Schenectady

Trustco to mark 120th anniversary where it began, on State Street in Schenectady

Bank officials and local dignitaries cut the ribbon for Trustco’s new Palm Coast, Florida, branch in October 2021.
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Bank officials and local dignitaries cut the ribbon for Trustco’s new Palm Coast, Florida, branch in October 2021.

SCHENECTADY One of the region’s longest-running companies will mark a milestone birthday Thursday with 70 times more employees than it started with, and an 82,000% increase in assets.

One thing that hasn’t changed is the address. The long history of Trustco began at 320 State St. on June 9, 1902, and in June 2022, the community bank’s Main Branch still operates behind the regal facade.

The company will celebrate its 120th birthday there starting at 9 a.m. Thursday, with the mayor of Schenectady presenting a key to the city and marking the bank’s longevity.

It has been a momentous ride for the bank originally chartered as the Schenectady Trust Company. 

The city’s population nearly tripled, then sharply contracted; two big pandemics struck a century apart; and two world wars roiled the economy.

The bank survived the Great Depression, during which 9,000 other banks failed, and it remains independent amid the wave of consolidation that has cut in half the number of American community banks so far in the 21st century.

The Schenectady Trust Company eventually shortened its name to Trustco and added 150 branches in five states as its assets grew from $762,578 to $6.3 billion in 120 years. The 11-man operation now has 750 employees.

But it retains the same fundamental role in the community — keeping people’s money safe and lending it out to buy homes.

RICH HISTORY

“Trustco is certainly an institution in Schenectady County,” said County Historian Bill Buell. 

“There were just three banks in Schenectady in 1886 when Thomas Edison brought Edison Electrical Works here, and soon the city of 14,000 grew to 32,000 by the turn of the century and would more than double over the next 20 years,” he added.

“Schenectady Trust Co. was one of those banks formed to help handle the population boom during that time, and when it opened in June of 1902 it became the fourth bank in Schenectady.”

Mark Eagan, president and CEO of the Capital Region Chamber, said Trustco is remarkable not just for surviving but growing and becoming part of the fabric of the community.

“As they started, they were the city of Schenectady, then they grew to other parts of the county, then they grew to other parts of the Capital Region,” he said. “They have a ton of branches.

“And they have a really strong niche in real estate. There’s so many people whose dreams of homeownership have come true. [Trustco] made it happen.”

Eagan also likes that the bank’s leadership has encouraged and enabled employees to become involved in the communities where they work.

“They demonstrate [support] not just through their words but through their actions,” he said.

THE BANK TODAY

The entity today is TrustCo Bank Corp of NY, a publicly traded savings and loan holding company based in Glenville. It operates 145 retail locations, almost all in three areas: the Capital Region, the lower Hudson Valley and central Florida. There is also one branch each in Vermont and Massachusetts, and two in New Jersey.

Chairman, President and CEO Robert J. McCormick has led the company since 2002, following his late father, Robert A. McCormick, who took the helm in 1985.

He spoke with The Daily Gazette last week about how and why Trustco endured and grew in a 120-year period that saw so many other banks fail or be merged out of existence.

“Trustco avoids that fate by staying strong, independent and invested in the community,” he said.

After graduating from Shenendehowa High School and Siena College, and after a stint at Albany Savings Bank, McCormick went to work for Trustco in 1995 and watched the banking landscape in Albany consolidate, with institutions dating to the early 1800s passing into the history books.

“I think when I worked for Albany Savings Bank there were 14 banks headquartered in the city of Albany,” he said. Among them was the venerable Albany Savings Bank, which was acquired by Charter One, which was acquired by Citizens Financial Group.

As McCormick relates it, the secret to success isn’t complicated: Give members of the community the financial services they need while remaining visible and accessible through a network of local branches.

“Our bread-and-butter product is the checking account and the residential mortgage,” he said, adding, “99.9% of the population has a residential mortgage or a checking account. If you can take care of people with those two products, they’re pretty loyal to you and pretty happy with you.”

McCormick continued: “We try to have a lot of locations, which is another trademark of Trustco. You’re going to find very few $6 billion banks that have 145 locations. We like that. They become billboards.”

The business model builds on those fundamentals.

Trustco doesn’t sell its mortgages, so it can make its profit on the interest over years rather than on the up-front mortgage-writing fees, so it can offer lower closing costs.

It has that network of branches in the communities where its borrowers live, so if they run into problems paying off their mortgage they can come in and speak with a human being who may already know them, rather than talk to a call center employee.

And that’s the heart of it.

Trustco’s financial filings show the great majority of its income coming from interest on loans, and also show that 90% of those loans are residential mortgages. Add in home equity lines of credit, and fully 95% of its loan portfolio involves people’s homes.

Just 4% is commercial loans, which can be much larger than residential loans — a two-edged sword.

“Real estate is a cyclical market. Prices come up and down. The key is to do [mortgages] the right way up front,” McCormick said. “You end up with a very diversified portfolio. Instead of having concentrations in one building, you have many consumers that own many one-family houses in many different neighborhoods.”

Trustco’s strategy to remain visible in the community follows a similar pattern, with donations of time and money to dozens of local organizations rather than the one big, high-visibility move.

Again and again the checks get presented at ceremonies. Again and again a platoon of employees don their Trustco T-shirts and undertake a community project.

The next beneficiaries will be Capital District YMCA, The Environmental Clearinghouse and The Schenectady Foundation, which will get monetary donations at the anniversary ceremony on Thursday.

“We make a lot of contributions every year,” McCormick said. “I don’t know how much good it is to have your name out there on arenas. I think taking care of people is the key.”

GROWTH STRATEGY

As it avoided being acquired by bigger companies, Trustco did not go on a buying spree while it steadily grew over the years.

It acquired several Bank of New York branches in the 1980s and bought Home Savings Bank of Albany in 1991, but most of its locations are branches that were opened by Trustco itself. (The Main Branch gained its first satellite in August 1923, in the Mont Pleasant neighborhood.)

“I’m a big fan of organic growth and I’m a big fan of de novo expansion,” McCormick said. “It’s not as fast and it’s not as slick and it’s not as sexy. But you open your own branches and you know what you’ve got, and you develop your own line of business. It’s been very effective for us.”

The jump out of the Capital Region in the early 2000s was a big move for Trustco, and not one that a lot of community banks would make.

McCormick said the company looked at Austin, Texas; Boston; Charlotte; and Phoenix, and rejected each for different reasons before choosing the Orlando region. 

There is some winter snowbird overlap between the Capital Region and central Florida, allowing Trustco to serve customers in both, but that’s not the reason it chose Orlando, McCormick said. Rather, it’s a diverse and thriving area that is reachable in a few hours from the Capital Region.

“We’re entering a dynamic, prosperous market that’s complete geographic and economic diversification from our home base,” he said. “That’s what makes it a home run.”

Trustco now has 50 branches in Florida.

“It’s a huge part of our success,” McCormick said.

Of all the challenges Trustco has faced in 120 years, COVID was an odd one — the impact was human rather than financial or corporate.

“I think COVID affected our employees more than it affected anything else,” McCormick said. “From a financial perspective, we were sound. But we were deemed to be essential and our employees took that very seriously. The management team as well, we didn’t hide in our basements.”

The labor shortage that escalated during the pandemic also is a hindrance as Trustco recruits and hires.

But with Americans’ personal savings at an all-time high after two years of COVID, and a housing market boom still going strong, Trustco posted historic financials for the first quarter of 2022. The value of its mortgage portfolio is substantially higher than prepandemic levels, and profits have followed.

LOOKING AHEAD

Don’t look for any big changes at Trustco in year 121.

“Obviously we stay on top of what the product offers are at other companies and what the competition is doing,” McCormick said. “But generally speaking, that mortgage and checking account is still a very effective blend.”

The machinery behind the scenes is the biggest component of change these days.

Trustco recently installed a new teller platform and a new loan tracking system. In the next three years it will upgrade its entire ATM network.

“The biggest issue for us and most companies our size is technology,” McCormick said. “You have to walk the fine line between brick and mortar [for] the classic customer and the customers demanding more and more technology. So we spend a lot of time, effort and money on developing technology and upgrading our systems.”

The old Main Branch has been expanded and remodeled so many times that it would be unrecognizable to the 11 dapper men who opened it 1902. The technology behind the counter would of course be alien — inconceivable in an era of longhand ledgers and mechanical calculators.

But when the ceremony is over Thursday, the people inside will be doing the same thing their forebears did: Keeping customers’ money safe and lending them other people’s money to pursue whatever the American dream looks like for them.

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