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.