TrustBank NY(US:TRST)2023-11-08 21:28Financial Performance - TrustCo recorded net income of $14.7 million, or $0.77 of diluted earnings per share, for Q3 2023, compared to $19.4 million, or $1.01 per share, in Q3 2022, representing a decrease of 24.1% in net income [152]. - For the nine months ended September 30, 2023, net income was $48.8 million, or $2.57 per diluted share, down from $54.3 million, or $2.84 per share, in the same period in 2022, a decline of 10.1% [153]. - Total noninterest income for Q3 2023 was $4.6 million, an increase from $4.4 million in Q3 2022, driven by higher market values of assets under management [208]. - Total noninterest expenses for Q3 2023 were $27.5 million, up from $26.1 million in Q3 2022, with significant increases in salaries and employee benefits, equipment expense, and professional services [210]. - The effective tax rate for Q3 2023 was 23.7%, down from 24.8% in Q3 2022, with income tax expense recognized at $4.6 million compared to $6.4 million in the prior year [214]. Asset and Liability Management - Total assets decreased to $6,045,601 thousand as of September 30, 2023, from $6,182,033 thousand in the same period of 2022, representing a decline of approximately 2.2% [228]. - Total interest-earning assets decreased to $5,920,155 thousand, compared to $6,038,880 thousand in the previous year, reflecting a decline of approximately 2.0% [228]. - Total average interest-bearing deposit accounts decreased by $49.1 million to $4.45 billion, while the average rate paid increased from 0.10% to 1.34% [179]. - The average balance of Federal Funds sold and other short-term investments decreased by $424.3 million, while the average yield increased by 312 basis points [164]. - The average balance of mortgage-backed securities and collateralized mortgage obligations was $278,252 thousand, with an interest rate of 2.21% for the nine months ended September 30, 2023 [233]. Interest Income and Margin - TrustCo experienced an increase in interest expense of $14.1 million from interest-bearing liabilities, while interest income from earning assets increased by $8.5 million, resulting in a decrease in taxable equivalent net interest income of $5.6 million in Q3 2023 compared to Q3 2022 [156]. - For Q3 2023, the net interest margin decreased to 2.85%, down 31 basis points from the prior year [163]. - Interest income on average earning assets increased from $49.0 million in Q3 2022 to $57.6 million in Q3 2023, driven by higher interest rates [165]. - The average interest rate on total interest-earning assets increased to 3.88% from 3.24% year-over-year, reflecting a rise of 64 basis points [228]. - The net interest spread decreased by 58 basis points to 2.55% in Q3 2023 compared to the same period in 2022 [183]. Loan Portfolio and Credit Quality - The average balance of residential mortgage loans increased by 5.3% to $4.33 billion, with the yield rising by 20 basis points to 3.64% [167]. - Nonperforming loans totaled $17.9 million as of September 30, 2023, compared to $18.7 million a year earlier, with a coverage ratio of 264.2% [186]. - The Company recorded a provision for credit losses of $100 thousand in Q3 2023, which includes a provision for loans of $300 thousand, reflecting continued growth in the loan portfolio [197]. - The allowance for loan losses was $47.2 million, representing 0.95% of the loan portfolio, compared to $46.0 million (0.97%) at December 31, 2022 [201]. - The Company has no subprime mortgages or loans with deteriorated credit quality in its loan portfolio as of September 30, 2023 [194]. Capital and Equity - Total shareholders' equity increased to $623.9 million as of September 30, 2023, compared to $589.0 million a year earlier [216]. - The Common Equity Tier 1 (CET1) capital ratio increased to 18.395% as of September 30, 2023, compared to 18.431% at the end of 2022 [219]. - The Total Risk-Based Capital ratio was 19.647% as of September 30, 2023, slightly down from 19.684% at December 31, 2022 [219]. - The consolidated equity to total assets ratio improved to 10.31% as of September 30, 2023, compared to 10.00% at December 31, 2022 [219]. - Shareholders' equity increased to $624,900 thousand as of September 30, 2023, compared to $601,061 thousand in the prior year, representing an increase of approximately 4.0% [228]. Dividends and Share Repurchase - The Company's dividend payout ratio for Q3 2023 was 46.65% of net income, an increase from 34.57% in Q3 2022 [220]. - The per-share dividend paid in Q3 2023 was $0.36, compared to $0.35 in Q3 2022 [220]. - TrustCo maintains a Dividend Reinvestment Plan (DRP) with approximately 6,771 participants, allowing reinvestment of dividends in shares [221]. - A share repurchase program for up to 200,000 shares was authorized on March 17, 2023, but no repurchases occurred during the three and nine months ended September 30, 2023 [222]. Regulatory and Economic Environment - The Federal Reserve increased the target range for the Federal Funds rate by a total of 525 basis points to a range of 5.25% to 5.50% as of September 30, 2023, in response to inflationary pressures [144]. - The FDIC proposed a special assessment on banks with total assets greater than $5.0 billion, expected to generate approximately $15.8 billion in revenue, effective January 1, 2024 [149]. - The average yield on the 10-year Treasury bond increased by 55 basis points to 4.15% in Q3 2023 compared to Q2 2023, and increased by 105 basis points compared to Q3 2022 [160].