10-Q 1 brhc10037310_10q.htm 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to _________

Commission File Number 0-10592

TRUSTCO BANK CORP NY
(Exact name of registrant as specified in its charter)

New York
  
14-1630287
(State or other jurisdiction of incorporation or organization)
  
(I.R.S. Employer Identification No.)

5 SARNOWSKI DRIVE,
GLENVILLE, NEW YORK
  
12302
(Address of principal executive offices)
  
(Zip Code)

Registrant’s telephone number, including area code:
(518) 377-3311

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

Title of each class
Trading Symbol (s)
Name of each exchange on which registered
Common Stock, $1.00 par value
TRST
Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  ☒ Yes  ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S‑T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☒ Yes  ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer ☒
Accelerated filer ☐
Non-accelerated filer ☐
Smaller reporting company ☐
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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes  ☒ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock
Number of Shares Outstanding
as of April 29, 2022
$1 Par Value
19,196,875

TrustCo Bank Corp NY

INDEX

Part I.
FINANCIAL INFORMATION
PAGE NO.
Item 1.
Consolidated Interim Financial Statements (Unaudited):

 
 
 
 
 3
 
 
 
 
 4
 
 
 
 
 5
 
 
 
 
 6
 
 
 
 
 7
 
 
 
 
8-42
 
 
 
 
43
 
 
 
Item 2.
44-63
 
 
 
Item 3.
64
 
 
 
Item 4.
64
 
 
 
Part II.
OTHER INFORMATION
 
 
 
 
Item 1.
65
 
 
Item 1A.
65
 
 
 
Item 2.
65
 
 
 
Item 3.
65
 
 
 
Item 4.
66
 
 
 
Item 5.
66
 
 
 
Item 6.
66

2
TRUSTCO BANK CORP NY
Consolidated Statements of Income (Unaudited)
(dollars in thousands, except per share data)

 
Three months ended
March 31,
  
   
2022
    
2021
  
             
Interest and dividend income:
            
Interest and fees on loans
  
$
39,003
      
40,217
  
Interest and dividends on securities available for sale:
                
U. S. government sponsored enterprises
    
86
      
50
  
State and political subdivisions
    
1
      
1
  
Mortgage-backed securities and collateralized mortgage obligations
    
1,087
      
1,237
  
Corporate bonds
    
233
      
316
  
Small Business Administration-guaranteed participation securities
    
154
      
206
  
Other securities
    
2
      
6
  
Total interest and dividends on securities available for sale
    
1,563
      
1,816
  
                 
Interest on held to maturity securities:
                
Mortgage-backed securities and collateralized mortgage obligations-residential
    
90
      
123
  
Total interest on held to maturity securities
    
90
      
123
  
                 
Federal Reserve Bank and Federal Home Loan Bank stock
    
62
      
69
  
Interest on federal funds sold and other short-term investments
    
572
      
270
  
Total interest income
    
41,290
      
42,495
  
                 
Interest expense:
                
Interest on deposits:
                
Interest-bearing checking
    
44
      
52
  
Savings accounts
    
156
      
159
  
Money market deposit accounts
    
214
      
283
  
Time deposits
    
546
      
1,666
  
Interest on short-term borrowings
    
234
      
228
  
Total interest expense
    
1,194
      
2,388
  
                 
Net interest income
    
40,096
      
40,107
  
(Credit) Provision for credit losses
    
(200
)
    
350
  
Net interest income after (credit) provision for credit losses
    
40,296
      
39,757
  
                 
Noninterest income:
                
Trustco financial services income
    
1,833
      
2,035
  
Fees for services to customers
    
2,801
      
2,204
  
Other
    
549
      
189
  
Total noninterest income
    
5,183
      
4,428
  
                 
Noninterest expenses:
                
Salaries and employee benefits
    
9,239
      
12,425
  
Net occupancy expense
    
4,529
      
4,586
  
Equipment expense
    
1,588
      
1,631
  
Professional services
    
1,467
      
1,432
  
Outsourced services
    
2,280
      
2,250
  
Advertising expense
    
617
      
354
  
FDIC and other insurance
    
812
      
707
  
Other real estate expense, net
    
11
      
239
  
Other
    
2,222
      
1,711
  
Total noninterest expenses
    
22,765
      
25,335
  
                 
Income before taxes
    
22,714
      
18,850
  
Income taxes
    
5,625
      
4,767
  
                 
Net income
  
$
17,089
      
14,083
  
                 
Net income per share (1):
                
- Basic
  
$
0.890
      
0.730
  
                 
- Diluted
  
$
0.890
      
0.730
  

(1) All periods presented have been adjusted for the 1 for 5 reverse stock split which occurred on May 28, 2021.

See accompanying notes to unaudited consolidated interim financial statements.

3
TRUSTCO BANK CORP NY
Consolidated Statements of Comprehensive Income (Unaudited)
(dollars in thousands)

 
Three months ended
March 31,
  
   
2022
    
2021
  
             
Net income
  
$
17,089
      
14,083
  
                 
Net unrealized holding loss on securities available for sale
    
(19,225
)
    
(6,018
)
Tax effect
    
4,974
      
1,557
  
                 
Net unrealized loss on securities available for sale, net of tax
    
(14,251
)
    
(4,461
)
                 
Amortization of net actuarial gain
    
(78
)
    
(228
)
Amortization of prior service credit
    
(280
)
    
(52
)
Tax effect
    
93
      
73
  
Amortization of net actuarial gain and prior service credit on pension and postretirement plans, net of tax
    
(265
)
    
(207
)
                 
Other comprehensive loss, net of tax
    
(14,516
)
    
(4,668
)
Comprehensive income
  
$
2,573
      
9,415
  

See accompanying notes to unaudited consolidated interim financial statements.

4
TRUSTCO BNK CORP NY
Consolidated Statements of Financial Condition (Unaudited)
(dollars in thousands, except per share data)

 
March 31, 2022
    
December 31, 2021
  
ASSETS:
            
             
Cash and due from banks
  
$
47,526
      
48,357
  
Federal funds sold and other short term investments
    
1,225,022
      
1,171,113
  
Total cash and cash equivalents
    
1,272,548
      
1,219,470
  
                 
Securities available for sale
    
408,991
      
407,713
  
                 
Held to maturity securities ($9,550 and $10,695 fair value at March 31, 2022 and December 31, 2021, respectively)
    
9,183
      
9,923
  
                 
Federal Reserve Bank and Federal Home Loan Bank stock
    
5,604
      
5,604
  
Loans, net of deferred net costs
    
4,464,354
      
4,438,779
  
Less:
                
Allowance for credit losses on loans
    
46,178
      
44,267
  
Net loans
    
4,418,176
      
4,394,512
  
                 
Bank premises and equipment, net
    
32,644
      
33,027
  
Operating lease right-of-use assets
    
48,569
      
48,090
  
Other assets
    
86,158
      
78,207
  
                 
Total assets
  
$
6,281,873
      
6,196,546
  
                 
LIABILITIES:
                
Deposits:
                
Demand
  
$
835,281
      
794,878
  
Interest-bearing checking
    
1,225,093
      
1,191,304
  
Savings accounts
    
1,553,152
      
1,504,554
  
Money market deposit accounts
    
796,275
      
782,079
  
Time deposits
    
940,215
      
995,314
  
Total deposits
    
5,350,016
      
5,268,129
  
                 
Short-term borrowings
    
248,371
      
244,686
  
Operating lease liabilities
    
53,094
      
52,720
  
Accrued expenses and other liabilities
    
37,497
      
29,883
  
                 
Total liabilities
    
5,688,978
      
5,595,418
  
                 
SHAREHOLDERS’ EQUITY:
                
Capital stock par value $1; 30,000,000 shares authorized;  20,045,684 shares issued at March 31, 2022 and December 31, 2021 and 19,201,875 and 19,219,989 shares outstanding at March 31, 2022 and December 31, 2021, respectively
    
20,046
      
20,046
  
Surplus
    
256,661
      
256,661
  
Undivided profits
    
355,948
      
349,056
  
Accumulated other comprehensive (loss) income, net of tax
    
(2,369
)
    
12,147
  
Treasury stock at cost - 843,809 and 825,695 shares at March 31, 2022 and December 31, 2021, respectively
    
(37,391
)
    
(36,782
)
                 
Total shareholders’ equity
    
592,895
      
601,128
  
                 
Total liabilities and shareholders’ equity
  
$
6,281,873
      
6,196,546
  

See accompanying notes to unaudited consolidated interim financial statements.

5
TRUSTCO BANK CORP NY
Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)
(dollars in thousands, except per share data)

 
Capital
Stock (1)
    
Surplus (1)
    
Undivided
Profits
    
Accumulated
Other
Comprehensive
Income
    
Treasury
Stock
    
Total
  
                                     
Beginning balance, January 1, 2021 (1)
  
$
20,041
      
256,606
      
313,974
      
11,936
      
(34,396
)
    
568,161
  
Net income
    
-
      
-
      
14,083
      
-
      
-
      
14,083
  
Other comprehensive loss, net of tax
    
-
      
-
      
-
      
(4,668
)
    
-
      
(4,668
)
Stock options exercised (2,650 shares) (1)
     3       68                               71  
Cash dividend declared, $0.340625 per share (2)
    
-
      
-
      
(6,571
)
    
-
      
-
      
(6,571
)
Purchase of treasury stock (1,261 shares) (2)
    
-
      
-
      
-
      
-
      
(45
)
    
(45
)
                                                 
Ending balance, March 31, 2021 (1)
  
$
20,044
      
256,674
      
321,486
      
7,268
      
(34,441
)
    
571,031
  
                                                 
Beginning balance, January 1, 2022
  
$
20,046
      
256,661
      
349,056
      
12,147
      
(36,782
)
    
601,128
  
Cumulative impact of adoption of ASU 2016-13
                     (3,470 )                     (3,470 )
Balance, January 1, 2022 as adjusted for impact of adoption of ASU 2016-13
     20,046       256,661       345,586       12,147       (36,782 )     597,658  
Net income
    
-
      
-
      
17,089
      
-
      
-
      
17,089
  
Other comprehensive loss, net of tax
    
-
      
-
      
-
      
(14,516
)
    
-
      
(14,516
)
Cash dividend declared, $0.35 per share
    
-
      
-
      
(6,727
)
    
-
      
-
      
(6,727
)
Purchase of treasury stock 18,114 shares
    
-
      
-
      
-
      
-
      
(609
)
    
(609
)
                                                 
Ending balance, March 31, 2022
  
$
20,046
     $
256,661
     $
355,948
     $
(2,369
)
   $
(37,391
)
   $
592,895
  

(1) All periods presented have been adjusted for the 1 for 5 reverse stock split which occurred on May 28, 2021.
(2)
 Share amounts and per share amounts have been adjusted for all periods presented for the 1 for 5 reverse stock split which occurred on May 28, 2021.
 
See accompanying notes to unaudited consolidated interim financial statements.

6
TRUSTCO BANK CORP NY
Consolidated Statements of Cash Flows (Unaudited)
(dollars in thousands)

 
Three months ended March 31,
  
   
2022
    
2021
  
             
Cash flows from operating activities:
            
Net income
  
$
17,089
      
14,083
  
                 
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation
    
1,024
      
1,063
  
Amortization of right-of-use asset
    
1,608
      
1,573
  
Net gain on sale of other real estate owned
    
(73
)
    
-
  
Writedown of other real estate owned
    
-
      
121
  
(Credit) provision for credit losses
    
(200
)
    
350
  
Deferred tax expense
    
744
      
1,152
  
Net amortization of securities
    
697
      
1,081
  
Net gain on sale of bank premises and equipment
     (314 )     (4 )
Decrease in taxes receivable
    
489
      
101
  
Decrease in interest receivable
    
202
      
392
  
Decrease in interest payable
    
(32
)
    
(164
)
Increase in other assets
    
(2,601
)
    
(3,160
)
Decrease in operating lease liabilities
    
(1,713
)
    
(1,637
)
Decrease in accrued expenses and other liabilities
    
(5,943
)
    
(6,221
)
Total adjustments
    
(6,112
)
    
(5,353
)
Net cash provided by operating activities
    
10,977
      
8,730
  
                 
Cash flows from investing activities:
                
Proceeds from sales, paydowns and calls of securities available for sale
    
17,923
      
36,820
  
Proceeds from paydowns of held to maturity securities
    
716
      
1,061
  
Purchases of securities available for sale
    
(34,097
)
    
(132,456
)
Proceeds from maturities of securities available for sale
    
5,000
      
55
  
Net increase in loans
    
(25,516
)
    
(24,656
)
Proceeds from dispositions of other real estate owned
    
166
      
-
  
Proceeds from dispositions of bank premises and equipment
    
469
      
4
  
Purchases of bank premises and equipment
    
(796
)
    
(663
)
Net cash used in investing activities
    
(36,135
)
    
(119,835
)
                 
Cash flows from financing activities:
                
Net increase in deposits
    
81,887
      
135,729
  
Net increase in short-term borrowings
    
3,685
      
15,195
  
Proceeds from exercise of stock options
    
-
      
71
  
Purchases of treasury stock
    
(609
)
    
(45
)
Dividends paid
    
(6,727
)
    
(6,571
)
Net cash provided by financing activities
    
78,236
      
144,379
  
Net increase in cash and cash equivalents
    
53,078
      
33,274
  
Cash and cash equivalents at beginning of period
    
1,219,470
      
1,107,099
  
Cash and cash equivalents at end of period
  
$
1,272,548
      
1,140,373
  
                 
Supplemental Disclosure of Cash Flow Information:
                
Cash paid during the year for:
                
Interest paid
  
$
1,226
      
2,552
  
Income taxes paid
    
5,090
      
4,661
  
Other non cash items:
                
Change in unrealized (loss) gain on securities available for sale-gross of deferred taxes
    
(19,225
)
    
(6,018
)
Change in deferred tax effect on unrealized loss (gain) on securities available for sale
    
4,974
      
1,557
  
Amortization of net actuarial gain and prior service cost (credit) on pension and postretirement plans
    
(358
)
    
(280
)
Change in deferred tax effect of amortization of net actuarial gain postretirement benefit plans
    
93
      
73
  
Security purchase settled in subsequent period
     (10,000 )     -  
Impact to retained earnings from adoption of ASC 326, net of tax
     (3,470 )     -  

See accompanying notes to unaudited consolidated interim financial statements.

7

(1) Financial Statement Presentation

The unaudited Consolidated Interim Financial Statements of TrustCo Bank Corp NY (the “Company” or “TrustCo”) include the accounts of the Company’s subsidiary, Trustco Bank (also referred to as the “Bank”) and other subsidiaries after elimination of all significant intercompany accounts and transactions.  Prior period amounts are reclassified when necessary to conform to the current period presentation.  The net income reported for the three months ended March 31, 2022 is not necessarily indicative of the results that may be expected for the year ending December 31, 2022, or any interim periods.  These financial statements consider events that occurred through the date of filing.

In the opinion of the management of the Company, the accompanying unaudited Consolidated Interim Financial Statements contain all recurring adjustments necessary to present fairly the financial position as of March 31, 2022, the results of operations and cash flows for the three months ended March 31, 2022 and 2021.  The accompanying unaudited Consolidated Interim Financial Statements should be read in conjunction with the Company’s year‑end Consolidated Financial Statements, including notes thereto, which are included in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2021.  The accompanying unaudited Consolidated Interim Financial Statements have been prepared in accordance with the instructions to Form 10‑Q and, therefore, do not include all information and notes necessary for a complete presentation of financial position, results of operations and cash flow activity required in accordance with accounting principles generally accepted in the United States.


The accounting policies of the Company, as applied in the Consolidated Interim Financial Statements presented herein, are substantially the same as those followed on an annual basis in the Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (“SEC”) on February 25, 2022 except as noted below. The accounting policies of the Company effective for the comparative periods presented prior to the adoption of ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326) are presented on the Form 10-K referenced above.