TRST TrustCo Bank Corporation of NY

TrustCo Bank Corp NY (TrustCo, NASDAQ: TRST) today announced first quarter 2023 net income of $17.7 million or $0.93 diluted earnings per share, compared to net income of $17.1 million or $0.89 diluted earnings per share for the first quarter 2022. Average loan growth increased 7.0% or $312.0 million for the first quarter 2023 over the same period in 2022.

Overview

Chairman, President, and CEO, Robert J. McCormick said “Our first quarter results, which build upon the Company’s record year in 2022, demonstrate that TrustCo is a pillar of strength and a model of stability. The biggest challenge presented by great performance is maintaining momentum. This quarter, TrustCo did not just equal last year’s results, but improved upon them in the key areas of average loan growth, diluted earnings per share, and net income, among others. That we have been able to improve upon our performance in the present challenging environment is a testament to the skill of our bankers and the soundness of our strategy. Careful expansions of our areas of operation and mortgage product offerings, resting upon a solid foundation devoid of risky gimmicks and dangerous concentrations, position us well for sustained success.”

TrustCo saw deposit balances rebound from the end of the year with net deposit inflows during the first quarter of 2023. Loan growth continued in the first quarter 2023 compared to the prior year first 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 and the existing loan portfolio. The Federal Reserve decision to raise the target Federal Funds rate multiple times since March 2022 has contributed to our results in the first quarter 2023, as our cash position and other variable rate products continue to reprice upward, and are likely to continue to do so to the extent there are additional rate increases. We also note that current mortgage rates significantly exceed the yield on our existing portfolio of mortgages, which, if sustained, should be 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

As discussed, average loans were up $312.0 million or 7.0% in the first quarter 2023 over the same period in 2022. Average residential loans, our primary lending focus, were up $205.0 million or 5.1%, in the first quarter 2023 over the same period in 2022. Average commercial loans and home equity lines of credit also increased $43.9 million or 22.5% and $58.8 million or 25.3%, respectively, over the same period in 2022.

We are now actively retaining deposits which is evident in the quarter over quarter results. Total deposits as of March 31, 2023 increased $19.6 million to $5.2 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 retained that liquidity on the balance sheet for when the depositors would start to absorb the funds. This gave us flexibility to strategically price deposits while retaining core customers.

Net interest income was $47.0 million for the first quarter 2023, an increase of $6.9 million or 17.1% compared to the same period in 2022, driven by solid liquidity, loan growth, and the recent increases in the Federal Funds target rate. The net interest margin for the first quarter 2023 was 3.21%, up 55 basis points from 2.66% in the first quarter of 2022. The yield on interest earnings assets increased to 3.69%, up 95 basis points from 2.74% in the first quarter of 2022. At the same time the cost of interest bearing liabilities only increased to 0.63% in the first quarter 2023 from 0.10% in the first quarter 2022. The increase in net interest income of $6.9 million is primarily a result of our ability to maintain a $576.9 million average cash balance at the Federal Reserve Bank during the first quarter of 2023 and being able to retain low cost deposit balances at competitive market rates.

Asset quality remains strong and loan loss reserve measures are consistent over the past twelve months. The Company recorded a provision for credit losses of $300 thousand in the first quarter of 2023, which includes a provision for credit losses on loans of $600 thousand and a benefit for credit losses on unfunded commitments of $300 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 0.97% and 1.03% as of March 31, 2023 and 2022, respectively. The allowance for credit losses on loans was $46.7 million at March 31, 2023, compared to $46.2 million at March 31, 2022. Nonperforming loans (NPLs) were $19.2 million at March 31, 2023, compared to $19.4 million at March 31, 2022. NPLs were 0.40% and 0.43% of total loans at March 31, 2023 and 2022, respectively. The coverage ratio, or allowance for credit losses on loans to NPLs, was 243.6% at March 31, 2023, compared to 237.8% at March 31, 2022. Nonperforming assets (NPAs) were $21.0 million at March 31, 2023, compared to $19.7 million at March 31, 2022.

At March 31, 2023 our equity to asset ratio was 10.17%, compared to 9.44% at March 31, 2022. Book value per share at March 31, 2023 was $32.31, up 4.7% compared to $30.85 a year earlier.

A conference call to discuss first quarter 2023 results will be held at 9:00 a.m. Eastern Time on April 25, 2023. Those wishing to participate in the call may dial toll-free for the United States at 1-833-470-1428, and for Canada at 1-833-950-0062, Access code 576267. A replay of the call will be available for thirty days by dialing toll-free for the United States at 1-866-813-9403, for Canada at 1-226-828-7578, and all other locations at +44-204-525-0658, Access code 635945. The call will also be audio webcast at https://events.q4inc.com/attendee/162588284, and will be available for one year.

About TrustCo Bank Corp NY

TrustCo Bank Corp NY is a $6.0 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 March 31, 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 performance during 2023, 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 the effects of the COVID-19 pandemic and macroeconomic or geopolitical concerns related to inflation, rising interest rates and the war in Ukraine. 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: 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; the COVID-19 pandemic; the soundness of other financial institutions; 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 risk of data breaches and cyber-attacks; the risk of an unauthorized disclosure of sensitive or confidential client or customer information; the impact of any expansion by us into new lines of business or new products and services; 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)
	Three months ended
	3/31/2023				12/31/2022					3/31/2022
Summary of operations
Net interest income	$	46,965			$	49,186			$	40,096
Provision (Credit) for credit losses		300				50				(200	)
Noninterest income		4,669				4,775				5,183
Noninterest expense		27,679				26,405				22,765
Net income		17,746				20,910				17,089
Per share
Net income per share:
- Basic	$	0.93			$	1.10			$	0.89
- Diluted		0.93				1.10				0.89
Cash dividends		0.360				0.360				0.350
Book value at period end		32.31				31.54				30.85
Market price at period end		31.94				37.59				31.93
At period end
Full time equivalent employees		776				750				769
Full service banking offices		143				143				144
Performance ratios
Return on average assets		1.20	%			1.38	%			1.12	%
Return on average equity		11.84				13.91				11.60
Efficiency ratio (1)		53.17				48.75				50.55
Net interest spread		3.06				3.28				2.63
Net interest margin		3.21				3.34				2.66
Dividend payout ratio		38.59				32.81				39.36
Capital ratios at period end
Consolidated equity to assets		10.17	%			10.00	%			9.44	%
Consolidated tangible equity to tangible assets (2)		10.16	%			9.99	%			9.43	%
Asset quality analysis at period end
Nonperforming loans to total loans		0.40	%			0.37	%			0.43	%
Nonperforming assets to total assets		0.35				0.33				0.31
Allowance for credit losses on loans to total loans		0.97				0.97				1.03
Coverage ratio (3)	2.4x				2.6x					2.4x

(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.

CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
(Unaudited)
	Three months ended
		3/31/2023				12/31/2022				9/30/2022				6/30/2022				3/31/2022
Interest and dividend income:
Interest and fees on loans	$	44,272			$	42,711			$	40,896			$	39,604			$	39,003
Interest and dividends on securities available for sale:
U. S. government sponsored enterprises		692				693				479				147				86
State and political subdivisions		-				-				1				-				1
Mortgage-backed securities and collateralized mortgage obligations - residential		1,585				1,606				1,617				1,367				1,087
Corporate bonds		521				523				526				522				233
Small Business Administration - guaranteed participation securities		117				124				133				140				154
Other securities		2				2				3				2				2
Total interest and dividends on securities available for sale		2,917				2,948				2,759				2,178				1,563
Interest on held to maturity securities:
Mortgage-backed securities and collateralized mortgage obligations - residential		78				81				85				87				90
Total interest on held to maturity securities		78				81				85				87				90
Federal Home Loan Bank stock		110				98				80				65				62
Interest on federal funds sold and other short-term investments		6,555				6,246				5,221				2,253				572
Total interest income		53,932				52,084				49,041				44,187				41,290
Interest expense:
Interest on deposits:
Interest-bearing checking		66				61				43				42				44
Savings		530				401				200				163				156
Money market deposit accounts		814				389				237				210				214
Time deposits		5,272				1,839				646				536				546
Interest on short-term borrowings		285				208				122				176				234
Total interest expense		6,967				2,898				1,248				1,127				1,194
Net interest income		46,965				49,186				47,793				43,060				40,096
Less: Provision (Credit) for credit losses		300				50				300				(491	)			(200	)
Net interest income after provision for loan losses		46,665				49,136				47,493				43,551				40,296
Noninterest income:
Trustco Financial Services income		1,774				1,773				1,435				1,996				1,833
Fees for services to customers		2,648				2,783				2,705				2,658				2,801
Other		247				219				246				262				549
Total noninterest income		4,669				4,775				4,386				4,916				5,183
Noninterest expenses:
Salaries and employee benefits		13,283				13,067				12,134				11,464				9,239
Net occupancy expense		4,598				4,261				4,483				4,254				4,529
Equipment expense		1,962				1,700				1,532				1,667				1,588
Professional services		1,607				1,251				1,375				1,484				1,467
Outsourced services		2,296				2,102				2,328				2,500				2,280
Advertising expense		390				532				508				389				617
FDIC and other insurance		1,052				770				773				804				812
Other real estate expense, net		225				101				124				74				11
Other		2,266				2,621				2,887				2,369				2,222
Total noninterest expenses		27,679				26,405				26,144				25,005				22,765
Income before taxes		23,655				27,506				25,735				23,462				22,714
Income taxes		5,909				6,596				6,371				5,591				5,625
Net income	$	17,746			$	20,910			$	19,364			$	17,871			$	17,089
Net income per common share:
- Basic	$	0.93			$	1.10			$	1.01			$	0.93			$	0.89
- Diluted		0.93				1.10				1.01				0.93				0.89
Average basic shares (in thousands)		19,024				19,045				19,111				19,153				19,209
Average diluted shares (in thousands)		19,028				19,050				19,112				19,153				19,210

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)
(Unaudited)
		3/31/2023				12/31/2022				9/30/2022				6/30/2022				3/31/2022
ASSETS:
Cash and due from banks	$	47,595			$	43,429			$	46,236			$	46,611			$	47,526
Federal funds sold and other short term investments		589,389				607,170				795,028				999,573				1,225,022
Total cash and cash equivalents		636,984				650,599				841,264				1,046,184				1,272,548
Securities available for sale:
U. S. government sponsored enterprises		119,132				118,187				102,779				101,100				62,059
States and political subdivisions		34				34				41				41				41
Mortgage-backed securities and collateralized mortgage obligations - residential		255,556				260,316				261,242				287,450				244,045
Small Business Administration - guaranteed participation securities		19,821				20,977				22,498				25,428				28,086
Corporate bonds		81,464				81,346				81,002				87,740				74,089
Other securities		652				653				657				656				671
Total securities available for sale		476,659				481,513				468,219				502,415				408,991
Held to maturity securities:
Mortgage-backed securities and collateralized mortgage obligations-residential		7,382				7,707				8,091				8,544				9,183
Total held to maturity securities		7,382				7,707				8,091				8,544				9,183
Federal Reserve Bank and Federal Home Loan Bank stock		5,797				5,797				5,797				5,797				5,604
Loans:
Commercial		246,307				231,011				217,120				199,886				192,408
Residential mortgage loans		4,241,459				4,203,451				4,132,365				4,076,657				4,026,434
Home equity line of credit		296,490				286,432				269,341				253,758				236,117
Installment loans		15,326				12,307				10,665				10,258				9,395
Loans, net of deferred net costs		4,799,582				4,733,201				4,629,491				4,540,559				4,464,354
Less: Allowance for credit losses on loans		46,685				46,032				45,517				45,285				46,178
Net loans		4,752,897				4,687,169				4,583,974				4,495,274				4,418,176
Bank premises and equipment, net		32,305				32,556				31,931				32,381				32,644
Operating lease right-of-use assets		43,478				44,727				45,733				47,343				48,569
Other assets		90,306				89,984				94,485				88,853				86,158
Total assets	$	6,045,808			$	6,000,052			$	6,079,494			$	6,226,791			$	6,281,873
LIABILITIES:
Deposits:
Demand	$	806,075			$	838,147			$	859,829			$	851,573			$	835,281
Interest-bearing checking		1,124,785				1,183,321				1,188,790				1,208,159				1,225,093
Savings accounts		1,400,887				1,521,473				1,562,564				1,577,034				1,553,152
Money market deposit accounts		600,410				621,106				716,319				760,338				796,275
Time deposits		1,280,301				1,028,763				954,352				999,737				940,215
Total deposits		5,212,458				5,192,810				5,281,854				5,396,841				5,350,016
Short-term borrowings		134,293				122,700				124,932				147,282				248,371
Operating lease liabilities		47,643				48,980				50,077				51,777				53,094
Accrued expenses and other liabilities		36,711				35,575				33,625				36,259				37,497
Total liabilities		5,431,105				5,400,065				5,490,488				5,632,159				5,688,978
SHAREHOLDERS' EQUITY:
Capital stock		20,058				20,058				20,046				20,046				20,046
Surplus		257,078				257,078				256,661				256,661				256,661
Undivided profits		404,728				393,831				379,769				367,100				355,948
Accumulated other comprehensive loss, net of tax		(23,375	)			(27,194	)			(25,209	)			(9,422	)			(2,369	)
Treasury stock at cost		(43,786	)			(43,786	)			(42,261	)			(39,753	)			(37,391	)
Total shareholders' equity		614,703				599,987				589,006				594,632				592,895
Total liabilities and shareholders' equity	$	6,045,808			$	6,000,052			$	6,079,494			$	6,226,791			$	6,281,873
Outstanding shares (in thousands)		19,024				19,024				19,052				19,127				19,202

NONPERFORMING ASSETS
(dollars in thousands)
(Unaudited)
		3/31/2023			12/31/2022			9/30/2022			6/30/2022			3/31/2022
Nonperforming Assets
New York and other states*
Loans in nonaccrual status:
Commercial	$	560		$	219		$	179		$	203		$	187
Real estate mortgage - 1 to 4 family		15,722			14,949			16,295			16,259			17,065
Installment		59			23			29			40			33
Total non-accrual loans		16,341			15,191			16,503			16,502			17,285
Other nonperforming real estate mortgages - 1 to 4 family		8			10			12			14			16
Total nonperforming loans		16,349			15,201			16,515			16,516			17,301
Other real estate owned		1,869			2,061			682			644			269
Total nonperforming assets	$	18,218		$	17,262		$	17,197		$	17,160		$	17,570
Florida
Loans in nonaccrual status:
Commercial	$	314		$	314		$	-		$	-		$	-
Real estate mortgage - 1 to 4 family		2,437			1,895			2,104			2,192			2,109
Installment		62			83			65			5			8
Total non-accrual loans		2,813			2,292			2,169			2,197			2,117
Other nonperforming real estate mortgages - 1 to 4 family		-			-			-			-			-
Total nonperforming loans		2,813			2,292			2,169			2,197			2,117
Other real estate owned		-			-			-			-			-
Total nonperforming assets	$	2,813		$	2,292		$	2,169		$	2,197		$	2,117
Total
Loans in nonaccrual status:
Commercial	$	874		$	533		$	179		$	203		$	187
Real estate mortgage - 1 to 4 family		18,159			16,844			18,399			18,451			19,174
Installment		121			106			94			45			41
Total non-accrual loans		19,154			17,483			18,672			18,699			19,402
Other nonperforming real estate mortgages - 1 to 4 family		8			10			12			14			16
Total nonperforming loans		19,162			17,493			18,684			18,713			19,418
Other real estate owned		1,869			2,061			682			644			269
Total nonperforming assets	$	21,031		$	19,554		$	19,366		$	19,357		$	19,687
Quarterly Net (Recoveries) Chargeoffs
New York and other states*
Commercial	$	-		$	-		$	-		$	-		$	36
Real estate mortgage - 1 to 4 family		(53	)		(46	)		(164	)		(119	)		(97	)
Installment		(6	)		31			34			12			3
Total net (recoveries) chargeoffs	$	(59	)	$	(15	)	$	(130	)	$	(107	)	$	(58	)
Florida
Commercial	$	-		$	-		$	-		$	-		$	-
Real estate mortgage - 1 to 4 family		(25	)		-			-			-			-
Installment		31			-			(2	)		-			-
Total net (recoveries) chargeoffs	$	6		$	-		$	(2	)	$	-		$	-
Total
Commercial	$	-		$	-		$	-		$	-		$	36
Real estate mortgage - 1 to 4 family		(78	)		(46	)		(164	)		(119	)		(97	)
Installment		25			31			32			12			3
Total net (recoveries) chargeoffs	$	(53	)	$	(15	)	$	(132	)	$	(107	)	$	(58	)
Asset Quality Ratios
Total nonperforming loans (1)	$	19,162		$	17,493		$	18,684		$	18,713		$	19,418
Total nonperforming assets (1)		21,031			19,554			19,366			19,357			19,687
Total net (recoveries) chargeoffs (2)		(53	)		(15	)		(132	)		(107	)		(58	)
Allowance for credit losses on loans (1)		46,685			46,032			45,517			45,285			46,178
Nonperforming loans to total loans		0.40	%		0.37	%		0.40	%		0.41	%		0.43	%
Nonperforming assets to total assets		0.35	%		0.33	%		0.32	%		0.31	%		0.31	%
Allowance for credit losses on loans to total loans		0.97	%		0.97	%		0.98	%		1.00	%		1.03	%
Coverage ratio (1)		243.6	%		263.1	%		243.6	%		242.0	%		237.8	%
Annualized net (recoveries) chargeoffs to average loans (2)		0.00	%		0.00	%		-0.01	%		-0.01	%		-0.01	%
Allowance for credit losses on loans to annualized net (recoveries) chargeoffs (2)		N/A			N/A			N/A			N/A			N/A

* 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
(dollars in thousands)
(Unaudited)	Three months ended										Three months ended
	March 31, 2023										March 31, 2022
		Average				Interest		Average				Average				Interest		Average
		Balance						Rate				Balance						Rate
Assets
Securities available for sale:
U. S. government sponsored enterprises	$	120,692			$	692		2.29	%		$	61,755			$	86		0.55	%
Mortgage backed securities and collateralized mortgage obligations - residential		287,046				1,585		2.20				261,124				1,087		1.67
State and political subdivisions		34				-		6.74				41				1		6.73
Corporate bonds		85,578				521		2.43				52,977				233		1.76
Small Business Administration - guaranteed participation securities		22,129				117		2.12				29,871				154		2.06
Other		686				2		1.17				686				2		1.17
Total securities available for sale		516,165				2,917		2.26				406,454				1,563		1.54
Federal funds sold and other short-term Investments		576,931				6,555		4.61				1,187,201				572		0.20
Held to maturity securities:
Mortgage backed securities and collateralized mortgage obligations - residential		7,542				78		4.14				9,541				90		3.79
Total held to maturity securities		7,542				78		4.14				9,541				90		3.79
Federal Home Loan Bank stock		5,797				110		7.59				5,604				62		4.43
Commercial loans		238,870				3,024		5.06				194,989				2,525		5.18
Residential mortgage loans		4,212,878				36,913		3.50				4,007,886				34,197		3.42
Home equity lines of credit		291,326				4,119		5.73				232,535				2,125		3.71
Installment loans		13,323				216		6.56				8,974				156		7.03
Loans, net of unearned income		4,756,397				44,272		3.73				4,444,384				39,003		3.52
Total interest earning assets		5,862,832			$	53,932		3.69				6,053,184			$	41,290		2.74
Allowance for credit losses on loans		(46,290	)									(46,759	)
Cash & non-interest earning assets		175,097										207,308
Total assets	$	5,991,639									$	6,213,733
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts	$	1,133,383			$	66		0.02	%		$	1,191,496			$	44		0.01	%
Money market accounts		600,855				814		0.55				791,689				214		0.11
Savings		1,456,242				530		0.15				1,527,975				156		0.04
Time deposits		1,160,969				5,272		1.84				964,158				546		0.23
Total interest bearing deposits		4,351,449				6,682		0.62				4,475,318				960		0.09
Short-term borrowings		131,867				285		0.88				248,535				234		0.38
Total interest bearing liabilities		4,483,316			$	6,967		0.63				4,723,853			$	1,194		0.10
Demand deposits		816,565										808,695
Other liabilities		84,092										83,633
Shareholders' equity		607,666										597,552
Total liabilities and shareholders' equity	$	5,991,639									$	6,213,733
Net interest income, GAAP and tax equivalent					$	46,965									$	40,096
Net interest spread, GAAP and tax equivalent								3.06	%									2.63	%
Net interest margin (net interest income to total interest earning assets) GAAP and tax equivalent								3.21	%									2.66	%
Tax equivalent adjustment						-										-
Net interest income					$	46,965									$	40,096

Non-GAAP Financial Measures Reconciliation

Tangible equity as a percentage of tangible assets at period end is a non-GAAP financial measure derived from GAAP-based amounts. We calculate tangible equity and tangible assets by excluding the balance of intangible assets from total shareholders’ equity and total assets, respectively. We calculate tangible equity as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end. We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios. Additionally, we believe that this measure is important to many investors in the marketplace who are interested in relative changes from period to period in equity and total assets, each exclusive of changes in intangible assets.

The efficiency ratio is a non-GAAP measure of expense control relative to revenue from net interest income and non-interest fee income. We calculate the efficiency ratio by dividing total noninterest expenses as determined under GAAP, excluding other real estate expense, net, by net interest income (fully taxable equivalent) and total noninterest income as determined under GAAP, excluding non-routine items from this calculation. We believe that this provides a reasonable measure of primary banking expenses relative to primary banking revenue. Additionally, we believe this measure is important to investors looking for a measure of efficiency in our productivity measured by the amount of revenue generated for each dollar spent.

We believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our financial results. Our management internally assesses our performance based, in part, on these measures. However, these non-GAAP financial measures are supplemental and not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these measures, this presentation may not be comparable to other similarly titled measures reported by other companies. A reconciliation of the non-GAAP measures of tangible equity as a percentage of tangible assets, and efficiency ratio to the most directly comparable GAAP measures is set forth below.

NON-GAAP FINANCIAL MEASURES RECONCILIATION
(dollars in thousands)
(Unaudited)
		3/31/2023			12/31/2022			3/31/2022
Tangible Equity to Tangible Assets
Total Assets (GAAP)	$	6,045,808		$	6,000,052		$	6,281,873
Less: Intangible assets		553			553			553
Tangible assets (Non-GAAP)	$	6,045,255		$	5,999,499		$	6,281,320
Equity (GAAP)	$	614,703		$	599,987		$	592,895
Less: Intangible assets		553			553			553
Tangible equity (Non-GAAP)	$	614,150		$	599,434		$	592,342
Tangible Equity to Tangible Assets (Non-GAAP)		10.16	%		9.99	%		9.43	%
Equity to Assets (GAAP)		10.17	%		10.00	%		9.44	%
	Three months ended
Efficiency Ratio		3/31/2023			12/31/2022			3/31/2022
Net interest income (fully taxable equivalent) (Non-GAAP)	$	46,965		$	49,187		$	40,096
Non-interest income (GAAP)		4,669			4,775			5,183
Less: Net gain on sale of building		-			-			268
Revenue used for efficiency ratio (Non-GAAP)	$	51,634		$	53,962		$	45,011
Total noninterest expense (GAAP)	$	27,679		$	26,405		$	22,765
Less: Other real estate (income) expense, net		225			101			11
Expense used for efficiency ratio (Non-GAAP)	$	27,454		$	26,304		$	22,754
Efficiency Ratio		53.17	%		48.75	%		50.55	%

Subsidiary: Trustco Bank
Contact:		Robert LeonardExecutive Vice President(518) 381-3693