5 Sarnowski Drive, Glenville, New York, 12302

Subsidiary:	Trustco Bank	NASDAQ -- TRST
Contact:	Robert Leonard
	Executive Vice President
	(518) 381-3693

FOR IMMEDIATE RELEASE:

TrustCo’s Home Town Approach to Customer Relationships Propels Loans to All Time High

Reports Third Quarter Net Income Of $14.7 million

Executive Snapshot:

Glenville, New York –October 23, 2023

TrustCo Bank Corp NY (TrustCo, NASDAQ: TRST) today announced third quarter 2023 net income of $14.7 million, or $0.77 diluted earnings per share, compared to net income of $16.4 million, or $0.86 diluted earnings per share, for the second quarter 2023; and compared to net income of $19.4 million, or $1.01 diluted earnings per share, for the third quarter 2022; and net income of $48.8 million, or $2.57 diluted earnings per share, for the nine months ended September 30, 2023, compared to net income of $54.3 million, or $2.84 diluted earnings per share, for the nine months ended September 30, 2022.  Total loan growth increased $330.8 million, or 7.1% for the third quarter 2023 over the same period in 2022.

Overview

Chairman, President, and CEO, Robert J. McCormick said “Our strength, in large measure, is characterized by our credit quality.  Solid underwriting and the avoidance of irresponsible lending have long been part of the fabric of our company, and we recently have had seven consecutive quarters of net loan recoveries.  We have leveraged strong customer relationships to foster organic loan portfolio growth and retain deposits despite competitive pressure on pricing. We are realizing the benefits of our long-term capital preservation strategy, avoiding the pitfalls of low-return investments that have plagued others.  Liquidity management continues to be an acute focus, and our capital ratio results this quarter exemplify those efforts. Other TrustCo hallmarks continue to serve us well – we are debt free and extremely well-capitalized. While we can’t predict the future, no matter what the rate environment, we stand ready to capitalize on opportunities.”

TrustCo saw deposit balances rebound from the end of the prior year with net deposit inflows during the first nine months of 2023.  Loan growth continued across all categories in the third quarter 2023 compared to the prior year’s third quarter, led by an increase in residential mortgages. Loan portfolio expansion was funded by a combination of utilizing a portion of our strong cash balances and by cash flow from investments, deposit inflows, and cash flow from the existing loan portfolio.  The Federal Reserve’s decision to raise the target Federal Funds rate multiple times since March 2022 has contributed to our results in the third quarter 2023, as our cash position and other variable rate products continue to reprice upward, and they are likely to continue to do so to the extent there are additional rate increases.  Accordingly, deposit costs continue to increase while we are also experiencing a shift in deposits to Time Deposits.  We continue to deploy strong marketing efforts to retain our deposit balances.  We also note that current mortgage rates significantly exceed the yield on our existing portfolio of mortgages, which, if sustained, should result in positive to net interest margin going forward.  TrustCo’s strong liquidity position continues to allow us to take advantage of opportunities as they arise.

Details

Average loans were up $337.6 million or 7.4% in the third quarter 2023 over the same period in 2022.  Average residential loans, our primary lending focus, were up $219.4 million, or 5.3%, in the third quarter 2023 over the same period in 2022.  Average commercial loans and home equity lines of credit also increased $53.6 million, or 25.8%, and $58.9 million, or 22.5%, respectively, in the third quarter 2023 over the same period in 2022.

We are actively retaining deposits, which is evident since they have increased since December 31, 2022.  Total deposits as of September 30, 2023 increased $41.6 million to $5.23 billion from December 31, 2022.  As we move forward, our objective is to continue to encourage customers to retain these funds in the expanded product offerings of the Bank through aggressive marketing and product differentiation.  We understood the big inflows of deposits during the pandemic were temporary and that is why we did not invest that liquidity into securities or loans, but we instead retained that liquidity on the balance sheet for when depositors would start to absorb the funds.  This gave us flexibility to strategically price deposits while retaining core customers.

Net interest income was $42.2 million for the third quarter 2023, a decrease of $5.6 million, or 11.7%, compared to the same period in 2022, driven by a higher cost of deposits, partially offset by the increased yield on the cash balance at the Federal Reserve Bank due to the increases in the Federal Funds target rate over the past year, and loan growth.  The net interest margin for the third quarter 2023 was 2.85%, down 31 basis points from 3.16% in the third quarter of 2022.  The yield on interest earnings assets increased to 3.88%, up 64 basis points from 3.24 % in the third quarter of 2022.  The cost of interest bearing liabilities increased to 1.33% in the third quarter 2023 from 0.11% in the third quarter 2022.

Asset quality remains strong and has been consistent over the past twelve months.  The Company recorded a provision for credit losses of $100 thousand in the third quarter of 2023, which is the result of a provision for credit losses on loans of $300 thousand, offset by a benefit for credit losses on unfunded commitments of $200 thousand as a result of a corresponding decrease in unfunded loan commitments.  The ratio of allowance for credit losses on loans to total loans was 0.95% and 0.98% as of September 30, 2023 and 2022, respectively.  The allowance for credit losses on loans was $47.2 million at September 30, 2023, compared to $45.5 million at September 30, 2022.  NPLs were $17.9 million at September 30, 2023, compared to $18.7 million at September 30, 2022.  NPLs were 0.36% and 0.40% of total loans at September 30, 2023 and 2022, respectively.  The coverage ratio, or allowance for credit losses on loans to NPLs, was 264.2% at September 30, 2023, compared to 243.6% at September 30, 2022.  Nonperforming assets (NPAs) were $19.1 million at September 30, 2023, compared to $19.4 million at September 30, 2022.  Additionally, we have also had minimal charge-offs and have been in a net recovery position for the past seven quarters.

At September 30, 2023, our equity to asset ratio was 10.31%, compared to 9.69% at September 30, 2022.  Book value per share at September 30, 2023 was $32.80, up 6.2% compared to $30.89 a year earlier.

About TrustCo Bank Corp NY

TrustCo Bank Corp NY is a $6.1 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 143 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at September 30, 2023.

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.

Forward-Looking Statements

All statements in this news release that are not historical are forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.  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 development, results or periods. Examples of forward-looking statements include, among others, statements we make regarding our expectations for our future performance, including our expectations regarding the effects of the economic environment on our financial results, our ability to retain customers and the amount of customers’ business, including deposit balances, with us, the impact of the Federal Reserve’s actions regarding interest rates, the growth of loans and deposits throughout our branch network, the increase in residential mortgage rates, and our ability to capitalize on economic changes in the areas in which we operate.  Forward-looking statements are based on management’s current expectations as well as certain assumptions and estimates made by, and information available to, management at the time the statements are made. Such forward-looking statements are subject to factors and uncertainties that could cause actual results to differ materially for TrustCo from the views, beliefs and projections expressed in such statements, and many of the risks and uncertainties are heightened by or may, in the future, be heightened by volatility in financial markets and macroeconomic or geopolitical concerns related to inflation, rising interest rates and ongoing armed conflicts (including the Russia/Ukraine conflict and the conflict in Israel and surrounding areas). 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:  the soundness of other financial institutions; U.S. government shutdowns or failure to increase the debt ceiling; changes in interest rates, including recent and possible future increases fueled by inflation; inflationary pressures and rising prices; exposure to credit risk in our lending activities; the sufficiency of our allowance for credit losses on loans to cover actual loan losses; our ability to meet the cash flow requirements of our depositors or borrowers or meet our operating cash needs to fund corporate expansion and other activities; claims and litigation pertaining to fiduciary responsibility and lender liability; our dependency upon the services of the management team; our disclosure controls and procedures’ ability to prevent or detect errors or acts of fraud; the adequacy of our business continuity and disaster recovery plans; the effectiveness of our risk management framework; the chance of a prolonged economic downturn, especially one affecting our geographic market area; instability in global economic conditions and geopolitical matters, as well as volatility in financial markets; fluctuations in the trust wealth management fees we receive as a result of investment performance; the impact of regulatory capital rules on our growth; changes in laws and regulations; our compliance with the USA PATRIOT Act, Bank Secrecy Act, and other laws and regulations that could result in fines or sanctions; changes in tax laws; limitations on our ability to pay dividends; TrustCo Realty Corp.’s ability to qualify as a real estate investment trust; changes in accounting standards; competition within our market areas; consumers and businesses’ use of non-banks to complete financial transactions; our reliance on third-party service providers; the impact of data breaches and cyber-attacks; the impact of a failure in or breach of our operational or security systems or infrastructure, or those of third parties; the impact of an unauthorized disclosure of sensitive or confidential client or customer information; the impact of interruptions in the effective operation of our computer systems; the impact of any expansion by us into new lines of business or new products and services; the impact of anti-takeover provisions in our organizational documents; the impact of the manner in which we allocate capital; the impact of severe weather events and climate change on us and the communities we serve, including societal responses to climate change; and other risks and uncertainties under the heading “Risk Factors” in our most recent annual report on Form 10-K and, if any, in our subsequent quarterly reports on Form 10-Q or other securities filings. The forward-looking statements contained in this news release represent TrustCo management’s judgment as of the date of this news release. TrustCo disclaims, however, any intent or obligation to update forward-looking statements, either as a result of future developments, new information or otherwise, except as may be required by law.

TRUSTCO BANK CORP NY

GLENVILLE, NY

FINANCIAL HIGHLIGHTS

(dollars in thousands, except per share data)

(Unaudited)

(1)	Non-GAAP measure; calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income. See Non-GAAP Financial Measures Reconciliation.

(2)	Non-GAAP measure; calculated as total shareholders’ equity less $553 of intangible assets divided by total assets less $553 of intangible assets.  See Non-GAAP Financial Measures Reconciliation.

(3)	Calculated as allowance for credit losses on loans divided by total nonperforming loans.

FINANCIAL HIGHLIGHTS, Continued

(dollars in thousands, except per share data)

(Unaudited)

		Nine months ended
		09/30/23				09/30/22
Summary of operations
Net interest income		$	133,238				130,949
(Credit) Provision for credit losses			(100	)			(391	)
Noninterest income			13,841				14,485
Noninterest expense			82,466				73,914
Net income			48,798				54,324
Per share
Net income per share:
- Basic		$	2.57				2.84
- Diluted			2.57				2.84
Cash dividends			1.08				1.05
Book value at period end			32.80				30.89
Market price at period end			27.29				31.42
Performance ratios
Return on average assets			1.08	%			1.17
Return on average equity			10.57				12.16
Efficiency ratio (1)			55.70				50.77
Net interest spread			2.78				2.86
Net interest margin			3.01				2.88
Dividend payout ratio			42.11				37.03

(1)	Non-GAAP measure; calculated as noninterest expense (excluding ORE income/expense) divided by taxable equivalent net interest income plus noninterest income.  See Non-GAAP Financial Measures Reconciliation.

CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands, except per share data)

(Unaudited)

CONSOLIDATED STATEMENTS OF INCOME, Continued

(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 three-month period ended

DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY -

INTEREST RATES AND INTEREST DIFFERENTIAL