TrustCo Bank Corp NY — 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023; filed March 11, 2024. TrustCo is a New York savings and loan holding company whose principal subsidiary, Trustco Bank, provides consumer and business banking, lending, investment and trust services. It operated 140 banking offices across New York, Florida, Vermont, Massachusetts and New Jersey.
Financial position and operating metrics
- The filing text provided does not include the consolidated income statement, balance sheet or cash flow statement figures. Those financial statements and management’s discussion are incorporated by reference from the 2023 Annual Report to Shareholders; revenue, net income, margins, cash flow, loan and deposit balances, and liquidity ratios therefore cannot be summarized reliably from this text.
- At December 31, 2023, the Bank reported a 10.43% Tier 1 leverage ratio, 18.28% CET1 and Tier 1 risk-based capital ratios, and a 19.53% total capital ratio. TrustCo reported corresponding ratios of 10.78%, 18.90%, 18.90%, and 20.15%. Both met applicable capital requirements; the Bank was categorized as well capitalized.
- The Bank had no Federal Home Loan Bank advances at year-end and reported available borrowing capacity supported by pledged securities and/or loans. Its FHLB stock was $6.2 million, compared with $5.8 million in 2022.
- Trust department assets under trust, custody or management were approximately $967 million at year-end. Consolidated assets were below $10 billion.
- FDIC deposit insurance expense was $2.9 million in 2023 versus $1.8 million in each of 2022 and 2021. The increase reflects, in part, a higher assessment schedule effective in 2023. The Company expects no FDIC special assessment related to the 2023 bank failures because the Bank’s relevant uninsured deposits were below $5 billion.
Changes versus prior periods
- The filing describes the federal funds target range as having risen by a cumulative 525 basis points through 2023, reaching 5.25%–5.50% at year-end. Management identifies elevated rates as a risk to funding costs, loan demand, housing activity and net interest income.
- FDIC insurance expense rose by $1.1 million from 2022 to 2023. The provided text does not supply enough financial-statement detail to assess year-over-year changes in earnings, margins, assets, deposits, lending or cash flows.
- No shares were repurchased in the fourth quarter of 2023. A March 2023 authorization permitted repurchases of up to 200,000 shares and was scheduled to expire March 17, 2024.
Outlook, commentary and risks
- No specific earnings, revenue or balance-sheet guidance is provided in the supplied text. Management stated it anticipates the Company will continue to be well capitalized and that the Bank expects to remain compliant with the qualified thrift lender test.
- The Bank has a material commercial real estate loan portfolio but stated it remained significantly below the cited supervisory concentration thresholds. The filing highlights the potential for CRE stress, weaker collateral values and borrower cash flows to raise credit losses.
- Principal risks include interest-rate and deposit-pricing sensitivity; credit risk, particularly from commercial lending and concentrated New York and Florida markets; inflation and economic weakness; liquidity and funding access; securities valuation; competition; regulatory changes and costs; and cybersecurity, third-party and operational disruptions.
- Management reported no pending legal proceeding that it believed would be material to consolidated equity or financial condition. It also reported no identified cybersecurity threat or incident that had materially affected, or was reasonably likely to materially affect, the Company.
- Disclosure controls were assessed as effective at December 31, 2023, and no material change in internal control over financial reporting during the fourth quarter was reported.
Investor verification points
- Review the incorporated 2023 Annual Report for complete income, balance-sheet and cash-flow statements, net interest margin, loan and deposit trends, asset quality, allowance for credit losses and liquidity detail.
- Check deposit mix, deposit costs, uninsured deposits, funding sensitivity and interest-rate risk measures against the full annual report.
- Verify commercial real estate and commercial business exposure, delinquency and nonperforming asset trends, and allowance assumptions.
- Confirm subsequent developments in dividends and the share-repurchase authorization, which was due to expire in March 2024, and assess regulatory limits on capital distributions.
- Track the implementation and potential cost of regulatory changes, including the revised Community Reinvestment Act framework and cybersecurity requirements.