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 June 30, 2023 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 000-10592 TRUSTCO BANK CORP NY (Exact name of registrant as specified in its charter) NEW YORK 14-1630287 (State or other j ...

TrustCo Bank Corp NY (NASDAQ:TRST) Q2 2023 Earnings Call Transcript July 25, 2023 9:00 AM ET Company Participants Robert J. McCormick - Chairman, President and CEO Michael Ozimek - CFO Scot Salvador - EVP Commercial Banking Conference Call Participants Ian Lapey - Gabelli Funds Nick Ripostella - NR Management Operator Good day, and welcome to TrustCo Bank Corp Earnings Call and webcast. All participants will be in a listen-only mode. [Operator Instructions] Before proceeding, we would like to mention that t ...

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, 2023 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 000-10592 TRUSTCO BANK CORP NY (Exact name of registrant as specified in its charter) NEW YORK 14-1630287 (State or other ...

TrustCo Bank Corp (NASDAQ:TRST) Q1 2023 Earnings Conference Call April 25, 2023 9:00 AM ET Company Participants Robert McCormick - President & Chief Executive Officer Michael Ozimek - Executive Vice President & Chief Financial Officer Scot Salvador - Executive Vice President & Chief Lending Officer Conference Call Participants Ian Lapey - Gabelli Funds Alex Twerdahl - Piper Sandler Nick Ripostella - NR Management Operator Good day and welcome to the TrustCo Bank Corp Earnings Call and Webcast. [Operator Ins ...

```markdown [Part I](index=4&type=section&id=PART%20I) This section outlines TrustCo Bank Corp NY's business, operations, regulatory environment, human capital, and key risk factors [Business](index=4&type=section&id=Item%201.%20Business) TrustCo Bank Corp NY, a savings and loan holding company, provides banking, trust, and investment services through Trustco Bank - **TrustCo Bank Corp NY** is a savings and loan holding company with its principal subsidiary being **Trustco Bank**, a federal savings bank[13](index=13&type=chunk) - As of year-end 2022, the Bank operated **143 banking offices** and **158 ATMs** across New York, Florida, Vermont, Massachusetts, and New Jersey[15](index=15&type=chunk) - The company's subsidiary, **Trustco Realty Corp.**, is a real estate investment trust (**REIT**) that provides certain New York State tax advantages on its dividend distributions to the Bank[17](index=17&type=chunk) - The company faces **strong competition** from a range of financial institutions, including super-regional banks, money center banks, and local commercial banks, competing on price, service, and location[21](index=21&type=chunk)[22](index=22&type=chunk) [Supervision and Regulation](index=6&type=section&id=Supervision%20and%20Regulation) The company and its bank subsidiary are extensively regulated by federal agencies, maintaining capital ratios exceeding all requirements - The Company and its subsidiaries are primarily supervised and regulated by the **Federal Reserve Board** and the **Office of the Comptroller of the Currency (OCC)**[24](index=24&type=chunk) Regulatory Capital Ratios as of December 31, 2022 | Ratio | Company (%) | Bank (%) | Minimum Requirement (%) | Well-Capitalized Requirement (%) | | :--- | :--- | :--- | :--- | :--- | | **CET1 Capital Ratio** | 18.93 | 18.43 | 4.5 | 6.5 | | **Tier 1 Capital Ratio** | 18.93 | 18.43 | 6.0 | 8.0 | | **Total Capital Ratio** | 20.18 | 19.68 | 8.0 | 10.0 | | **Tier 1 Leverage Ratio** | 10.39 | 10.12 | 4.0 | 5.0 | - As of December 31, 2022, the OCC categorized the Bank as "**well capitalized**" under the prompt corrective action framework[45](index=45&type=chunk) - FDIC deposit insurance expense was **$1.8 million** in both 2022 and 2021. The FDIC increased the initial base deposit insurance assessment rate by **2 basis points**, effective January 1, 2023[57](index=57&type=chunk)[58](index=58&type=chunk) [Human Capital Resources](index=16&type=section&id=Human%20Capital%20Resources) The company focuses on internal talent development, promoting diversity, and retaining employees through equity awards - As of December 31, 2022, the company had **818 employees**, equivalent to **754 full-time employees**[95](index=95&type=chunk) - In 2022, **140 employees** (approximately **17%**) were promoted internally, and employees participated in over **20,000 hours** of training[97](index=97&type=chunk)[98](index=98&type=chunk) - The workforce is composed of approximately **59% female** and **41% male** employees, with **42% ethnically diverse**[101](index=101&type=chunk) - The company has retained **93%** of employees who received officer equity awards since expanding the program in 2019 and 2020[105](index=105&type=chunk) [Risk Factors](index=19&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including lending, market conditions, compliance, cybersecurity, and climate change [Risks Related to Lending Activities](index=19&type=section&id=Risks%20Related%20to%20Our%20Lending%20Activities) The company is exposed to significant interest rate and credit risks, with potential for insufficient allowance for credit losses - The company is subject to **significant interest rate risk**. Rising interest rates, driven by inflation, positively impact interest income but may negatively affect the housing market, loan demand, and refinancing activity[112](index=112&type=chunk)[113](index=113&type=chunk)[115](index=115&type=chunk) - The company is exposed to **credit risk**, as adverse changes in economic conditions could impact borrowers' ability to repay loans and reduce the value of collateral[119](index=119&type=chunk) - The allowance for credit losses (ACLL) may be **insufficient** to cover expected losses if assumptions about the economy, borrower creditworthiness, or collateral values prove incorrect, potentially requiring material additions that would **decrease net income**[120](index=120&type=chunk) [Risks Related to Market Conditions](index=22&type=section&id=Risks%20Related%20to%20Market%20Conditions) Geographic loan concentration in New York and Florida, global instability, and financial institution soundness pose significant market risks - The company has a geographic concentration of loans in New York (**68.0%**) and Florida (**32.0%**), making it vulnerable to downturns in these local economies and real estate markets[130](index=130&type=chunk) - **Instability in global economic conditions**, geopolitical matters like the conflict in Ukraine, and financial market volatility could adversely affect results of operations[131](index=131&type=chunk)[132](index=132&type=chunk) - The **soundness of other financial institutions** poses a risk, as defaults or rumors about counterparties could lead to market-wide liquidity problems and potential losses[135](index=135&type=chunk) [Risks Related to Compliance and Regulation](index=24&type=section&id=Risks%20Related%20to%20Compliance%20and%20Regulation) Stringent regulatory capital rules, changes in tax laws, and dividend payment limitations pose significant compliance and regulatory risks - **Stringent regulatory capital rules** could slow growth, require raising additional capital, or result in restrictions on dividends and compensation if the company fails to comply[137](index=137&type=chunk)[138](index=138&type=chunk) - **Changes in tax laws**, such as the Inflation Reduction Act's **1%** excise tax on stock repurchases, may adversely affect financial results and capital return strategies[144](index=144&type=chunk)[145](index=145&type=chunk) - The company's ability to pay dividends to stockholders is dependent on receiving dividends from Trustco Bank, which is subject to **regulatory limitations**[148](index=148&type=chunk) [Risks Related to Cybersecurity, Third Parties, and Technology](index=27&type=section&id=Risks%20Related%20to%20Cybersecurity%2C%20Third%20Parties%2C%20and%20Technology) Reliance on third-party vendors, cyber-attacks, and unauthorized data disclosure present significant cybersecurity and operational risks - The company **relies heavily on third-party service providers** for critical systems, and any operational failure or security breach from these vendors could disrupt business[158](index=158&type=chunk) - **Cyber-attacks and security breaches** pose a significant risk, potentially leading to financial loss, reputational damage, litigation, and increased regulatory scrutiny[159](index=159&type=chunk)[164](index=164&type=chunk) - **Unauthorized disclosure of sensitive customer information**, whether through a breach of internal or third-party systems, could severely harm the business[161](index=161&type=chunk) [Other Risks](index=29&type=section&id=Other%20Risks) Climate change presents physical and transition risks, while new tax laws like the Inflation Reduction Act may impact capital allocation - **Climate change** presents physical risks (e.g., extreme weather damaging facilities and collateral) and transition risks (e.g., societal and regulatory responses impacting customers and business operations)[171](index=171&type=chunk)[172](index=172&type=chunk)[174](index=174&type=chunk) - The **Inflation Reduction Act of 2022** imposes a **1%** excise tax on stock repurchases, which may impact future capital allocation decisions[169](index=169&type=chunk) [Unresolved Staff Comments](index=30&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the SEC - None[175](index=175&type=chunk) [Properties](index=30&type=section&id=Item%202.%20Properties) The company's executive offices are located in a company-owned facility in Glenville, New York. It operates 143 banking offices, of which 24 are owned and 119 are leased, across its operating states - The Company operates **143 banking offices** in New York, New Jersey, Vermont, Massachusetts, and Florida[176](index=176&type=chunk) - As of December 31, 2022, **24 properties are owned** and **119 are leased** from others[176](index=176&type=chunk) [Legal Proceedings](index=30&type=section&id=Item%203.%20Legal%20Proceedings) According to management, there are no pending legal proceedings that would have a material adverse effect on the company's consolidated financial condition or shareholders' equity - In the opinion of management, there are **no pending proceedings** that, if determined adversely, would be **material** to TrustCo's consolidated shareholders' equity and financial condition[177](index=177&type=chunk) [Mine Safety Disclosures](index=30&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[178](index=178&type=chunk) [Part II](index=32&type=section&id=PART%20II) This section details common equity, financial analysis, market risk, financial statements, and internal controls [Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=32&type=section&id=Item%205.%20Market%20for%20the%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) TrustCo's common stock trades on Nasdaq, with details on stock repurchase activity and dividend payment dependencies - TrustCo's common stock trades on The Nasdaq Stock Market under the symbol "TRST". As of February 23, 2023, there were approximately **7,566 shareholders of record**[181](index=181&type=chunk) Issuer Purchases of Equity Securities (Q4 2022) | Period | Total Shares Purchased | Average Price Paid Per Share | Total Shares Purchased as Part of Publicly Announced Program | Maximum Shares Remaining Under Program | | :--- | :--- | :--- | :--- | :--- | | Oct 2022 | - | - | - | 32,786 | | Nov 2022 | - | - | - | 32,786 | | Dec 2022 | 32,786 | $38.17 | 32,786 | - | | **Total** | **32,786** | **$38.17** | **32,786** | **-** | - A share repurchase program for up to **200,000 shares**, authorized on March 9, 2022, was completed as of December 31, 2022[184](index=184&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The information required for Management's Discussion and Analysis (MD&A) is not presented directly in this section but is incorporated by reference from the company's Annual Report to Shareholders for the year ended December 31, 2022, filed as Exhibit 13 - The information required by this item is **incorporated by reference** from TrustCo's Annual Report to Shareholders for the year ended December 31, 2022 (Exhibit 13)[186](index=186&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=33&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The quantitative and qualitative disclosures regarding market risk are incorporated by reference from the company's Annual Report to Shareholders for the year ended December 31, 2022, which is filed as Exhibit 13 - The information required by this item is **incorporated by reference** from TrustCo's Annual Report to Shareholders for the year ended December 31, 2022 (Exhibit 13)[187](index=187&type=chunk) [Financial Statements and Supplementary Data](index=33&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The company's consolidated financial statements, the report from its independent auditor Crowe LLP, and supplementary financial data are incorporated by reference from the Annual Report to Shareholders for the year ended December 31, 2022, filed as Exhibit 13 - The consolidated financial statements and supplementary data are **incorporated by reference** from TrustCo's Annual Report to Shareholders for the year ended December 31, 2022 (Exhibit 13)[188](index=188&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=33&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[189](index=189&type=chunk) [Controls and Procedures](index=33&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of December 31, 2022. Management's Report on Internal Control over Financial Reporting is incorporated by reference. There were no material changes to internal controls during the fourth quarter of 2022 - Based on an evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were **effective** as of December 31, 2022[191](index=191&type=chunk) - There were **no changes** in the Company's internal control over financial reporting during the quarter ended December 31, 2022, that have materially affected, or are reasonably likely to materially affect, these controls[193](index=193&type=chunk) [Other Information](index=34&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[194](index=194&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=34&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[195](index=195&type=chunk) [Part III](index=34&type=section&id=PART%20III) Part III's governance, compensation, and ownership details are incorporated by reference from the Proxy Statement [Directors, Executive Officers and Corporate Governance](index=34&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the Company's 2023 Proxy Statement - The information required by this item is **incorporated by reference** from the Company's Proxy Statement for its 2023 Annual Meeting of Shareholders[197](index=197&type=chunk) [Executive Compensation](index=34&type=section&id=Item%2011.%20Executive%20Compensation) Details on executive compensation are incorporated by reference from the Company's 2023 Proxy Statement - The information required by this item is **incorporated by reference** from the Company's Proxy Statement for its 2023 Annual Meeting of Shareholders[198](index=198&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=34&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership of beneficial owners and management is incorporated by reference from the Company's 2023 Proxy Statement - The information required by this item is **incorporated by reference** from the Company's Proxy Statement for its 2023 Annual Meeting of Shareholders[199](index=199&type=chunk) [Certain Relationships, Related Transactions and Director Independence](index=34&type=section&id=Item%2013.%20Certain%20Relationships%2C%20Related%20Transactions%20and%20Director%20Independence) Disclosures regarding certain relationships, related-party transactions, and director independence are incorporated by reference from the Company's 2023 Proxy Statement - The information required by this item is **incorporated by reference** from the Company's Proxy Statement for its 2023 Annual Meeting of Shareholders[200](index=200&type=chunk) [Principal Accountant Fees and Services](index=34&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information concerning principal accountant fees and services is incorporated by reference from the Company's 2023 Proxy Statement - The information required by this item is **incorporated by reference** from the Company's Proxy Statement for its 2023 Annual Meeting of Shareholders[201](index=201&type=chunk) [Part IV](index=35&type=section&id=PART%20IV) This section details the financial statements and exhibits filed with the Form 10-K [Exhibits, Financial Statement Schedules](index=35&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the financial statements and exhibits filed as part of the Form 10-K. It notes that all required financial statement schedules are included within the consolidated financial statements or notes thereto. Key exhibits include the company's articles of incorporation, bylaws, various compensation plans, and the Annual Report to Shareholders (Exhibit 13) - Lists the **consolidated financial statements** of TrustCo and its subsidiaries that are filed as part of the report[204](index=204&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk) - States that **all required financial statement schedules** have been included in the consolidated financial statements or related notes, making separate schedules not applicable[207](index=207&type=chunk) - Provides a **detailed index of exhibits** filed with the report, including management contracts, compensation plans, and certifications[209](index=209&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk) [Form 10-K Summary](index=39&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable to the company - Not applicable[178](index=178&type=chunk) ```

Financial Data and Key Metrics Changes - The company reported a net income of $75.2 million for 2022, an increase of over 22% from 2021, marking a record year [4] - The return on average assets (ROA) and return on average equity (ROE) for Q4 2022 were 1.38% and 13.91% respectively, both showing improvement compared to the previous year [6] - The efficiency ratio improved to 48.8% in Q4 2022 from 58.5% in Q4 2021 [13] Business Line Data and Key Metrics Changes - The loan portfolio grew by 5.7% year-over-year, with significant growth in residential mortgages, commercial loans, and home equity lending [4][14] - The average commercial loan portfolio increased by 10.4% year-over-year, while residential real estate loans increased by 4.6% [7] - Non-performing loans decreased from $18.7 million to $17.5 million, with a non-performing loans ratio of 0.37% [17] Market Data and Key Metrics Changes - Total average deposits decreased by $25.4 million or 0.5% year-over-year, primarily due to a decrease in money market deposits [10] - The cost of interest-bearing deposits increased to 25 basis points from 11 basis points year-over-year, driven by higher time deposit rates [10] Company Strategy and Development Direction - The company plans to maintain a conservative approach to deposit pricing and focus on retaining existing deposits rather than aggressive growth [5][22] - There is an intention to add loan originators in the residential area and to begin originating secondary market products, which is a new venture for the company [16][29] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2023, citing a strong backlog of loans and a cautious approach to deposit offerings [6][24] - The company is closely monitoring the changing interest rate environment and is prepared to adjust its strategies accordingly [5][24] Other Important Information - The financial services division managed approximately $954 million in assets as of December 31, 2022, contributing to non-interest income [12] - The capital ratios remained strong, with a consolidated equity to assets ratio of 10% for Q4 2022 [13] Q&A Session Summary Question: Can you elaborate on the cautious approach to deposit pricing? - Management indicated a focus on retaining existing deposits and not aggressively pursuing new deposits at high rates [22] Question: Is there a target to keep deposits flat or grow them? - Management confirmed that they are more focused on maintaining deposits rather than aggressive growth [23] Question: Any changes in delinquencies in Florida or New York? - Management reported no changes in early-stage delinquencies across the board [27] Question: Can you provide details on the increase in commercial loan NPLs in Florida? - Management clarified that it pertains to a residential mortgage on a multi-family property [27] Question: What is the competitive environment in residential mortgage underwriting? - Management emphasized a conservative underwriting approach and a consistent performance strategy, welcoming competition [30]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 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 Form 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION ...

TrustCo Bank Corp NY (NASDAQ:TRST) Q3 2022 Earnings Conference Call October 25, 2022 9:00 AM ET Company Participants Robert J. McCormick - Chairman, President, and CEO Michael M. Ozimek - EVP and CFO Scot R. Salvador - EVP, Commercial Banking Conference Call Participants Alexander Twerdahl - Piper Sandler Operator Good day and welcome to the TrustCo Bank Corp Earnings Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions]. Before proceeding, we would like to mention that ...

Part I. Financial Information [Consolidated Interim Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Consolidated%20Interim%20Financial%20Statements%20(Unaudited):) TrustCo Bank Corp NY's unaudited consolidated financial statements detail increased net income, balance sheet growth, CECL adoption, and significant unrealized investment losses [Consolidated Statements of Income](index=3&type=section&id=Consolidated%20Statements%20of%20Income) Net income for Q2 2022 increased by 23.8% to $17.9 million, driven by higher net interest income and a credit for credit losses Consolidated Income Statement Highlights (in thousands, except per share data) | Metric | Q2 2022 | Q2 2021 | Change | Six Months 2022 | Six Months 2021 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Net Interest Income** | $43,060 | $40,122 | +7.3% | $83,156 | $80,229 | +3.6% | | **(Credit) Provision for credit losses** | ($491) | $0 | N/A | ($691) | $350 | N/A | | **Noninterest Income** | $4,916 | $4,688 | +4.9% | $10,099 | $9,116 | +10.8% | | **Noninterest Expenses** | $25,005 | $25,440 | -1.7% | $47,770 | $50,775 | -5.9% | | **Net Income** | $17,871 | $14,433 | +23.8% | $34,960 | $28,516 | +22.6% | | **Diluted EPS** | $0.933 | $0.748 | +24.7% | $1.822 | $1.478 | +23.3% | [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income for Q2 2022 was $10.8 million, significantly lower than net income due to a $9.2 million unrealized loss on available-for-sale securities Comprehensive Income Reconciliation (in thousands) | Metric | Q2 2022 | Q2 2021 | Six Months 2022 | Six Months 2021 | | :--- | :--- | :--- | :--- | :--- | | **Net Income** | $17,871 | $14,433 | $34,960 | $28,516 | | **Other Comprehensive (Loss) Gain, net of tax** | ($7,053) | $572 | ($21,569) | ($4,096) | | *Net unrealized (loss) gain on securities, net of tax* | *($6,829)* | *$622* | *($21,080)* | *($3,839)* | | **Comprehensive Income** | $10,818 | $15,005 | $13,391 | $24,420 | [Consolidated Statements of Financial Condition](index=6&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) Total assets increased slightly to $6.23 billion, driven by growth in net loans and deposits, while shareholders' equity decreased due to unrealized securities losses Financial Condition Highlights (in thousands) | Metric | June 30, 2022 | Dec 31, 2021 | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | $6,226,791 | $6,196,546 | +0.5% | | Net Loans | $4,495,274 | $4,394,512 | +2.3% | | Securities Available for Sale | $502,415 | $407,713 | +23.2% | | **Total Liabilities** | $5,632,159 | $5,595,418 | +0.7% | | Total Deposits | $5,396,841 | $5,268,129 | +2.4% | | **Total Shareholders' Equity** | $594,632 | $601,128 | -1.1% | [Notes to Consolidated Interim Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Interim%20Financial%20Statements) The notes detail significant accounting policies, including CECL adoption, a residential real estate-focused loan portfolio, substantial unrealized investment losses, and the company's well-capitalized status - The Company adopted the CECL standard on January 1, 2022, resulting in a **$2.4 million increase** in the allowance for credit losses on loans and a **$2.3 million increase** for unfunded commitments, leading to a **$3.5 million net decrease** in undivided profits[28](index=28&type=chunk)[30](index=30&type=chunk) - Management elected the **'Stagflation' economic forecast scenario** for its CECL calculation, considering current and prospective inflationary pressures and monetary policies[42](index=42&type=chunk)[43](index=43&type=chunk)[80](index=80&type=chunk) - The available-for-sale securities portfolio had gross unrealized losses of **$28.6 million** as of June 30, 2022, a substantial increase from **$3.9 million** at year-end 2021, primarily due to interest rate changes, with no credit losses recorded[62](index=62&type=chunk)[63](index=63&type=chunk) - The loan portfolio is heavily concentrated in **1-to-4 family residential real estate**, constituting **$4.33 billion (95.4%)** of the total **$4.54 billion** loan portfolio as of June 30, 2022[77](index=77&type=chunk) - As of June 30, 2022, both the Company and the Bank were categorized as **'well capitalized'** under regulatory frameworks, with all capital ratios significantly exceeding minimum requirements[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk) [Management's Discussion and Analysis (MD&A)](index=51&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes strong Q2 2022 performance to higher net interest income, expanded net interest margin, loan portfolio growth, stable nonperforming loans, CECL adoption, and strong capital levels Q2 2022 vs Q2 2021 Performance Drivers (in millions/thousands) | Metric | Change | Reason | | :--- | :--- | :--- | | **Net Income** | +$3.5M | Increased net interest income and a credit for credit losses | | **Net Interest Income** | +$2.9M | Higher yield on earning assets and lower cost of interest-bearing liabilities | | **Net Interest Margin** | +13 bps to 2.83% | Benefit from rising Federal Funds rate on short-term investments | | **Provision for Credit Losses** | ($491K) credit | Improved unemployment and housing price forecasts under CECL model | | **Noninterest Expense** | -$435K | Decrease in salaries and benefits, partially offset by higher outsourced services costs | - The average loan portfolio grew by **$196.2 million** to **$4.50 billion** in Q2 2022 compared to Q2 2021, with residential mortgage loans increasing by **5.3%**[186](index=186&type=chunk)[187](index=187&type=chunk) - Nonperforming loans (NPLs) were stable at **$18.7 million** at June 30, 2022, compared to **$18.8 million** at December 31, 2021, with the allowance for credit losses on loans at **1.00%** of the total loan portfolio[205](index=205&type=chunk)[219](index=219&type=chunk) - The company's liquidity position remains strong, with average Federal Funds sold and other short-term investments at **$1.1 billion**, and the yield on this portfolio increased from **0.10%** in Q2 2021 to **0.82%** in Q2 2022 due to Fed rate hikes[195](index=195&type=chunk) - Total shareholders' equity was **$594.6 million**, and the company declared a dividend of **$0.35 per share** in Q2 2022, representing a payout ratio of **37.46%**[231](index=231&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=70&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's principal market risk is interest rate risk, with an internal model indicating asset sensitivity in rising rate scenarios and decreased capital fair value in falling rate scenarios Interest Rate Sensitivity Analysis (as of June 30, 2022) | Rate Shock Scenario | Estimated Fair Value of Capital to Fair Value of Assets | | :--- | :--- | | +400 BP | 28.90% | | +300 BP | 28.40% | | +200 BP | 29.10% | | +100 BP | 28.90% | | **Current Rates (Base)** | **27.60%** | | -100 BP | 25.00% | | -200 BP | 21.50% | [Controls and Procedures](index=70&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2022, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that the Company's disclosure controls and procedures were **effective** as of June 30, 2022[252](index=252&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the internal control over financial reporting[254](index=254&type=chunk) Part II. Other Information [Legal Proceedings](index=71&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no material legal proceedings during the period - None[255](index=255&type=chunk) [Risk Factors](index=71&type=section&id=Item%201A.%20Risk%20Factors) The company updated its risk factors to include potential material adverse effects from global economic instability, geopolitical matters, high inflation, and Federal Reserve actions - The company highlights that instability in global economic conditions, geopolitical matters like the Russia-Ukraine conflict, and financial market volatility could materially and adversely affect its operations and financial condition[257](index=257&type=chunk) - Risks from high inflation and responsive actions by the Federal Reserve (e.g., rate hikes) are noted as potentially reducing demand for products, adversely affecting borrower creditworthiness, and lowering the value of investment securities[258](index=258&type=chunk) [Share Repurchases](index=72&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2022, the company repurchased 75,000 shares of common stock for approximately $2.4 million under an authorized program Share Repurchases for Q2 2022 | Period | Shares Purchased | Average Price Paid | | :--- | :--- | :--- | | April 2022 | 25,000 | $31.42 | | May 2022 | 50,000 | $31.49 | | June 2022 | 0 | - | | **Total Q2** | **75,000** | **$31.47** | - The repurchases were made under a program authorized on March 9, 2022, for up to **200,000 shares**, with **106,886 shares** yet to be purchased as of June 30, 2022[259](index=259&type=chunk) [Exhibits](index=73&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the 10-Q report, including certifications by the CEO and CFO, a letter from the independent accounting firm, and XBRL data files

TrustCo Bank Corp NY (NASDAQ:TRST) Q2 2022 Earnings Conference Call July 22, 2022 9:00 AM ET Company Participants Robert McCormick - President, Chief Executive Officer Michael Ozimek - Executive Vice President, Chief Financial Officer Scot Salvador - Executive Vice President, Chief Lending Officer Michelle Simmonds - Administrative Vice President Conference Call Participants Alex Twerdahl - Piper Sandler Ian Lapey - Gabelli Funds Operator Good day and welcome to the TrustCo Bank Corp earnings call and webca ...