings Rise

Glenville, New York – January 21, 2016

TrustCo Bank Corp NY (TrustCo, Nasdaq: TRST) today announced that fourth quarter of 2015 GAAP net income was $10.2 million compared to $10.7 million for the fourth quarter of 2014.  Despite added operating costs during the second half of 2015 in response to recent regulatory concerns, core net income for the full year 2015 increased to $42.2 million from $41.5 million in 2014.

Robert J. McCormick, President and Chief Executive Officer noted, “We continue to be pleased with the ongoing improvement in our asset quality during both the fourth quarter and over the last year. Our long-term focus on traditional lending criteria and conservative balance sheet management has enabled us to maintain strong liquidity and capital and allowed us to continue to grow our business and take advantage of changes in market and competitive conditions.”

Mr. McCormick also noted, “We consider our fourth quarter 2015 results to be solid and were encouraged by the increase in pre-tax earnings from the third quarter to the fourth quarter.  As we  discussed in recent quarters, increased operating costs in response to regulatory concerns have hampered earnings.  Higher expenses were anticipated in order to fulfill operating and regulatory requirements.  We took aggressive action to meet these requirements during the second half of 2015, resulting in added costs in both the third and the fourth quarters.  While some of these costs will be recurring, others will diminish over time.  In terms of our core business, we continue to make solid progress, adding customer relationships which ultimately position our business well for the future.  Our highly liquid balance sheet continues to allow us to fund our loan growth without having to overpay for deposits.  We look forward to 2016 with optimism.  We will continue taking advantage of opportunities as they are presented.”

TrustCo saw continued strong loan growth in the fourth quarter of 2015.  Loan portfolio expansion was funded by a combination of deposit growth and cash flow from the Bank’s investment portfolio.  The continued shift toward loans helped offset the margin impact from continued comparatively low yields on cash and investments.  The growth in average deposits was led by lower cost core deposits.  TrustCo’s strong liquidity position continues to allow the Company to take advantage of opportunities when interest rate conditions change.

For the fourth quarter of 2015, return on average assets and return on average equity were 0.86% and 9.75%, respectively, compared to 0.92% and 10.70% for the fourth quarter of 2014.  GAAP diluted earnings per share were $0.107 for the fourth quarter of 2015, compared to $0.112 for the fourth quarter of 2014.

 

For the full year 2015, core diluted net income per share was up slightly to $0.443, compared to $0.438 for 2014.  GAAP diluted net income per share was $0.444 for 2015, compared to $0.466 for 2014.  Return on average assets and equity were 0.89% and 10.41% for 2015, compared to 0.97% and 11.54% for 2014, all on a GAAP basis.  Non-GAAP measures are discussed on pages 13 and 14.

Average loans were up $162.8 million or 5.2% in the fourth quarter of 2015, over the same period in 2014.  Average deposits were up $94.0 million or 2.4% for the fourth quarter of 2015 over the same period a year earlier.  Most of the increase in deposits came from core deposit accounts, which consist of checking, savings and money market deposits.  Average core deposits increased $108.7 million from the fourth quarter of 2014 to the fourth quarter of 2015.  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 core deposit base reflect 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 continue to make significant progress expanding loans and deposits throughout our entire branch network.  We expect that trend to continue as the newer branches continue to mature.

“At December 31, 2015, our average branch size was $28.1 million.  On a same store basis, our average deposits per branch grew by $452 thousand from December 31, 2014 to December 31, 2015.  We have always designed our branches to be smaller and more cost effective than those built by many of our competitors.  We use open floor plans that help maximize the value of our branches.  We remain mindful that fully achieving our goals for newer branches will take time and continued work.  We believe success in growing customer relationships provides basic building blocks that will help drive profit growth for the coming years.”

Asset quality and the allowance for loan losses coverage of nonperforming loans (NPLs) improved from both December 31, 2014 and September 30, 2015 to December 31, 2015.  NPLs declined to $28.3 million at December 31, 2015, compared to $34.0 million at December 31, 2014 and $31.9 million at September 30, 2015.  NPLs were equal to 0.86% of total loans at December 31, 2015, compared to 1.08% a year earlier and 0.97% at September 30, 2015.  The coverage ratio, or allowance for loan losses to NPLs, was 158.4% at December 31, 2015, compared to 141.4% at September 30, 2015 and 136.2% at December 31, 2014.  Nonperforming assets (NPAs) declined to $34.7 million at December 31, 2015 from $37.8 million at September 30, 2015 and $40.5 million at December 31, 2014.  Overall, virtually every asset quality indicator improved during the fourth quarter of 2015 relative to the third quarter of 2015 and the fourth quarter of 2014.  The ratio of loan loss allowance to total loans was 1.36% as of December 31, 2015, compared to 1.38% at September 30, 2015 and to 1.47% at December 31, 2014 and reflects both the improvement in asset quality and economic conditions in our lending areas.  The allowance for loan losses was $44.8 million at December 31, 2015 compared to $45.1 million at September 30, 2015 and $46.3 million at December 31, 2014.

The net interest margin for the fourth quarter of 2015 was 3.14% compared to 3.08% in the third quarter of 2015 and 3.17% in the fourth quarter of 2014.

At December 31, 2015 the tangible equity ratio was 8.72% compared to 8.71% at September 30, 2015 and 8.46% at December 31, 2014.  The equity to asset ratio was 8.73% at December 31, 2015, compared to 8.72% at September 30, 2015 and 8.47% at December 31, 2014.  Tangible book value per share at December 31, 2015 was $4.33 compared to $4.14 a year earlier and GAAP book value per share was $4.34 and $4.15, respectively.  Non-GAAP measures are discussed on pages 13 and 14.

 

TrustCo Bank Corp NY is a $4.7 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 146 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at December 31, 2015.

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 fourth quarter 2015 results will be held at 9:00 a.m. Eastern Time on January 22, 2016.  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 10079078. The call will also be audio webcast at: http://services.choruscall.com/links/trst160122.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 2016 and for 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 comply with the supervisory agreement entered into with Trustco Bank’s regulator and potential regulatory actions if we fail to comply; 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 Trustco Bank and the continued ability of Trustco Bank under regulatory rules and the supervisory agreement to distribute capital to TrustCo, which could affect our ability to pay dividends; results of examinations of Trustco Bank and TrustCo by our respective regulators; our ability to make accurate assumptions and judgments regarding the credit risks associated with lending and investing activities; the effect of changes in financial services laws and regulations and the impact of other governmental initiatives affecting the financial services industry; 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; 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; real estate and collateral values; changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the FASB or PCAOB; 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, as amended, and, if any, in our subsequent quarterly reports on Form 10-Q or other securities filings.

 

 

						Three Months Ended
		12/31/15				09/30/15				12/31/14
Summary of operations
Net interest income (TE)		$	36,278				36,069				35,693
Provision for loan losses			1,300				800				1,000
Net securities transactions			2				-				335
Noninterest income, excluding net securities transactions			4,428				4,365				4,417
Noninterest expense			23,108				23,464				22,240
Net income			10,180				10,616				10,660
Per common share
Net income per share:
- Basic		$	0.107				0.112				0.113
- Diluted			0.107				0.111				0.112
Cash dividends			0.066				0.066				0.066
Tangible Book value at period end			4.33				4.33				4.14
Market price at period end			6.14				5.84				7.26
At period end
Full time equivalent employees			787				778				737
Full service banking offices			146				146				144
Performance ratios
Return on average assets			0.86	%			0.88				0.92
Return on average equity			9.75				10.35				10.70
Efficiency (1)			55.37				56.04				53.35
Net interest spread (TE)			3.08				3.02				3.11
Net interest margin (TE)			3.14				3.08				3.17
Dividend payout ratio			61.54				58.82				58.55
Capital ratio at period end
Consolidated tangible equity to tangible assets (2)			8.72				8.71				8.46
Asset quality analysis at period end
Nonperforming loans to total loans			0.86				0.97				1.08
Nonperforming assets to total assets			0.73				0.80				0.87
Allowance for loan losses to total loans			1.36				1.38				1.47
Coverage ratio (3)			1.6	x			1.4				1.4

FINANCIAL HIGHLIGHTS, Continued

(dollars in thousands, except per share data)

(Unaudited)

(1)	Calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income (excluding net securities transactions).

 

TE = Taxable equivalent.

 

CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands, except per share data)

(Unaudited)

 

CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands, except per share data)

(Unaudited)

 

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(dollars in thousands)

(Unaudited)

 

NONPERFORMING ASSETS

(dollars in thousands)

(Unaudited)

 

* 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