For the first nine months of 2012 net income was $27.7 million and resulted in diluted earnings per share of $0.296, as compared to the first nine months of 2011 net income of $24.4 million and diluted earnings per share of $0.296. Net income was up 13.8% from the first nine months of 2011 to the first nine months of 2012. Return on average equity and return on average assets were 10.64% and 0.85%, respectively, for the first nine months of 2012 and 11.38% and 0.80% for the comparable period in 2011.
Reported credit results for the quarter were affected by the implementation in the third quarter of new OCC guidance which affected consumer loans where the borrower's obligation to TrustCo has been discharged in bankruptcy and the borrower has not reaffirmed the debt. Implementation of this new OCC guidance affected nonperforming loans and net charge offs as follows:
- Net $4.0 million of performing consumer loans were reclassified to nonaccrual status, and
- $804 thousand increase in net charge offs, which was covered by the reserve.
Nonperforming loans were $49.9 million as of September 30, 2012, compared to $51.5 million at June 30, 2012 and $47.0 million at September 30, 2011. Nonperforming assets were $58.6 million at September 30, 2012, compared to $55.3 million at June 30, 2012 and $53.1 million at September 30, 2011. At September 30, 2012, nonperforming loans were equal to 1.92% of total loans, compared to 2.01% at June 30, 2012 and 1.89% at September 30, 2011. Nonperforming assets to total assets were 1.36% at September 30, 2012, compared to 1.25% at June 30, 2012 and 1.27% at September 30, 2011. The allowance for loan losses as a percentage of gross loans and as a multiple of net charge-offs remains strong. Excluding the affect of implementing the new OCC guidance TrustCo would have had nonperforming loans of $45.9 million or 1.76% of total loans, and nonperforming assets of $54.6 million or 1.26% of total assets as of September 30, 2012. The allowance to total loans was 1.82% at September 30, 2012 and 1.88% at June 30, 2012, and covered annualized third quarter net charge-offs by 3.3 times, compared to an annualized 4.1 times for the third quarter of 2011. The coverage ratio, or allowance for loan losses to nonperforming loans was 94.9% at September 30, 2012, compared to 93.3% at June 30, 2012 and 101.7% at September 30, 2011. Excluding the affect of implementing the new OCC guidance TrustCo's allowance for loan losses at September 30, 2012 as a percentage of gross loans would have been 1.85%, which would have covered annualized third quarter net charge offs by 4.4 times. Likewise the coverage ratio of the allowance for loan losses to nonperforming loans would have been 104.9% at September 30 , 2012.
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