Is This Bank Worth Your Trust?

TrustCo Bank (Nasdaq: TRST  ) has come a long way since the last recession, thanks to its conservative lending policies. The company wasn't much affected during the housing collapse compared with its risk-taking mortgage peers.

In its most recent quarter, TrustCo posted 10.4% growth in net income, increasing to $9.2 million. The company earned $0.10 per share, just above the market expectation of $0.09. This regional bank benefited from the growth in its core loans and deposits. Average deposits were noticeably up by 6.6% to $228.8 million, while average loans were also up by 4.8% to $112.8 million. TrustCo has also managed to decrease its non performing assets by $1.3 million over the past three months, shrinking them down to to 1.27% from 1.44% last year.

Lately, many regional banks, including Hudson City Bancorp (Nasdaq: HCBK  ) and Flagstar Bancorp (NYSE: FBC  ) , have seen a significant fall in their provisions for loan losses. TrustCo has also seen a 13.5% drop in its provisions, which helps profits. It's evident in its non-performing loans coverage ratio, which tells us how many times the loss incurred by non-performing loans could be covered by the money the bank has set aside. As TrustCo's loan quality has improved, it has managed to widen its coverage ratio to 1.0 from 0.8 a year ago.

As TrustCo grew in revenue figures and managed to curb its core operating expenses, its efficiency ratio -- which calculates non-interest expenses as a percentage of net revenue -- dropped to 46.5% from 49% in the same quarter last year. A fall in this ratio shows that the company has decreased expenses or increased income, becoming more efficient either way.

The Foolish bottom line
The banking sector has recently braved some choppy waters. Now things seem to be stabilizing, and that's even better news for TrustCo, which has maintained its high standards despite the adverse economic conditions. As the economy recovers, this bank is one to watch.

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