TRUSTCO BANK CORP NY Forward-looking Statements
• Statements included in this report and in future filings by TrustCo with the
statements made with the approval of an authorized executive officer, including
statements regarding the effect of the novel coronavirus disease ("COVID-19")
pandemic on our business and our continuing response to the COVID-19 pandemic,
that are not historical or current facts, are "forward-looking statements" made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995 and are subject to certain risks and uncertainties that
could cause actual results to differ materially from historical earnings and
those presently anticipated or projected. Forward-looking statements can be
identified by the use of such words as may, will, should, could, would,
estimate, project, believe, intend, anticipate, plan, seek, expect and similar
expressions. TrustCo wishes to caution readers not to place undue reliance on
any such forward-looking statements, which speak only as of the date made.
• In addition to factors described under Part II, Item 1A, Risk Factors, and
under the Risk Factor discussion in TrustCo's Annual Report on Form 10-K for
the year ended
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. Additionally,
many of these risks and uncertainties are currently elevated by and may or will
continue to be elevated by the effects of the COVID-19 pandemic and
macroeconomic or geopolitical concerns related to inflation, rising interest
rates and the war in
• The current COVID-19 pandemic, the effects of which could, and in some
instances has, caused us to experience a decline in the demand for products and
services; an increase in loan delinquencies; problem assets and foreclosures; a
decline in collateral value; a work stoppage, forced quarantine, or other
interruption or the unavailability of key employees; an increase in the allowance for credit losses on loans; a reduction in wealth management revenues; an increase inFederal Deposit Insurance Corporation premiums; a
reduction in the value of the securities portfolio; or a decline in the net
worth and liquidity of loan guarantors;
• changes in and uncertainty related to benchmark interest rates used to price
loans and deposits;
• future business strategies related to the implementation of CECL;
• credit risks and risks from concentrations (by geographic area and by loan
product) within our loan portfolio;
• changes in local market areas and general business and economic trends, as well
as changes in consumer spending, borrowing and savings habits; and our ability
to assess and react effectively to such changes;
• TrustCo's ability to continue to originate a significant volume of one- to-
four family mortgage loans in its market areas and to otherwise maintain or
increase its market share in the areas in which it operates;
• TrustCo's ability to continue to maintain noninterest expense and other
overhead costs at reasonable levels relative to income;
• TrustCo's ability to make accurate assumptions and judgments regarding the
credit risks associated with its lending and investing activities, including
changes in the level and direction of loan delinquencies and charge-offs,
changes in property values, and changes in estimates of the adequacy of the
allowance for loan and lease losses;
44--------------------------------------------------------------------------------
Index
• the effects of and changes in, trade, monetary and fiscal policies and laws,
including interest rate policies of the
Reserve System, inflation, interest rates, market and monetary fluctuations;
• restrictions or conditions imposed by TrustCo's and
on their operations that may make it more difficult to achieve TrustCo's and
• the future earnings and capital levels of
continued non objection from TrustCo's and
banking regulators under regulatory rules to distribute capital from Trustco
Bank to TrustCo, which could affect the ability of TrustCo to pay dividends;
• the results of supervisory monitoring or examinations of
Company by their respective primary federal banking regulators, including the
possibility that the regulators may, among other things, require us to increase
our loss allowances or to take other actions that reduce capital or income;
• adverse conditions in the securities markets that lead to impairment in the
value of securities in TrustCo's investment portfolio;
• the perceived overall value of TrustCo's products and services by users,
including the features, pricing and quality, compared to competitors' products
and services and the willingness of current and prospective customers to substitute competitors' products and services for TrustCo's products and services;
• the effect of changes in financial services laws and regulations (including
laws concerning taxation, banking and securities) and the impact of other
governmental initiatives affecting the financial services industry, including
regulatory capital requirements;
• changes in management personnel;
• real estate and collateral values;
• changes in accounting policies and practices, as may be adopted by the bank
regulatory agencies,
Accounting Oversight Board;
• disruptions, security breaches or other adverse events affecting the
third-party vendors who perform several of our critical processing functions;
• technological changes and electronic, cyber and physical security breaches;
• changes in local market areas and general business and economic trends;
• TrustCo's success at managing the risks involved in the foregoing and managing
its business; and
• other risks and uncertainties included under "Risk Factors" in our Form 10-K
for the year ended
You should not rely upon forward-looking statements as predictions of future
events. Although TrustCo believes that the expectations reflected in the
forwardlooking statements are reasonable, it cannot guarantee that the future
results, levels of activity, performance or events and circumstances reflected
in the forward-looking statements will be achieved or occur. The foregoing list
should not be construed as exhaustive, and the Company disclaims any obligation
to subsequently revise any forward-looking statements to reflect events or
circumstances after the date of such statements, or to reflect the occurrence of
anticipated or unanticipated events.
45
--------------------------------------------------------------------------------
Index
Following this discussion are the tables "Distribution of Assets, Liabilities and Shareholders' Equity: Interest Rates and Interest Differential" which gives a detailed breakdown of TrustCo's average interest earning assets and interest bearing liabilities for the three month periods endedMarch 31, 2022 and 2021.
Introduction
The review that follows focuses on the factors affecting the financial condition and results of operations of TrustCo during the three month period endedMarch 31, 2022 , with comparisons to the corresponding period in 2021, as applicable. Net interest margin is presented on a fully taxable equivalent basis in this discussion. The consolidated interim financial statements and related notes, as well as the 2021 Annual Report on Form 10-K, which was filed with theSEC onFebruary 25, 2022 , should also be read in conjunction with this review. Amounts in prior period consolidated interim financial statements are reclassified whenever necessary to conform to the current period's presentation. COVID-19 Impact The Company evaluated the impact of the effects of the COVID-19 pandemic and determined that there were no material or systematic adverse impacts on the Company's balance sheets and results of operations as of and for the yearsDecember 31, 2021 and 2020, as well as for the quarters endedMarch 31, 2022 and 2021. At this time, it is difficult to quantify the impact the pandemic will have on future periods due to various uncertainties, including the duration, severity, spread, variants and resurgences of COVID-19.
The following is a description of the impact the COVID-19 global pandemic is having on certain elements of our business:
Loan modifications
We have always been committed to working with our customers or borrowers to allow time to work through the challenges of the pandemic. At this time, it is uncertain what future impact, if any, further loan modifications related to COVID-19 difficulties may have on our financial condition, results of operations and provision for credit losses. We began receiving requests from our borrowers for loan deferrals inMarch 2020 and agreed with many borrowers to modify their loans. Modifications included the deferral of principal and/or interest payments for terms generally up to 90 days. Requests were evaluated individually and approved modifications were based on the unique circumstances of each borrower. Loan modifications and payment deferrals as a result of the COVID-19 pandemic that meet the criteria established under Section 4013 of the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") or under applicable interagency guidance of the federal banking regulators have been and will be excluded from evaluation of troubled debt restructuring ("TDR") classification and will continue to be reported as current during the payment deferral period. The relief provided by CARES Act expired onDecember 31, 2021 . The Company doesn't have any loans on deferral as ofMarch 31, 2022 .
46
--------------------------------------------------------------------------------
Index
Paycheck Protection Program ("PPP") and Liquidity
As part of the CARES Act, theSmall Business Administration (SBA) was authorized to guarantee loans under the PPP for small businesses that meet the necessary eligibility requirements in order to keep their workers on the payroll. As ofMarch 31, 2022 87 PPP loans totaling approximately$3 million remain outstanding. The Company has received loan origination fees from the SBA which are being recognized over the life of the loan using the effective yield method.
Asset impairment
At this time, we do not believe there exists any impairment to our goodwill, long-lived assets, right of use assets, held to maturity investment securities or available-for-sale investment securities due to the COVID-19 pandemic. It is uncertain whether prolonged effects of the COVID-19 pandemic will result in future impairment charges related to any of the aforementioned assets.
Provision for credit losses
See "Allowance for Credit Losses on Loans" for more information.
Economic Overview During the first quarter of 2022, financial markets declined as the economy felt the impact from several economic areas, as well as reacting to global concerns. Investors evaluated inflationary worries, higher interest rates, ongoing pandemic concerns, supply-chain bottlenecks, and the war inUkraine , while also seeing a rise inTreasury yields. For the first quarter of 2022, the S&P 500 Index was down 5.0% and the Dow Jones Industrial Average was down 4.6%. This comes after the economy saw continued improvement throughout 2021. The shape of the yield curve tightened during the quarter as compared to prior quarters.
The
10yearTreasury bond averaged 1.95% during Q1 2022 compared to 1.53% in Q4 2021, an increase of 42 basis points. The 2yearTreasury bond average rate increased 93 basis points to 1.46%, resulting in a flattening of the yield curve. Consequently, the spread between the 10year and the 2-yearTreasury bonds decreased from 1.00% on average in Q4 to 0.49% in Q1. This spread had been depressed in recent years, and compares to 2.42% during its most recent peak in Q4 of 2013. Steeper yield curves are favorable for portfolio mortgage lenders like TrustCo. The table below illustrates the range of rate movements for both short term and longer term rates. The target Federal Funds rate increased 25 basis points inMarch 2022 to end the quarter at 0.25% to 0.50%, the first rate increase since 2018. Spreads of most asset classes to the comparative treasury yield, including agency securities, corporates, municipals and mortgage-backed securities, continue to be down as compared to the levels seen before the pandemic. Accordingly, changes in rates and spreads continue to be effected by the pandemic and global economic concerns.
47
--------------------------------------------------------------------------------
Index
3 Month 2 Year 5 Year 10 Year 10 - 2 Year
Yield (%) Yield (%) Yield (%) Yield (%) Spread (%)
Beg of Q1 0.09 0.13 0.36 0.93 0.80
Peak 0.09 0.17 0.92 1.74 1.59
Q1/21 Trough 0.01 0.09 0.36 0.93 0.82
End of Q1 0.03 0.16 0.92 1.74 1.58
Average in Q1 0.05 0.13 0.62 1.34 1.20
Beg of Q2 0.03 0.16 0.92 1.74 1.58
Peak 0.06 0.28 0.97 1.73 1.56
Q2/21 Trough 0.01 0.13 0.73 1.45 1.19
End of Q2 0.05 0.25 0.87 1.45 1.20
Average in Q2 0.03 0.17 0.84 1.59 1.42
Beg of Q3 0.05 0.25 0.87 1.45 1.20
Peak 0.07 0.31 1.02 1.55 1.25
Q3/21 Trough 0.03 0.17 0.65 1.19 0.98
End of Q3 0.04 0.28 0.98 1.52 1.24
Average in Q3 0.05 0.23 0.80 1.32 1.10
Beg of Q4 0.04 0.28 0.98 1.52 1.24
Peak 0.08 0.76 1.34 1.68 1.29
Q4/21 Trough 0.04 0.27 0.93 1.35 0.72
End of Q4 0.06 0.73 1.26 1.52 0.79
Average in Q4 0.05 0.53 1.18 1.53 1.00
Beg of Q1 0.06 0.73 1.26 1.52 0.79
Peak 0.59 2.35 2.55 2.48 0.89
Q1/22 Trough 0.08 0.77 1.37 1.63 0.04
End of Q1 0.52 2.28 2.42 2.32 0.04
Average in Q1 0.31 1.46 1.83 1.95 0.49
The United States economy experienced several areas of concern as 2022 began as
mentioned above. Economic conditions can vary significantly over geographic
areas, with strength concentrated in and around major population centers on the
coasts and in certain areas where economic activity has been driven by specific
regional factors.
TrustCo believes that its long-term focus on traditional banking services and
practices historically has enabled the Company to avoid significant impact from
asset quality problems, and that the Company's strong liquidity and solid
capital positions have allowed the Company to continue to conduct business in a
manner consistent with its past practice. TrustCo has not engaged in the types
of high risk loans and investments that have led to the widely reported problems
in the industry, particularly those arising during the 2008-2010 financial
crisis. Nevertheless, the Company may experience increases in nonperforming
loans ("NPLs") relative to historical levels from time to time. Should general
housing prices and other economic measures, such as unemployment in the
Company's market areas, deteriorate as a result of the COVID-19 pandemic or
other reasons, the Company may experience an increase in the level of credit
risk and in the amount of its classified and nonperforming loans.
48
--------------------------------------------------------------------------------
Index
In a direct response to the COVID-19 pandemic, onMarch 27, 2020 Congress passed the CARES Act. As previously noted, included in the CARES Act is support for small businesses, direct payments to lower and middle income families, expanded unemployment insurance, additional funding for health care providers, as well as support for other industries. TheFederal Reserve Board , in an attempt to increase liquidity and promote the normal functioning of financial markets, also provided support by increasing purchases ofTreasury securities and agency mortgage-backed securities. Financial Overview TrustCo recorded net income of$17.1 million , or$0.890 of diluted earnings per share, for the three months endedMarch 31, 2022 , compared to net income of$14.1 million , or$0.730 of diluted earnings per share, in the same period in 2021. Return on average assets was 1.12% and 0.96%, respectively, for the three months endedMarch 31, 2022 and 2021. Return on average equity was 11.60% and 10.01%, respectively, for the three months endedMarch 31, 2022 and 2021.
The primary factors accounting for the change in net income for the three months
ended
• A decrease of
corresponding decrease in interest expense also of
• A decrease of
quarter of 2022 compared to the first quarter 2021.
• A increase of
compared to the first quarter of 2021, primarily driven by a
increase in fees for services to customers.
• A decrease of
compared to the first quarter 2021, primarily as a result of a decrease in
salaries and employee benefits due of a true-up to the incentive compensation
accrual upon payout in the first quarter of 2022, as well as decreases in
various other employee benefit plan expenses. This decrease was partially
offset by an increase in other expense primarily as a result of higher mortgage
origination volume.
Asset/Liability Management
The Company strives to generate its earnings capabilities through a mix of core
deposits funding a prudent mix of earning assets. Additionally, TrustCo
attempts to maintain adequate liquidity and reduce the sensitivity of net
interest income to changes in interest rates to an acceptable level while
enhancing profitability both on a shortterm and longterm basis.
49
--------------------------------------------------------------------------------
Index
TrustCo's results are affected by a variety of factors including competitive and economic conditions in the specific markets in which the Company operates and, more generally, in the national economy, financial market conditions and the regulatory environment. Each of these factors is dynamic, and changes in any area can have an impact on TrustCo's results. Included in the Annual Report on Form 10-K for the year endedDecember 31, 2021 is a description of the effect interest rates had on the results for the year 2021 compared to 2020. Many of the same market factors discussed in the 2021 Annual Report continued to have a significant impact on results through the first quarter of 2022, as well as the economic effect of COVID-19 and heightened global concerns. TrustCo competes with other financial service providers based upon many factors including quality of service, convenience of operations and rates paid on deposits and charged on loans. In the experience of management, the absolute level of interest rates, changes in interest rates and customers' expectations with respect to the direction of interest rates have a significant impact on the volume of loan and deposit originations in any particular period. Interest rates have a significant impact on the operations and financial results of all financial services companies. One of the most important interest rates used to control national economic policy is the "Federal Funds" rate. This is the interest rate utilized within the banking system for overnight borrowings for institutions with the highest credit rating. FromDecember 2015 throughDecember 2018 , theU.S. Federal Reserve Board increased its federal funds target rate from a range of 0.00% - 0.25% to a range of 2.25% - 2.50%. Beginning in the second half of 2019, theFederal Reserve Board began lowering the rate in response to a slowing economy. During the first quarter of 2020 the rate was significantly decreased again to 0.00% to 0.25% as a result of the global pandemic. InMarch 2022 theFederal Reserve board increased the rate to 0.25% to 0.50% to assist with inflationary concerns, with additional rate increases anticipated. Traditionally, interest rates on bank deposit accounts are heavily influenced by the Federal Funds rate. The average rate on interest bearing deposits was 11 basis points lower in the first quarter of 2022 relative to the prior year period. Rates were lower on all interest bearing deposit accounts as a result of repricing since theFederal Reserve Board lowered the Federal Funds rate due to the pandemic. Please refer to the statistical disclosures in the table below entitled "Distribution of Assets, Liabilities and Shareholders' Equity: Interest Rates and Interest Differential." The interest rate on the 10-yearTreasury bond and other long-term interest rates have significant influence on the rates for new residential real estate loans. These changes in interest rates have an effect on the Company relative to the interest income on loans, securities, and Federal Funds sold and other short-term instruments as well as the interest expense on deposits and borrowings. Residential real estate loans and longerterm investments are most affected by the changes in longer term market interest rates such as the 10yearTreasury . The Federal Funds sold portfolio and other shortterm investments are affected primarily by changes in the Federal Funds target rate. Deposit interest rates are most affected by short term market interest rates. Also, changes in interest rates have an effect on the recorded balance of the securities available for sale portfolio, which are recorded at fair value. Generally, as market interest rates increase, the fair value of the securities will decrease and the reverse is also generally applicable. Interest rates on new residential real estate loan originations are also influenced by the rates established by secondary market participants such as Freddie Mac and Fannie Mae. Because TrustCo is a portfolio lender and does not sell loans into the secondary market, the Company establishes rates that management determines are appropriate in light of the long-term nature of residential real estate loans while remaining competitive with the secondary market rates. Higher market interest rates also generally increase the value of retail deposits.
50
--------------------------------------------------------------------------------
Index
TrustCo's principal loan products are residential real estate loans. As noted above, residential real estate loans and longerterm investments are most affected by the changes in longer term market interest rates such as the 10-yearTreasury . The 10yearTreasury yield was up 42 basis points, on average, during the first quarter of 2022 compared to the fourth quarter of 2021 and was up 61 basis points as compared to the first quarter of 2021. While TrustCo has been affected by changes in financial markets over time, the impacts have been mitigated by the Company's generally conservative approach to banking. The Company utilizes a traditional underwriting process in evaluating loan applications, and since originated loans are retained in the portfolio, there is a strong incentive to be conservative in making credit decisions. For additional information concerning TrustCo's loan portfolio and nonperforming loans, please refer to the discussions under "Loans" and "Nonperforming Assets," respectively. Further, the Company does not rely on borrowed funds to support its assets and maintains a significant level of liquidity on the asset side of the balance sheet. These characteristics provide the Company with increased flexibility and stability during periods of market disruption and interest rate volatility. A fundamental component of TrustCo's strategy has been to grow customer relationships and the deposits and loans that are part of those relationships. The Company has significant capacity to grow its balance sheet given its extensive branch network. The Company expects that growth to be profitable. The current interest rate environment, however, has narrowed the margin on incremental balance sheet expansion. While the Company has not changed its fundamental long term strategy in regard to utilizing its excess capacity, management continually evaluates changing conditions and may seek to limit growth or reduce the size of the balance sheet if its analysis indicates that doing so would be beneficial.
For the first quarter of 2022, the net interest margin was 2.66%, down 12 basis points versus the prior year's quarter. The quarterly results reflect the following significant factors:
• The average balance of securities available for sale decreased by
while the average yield increased 4 basis points to 1.54%. The average balance
of held to maturity securities decreased by
increased 9 basis points to 3.79% for the first quarter of 2022 compared to the
same period in 2021. For both categories of investments, the slight increase in
yield was not enough to offset the decrease in average balances year over year.
• The average loan portfolio grew by
average yield decreased 28 basis points to 3.52% in the first quarter of 2022
compared to the same period in 2021. The increase in the average balance was
not enough to offset the decrease in yield, which was primarily the result of
less PPP income as compared to the prior year period.
51--------------------------------------------------------------------------------
Index
• The average balance of interest bearing liabilities (primarily deposit
accounts) increased
points to 0.10% in the first quarter of 2022 compared to the same period in
2021. During the first quarter of 2022, the Company continued to focus on its strategy to expand the loan portfolio by offering competitive interest rates. Management believes the TrustCo residential real estate loan product is very competitive compared to local and national competitors. Competition remains strong in the Company's market areas. The strategy on the funding side of the balance sheet was to offer competitive shorter term rates which allowed the Bank to gain market share as well as retain our existing deposits. This strategy drove growth at a relatively low cost that will sustain TrustCo's strong liquidity position and continue to allow us to cross sell new relationships and take advantage of opportunities as they arise. Earning Assets Total average interest earning assets increased from$5.78 billion in the first quarter of 2021 to$6.05 billion in the same period of 2022 with an average yield of 2.74% in the first quarter of 2022 and 2.95% in the first quarter of 2021. There was a continued shift in the mix of assets towards a higher proportion of federal funds sold and other short-term investments from securities available for sale, as well as from increases in deposits. Interest income on average earning assets decreased$1.2 million in the first quarter of 2022 from the prior year period, on a tax equivalent basis, and was primarily driven by lower market rates on loans. The increase in interest income from average federal funds sold and other short-term investments, as a result of higher balances and interest rate, was mostly offset by less interest income from securities available for sale and held-to-maturity securities due to their lower average balances.
Loans
The average balance of loans was$4.44 billion in the first quarter of 2022 and$4.25 billion in the comparable period in 2021. The yield on loans decreased 28 basis points to 3.52%. The higher average balances did not offset the decrease in yield. Compared to the first quarter of 2021, the average balance of residential mortgage loans and installment loans increased while commercial loans and home equity lines of credit decreased. The average balance of residential mortgage loans was$4.01 billion in 2022 compared to$3.79 billion in 2021, an increase of 5.8%. The average yield on residential mortgage loans decreased by 27 basis points to 3.42% in the first quarter of 2022 compared to 2021 primarily as a result of the low interest rate environment. TrustCo actively markets the residential loan products within its market territories. Mortgage loan rates are affected by a number of factors including rates onTreasury securities, the Federal Funds rate and rates set by competitors and secondary market participants. TrustCo aggressively markets the unique aspects of its loan products thereby attempting to create a differentiation from other lenders. These unique aspects include low closing costs, fast turn-around time on loan approvals, no escrow or mortgage insurance requirements for qualified borrowers and the fact that the Company typically holds these loans in portfolio and does not sell them into the secondary markets. Assuming a continued rise in long-term interest rates, the Company would anticipate that the unique features of its loan products will continue to attract customers in the residential mortgage loan area.
52
--------------------------------------------------------------------------------
Index
Commercial loans, which consist primarily of loans secured by commercial real estate, decreased$17.8 million to an average balance of$195.0 million in the first quarter of 2022 compared to the same period in the prior year, primarily as a result of forgiven PPP loans. The average yield on this portfolio was down 36 basis points to 5.18% compared to the prior year period, primarily as a result of the less origination income recognized on forgiven PPP loans as compared to the prior year period. The Company remained selective in underwriting commercial loans in recent periods as the apparent risk/reward balance has been less favorable in many cases. The average yield on home equity credit lines decreased 13 basis points to 3.71% during the first quarter of 2022 compared to the prior year period. The average balances of home equity lines decreased 2.5% to$232.5 million in the first quarter of 2022 as compared to the prior year. Over the last year, customers with home equity lines continued to refinance their balances into fixed rate mortgage loans given the low rate environment and have been less likely to draw on home equity lines due to reduced tax benefits. Securities Available for Sale The average balance of the securities available for sale portfolio for the first quarter of 2022 was$406.5 million compared to$482.9 million for the comparable period in 2021. The decrease in the balance reflects routine paydowns, and calls and maturities, offset by new investment purchases. The average yield was 1.54% for the first quarter of 2022 compared to 1.50% for the first quarter of 2021. This portfolio is primarily comprised of agency issued residential mortgage backed securities, bonds issued by government sponsored enterprises (such as Fannie Mae, theFederal Home Loan Bank , and Freddie Mac),Small Business Administration participation certificates, corporate bonds and municipal bonds. These securities are recorded at fair value with any adjustment in fair value included in other comprehensive income (loss), net of tax. The net unrealized loss in the available for sale securities portfolio was$19.2 million as ofMarch 31, 2022 compared to a net unrealized loss of$4 thousand as ofDecember 31, 2021 . The increase in the net unrealized losses in the portfolio is the result of changes in market interest rate levels. Held toMaturity Securities The average balance of held to maturity securities was$9.5 million for the first quarter of 2022 compared to$13.3 million in the first quarter of 2021. The decrease in balances reflects routine paydowns. No new securities were added to this portfolio during the period. The average yield was 3.79% for the first quarter of 2022 compared to 3.70% for the year earlier period. TrustCo expects to hold the securities in this portfolio until they mature or are called.
As of
Federal Funds Sold and Other Short-term Investments The 2022 first quarter average balance of Federal Funds sold and other short-term investments was$1.19 billion , a$157.6 million increase from the$1.03 billion average for the same period in 2021. The yield was 0.20% for the first quarter of 2022 and 0.11% for the comparable period in 2021. Interest income from this portfolio increased$302 thousand from$270 thousand in 2021 to$572 thousand in 2022. The higher average balances, as well as an increase in the interest rate on excess reserves inJune 2021 , and an increase in the federal funds rate inMarch 2022 , resulted in an increase in interest income over the same period in the prior year.
53
--------------------------------------------------------------------------------
Index
The Federal Funds sold and other short-term investments portfolio is utilized to generate additional interest income and liquidity as funds are waiting to be deployed into the loan and securities portfolios. Funding Opportunities TrustCo utilizes various funding sources to support its earning asset portfolio. The vast majority of the Company's funding comes from traditional deposit vehicles such as savings, demand deposits, interest-bearing checking, money market and time deposit accounts. Total average interest bearing deposits (which includes interest bearing checking, money market accounts, savings and time deposits) increased$88.2 million to$4.48 billion for the first quarter of 2022 versus the first quarter in the prior year, and the average rate paid decreased from 0.20% for 2021 to 0.09% for 2022. Total interest expense on these deposits decreased$1.2 million to$960 thousand in the first quarter of 2022 compared to the year earlier period. From the first quarter of 2021 to the first quarter of 2022, interest bearing checking account average balances were up 9.9%, certificates of deposit average balances were down 23.6%, noninterest demand average balances were up 20.1%, average savings balances increased 16.2% and money market balances were up 9.1%. Our growth in deposits came at relatively low cost and continues to be offset by higher earnings on loan yields and returns in the investment portfolio.
At
(dollars in thousands) Under 1 year$ 888,760 1 to 2 years 43,570 2 to 3 years 6,297 3 to 4 years 937 4 to 5 years 518 Over 5 years 133$ 940,215 Average short-term borrowings for the first quarter of 2022 were$248.5 million compared to$223.8 million in the same period in 2021. The average rate decreased during this period from 0.41% in 2021 to 0.38% in 2022. The short-term borrowings of the Company are cash management accounts, which represent retail accounts with customers for which the Bank has pledged certain assets as collateral. The Company has a number of contingent funding alternatives available in addition to the large cash and cash equivalents position and the investment securities positions it maintains on its balance sheet. The Bank is a member of theFederal Home Loan Bank of New York ("FHLBNY") and is an eligible borrower at theFederal Reserve Bank of New York ("FRBNY") and has the ability to borrow utilizing securities and/or loans as collateral at either. The Bank does not utilize brokered deposits as a part of its funding strategy, but does incorporate them as a contingent funding source within its Asset/Liability Management Policy. Like other contingent funding sources, brokered CDs may be tested from time to time to ensure operational and market readiness.
54
--------------------------------------------------------------------------------
Index
Net Interest Income Taxable equivalent net interest income was relatively flat at$40.1 million in both the first quarter of 2022 and 2021. The net interest spread was down 11 basis points to 2.63% in the first quarter of 2022 compared to the same period in 2021. As previously noted, the net interest margin was down 12 basis points to 2.66 for the first quarter of 2022 compared to the same period in 2021. Nonperforming Assets Nonperforming assets include nonperforming loans ("NPLs"), which are those loans in a nonaccrual status and loans past due three payments or more and still accruing interest. Also included in the total of nonperforming assets are foreclosed real estate properties, which are included in other assets and categorized as other real estate owned.
The following describes the nonperforming assets of TrustCo as of
Nonperforming loans and foreclosed real estate: Total NPLs and non-accrual loans were$19.4 million atMarch 31, 2022 , compared to$21.6 million atMarch 31, 2021 . AtDecember 31, 2021 there were total NPLs of$18.8 million and non-accrual loans of$18.7 million . There were no loans atMarch 31, 2022 and 2021 andDecember 31, 2021 that were past due 90 days or more and still accruing interest. AtMarch 31, 2022 , nonperforming loans primarily include a mix of commercial and residential loans. Of total nonperforming loans of$19.4 million atMarch 31, 2022 ,$19.2 million were residential real estate loans,$187 thousand were commercial loans and mortgages and$41 thousand were installment loans, compared to$18.6 million ,$112 thousand and$37 thousand , respectively atDecember 31, 2021 . A significant percentage of nonperforming loans are residential real estate loans, which are historically lower-risk than most other types of loans. Net recoveries were$97 thousand on residential real estate loans (including home equity lines of credit) for the first quarter of 2022 compared to net recoveries of$2 thousand for the first quarter of 2021. Management believes that these loans have been appropriately written down where required. Ongoing portfolio management is intended to result in early identification and disengagement from deteriorating credits. TrustCo has a diversified loan portfolio that includes a significant balance of residential mortgage loans to borrowers in theCapital Region ofNew York andCentral Florida , and avoids concentrations to any one borrower or any single industry. TrustCo has no advances to borrowers or projects located outsidethe United States . TrustCo continues to identify delinquent loans as quickly as possible and to move promptly to resolve problem loans. Efforts to resolve delinquencies begin immediately after the payment grace period expires, with repeated, automatically generated notices, as well as personalized phone calls and letters. Loans are placed in nonaccrual status once they are 90 days past due, or earlier if management has determined that such classification is appropriate. Once in nonaccrual status, loans are either brought current and maintained current, at which point they may be returned to accrual status, or they proceed through the foreclosure process. The collateral on nonaccrual loans is evaluated periodically, and the loan value is written down if the collateral value is insufficient.
55
--------------------------------------------------------------------------------
Index
The Company originates loans throughout its deposit franchise area. AtMarch 31, 2022 , 70.0% of its gross loan portfolio balances were inNew York State and the immediately surrounding areas (includingNew Jersey ,Vermont andMassachusetts ), and 30.0% were inFlorida . Those figures compare to 70.6% and 29.4%, respectively atDecember 31, 2021 . Economic conditions vary widely by geographic location. As a percentage of the total nonperforming loans as ofMarch 31, 2022 , 10.9% were toFlorida borrowers, compared to 89.1% to borrowers inNew York and surrounding areas. For the three months endedMarch 31, 2022 ,New York and surrounding areas experienced net recoveries of approximately$58 thousand and there was no net chargeoffs or recoveries inFlorida . Other than loans currently identified as nonperforming, management is aware of no other loans in the Bank's portfolio that pose material risk of the eventual non-collection of principal and interest. Also as ofMarch 31, 2022 , there were no other loans classified for regulatory purposes that management reasonably expects will materially impact future operating results, liquidity, or capital resources. TrustCo has identified nonaccrual commercial and commercial real estate loans, as well as all loans restructured under a TDR, as individually evaluated loans. There were$178 thousand of commercial mortgages and commercial loans classified as individually evaluated as ofMarch 31, 2022 . There were$232 thousand classified as impaired atDecember 31, 2021 . There were$17.6 million of individually evaluated residential loans atMarch 31, 2021 .$18.3 million were classified as impaired atDecember 31, 2021 .
As of
At
Allowance for credit on loan losses: The Company implemented CECL onJanuary 1, 2022 . Under this standard, allowances have been established for loans, and commitments to lend. The allowance for credit losses on loans ("ACLL") replaces the previous allowance for loan losses ("ALLL"). The allowance for credit losses on loans increased by$2.4 Million at period end to$46.6 million from$44.2 atDecember 31, 2021 under the ALLL. The allowance for credit losses on unfunded commitments increased from$18 thousand to$2.4 million and is recorded in other liabilities. The Company recorded a net decrease to undivided profits of$3.5 million , net of$1.2 million in deferred tax balances as ofJanuary 1, 2022 for the cumulative effect of adopting CECL. In the first quarter of 2022, the Company recorded a credit to provision for credit losses of$200 thousand , which includes a credit to provision for credit losses on loans of$500 thousand as a result of improving unemployment and housing price forecasts, offset by a provision for credit losses on unfunded commitments of$300 thousand as a result of a corresponding increase in unfunded loans. 56
--------------------------------------------------------------------------------
Index
The Company evaluates several external forecasts in choosing the forecast element for the economic components of the allowance for credit losses on loans. The Company selected the stagflation forecast for bothJanuary 1, 2022 andMarch 31, 2022 for economic modeling. The unemployment forecast impacted the reserves due to unemployment rates declining 13% forNew York and 8 % forFlorida offset by increases in consumer price indices ("CPI") of 3% for NY and 1% forFlorida and increases in Gross Metro Product ("GMP") 1% forNew York and 3% forFlorida from December to March respectively. See Notes 1 and 5 of the financial statements for additional discussion related to the adoption of CECL, the process for determining the provision for credit losses is described in Note 5 to the financial statements.
The allocation of the allowance for credit losses on loans as follows:
As of As of
(dollars in thousands) March 31, 2022 January 1, 2022
Percent of Percent of
Loans to Loans to
Amount Total Loans Amount Total Loans
Commercial $ 1,940 3.86 % $ 1,917 4.07 %
Real estate - construction 341 0.68 % 409 0.84 %
Real estate mortgage - 1 to 4 family 39,173 89.96 % 39,620 89.68 %
Home equity lines of credit 4,654 5.29 % 4,609 5.20 %
Installment Loans 70 0.21 % 65 0.21 %
$ 46,178 100.00 % $ 46,620 100.00 %
At March 31, 2022 , the allowance for credit losses on loans was $46.2 million ,
compared to $50.0 million at March 31, 2021 and $44.3 million at December 31,
2021 . The allowance represents 1.03% of the loan portfolio as of March 31, 2022
compared to 1.17% at March 31, 2021 and 1.00% at December 31, 2021 .
Net recoveries for the three-month period ended
During the first quarter of 2022, there were$36 thousand of commercial loan chargeoffs and$11 thousand of consumer loan chargeoffs compared with no commercial loan chargeoffs and$95 thousand of gross residential mortgage and consumer loan chargeoffs in the first quarter of 2021. During the first quarter of 2022 there were no commercial loan recoveries and$105 thousand for residential mortgage and consumer loan recoveries, compared to$32 thousand for commercial loan recoveries and$109 thousand for residential mortgage and consumer loan recoveries in the first quarter of 2021.
57
--------------------------------------------------------------------------------
Index
Liquidity and Interest Rate Sensitivity TrustCo seeks to obtain favorable sources of funding and to maintain prudent levels of liquid assets in order to satisfy varied liquidity demands. Management believes that TrustCo's earnings performance and strong capital position enable the Company to easily secure new sources of liquidity. The Company actively manages its liquidity through target ratios established under its liquidity policies. Continual monitoring of both historical and prospective ratios allows TrustCo to employ strategies necessary to maintain adequate liquidity. Management has also defined various degrees of adverse liquidity situations which could potentially occur and has prepared appropriate contingency plans should such a situation arise. As noted, the Company has a number of contingent funding alternatives available in addition to the large cash and cash equivalents position and the investment securities positions it maintains on its balance sheet. As previously stated, the Bank is a member of the FHLBNY and is an eligible borrower at the FRBNY and has the ability to borrow utilizing securities and/or loans as collateral at either institution. The Bank does not utilize brokered deposits as a part of its funding strategy, but does incorporate them as a contingent funding source within its Asset/Liability Management Policy. Like other contingent funding sources, brokered CDs may be tested from time to time to ensure operational and market readiness. The Company uses an industry standard external model as the primary tool to identify, quantify and project changes in interest rates and prepayment speeds taken both from industry sources and internally generated data based upon historical trends in the Bank's balance sheet. Assumptions based on the historical behavior of deposit rates and balances in relation to changes in market interest rates are also incorporated into the model. This model calculates an economic or fair value amount with respect to non-time deposit categories since these deposits are part of the core deposit products of the Company. The assumptions used are inherently uncertain and, as a result, the model cannot precisely measure the fair value of capital or precisely predict the impact of fluctuations in interest rates on the fair value of capital. Using this model, the fair value of capital projections as ofMarch 31, 2022 are referenced below. The base case (current rates) scenario shows the present estimate of the fair value of capital assuming no change in the operating environment or operating strategies and no change in interest rates from those existing in the marketplace as ofMarch 31, 2022 . The table indicates the impact on the fair value of capital assuming interest rates were to instantaneously increase by 100 bp, 200 bp, 300 bp and 400 bp or to decrease by 100 bp. Estimated Percentage of Fair value of Capital to As ofMarch 31, 2022 Fair value of Assets +400 BP 28.10 % +300 BP 27.60 +200 BP 28.40 +100 BP 27.70 Current rates 26.00 -100 BP 23.00 58
--------------------------------------------------------------------------------
Index
Noninterest Income Total noninterest income for the first quarter of 2022 and 2021 was$5.2 million and$4.4 million , respectively. The increase over the same period in the prior year was primarily related to an increase of$549 thousand in interchange fees and a$268 thousand gain on the sale of a building, partially offset by a decrease in financial services income of$202 thousand . The fair value of assets under management was$1.03 billion atMarch 31, 2022 ,$1.10 billion as ofDecember 31, 2021 and$1.04 billion atMarch 31, 2021 . Noninterest Expenses Total noninterest expenses were$22.8 million for the three months endedMarch 31, 2022 , compared to$25.3 million for the three months endedMarch 31, 2021 . Significant changes included a decrease in salaries and employee benefits primarily as a result of a$2 million favorable true-up to the incentive compensation accrual upon payout in the first quarter of 2022, as well as decreases in various other employee benefit plan expenses. There were also decreases in net occupancy expense, equipment expense, and other real estate expense, net. These decreases were partially offset by an increase in advertising expense due to more marketing efforts, and other expenses increased primarily due to higher mortgage origination volume. The Company does expect salaries and benefit expense to return to historic levels in future periods. Full time equivalent headcount decreased from 820 as ofMarch 31, 2021 to 769 as ofMarch 31, 2022 primarily as a result of a strategic realignment over the past year and the ongoing impact of the pandemic on the labor market. Income Taxes In the first quarter of 2022, TrustCo recognized income tax expense of$5.6 million compared to$4.8 million for the first quarter of 2021. The effective tax rates were 24.8% and 25.3%, respectively, for the first quarters of 2022 and 2021. Capital Resources Consistent with its long-term goal of operating a sound and profitable financial organization, TrustCo strives to maintain strong capital ratios. Banking regulators have moved towards higher required capital requirements due to the standards included in the "Basel III" banking capital reform measures and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as a general trend towards reducing risk in the banking system by providing a greater capital margin.
Total shareholders' equity at
The capital rules, which are generally applicable to both the Company and the
Bank, include several measures; specifically, a Tier 1 leverage ratio, a common
equity tier 1 ("CET1") capital ratio, a tier 1 risk-based capital ratio and a
total risk-based capital ratio. The rules also impose a capital conservation
buffer that requires the Company and the Bank to maintain additional levels of
Tier 1 common equity over the minimum risk-based capital levels before they may
pay dividends, repurchase shares or pay discretionary bonuses.
59
--------------------------------------------------------------------------------
Index
The Bank and the Company reported the following capital ratios as ofMarch 31, 2022 andDecember 31, 2021 : (Bank Only) Minimum for Capital Adequacy plus As of March 31, 2022 Well Capital Conservation Amount Ratio Capitalized(1) Buffer (1)(2) (dollars in thousands) Tier 1 leverage ratio$ 575,895 9.286 % 5.000 % 4.000 % Common equity tier 1 capital 575,895 18.743 6.500 7.000 Tier 1 risk-based capital 575,895 18.743 8.000 8.500 Total risk-based capital 614,433 19.997 10.000 10.500 Minimum for Capital Adequacy plus As of December 31, 2021 Well Capital Conservation (dollars in thousands) Amount Ratio Capitalized(1) Buffer (1)(2) Tier 1 leverage ratio$ 570,594 9.324 % 5.000 % 4.000 % Common equity tier 1 capital 570,594 18.954 6.500 7.000 Tier 1 risk-based capital 570,594 18.954 8.000 8.500 Total risk-based capital 608,308 20.206 10.000 10.500 (Consolidated) Minimum for Capital Adequacy plus As of March 31, 2022 Capital Conservation (dollars in thousands) Amount Ratio Buffer (1)(2) Tier 1 leverage ratio$ 594,711 9.585 % 4.000 % Common equity tier 1 capital 594,711 19.349 7.000 Tier 1 risk-based capital 594,711 19.349 8.500 Total risk-based capital 633,260 20.603 10.500 Minimum for Capital Adequacy plus As of December 31, 2021 Capital Conservation (dollars in thousands) Amount Ratio Buffer (1)(2) Tier 1 leverage ratio$ 588,427 9.614 % 4.000 % Common equity Tier 1 capital 588,427 19.541 7.000 Tier 1 risk-based capital 588,427 19.541 8.500 Total risk-based capital 626,150 20.794 10.500
(1) Federal regulatory minimum requirements to be considered to be Well
Capitalized and Adequately Capitalized
(2) The
risk-based, and total risk-based capital ratios include a capital
conservation buffer of 2.50 percent
In addition, at March 31, 2022 , Trustco's consolidated equity to total assets
ratio was 9.44% compared to 9.70% at December 31, 2021 and 9.44% at March 31,
2021 .
As of March 31, 2022 , the capital levels of both TrustCo and the Bank exceeded
the minimum standards, including with the current, capital conservation buffer
taken into account.
60--------------------------------------------------------------------------------
Index
Under theOffice of the Comptroller of the Currency's ("OCC") "prompt corrective action" regulations, a bank is deemed to be "well capitalized" when its CET1, Tier 1, total risk-based and leverage capital ratios are at least 7%, 8.5%, 10.5% and 5%, respectively. A bank is deemed to be "adequately capitalized" or better if its capital ratios meet or exceed the minimum federal regulatory capital requirements, and "undercapitalized" if it fails to meet these minimal capital requirements. A bank is "significantly undercapitalized" if its CET1, Tier 1, total risk-based and leverage capital ratios fall below 3%, 4%, 6% and 3%, respectively and "critically undercapitalized" if the institution has a ratio of tangible equity to total assets that is equal to or less than 2%. AtMarch 31, 2022 and 2021,Trustco Bank met the definition of "well capitalized." As noted, the Company's dividend payout ratio was 39.36% of net income for the first quarter of 2022 and 46.65% of net income for the first quarter of 2021. The per-share dividend paid in both the first quarter of 2022 and the fourth quarter of 2021, was$0.350 and was$0.341 in the first quarter of 2021. The Company's ability to pay dividends to its shareholders is dependent upon the ability of the Bank to pay dividends to the Company. The payment of dividends by the Bank to the Company is subject to continued compliance with minimum regulatory capital requirements. The OCC may disapprove a dividend if the Bank would be undercapitalized following the distribution; the proposed capital distribution raises safety and soundness concerns; or the capital distribution would violate a prohibition contained in any statue, regulation or agreement. TrustCo maintains a dividend reinvestment plan (DRP) with approximately 7,110 participants. The DRP allows participants to reinvest dividends in shares of the Company. The DRP also allows for additional purchases by participants and has a discount feature (up to a 5% for safe harbor provisions) that can be activated by management as a tool to raise capital. To date, the discount feature has not been utilized. Reverse Stock Split Effective as ofMay 28, 2021 , the Company completed a 1-for-5 reverse stock split (the "Reverse Stock Split") of the Company's issued and outstanding shares of common stock, par value$1.00 per share, as previously approved by our shareholders. Proportional adjustments were made to the Company's issued and outstanding common stock and to the exercise price and number of shares issuable upon exercise of the options outstanding under the Company's equity incentive plans, and the number of shares subject to restricted stock units under the Company's equity incentive plans. No fractional shares of common stock were issued in connection with the Reverse Stock Split, and shareholders received cash in lieu of any fractional shares. All references herein to common stock and per share data for all periods presented in the consolidated financial statements and notes thereto, have been retrospectively adjusted to reflect the Reverse Stock Split. Share Repurchase Program OnFebruary 18, 2021 the Company's Board of Directors authorized a share repurchase program of up to 2,000,000 shares, which was adjusted to 400,000 shares as a result of the Reverse Stock Split, and represented approximately 2% of its then outstanding common stock. OnMarch 9, 2022 the Company's Board of Directors authorized, and the Company announced another share repurchase program of up to 200,000 shares, or approximately 1% of its currently outstanding common stock. During the three months endedMarch 31, 2022 , the Company repurchased a total of 18 thousand shares at an average price per share of$33.57 for a total of$609 thousand under its Board authorized share repurchase program.
61
--------------------------------------------------------------------------------
Index
Critical Accounting Policies and Estimates Pursuant toSecurities and Exchange Commission ("SEC") guidance, management of the Company is encouraged to evaluate and disclose those accounting policies judged to be critical policies those most important to the portrayal of the Company's financial condition and results, and that require management's most difficult subjective or complex judgments. Management considers the accounting policy relating to the allowance for credit losses to be a critical accounting policy given the measurement uncertainty and subjective judgement necessary in evaluating the levels of the allowance required to cover the life time losses in the loan portfolio and the material effect that such judgments can have on the results of operations.
62
--------------------------------------------------------------------------------
Index
TrustCo Bank Corp NY
Management's Discussion and Analysis
STATISTICAL DISCLOSURE
I. DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY:
INTEREST RATES AND INTEREST DIFFERENTIAL
The following table summarizes the component distribution of the average balance
sheet, related interest income and expense and the average annualized yields on
interest earning assets and annualized rates on interest bearing liabilities of
TrustCo (adjusted for tax equivalency) for each of the reported periods.
Nonaccrual loans are included in loans for this analysis. The average balances
of securities available for sale and held to maturity are calculated using
amortized costs for these securities. Included in the average balance of
shareholders' equity is the unrealized gain (loss), net of tax, in the available
for sale portfolio of $($8.9) million in 2022 and $3.9 million in 2021. The
subtotals contained in the following table are the arithmetic totals of the
items contained in that category. Increases and decreases in interest income
and expense due to both rate and volume have been allocated to the categories of
variances (volume and rate) based on the percentage relationship of such
variances to each other.
Three months ended Three months ended
(dollars in thousands) March 31, 2022 March 31, 2021
Average Average Average Average Change in Variance Variance
Balance Interest Rate Balance Interest Rate Interest Balance Rate
Income/ Change Change
Assets Expense
Securities available for sale:
U. S. government sponsored enterprises $ 61,755 $
86 0.55 %
36 11 25 Mortgage backed securities and collateralized mortgage obligations-residential 261,124
1,087 1.67 % 327,614 1,237 1.51 % (150 ) (774 ) 624 State and political subdivisions
41 1 6.73 % 50 1 6.47 % - - -
Corporate bonds 52,977 233 1.76 % 63,334 316 1.99 % (83 ) (49 ) (34 )
Small Business Administration -guaranteed
participation securities 29,871 154 2.06 % 39,582 206 2.09 % (52 ) (50 ) (2 )
Other 686 2 1.17 % 686 6 3.50 % (4 ) - (4 )
Total securities available for sale 406,454 1,563 1.54 % 482,915 1,816 1.50 % (253 ) (862 ) 609
Federal funds sold and other short-term Investments 1,187,201
572 0.20 % 1,029,570 270 0.11 % 302 47 255 Held to maturity securities: Mortgage backed securities and collateralized mortgage obligations-residential 9,541 90 3.79 % 13,273 123 3.70 %
(33 ) (52 ) 19
Total held to maturity securities 9,541 90 3.79 % 13,273 123 3.70 % (33 ) (52 ) 19 Federal Reserve Bank and Federal Home Loan Bank stock 5,604 62 4.43 % 5,506 69 5.01 % (7 ) 8 (15 ) Commercial loans 194,989
2,525 5.18 % 212,781 2,945 5.54 % (420 ) (238 ) (182 ) Residential mortgage loans
4,007,886 34,197 3.42 % 3,789,256 34,852 3.69 % (655 ) 8,684 (9,339 ) Home equity lines of credit
232,535 2,125 3.71 % 238,379 2,259 3.84 % (134 ) (54 ) (80 )
Installment loans 8,974 156 7.03 % 8,795 161 7.41 % (5 ) 17 (22 )
Loans, net of unearned income 4,444,384 39,003 3.52 % 4,249,211 40,217 3.80 % (1,214 ) 8,409 (9,623 )
Total interest earning assets 6,053,184
41,290 2.74 % 5,780,475 42,495 2.95 % (1,205 ) 7,550 (8,755 )
Allowance for credit losses on loans (46,759 ) (49,945 ) Cash & non-interest earning assets 207,308 199,769 Total assets$ 6,213,733 5,930,299
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts$ 1,191,496
44 0.01 %
(8 ) 27 (35 ) Money market accounts 791,689 214 0.11 % 725,570 283 0.16 % (69 ) 146 (215 ) Savings 1,527,975 156 0.04 % 1,315,049 159 0.05 % (3 ) 101 (104 ) Time deposits 964,158
546 0.23 % 1,261,963 1,666 0.54 % (1,120 ) (327 ) (793 )
Total interest bearing deposits 4,475,318 960 0.09 % 4,387,154 2,160 0.20 % (1,200 ) (53 ) (1,147 ) Short-term borrowings 248,535 234 0.38 % 223,807 228 0.41 % 6 87 (81 ) Total interest bearing liabilities 4,723,853 1,194 0.10 % 4,610,961 2,388 0.21 % (1,194 ) 34 (1,228 ) Demand deposits 808,695 673,428 Other liabilities 83,633 75,143 Shareholders' equity 597,552 570,767 Total liabilities and shareholders' equity$ 6,213,733 $ 5,930,299 Net interest income , tax equivalent 40,096 40,107$ (11 ) 7,516 (7,527 ) Net interest spread 2.63 % 2.74 % Net interest margin (net interest income to total interest earning assets) 2.66 % 2.78 % Tax equivalent adjustment - - Net interest income 40,096 40,107 63
--------------------------------------------------------------------------------
Index
© Edgar Online, source
