TRST TrustCo Bank Corporation of NY

Executive Snapshot:

-- Continued strong financial results:

-- First quarter 2014 compared to 2013:

• Net income up 20.1%
• Diluted EPS up 19.6%
• Return on average assets (ROA) rose 13 basis points to 0.99%
• Return on average equity (ROE) rose 174 basis points to 12.09%
• Significant improvement in the efficiency ratio from 54.33% in 2013 to 51.28% in 2014

-- Continued expansion of customer base:

-- Focus on capitalizing on the opportunities presented by expanded branch franchise

-- Deposits per branch grew from $28.0 million at year-end 2013 to $28.7 million at March 31, 2014

-- Average core deposits grew $90.7 million from Q1 2013 to Q1 2014

-- Loan portfolio reaches all-time high:

-- Average loans were up $233.5 million or 8.7% from Q1 2013 to Q1 2014

-- Residential mortgage loans comprised $219.1 million of the increase

-- At $2.94 billion, loans have reached an all-time high

-- Asset quality improvement:

-- Non-performing assets (NPAs) fell $5.8 million to $53.9 million at March 31, 2014 compared to $59.7 million at March 31, 2013

-- NPAs to total assets improved from 1.35% to 1.18% over the last year

-- NCOs to average loans improved from 0.34% in Q1 2013 to 0.30% in Q1 2014

TrustCo Announces First Quarter Earnings Increase Of 20.1% Over Prior Year

TrustCo Bank Corp NY (TrustCo) (Nasdaq:TRST) today announced that net income rose to $11.0 million in the quarter ended March 31, 2014, up 20.1% from $9.2 million for the quarter ended March 31, 2013.

Robert J. McCormick, President and Chief Executive Officer noted, "Our results for the first quarter of 2014 continued our progress in terms of solid bottom line growth and in positioning our business for the future. In addition to the significant increase in net income, we continued to add profitable customer relationships on both the loan and deposit sides of the Bank. Our highly liquid balance sheet continues to allow us to fund our loan growth without having to overpay for deposits. The first quarter was a strong start for TrustCo and we look forward to the remainder of 2014 with optimism. We continue to take advantage of opportunities as they are presented."

TrustCo saw continued strong loan growth in the first quarter of 2014. The gains were primarily funded by continued expansion of retail deposits. Lower yielding investment securities declined during the quarter, with most of the proceeds invested in short term instruments as of quarter-end. The shift towards loans helped offset part of the impact from continued low yields on cash and securities, while this liquidity provides for opportunities when interest rate conditions improve.

Mr. McCormick also noted, "We are encouraged by the continued economic improvements where we operate, particularly Florida, and believe that we are well positioned to capitalize on these changes. Our long-term focus on traditional lending criteria and conservative balance sheet management has enabled us to maintain a strong balance sheet and continued profitability. As a result, we have been able to focus on conducting business, which has significantly enhanced our reputation and put us in a position to take advantage of changes in market and competitive conditions."

Return on average assets and return on average equity were 0.99% and 12.09%, respectively for the first quarter of 2014, compared to 0.86% and 10.35% for the first quarter of 2013. Diluted earnings per share were $0.116 for the first quarter of 2014, up 19.6% from $0.097 for the first quarter of 2013.

On a year-over-year basis, average loans were up $233.5 million or 8.7% in the first quarter of 2014, over the same period in 2013. Average deposits were up $141.6 million for the first quarter of 2014 over the same period a year earlier. Customers continued to move some funds into certificates with slightly longer maturities, which may help TrustCo if rates rise, without having a material impact on the current cost of funds. During this time period core deposits rose $90.7 million. Core deposits typically represent longer term customer relationships and are generally lower cost than time deposits. Mr. McCormick noted that, "The year-over-year growth of our loans and core deposit base reflect the long term strategic focus of the Company.

"While some banks have backed away from branches, a customer friendly branch franchise continues to be the key to our long term plans. During 2013 we celebrated the ten year anniversary of our expansion into Florida, while at the same time making significant progress expanding loans and deposits throughout our branch network. We expect that trend to continue as the new branches continue to grow. At March 31, 2014, our average branch had $28.7 million of deposits, up $731 thousand compared to the prior year. We also note we have always designed our branches to be smaller and more cost effective than those built by many of our competitors. We have utilized open floor plans that help maximize the value of our branches. We remain mindful that fully achieving our goals for our newer branches will take time and continued work. We believe our success in growing customer relationships provides the basic building blocks that will help drive profit growth for the coming years."

Asset quality, reserve coverage of nonperforming loans (NPLs) and net charge-offs all improved from March 31, 2013 to March 31, 2014. NPLs declined to $44.9 million at March 31, 2014, compared to $49.9 million at March 31, 2013 and nonperforming assets (NPAs) declined to $53.9 million from $59.7 million over the same period. NPLs were equal to 1.53% of total loans at March 31, 2014, compared to 1.84% a year earlier. The coverage ratio, or allowance for loan losses to NPLs, was 104.7% at March 31, 2014, compared to 95.6% at March 31, 2013. Overall, virtually every asset quality indicator improved during the first quarter of 2014 relative to the first quarter of 2013. The ratio of reserves to total loans was 1.60% as of March 31, 2014, compared to 1.76% at March 31, 2013. This decline was due primarily to new loan growth over the last year.

The net interest margin for the first quarter of 2014 was 3.13%, compared to 3.15% in the fourth quarter of 2013. Included in first quarter of 2014 results was a gain of $1.6 million on the previously disclosed sale of the regional operations center in Florida. First quarter results also reflect the impact of New York State tax law changes which required a deferred tax asset write-down of $200 thousand.

At March 31, 2014 the tangible equity ratio was 8.11% compared to 7.99% at December 31, 2013 and 8.17% at March 31, 2013. Tangible book value per share ended the first quarter at $3.93 compared to $3.83 in the year-ago period.

TrustCo Bank Corp NY is a $4.6 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 139 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at March 31, 2013.

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.

A conference call to discuss first quarter 2014 results will be held at 9:00 a.m. Eastern Time on April 22, 2014. Those wishing to participate in the call may dial toll-free 1-888-317-6016. International callers must dial 1-412-317-6016. A replay of the call will be available thirty days by dialing 1-877-344-7529 (1-412-317-0088 for international callers), Conference Number 10043698. The call will also be audio webcast at: https://services.choruscall.com/links/trst140422.html, and will be available for one year.

Safe Harbor Statement

All statements in this news release that are not historical are forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended. The "forward-looking statements" may include statements regarding future events or performance. Such forward-looking statements are subject to factors that could cause actual results to differ materially for TrustCo from those discussed. 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: our ability to continue to originate a significant volume of one-to-four family mortgage loans in our market areas; our ability to continue to maintain noninterest expense and other overhead costs at reasonable levels relative to income; the future earnings and capital levels of Trustco Bank and the continued ability of Trustco Bank under regulatory rules to distribute capital to TrustCo, which could affect our ability to pay dividends; our ability to make accurate assumptions and judgments regarding the credit risks associated with lending and investing activities; the effect of changes in financial services laws and regulations and the impact of other governmental initiatives affecting the financial services industry; results of examinations of Trustco Bank and TrustCo by our respective regulators; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board, inflation, interest rates, market and monetary fluctuations; the perceived overall value of our products and services by users, including in comparison to competitors' products and services and the willingness of current and prospective customers to substitute competitors' products and services for our products and services; real estate and collateral values; changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the FASB or PCAOB; changes in local market areas and general business and economic trends, as well as changes in consumer spending and saving habits; our success at managing the risks involved in the foregoing and managing our business; and other risks and uncertainties under the heading "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2013, as amended, and, if any, in our subsequent quarterly reports on Form 10-Q or other securities filings.

Non-GAAP Financial Measures Reconciliation

Tangible book value per share and tangible equity as a percentage of tangible assets at period end are non-GAAP financial measures derived from GAAP-based amounts. We calculate tangible equity and tangible assets by excluding the balance of intangible assets from shareholders' equity and total assets, respectively. We calculate tangible book value per share by dividing tangible equity by common shares outstanding, as compared to book value per common share, which we calculate by dividing shareholders' equity by common shares outstanding. 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. 

The efficiency ratio is a non-GAAP measure of expense control relative to recurring revenue. We calculate the efficiency ratio by dividing total noninterest expenses as determined under GAAP, but excluding other real estate expense, net, which we refer to below as recurring expense, by net interest income (fully taxable equivalent) and total noninterest income as determined under GAAP, but excluding net gains on securities from this calculation, which we refer to below as recurring revenue. We believe that this provides one reasonable measure of core expenses relative to core revenue. 

We believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our financial position, results and ratios. Our management internally assesses our performance based, in part, on these measures. However, these non-GAAP financial measures are supplemental and are 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 common equity, tangible book value per share and efficiency ratio to the underlying GAAP numbers is set forth below.

CONTACT: Kevin T. Timmons
         Vice President/Treasurer
         (518) 381-3607

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