TrustCo Bank Corp NY Q4 2023 Earnings Call

© transcript Emily Beynon

Yes.

Good day and welcome to the Trustco Bancorp earnings call and webcast all participants will be in a listen only mode.

Good day and welcome to the Trustco Bank Co-op earnings call and webinar.

All participants will be in a listen-only mode.

Should you need assistance, please signal a conference specialist by pressing the star key followed by zero on your keypad.

As you need assistance, please signal conference specialist by pressing the sake flip Boise right on your keypad.

After today's presentation there will be an opportunity to ask

After todays presentation, there will be an opportunity to ask questions ask a question you May press Star and then one to withdraw your question you May press Star on case.

To ask a question you may press star and then 1. To withdraw your question you may press star and

Before proceeding, we would like to mention that this presentation may contain forward-looking information about Trusco Bank Corp New York that is intended to be covered by the Safe Harbor for Forward-Looking Statements provided by the Private Securities Litigation Reform Act of 1995.

Before proceeding we would like to mention that this presentation may contain forward looking information about Trustco Bank Corp. New York that is intended to be covered by the safe Harbor for forward looking statements provided by the private Securities Litigation Reform Act of 1995.

Actual results, performance or achievements could differ materially from those expressed in or implied by such statements due to various risks, uncertainties and other factors.

Actual results performance or achievements could differ materially from those expressed in or implied by such statements due to various risks uncertainties and other factors more detailed information about these and other risk factors can be found in our press release that preceded this cool and in the risk factors and forward looking statements section of our annual report.

More detailed information about these and other risk factors can be found in our press release that

We've preceded this call and in the risk factors and forward-looking statements section of our annual report on Form 10-K and as updated by our quarterly report on Form 10-K.

And on Form 10-K, and as updated by of course, the reports on Form 10-Q.

The forward-looking statements made on this call are valid only as of the date hereof, and the company disclaims any obligation to update this information to reflect events or developments after the date of this call, except as may be required by applicable law.

The forward looking statements made on the school are valid only as of the date hereof and the company disclaims any obligation to update this information to reflect events or developments. After the date of this cool except as may be required by applicable law.

During today's call, we will discuss certain financial measures derived from our financial statements that are not determined in accordance with U S. GAAP reconciliations of such non-GAAP financial measures to the most comparable GAAP figures are included in our earnings press release, which is available under the Investor Relations tab of our website at Trustco Bank Dotcom.

During today's call we will discuss certain financial measures derived from our financial statements that are not determined in accordance with US GAAP. The reconciliations of such non-GAAP financial measures to the most comparable GAAP figures are included in our Earnings

are available under the Investor Relations tab of our website at chascobank.com.

Please also note that today's event is being recorded. A replay of the call will be available for 30 days and an audio webcast will be available for one year as described in our earnings press release.

Please also note that todays event is being recorded a replay of the call will be available for 30 days and the audio webcast will be available for one year as described in our earnings press release.

At this time I would like to turn the conference over to Mr. Robert J Mccormick Chairman President CEO of <unk>. Please go ahead.

At this time, I would like to turn the conference over to Mr. Robert J. McCormick, Chairman, President, CEO. Please go ahead.

Good morning, everyone and thank you for joining the call.

Good morning everyone and thank you for joining the call.

As a whole said I'm, Rob Mccormick President of Trustco Bank.

As the host said, I'm Rob McCormick, president of the Trusco Bank. I'm joined today, as usual, with Scott Salvador and Mike Ozimek. Scott will provide color on lending and credit quality, and Mike will follow my comments with detail on the numbers.

Joined today as usual as usual with Scot Salvador Michaels WOMAC, Scott will provide color on lending and credit quality and Mike will follow my comments with detail on the numbers.

Michael M. Ozimek: In 2023, we crossed an important milestone. Our loan portfolio surpassed $5 billion. During the year, we grew residential loans over $192 million and grew our commercial portfolio by over $50 million.

Mike: In 2023, we crossed an important milestone in our wine portfolio surpassed $5 billion. During the year, we grew residential loans over $192 million and grow our commercial portfolio by over $50 million. We're very happy to report that our loan growth was accomplished without borrowing or broker time deposits or many see merit in these devices we think.

Michael M. Ozimek: We are very happy to report that our loan growth was accomplished without borrowing or broker time deposits.

Michael M. Ozimek: While many see merit in these devices, we think the better practice is funding loan growth from our deposits.

Mike: Better practices funding loan growth from our deposits.

Michael M. Ozimek: That's the trustful way.

Mike: Trustful way.

Mike: On the subject of deposits. It is noteworthy that our team managed a difficult year very well because they have already done the hard work of establishing customer relationships. Our bankers were able to grow our total deposits well some funds shifted from core to time. The important thing is we kept the customer retains deposits and created the opportunity for funds to flow back into.

Michael M. Ozimek: and the subject of deposits, it is noteworthy that our team managed a difficult year very well. Because they had already done the hard work of establishing customer relationships, our bankers were able to grow our total deposits. While some funds shifted from core to time, the important thing is we kept the customer, retained the deposits and created the opportunity for funds to flow back into core.

transcript Emily Beynon

Mike: Core.

Michael M. Ozimek: Of course, the resulting increase in cost of funds affected our margin. The effect was less than it would have been had we borrowed or purchased deposits. In other words, in classic Trusco fashion, our team turned a potential negative into a positive.

Mike: Of course, the resulting increase in cost of funds affected our margin. The effect was less than it would have been had we borrowed a purchase deposits in other words in classic trustco fashion, our team turned a potential negative into a positive.

Good day, and welcome to the Trustco Bank Co-op earnings call and webinar.

All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero on your keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then 1. To withdraw your question, you may press star and then. Before proceeding, we would like to mention that this presentation may contain forward-looking information about Trusco Bank Corp. New York that is intended to be covered by the Safe Harbor for Forward-Looking Statements provided by the Private Securities Litigation Reform Act of 1995. Actual results, performance, or achievements could differ materially from those expressed in or implied by such statements due to various risks, uncertainties, and other factors.

Michael M. Ozimek: also in 2023 we cleaned up some things that could have hampered us in the future like many banks across the country we were faced with litigation involving overdraft fees we chose to resolve these matters in the best way that in the way that best benefits our customers and shareholders although final court approval is pending we consider it all resolved and that matter behind us

Also in 2023, we cleaned up some things that could have hampered us in the future like many banks across the country. We were faced with litigation involving overdraft fees. We chose to resolve these matters in the best way and the way that best benefits, our customers and shareholders. Although final court approval is pending we considered all resolved and.

Mike: In that matter behind us.

Mike: We also took a hard look at our branch network and made the decision to close three locations did not meet our expectations.

Michael M. Ozimek: We also took a hard look at our branch network and made the decision to close three locations that did not meet our expectations.

Michael M. Ozimek: We are leaner and more efficient coming into 2024.

Mike: We are leaner and more efficient coming into 2024.

Michael M. Ozimek: Also worthy of comment is the fact that our credit quality remains extraordinary. Non-performing assets to total assets were 0.29% at year end. That is the lowest this metric has been in over 17 years. Again, quite an accomplishment by our team in a challenging environment.

Mike: Also worthy of comment is the fact that our credit quality remains extraordinary nonperforming assets to total assets were 0.29% at year end that is the lowest this metric has been in over 17 years again quite an accomplishment by our team in a challenging environment.

More detailed information about these and other risk factors can be found in our press release that preceded this call and in the risk factors and forward-looking statements section of our annual report on Form 10-K and as updated by our quarterly report on Form 10-K. The forward-looking statements made on this call are valid only as of the date hereof, and the company disclaims any obligation to update this information to reflect events or developments after the date of this call, except as may be required by applicable law. During today's call, we will discuss certain financial measures derived from our financial statements that are not determined in accordance with US GAAP. The reconciliations of such non-GAAP financial measures to the most comparable GAAP figures are included in our Earnings and are available under the Investor Relations tab of our website at chascobank.com. Please also note that today's event is being recorded. A replay of the call will be available for 30 days, and an audio webcast will be available for one year, as described in our earnings press release.

Michael M. Ozimek: Finally, as noted in the press release, all of this good work springs from our rock-solid capital position. We took advantage of investment opportunities that were in line with our strategy preserving capital and maintaining maximum flexibility.

Finally as noted in the press release all of this good work Springs from our rock solid capital position. We took advantage of investment opportunities that were in line with our strategy preserving capital and maintaining maximum flexibility because of this we had cash on hand to fund our loan growth did not need to chase higher price deposits.

Michael M. Ozimek: Because of this, we had cash on hand to fund our loan growth and did not need to chase higher price deposits.

Mike: No one knows exactly where rates will go or what other factors might come up this year, but we are confident in our position and ready to capitalize on opportunities that arise now Mike will give us detail on the numbers Scott will cover lending and then we'll take your questions. Mike. Thank you, Rob and good morning, everyone. I will now review <unk> financial.

Michael M. Ozimek: No one knows exactly where rates will go or what other factors might come up this year, but we are confident in our position and ready to capitalize on opportunities that arise. Now, Mike will give us detail on the numbers, Scott will cover lending, and then we'll take your questions. Mike? Thank you, Rob, and good morning, everyone. I will now review Trusco's financial results for the fourth quarter of 2020.

Mike: Results for the fourth quarter of 2023, as we noted in the press release the company saw year to date net income of $58 6 million, which yielded a return on average assets and average equity of <unk>, 97% and 946% respectively capital remains strong consolidated equity to assets ratio was 10 four six.

Michael M. Ozimek: As we noted in the press release, the company saw a year-to-date net income of $58.6 million, which yielded a return on average assets and average equity of 0.97% and 9.46% respectively.

At this time, I would like to turn the conference over to Mr. Robert J. McCormick, Chairman, President, and CEO.

Please go ahead.

Michael M. Ozimek: Capital remains strong. Consolidated equity to assets ratio was 10.46 for the fourth quarter of 23, 310% for the fourth quarter of 23.

Good morning everyone, and thank you for joining the call.

As the host said, I'm Rob McCormick, president of Trusco Bank.

Mike: The fourth quarter of 23, 310% for the fourth quarter of 2022.

I'm joined today, as usual, by Scott Salvador and Mike Ozimek. Scott will provide color on lending and credit quality, and Mike will follow my comments with detail on the numbers. In 2023, we crossed an important milestone. Our loan portfolio surpassed $5 billion. During the year, we grew our residential loans by over $192 million and grew our commercial portfolio by over $50 million. We are very happy to report that our loan growth was accomplished without borrowing or brokering time deposits. While many see merit in these devices, we think the better practice is funding loan growth from our deposits.

Michael M. Ozimek: Book value per share at December 31st, 2023.

Value per share at December 31, 2003 was $33 92 up.

Michael M. Ozimek: 3392, up 7.5% compared to 3154 a year earlier.

Mike: Seven 5% compared to $31 54 euros.

Speaker Change: Thank you.

Speaker Change: Average loans for the fourth quarter of 23 grew 6.6% or $309.9 million to $5 billion from the fourth quarter of 2022, an all-time high.

Mike: Yeah.

Average loans for the fourth quarter of 'twenty, three grew six 6% or $309 9 million.

Mike: To $5 billion from the fourth quarter of 2020 to an all time high.

Speaker Change: Consequently, loan growth has continued to increase and occurred in all of our loan categories, and leading the charge was the residential real estate portfolio, as always, which increased by 192.2 million, or 4.6% in the fourth quarter of 2023, over the same period in 2022.

Mike: Consequently loan growth has continued to increase.

Mike: Occurred in all of our loan categories and leading the charge was the residential real estate portfolio as always which increased by $192 2 million or $4 two 6% in the fourth quarter of 2000 through 2023 for the same period in 2022.

In that trusting way, and on the subject of deposits, it is noteworthy that our team managed a difficult year very well. Because they had already done the hard work of establishing customer relationships, our bankers were able to grow our total deposits. While some funds shifted from core to time, the important thing is that we kept the customer, retained the deposits, and created the opportunity for funds to flow back into core. Of course, the resulting increase in cost of funds affected our margin. The effect was less than it would have been had we borrowed or purchased deposits. In other words, in classic Trusco fashion, our team turned a potential negative into a positive. Also, in 2023, we cleaned up some things that could have hampered us in the future. Like many banks across the country, we were faced with litigation involving overdraft fees. We chose to resolve these matters in the best way that best benefits our customers and shareholders. Although final court We are leaner and more efficient coming into 2024. Also, worthy of comment is the fact that our credit quality remains extraordinary.

Speaker Change: Average commercial loans increased 50.5 million or 22.6 percent. Home equity lines of credit increased 61.8 million or 22.2 percent and installment loans increased 5.5 million or 50.3 percent over the same period in 2023.

Mike: Average commercial loans increased $50 5 million or 22, 6% home equity lines of credit increased $61 $8 million or 22, 2% and installment loans increased $5 5 million or 53% over the same period in 2023 for.

Speaker Change: For the fourth quarter of 2023, the provision for credit losses was $1.35 million.

Mike: For the fourth quarter of 2023 recent provision for credit losses was $135 million.

Speaker Change: The additional provision this quarter is a reflection of the current economic environment and not an indication of existing credit issues at the bank.

Mike: The additional provision this quarter is a reflection on the current economic environment and not an indication of existing credit issues at the bank.

Mike: Retaining deposits has been a key focus of our 'twenty three.

Speaker Change: Retaining deposits has been a key focus during 2020.

Speaker Change: Although core deposits were down compared to prior year, total deposits as of December 31, 23 increased $158 million to $5.35 billion from the end of 2020.

Mike: Although our core deposits were down compared to prior year total deposits as of December 31, 23 increased $158 million or 535 billion from the end of 'twenty two as we move forward. Our objective is to continue to offer competitive product offerings of the bank through aggressive marketing and product differentiation as we have mentioned we understood the big inflows.

Speaker Change: as we move forward our objective is to continue to offer competitive product offerings of the bank through aggressive marketing and product differentiation. As we have mentioned, we understood the big inflows of deposits during the pandemic were temporary and that is why we did not invest that liquidity into securities or loans or retain that liquidity on balance sheet for when the depositors would absorb those funds.

Mike: Deposits during the pandemic were temporary and that is why we did not invest that liquidity into securities or loans or retain up liquidity on balance sheet for when that depositors, where and absorb those funds.

Non-performing assets to total assets were 0.29% at year end. That is the lowest this metric has been in over 17 years. Again, quite an accomplishment by our team in a challenging environment. Finally, as noted in the press release, all of this good work springs from our rock-solid capital position.

Speaker Change: This gave us the flexibility to strategically price core deposits while retaining core customers.

Mike: This gave us the flexibility to strategically price core deposits, while retaining core customers.

Speaker Change: The net interest income was $38.6 million for the fourth quarter of 2023, a decrease of $10.6 million, or 21.5%, compared to the same period in 2022. The net interest margin for the fourth quarter of 2023 was 2.6% compared to the fourth quarter of 2022. The yield on interest earnings and assets increased to 3.93%, up 39 basis points from 3.54% in the fourth quarter of 2022.

Mike: Net interest income was $38 6 million for the fourth quarter of 2003 and decrease of $10 6 million or 21, 5% compared to the same period in 2000 to net interest margin for the fourth quarter of.

We took advantage of investment opportunities that were in line with our strategy of preserving capital and maintaining maximum flexibility. Because of this, we had cash on hand to fund our loan growth and did not need to chase higher-priced deposits. No one knows exactly where rates will go or what other factors might come up this year, but we are confident in our position and ready to capitalize on opportunities that arise. Now, Mike will give us detail on the numbers, Scott will cover lending, and then we'll take your questions.

Mike: 2023 was two 6% compared to the fourth quarter of 'twenty, two yogurt interest earnings assets increased to 393% up 39 basis points from 354% in the fourth quarter of 2022, and the cost of interest bearing liabilities increased to 172% in the fourth quarter of 2003 in the fourth quarter of 2000.

Speaker Change: and the cost of interest bearing to liability.

Speaker Change: to 1.72% in the fourth quarter of 23 from the fourth quarter of 2020.

Speaker Change: continue to be optimistic as we enter 2024. The majority of our CD portfolio has a three to nine month maturity and will give us opportunity to reprice these CDs in the near term as rates potentially fall.

Mike: We continue to be optimistic as we enter 2020 for the majority of our CD portfolio is a three to nine months maturity and will give us opportunity to reprice the Cds in the near term as rates potentially.

Mike?

Michael M. Ozimek: Thank you, Rob, and good morning, everyone. I will now review Trusco's financial results for the fourth quarter of 2020.

Speaker Change: Our Wealth Management Division continues to be a significant recurring source of non-interest

Mike: Our wealth management Division continues to be significant recurring source of noninterest income and.

Michael M. Ozimek: As we noted in the press release, the company saw a year-to-date net income of $58.6 million, which yielded a return on average assets and average equity of 0.97% and 9.46%, respectively. Capital remains strong. Consolidated equity to assets ratio was 10.46 for the fourth quarter of 23, 310% for the fourth quarter of 23, and book value per share at December 31st, 2023. 3392, up 7.5% compared to 3154 a year earlier. Thank you. Average loans for the fourth quarter of 2023 grew 6.6% or $309.9 million to $5 billion from the fourth quarter of 2022, an all-time high. Consequently, loan growth has continued to increase and occurred in all of our loan categories, and leading the charge was the residential real estate portfolio, as always, which increased by 192.2 million, or 4.6%, in the fourth quarter of 2023 over the same period in 2022. Average commercial loans increased by 50.5 million, or 22.6 percent.

Speaker Change: They had approximately $967 million of assets under management as of December 31, 2020.

Mike: We had approximately $967 million of assets under management as of December 31, 2023 now.

Speaker Change: Now on to non-interest expense. Total non-interest expense, net of orderly expense, came in at $28.8 million, up $1.5 million from the prior quarter. As mentioned in the earnings

Mike: Now onto noninterest expense total noninterest expense net of already expense came in at $28 8 million up $1 5 million from the prior quarter as mentioned in the earnings release. This increase is primarily primarily the result of nonrecurring expenses, our litigation settlement and also for branch Closers. This was offset by decreases in various product.

Speaker Change: This increase is primarily the result of non-recurring expenses for a litigation settlement and also for branch clauses.

Speaker Change: This was offset by decreases in various other categories of expenses.

<unk> expenses.

Speaker Change: Ori, Nat came in at

Mike: <unk> expense net of net came in at.

Speaker Change: An income of 12,000 for the quarter as compared to the expense of 163,000 in the prior quarter.

Mike: And income was 12 <unk> thousand for the quarter as compared to expense of 163000 in the prior quarter.

Speaker Change: Given the continued low level of ORE expenses, we are going to continue to hold the anticipated level of expense not to exceed $250,000 per quarter. All the other categories of non-interest expense were in line with our expectations for the fourth quarter.

Mike: Given the continued low level of Oreo expenses, we're going to continue to hold the anticipated level of expense not to exceed $250000 per quarter.

Mike: And the other categories of noninterest expense were in line with our expectations for the fourth quarter. We would expect 24 as total recurring noninterest expense net of ore expense to remain in the range of $26 nine to $27 4 million, we are optimistic of expenses in 2024.

Speaker Change: We would expect 24 is total recurring non-interest expense, net of or re-expense to remain in the range of $26.9 to $27.4 million. We are optimistic of expenses in 2020.

Speaker Change: Pascal will review the loan portfolio and nonperforming loans.

Mike: Scott will review the loan portfolio and nonperforming loans.

Pascal: Good morning, everyone. Thanks, Mike.

Good morning, everyone. Thanks, Mike.

Scott: Total loans for the fourth quarter increased by $43 million actual numbers of <unk>, 9% year over year, the increase was $270 million or five 7%.

Pascal: Total loans for the fourth quarter increased by $43 million in actual numbers of 0.9%. Year-over-year, the increase was $270 million or 5.7%.

Robert Joseph McCormick: for funds to flow back into CORE. Of course, the resulting increase in the cost of funds affected our margin. The effect was less than it would have been had we borrowed or purchased deposits. In other words, in classic trust code fashion, our team turned a potential negative into a positive. Also, in 2023, we cleaned up some things that could have hampered us in the future. Like many banks across the country, we were faced with litigation involving overdraft fees. We chose to resolve these matters in the way that best benefits our customers and shareholders. Although final court approval is pending, we consider it all resolved, and that matter behind us. We also took a hard look at our branch network and made the decision to close three locations that did not meet our expectations.

Pascal: Residential loans again led to increases with a total of $37 million in quarterly growth. This was split between $22 million in first mortgages and $15 million in home equity prices.

Michael M. Ozimek: Home equity lines of credit increased 61.8 million, or 22.2 percent, and installment loans increased 5.5 million, or 50.3 percent, over the same period in 2023. For the fourth quarter of 2023, the provision for credit losses was $1.35 million. The additional provision this quarter is a reflection of the current economic environment and not an indication of existing credit issues at the bank.

Scott: Residential loans again led the increases with a total of $37 million and quarterly growth. This was split between $22 million of first mortgages and $15 million of home equity.

Pascal: The full year shows similar trends with $160 million of first mortgage growth and $62 million

Scott: Our full year showed similar trends with $160 million of first mortgage growth of $62 million of home equity.

Pascal: Commercial loans continue to grow, increasing by $5 million on the quarter and by $43 million year over year.

Scott: Commercial loans continued to grow increasing by $5 million in the quarter and by 43 million year over year.

Scott: Overall residential activity and market trends remained similar to those discussed in the most recent quarters.

Pascal: Overall, residential activity and market trends remain similar to those discussed in the most recent quarter.

Scott: We continue to post solid net growth in our first mortgage product. Although overall purchase activity is reflected of nationwide trends and a slower than in prior year.

Pascal: continue to post solid net growth in our first mortgage product, although overall purchase activity is reflected of nationwide trends and is slower than in prior years.

Michael M. Ozimek: Retaining deposits has been a key focus during 2020. Although core deposits were down compared to the prior year, total deposits as of December 31, 23 increased $158 million to $5.35 billion from the end of 2020. As we move forward, our objective is to continue to offer competitive product offerings of the bank through aggressive marketing and product differentiation. As we have mentioned, we understood the big inflows of deposits during the pandemic were temporary, and that is why we did not invest that liquidity into securities or loans or retain that liquidity on the balance sheet for when the depositors would absorb those funds. This gave us the flexibility to strategically price core deposits while retaining core customers. The net interest income was $38.6 million for the fourth quarter of 2023, a decrease of $10.6 million, or 21.5%, compared to the same period in 2022.

Robert Joseph McCormick: We are leaner and more efficient coming into 2024. Also worthy of comment is the fact that our credit quality remains extraordinary; non-performing assets to total assets were 0.29% at year-end; that is the lowest this metric has been in over 17 years, again quite an accomplishment by our team in a challenging environment. Finally, as noted in the press release, all of this good work springs from our rock-solid capital position. We took advantage of investment opportunities that were in line with our strategy of preserving capital and maintaining maximum flexibility. Because of this, we had cash on hand to fund our loan growth and did not need to chase higher-priced deposits. However, no one knows exactly where rates will go or what other factors might come up this year. But we are confident in our position and ready to capitalize on opportunities that arise. Now, Mike will give us details on the numbers. Scott will cover lending, and then we'll take your questions, Mike. Thank you, Rob. And good morning, everyone.

Pascal: The midwinter holiday period is of course also a slower time

Scott: Midwinter holiday periods of course also a slower time of year, although we expect activity to pick up as we begin to enter the early stages of the new season the.

Pascal: although we expect activity to pick up as we begin to enter the early stage

Pascal: The recent decrease in interest rates, although modest, is also a positive factor which should help overall activity.

Scott: The recent decrease in interest rates, although modest is also a positive factor, which should help overall activity.

Pascal: The home equity products continue to perform well overall with a good amount of activity and net growth.

Scott: The home equity products continue to perform well overall with a good amount of activity and net growth.

Pascal: The loan backlog is down from quarter end, which is normal for this time of year, and also down year over year. This should begin to build as we progress forward and overactivity increases.

Scott: The loan backlog is down from quarter end, which is normal for this time of year and also down year over year. This should begin to build as we progress forward and over activity increases.

Pascal: Interest rates have come down somewhat as mentioned and we currently stand at 6.38% for our base 30-year fixed rate.

Scott: Interest rates have come down somewhat as mentioned, we currently stand at 6% and three 8% for our base 30 year fixed rate.

Pascal: We always have a variety of promotions and product enhancements we are working on. We expect to utilize our status as primarily a portfolio lender to help spread our business

Scott: We always have a variety of promotions and product enhancements. We are working on we expect to utilize our status as primarily a portfolio lender to help spur activity and increased growth.

Pascal: Scrooge.

Pascal: Asset Quality remains strong overall. Non-performing assets totaled $17.9 million as of 12-31. This is down from $19.1 million in September and $19.6 a year ago. Non-performing loans have remained relatively flat at $17.7 million, down approximately $200,000 from last quarter and up about the same amount from a year ago. This total equates to 0.35% of non-performing loans to total loans, down slightly from 0.37% prior to

Scott: Asset quality remained strong overall nonperforming assets totaled $17 9 million as of 12 31. This is down from $19 1 million at September $19, six a year ago.

Michael M. Ozimek: I will now review Trusco's financial results for the fourth quarter of 2020. As we noted in the press release, the company saw a year-to-date net income of $58.6 million, which yielded a return on average assets and average equity of 0.97% and 9.46%, respectively. Capital remains strong. The consolidated equity to assets ratio was 10.46 for the fourth quarter of 2020.

Nonperforming loans have remained relatively flat at $17 7 million down approximately 200000 from last quarter and up about the same amount from a year ago.

Michael M. Ozimek: The net interest margin for the fourth quarter of 2023 was 2.6% compared to the fourth quarter of 2022. The yield on interest earnings and assets increased to 3.93%, up 39 basis points from 3.54% in the fourth quarter of 2022, and the cost of interest bearing to liability, to 1.72% in the fourth quarter of 2023 from the fourth quarter of 2020. We continue to be optimistic as we enter 2024. The majority of our CD portfolio has a three to nine month maturity and will give us an opportunity to reprice these CDs in the near term as rates potentially fall.

Scott: This total equates to 0.35% of nonperforming loans to total loans down slightly from <unk> 37 prior year.

Pascal: Net charge-offs to the quarter totaled $248,000.

Scott: Net charge offs for the quarter totaled 248000.

Pascal: For the full year, our charge-offs equated to a net recovery of 46,000.

Michael M. Ozimek: Thread to 10% for the fourth quarter of 23. Book value per share at December 31st, 2020. 3,392, up 7.5% compared to 3,154 a year earlier. Average loans for the fourth quarter of 2023 grew 6.6%, or $309.9 million to $5 billion from the fourth quarter of 2022, an all-time high. Consequently, loan growth has continued to increase and occurred in all of our loan categories, and leading the charge was the residential real estate portfolio, as always, which increased by $192.2 million, or 4.6%, in the fourth quarter of 2023 over the same period in 2020. Average commercial loans increased $50.5 million, or 22.6%. Home equity lines of credit increased by $61.8 million, or 22.2%.

Scott: For the full year charge offs equated to a net recovery of $46.

Pascal: The loan loss allowance now stands at 0.97% of total loans as of U.S.

Scott: The loan loss allowance now stands at <unk>, 97% of total loans as of yearend.

Scott: And finally, the coverage ratio or allowance for credit losses to nonperforming loans was 275% in December compared to $2 63, a year ago dropped.

Pascal: and finally the coverage ratio or allowance for credit losses to non-performing loans was 275% in December compared to 263 a year.

Pascal: Drop.

Speaker Change: That's our story and we're happy to answer any questions any of you might have.

Scott: Our story and we're happy to answer any questions any of you might have.

Speaker Change: Thank you. As a reminder if you would like to ask a question today you may do so now by pressing star followed by the number one on your telephone keypad. If you change your mind and would like to be removed from the queue please press star and then two. When preparing to ask your question please ensure that your device and your microphone are unmuted locally.

Scott: As a reminder, if you'd like to ask a question today you may do so now by pressing star followed by the number one on your telephone keypad. If you change your mind I would like to be removed from the queue. Please press star and then K when preparing to ask a question. Please ensure that your device Andrew microphone on mute you lately.

Michael M. Ozimek: Our Wealth Management Division continues to be a significant recurring source of non-interest expense. They had approximately $967 million of assets under management as of December 31, 2020. Now on to non-interest expense. Total non-interest expense, net of orderly expense, came in at $28.8 million, up $1.5 million from the prior quarter. As mentioned in the earnings, this increase is primarily the result of non-recurring expenses for a litigation settlement and also for branch clauses. This was offset by decreases in various other categories of expenses. Ori, Nat came in at an income of 12,000 for the quarter as compared to an expense of 163,000 in the prior quarter. Given the continued low level of ORE expenses, we are going to continue to hold the anticipated level of expenses not to exceed $250,000 per quarter.

Speaker Change: Our first question comes from the line of Alex Twerdahl with Piper Sandler. Alex, please go ahead, your line is now open.

Speaker Change: Our first question comes from the line of Alex <unk> with Piper Sandler Alex. Please go ahead. Your line is now open.

Alex: Good morning, guys.

Alexander Roberts Huxley Twerdahl: Good morning, guys.

Speaker Change: Good morning, Alex. Good morning, Alex.

Michael M. Ozimek: And installment loans increased $5.5 million, or 50.3%, over the same period in 2023. For the fourth quarter of 2023, the provision for credit losses was $1.35 million. The additional provision this quarter is a reflection of the current economic environment and not an indication of existing credit issues at the bank. Retaining deposits has been a key focus for... Although core deposits were down compared to the prior year, total deposits as of December 31, 2023 increased to $158 million, to $5.35 billion from the end of 2020. As we move forward, our objective is to continue to offer competitive product offerings of the bank through aggressive marketing and product differentiation.

Alex: Good morning, Alex.

Alexander Roberts Huxley Twerdahl: I was just first hoping that maybe you could sort of just help us get a sense for how the NIM might react to some Fed rate cuts. I think the first one is not modeled in for May, according to the forward curve. And as you kind of think about the CDs that, Mike, you alluded to repricing, you know, relatively quickly versus some of the assets that are more tied to the short end of the curve, you know, like how should we expect the NIM to react to the first couple cuts, you know, if and when we get them?

Speaker Change: I was just hoping that maybe you could.

Alex: Sort of just help us get a sense for how the NIM might react.

Alex: Fed rate cuts I think the first one is now modeled in for for May According to the foreign curve and as you kind of think about the Cds that Mike you alluded to repricing relatively quickly versus some of the assets that are more tied to the short end of the curve.

Alex: How should we expect the NIM to react to the first couple of cuts.

Alex: If and when we get them.

Speaker Change: Well, we've already we've already started back in CD rates now from their hi, Alex.

Speaker Change: We've already started backing CD rates down from their high, Alex, and most people are going very short with regard to CDs, so we're optimistic with regard to repricing those.

Most people are going very short with regard to Cds. So we are optimistic with regards to repricing nose.

Michael M. Ozimek: All the other categories of non-interest expense were in line with our expectations for the fourth quarter. We would expect 24 is total recurring non-interest expense, net of or re-expense to remain in the range of $26.9 to $27.4 million. We are optimistic about expenses in 2020. Pascal will review the loan portfolio and nonperforming loans.

Speaker Change: the current market conditions at a lower rate later in the year.

Speaker Change: The current market conditions at a lower rate later in the year.

Michael M. Ozimek: As we have mentioned, we understood the big inflows of deposits during the pandemic were temporary, and that is why we did not invest that liquidity into securities or loans or retain that liquidity on the balance sheet for when the depositors would absorb those funds. This gave us the flexibility to strategically price core deposits while retaining core customers. The net interest income was $38.6 million for the fourth quarter of 2023, a decrease of $10.6 million, or 21.5%, compared to the same period in 2022. The interest margin for the fourth quarter of 2023 was 2.6% compared to the fourth quarter of 2022. Yield on interest earnings and assets increased to 3.93%, up 39 basis points from 3.54% in the fourth quarter of 2022, and the cost of interest bearing to liabilities increased to 1.72% in the fourth quarter of 2023. We continue to be optimistic as we enter 2024. The majority of our CD portfolio has a three to nine month maturity and will give us the opportunity to reprice these CDs in the near term as rates potentially fall.

Speaker Change: it's interesting if you offer

Speaker Change: It's interesting if you offer a.

Speaker Change: A 4, you know, just a 4.9% CD for three months or a 475 for six to nine months. Everybody takes the 490.

Speaker Change: For.

Speaker Change: Just a four 9% CD for three months or four.

Speaker Change: 475, or six to nine months it takes to $4 90.

Speaker Change: So it's interesting to watch how the consumer is reacting to that.

Speaker Change: So it's interesting to watch how the consumers reacting to that.

Speaker Change: And.

Speaker Change: and

Speaker Change: I do hope we are optimistic with regard to repricing deposits.

Speaker Change: I do hope we are optimistic with regards to repricing deposits through the balance of the year.

Speaker Change: through the balance of the year.

Pascal: Good morning, everyone.

Pascal: Thanks, Mike. Total loans for the fourth quarter increased by $43 million, or 0.9%. Year-over-year, the increase was $270 million or 5.7%. Residential loans again led to increases with a total of $37 million in quarterly growth. This was split between $22 million in first mortgages and $15 million in home equity prices. The full year shows similar trends with $160 million of first mortgage growth and $62 million. Commercial loans continue to grow, increasing by $5 million in the quarter and by $43 million year over year. Overall, residential activity and market trends remain similar to those discussed in the most recent quarter, and we continue to post solid net growth in our first mortgage product, although overall purchase activity is reflected in nationwide trends and is slower than in prior years.

Speaker Change: Okay.

Speaker Change: Okay, I mean, I take from your tone that you'd expect that

Speaker Change: I take from your tone that you would expect that.

Speaker Change: It's sort of the pace of repricing of the deposits the right way.

Speaker Change: sort of the pace of repricing of the deposits, the rate which accelerated a little bit in the fourth quarter, that that should abate.

Accelerated a little bit in the fourth quarter that should abate.

Speaker Change: in the first quarter, is that reasonable expectation?

Speaker Change: In the first quarter is that reasonable expectation.

Speaker Change: That would be the hope.

That would be the hope.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: and then

Speaker Change: And then.

Speaker Change: When I look at the ACL, it went up about two basis points during the quarter, and I think you alluded to just some macro, some changes in macro forecasts. You know, what specifically, I guess, is it one geography versus the other, or I guess what specifically has been driving that ACL and

Speaker Change: When I look at the ACL went up two basis points during the quarter.

Speaker Change: And I think you alluded it to alluded to some macro and some change in the macro forecast what specifically I guess is it one of the one geography versus the other or I guess, what specifically.

Speaker Change: Has been driving that ACL and <unk>.

Speaker Change: Is that something that I guess should creep higher a little bit, you know, as maybe a little bit more uncertainty develops in 2024?

Speaker Change: Is that something that I guess should creep higher a little bit.

Speaker Change: Maybe a little bit more uncertainty.

Speaker Change: In 2024.

Speaker Change: Well, that certainly could creep higher if uncertainty continues. I can tell you that it is, I mean, you can see the non-performing numbers. They're better. I mean, they really are flat, so that's not what's driving the calculation.

Speaker Change: It certainly could creep higher.

Uncertainty continues.

Speaker Change: I can tell you that it is you can see the nonperforming numbers are there I mean, there really are flat. So that's not what's driving the calculation. It is however, some of the macro numbers as you alluded to on some of the unemployment forecasts. Some of the housing numbers that type of thing that's what drove it a little bit in the fourth quarter. So.

Michael M. Ozimek: Our Wealth Management Division continues to be a significant recurring source of non-interest income. They had approximately 967 million assets under management as of December 31, 2020. Now on to non-interest expense. Total non-interest expense, net of orderly expense, came in at $28.8 million, up $1.5 million from the prior quarter.

Pascal: The midwinter holiday period is, of course, also a slower time, although we expect activity to pick up as we begin to enter the early stage. The recent decrease in interest rates, although modest, is also a positive factor which should help overall activity. The home equity products continue to perform well overall, with a good amount of activity and net growth. The loan backlog is down from quarter end, which is normal for this time of year, and also down year over year. However, this should begin to build as we progress forward and overactivity increases. Interest rates have come down somewhat, as mentioned, and we currently stand at 6.38% for our base 30-year fixed rate. We always have a variety of promotions and product enhancements we are working on.

Speaker Change: It is, however, some of the macro numbers, as you alluded to, on some of the unemployment forecasts, some of the housing numbers, that type of thing. That's what drove it a little bit.

Speaker Change: so if to the extent that that gets worse we could see a little more but I think that was a healthy provision for the fourth quarter and I don't see us trending

Speaker Change: Extended that gets worse, we can see a little more.

I think that was a healthy provision for the fourth quarter.

Speaker Change: And I don't see us trending.

Michael M. Ozimek: As mentioned, the earnings... This increase is primarily the result of non-recurring expenses for a litigation settlement and also for branch clauses. This was offset by decreases in various other categories of expenses. Ori, Atencio, Neto, Net came in at an income of $12,000 for the quarter as compared to an expense of $163,000 in the prior quarter.

Speaker Change: Well above 1%, but I think I'm comfortable where we are now. We've been in a net recovery position for a very long period of time now.

Well about 1% I think.

Speaker Change: Comfortable where we are now we've been in a net recovery position for a very long time now so.

Speaker Change: At some point you have to correct that's correct.

Speaker Change: At some point, yeah. Correct. That's correct.

Speaker Change: Yes.

Speaker Change: Yeah, I guess just back to sort of the deposit strategy, you guys have always kept a pretty healthy level of cash on the balance sheet, and that looks like it grew into the end of the year. As I think about that, just relative to the amount of capital you have, it seems like you have so much capital that gives you a lot of flexibility to sort of create liquidity if needed. You know, I guess, do you need to carry such a high level of cash, or is that something that, you know, maybe can run down and give you a little bit more?

Speaker Change: I guess just that sort of the deposit strategy you guys have always kept.

Speaker Change: Pretty healthy level of cash on the balance sheet. It looks like it grew into the end of the year.

Speaker Change: We expect to utilize our status as primarily a portfolio lender to help spread our business, Scrooge.

Speaker Change: As I think about that just relative to the amount of capital you have it seems like you have so much capital that gives you a lot of flexibility to sort of create liquidity if needed.

Operator: Given the continued low level of ORE expenses, we are going to continue to hold the anticipated level of expense not to exceed $250,000 per quarter. All the other categories of non-interest expense were in line with our expectations for the fourth quarter. We would expect 24's total recurring non-interest expense, net of orrery expense, to remain in the range of $26.9 to $27.4 million. We are optimistic about expenses in 24. Pascal will review the loan portfolio and non-performing loans. Good morning, everyone.

Speaker Change: Asset quality remains strong overall. Non-performing assets totaled $17.9 million as of 12-31. This is down from $19.1 million in September and $19.6 a year ago. However, non-performing loans have remained relatively flat at $17.7 million, down approximately $200,000 from last quarter and up about the same amount from a year ago. This total equates to 0.35% of non-performing loans to total loans, down slightly from 0.37% prior to. Net charge-offs for the quarter totaled $248,000.

Speaker Change: I guess do you need to carry such a high level of cash or is that something that you know.

Speaker Change: Maybe you can run down and give you a little bit more.

Speaker Change: just a little bit more flexibility with deposit pricing and maybe a little bit more aggressiveness you know in lowering your deposit costs as you know as maybe we're now at a peak in rates

Speaker Change: Just a little bit more flexibility with deposit pricing and maybe a little bit more aggressiveness.

Speaker Change: And lowering your deposit costs.

Speaker Change: We're now at a peak in rates.

Speaker Change: I mean, you know as much or more about that than we do liquidity certainly keeps tools off the door and gives you great flexibility to do what you have done with regard to deposit pricing.

Speaker Change: I mean, you know as much or more about that than we do. Liquidity certainly keeps the wolves off the door and gives you great flexibility to do what you have to with regard to deposit pricing.

Speaker Change: so I wouldn't want to see a crazy increase in cash levels

Speaker Change: So I wouldn't want to see a crazy increase in cash levels.

Speaker Change: But where we're at right now is not a bad position for the economic conditions and some of the things we're facing.

Speaker Change: But where we're at right now is not is not a bad position for the economic conditions in some of the things we're facing.

Scot R. Salvador: Thanks, Mike. Total loans for the fourth quarter increased by $43 million, or 0.9%. Year-over-year, the increase was $270 million, or 5.7%. Residential loans again led the increases with a total of $37 million in quarterly growth. This was split between $22 million in first mortgages and $15 million at a home equity price. The full year shows similar trends, with $160 million of first mortgage growth and $62 million in home equity. Commercial loans continue to grow, increasing by $5 million in the quarter and by $43 million year-over-year.

Speaker Change: For the full year, our charge-offs equated to a net recovery of 46,000. The loan loss allowance now stands at 0.97% of total loans as of U.S., and finally, the coverage ratio or allowance for credit losses to non-performing loans was 275% in December compared to 263.

Speaker Change: The industry.

Speaker Change: The industry. Okay. And then just final question for me, just on expenses. You know, you guys talked about closing three branches and making some tough decisions. Obviously, it's a challenging revenue environment. That makes a lot of sense. Are there more initiatives underway? I mean, I know you gave the guidance for the year, but, you know, are there more things you're looking at, you know, if the revenue environment remains challenged to be able to trim expenses?

Speaker Change: And then just final one.

Speaker Change: Anil question for me just on expenses, you guys talked about closing three branches and making some tough decisions. Obviously its a challenging revenue environment that makes a lot of sense are there more are there more initiatives underway I mean, I know you gave the guidance for the year, but.

Speaker Change: Are there more things you are looking at their revenue environment remains challenged to be able to trim expenses.

Speaker Change: Drop.

Speaker Change: That's our story, and we're happy to answer any questions any of you might have.

Speaker Change: Yeah.

Speaker Change: Yeah, there are a number of relocations that are pending right now in our branch network, not necessarily closures, and every branch that comes up for maturity is evaluated and all options are open at that point in time.

Speaker Change: There were a number of relocations that are pending right now in our branch network not necessarily closures and every every branch that comes up for maturity is evaluated and all options are open at that point in time.

Speaker Change: Thank you.

Speaker Change: As a reminder, if you would like to ask a question today, you may do so now by pressing star followed by the number one on your telephone keypad. If you change your mind and would like to be removed from the queue, please press star and then two. When preparing to ask your question, please ensure that your device and your microphone are unmuted locally.

Speaker Change: an analysis is done on profitability and

Speaker Change: And the analysis is done on profitability.

Speaker Change: influence on the company and everything else and a decision and a risk assessment is made.

Speaker Change: Influence on the company and everything else.

Scot R. Salvador: Overall, residential activity and market trends remain similar to those discussed in the most recent quarter. We continue to post solid net growth in our first mortgage product, although overall purchase activity is reflected in nationwide trends and is slower than in prior years. The mid-winter holiday period is, of course, also a slower time.

Speaker Change: A decision on our risk assessment is made.

Speaker Change: and then the decision is made whether we should continue with that lease or not and we have two two or three pending relocations right now

Speaker Change: And then the decision is made whether we should continue with that lease or not and we have to two or three pending relocations right now.

Speaker Change: That, uh...

Speaker Change: Our first question comes from the line of Alex Twerdahl with Piper Sandler.

Speaker Change: That.

Speaker Change: We think a great opportunities for our company.

Speaker Change: we think are great opportunities for our

Speaker Change: Just like we did with Wilton.

Speaker Change: just like we did with Wilton.

Alexander Roberts Huxley Twerdahl: Alex, please go ahead; your line is now open.

Speaker Change: Last year, I don't know how closely you track us, but we moved our Wilton branch up the road.

Speaker Change: Last year, if you don't know how closely you track us, but we moved our Wilton branch up the road.

Alexander Roberts Huxley Twerdahl: Good morning, guys.

Speaker Change: Good morning, Alex.

Speaker Change: Good morning, Alex.

Scot R. Salvador: Although we expect activity to pick up as we begin to enter the early... The recent decrease in interest rates, although modest, is also a positive factor which should help overall activity. The home equity products continue to perform well overall, with a good amount of activity and net growth.

Speaker Change: Thanks to a very popular convenience store and it's been a great move for us out of out of our former <unk>.

Speaker Change: next to a very popular convenience store and it's been a great move for us out of a former

Speaker Change: I was just hoping that maybe you could sort of just help us get a sense for how the NIM might react to some Fed rate cuts.

Speaker Change: and Closed Mall. So those types of things are opportunities for us

Enclosed mall.

Speaker Change: So those types of things are opportunities for us.

Speaker Change: I think the first one is not modeled in for May, according to the forward curve.

Speaker Change: and we're very happy to take advantage.

Speaker Change: <unk>.

Speaker Change: We're very happy to take advantage of them.

Speaker Change: We have further consolidation you'll see in our Rotterdam location.

Speaker Change: Further consolidation youll see in our Rotterdam locations.

Speaker Change: And as you kind of think about the CDs that, Mike, you alluded to repricing, you know, relatively quickly versus some of the assets that are more tied to the short end of the curve, you know, like how should we expect the NIM to react to the first couple cuts, you know, if and when we get them?

Speaker Change: were closing a branch there and selling that.

Speaker Change: We're closing a branch there in selling that solved.

Scot R. Salvador: The Loan Backlog is down from quarter-end, which is normal for this time of year, and also down year-over-year. This should begin to build as we progress forward and overactivity increases. Interest rates have come down somewhat, as mentioned, and we currently stand at six and three-eighth percent for our base 30-year fixed rate. We always have a variety of promotions and product enhancements we are working on. We expect to utilize our status as primarily a portfolio lender to help spread the word. CoachingBadminton.com, Asset quality remains strong overall. Non-performing assets totaled $17.9 million as of 12-31.

Speaker Change: will see more coming.

Speaker Change: You'll see more coming.

Speaker Change: Okay, that's helpful. And actually, one more question, if I could, just on capital, you guys have a pretty healthy level of TCE stocks.

Speaker Change: Okay. That's helpful and actually I have one more question if I could just on capital you guys surcharge a healthy level of TCE.

Speaker Change: still trading below tangible book value, is buyback something that you would put back on the table in the near term?

Speaker Change: Still trading below tangible book value as that is buyback something that you would put back on the table in the near term.

Speaker Change: We've already started bringing CD rates down from their highs, Alex, and most people are going very short with regard to CDs, so we're optimistic with regard to repricing those at the current market conditions at a lower rate later in the year. It's interesting if you offer, A 4, just a 4.9% CD for three months or a 475 for six to nine months. Everybody takes the 490.

Speaker Change: Yeah, we like the idea of the buyback we have an approved program Alex.

Speaker Change: Yeah, we like the idea of the buyback. You know, we have an approved program, Alex, and we've been active in the past with regard to buybacks.

Speaker Change: We've been active in the past with regards to buybacks.

Speaker Change: We like that idea.

Speaker Change: We like we like that idea.

Especially with regard to book value Okay.

Speaker Change: especially with regard to book value. Okay.

Speaker Change: Great, appreciate you taking my question.

Speaker Change: Great I appreciate you taking my questions.

Scot R. Salvador: This is down from $19.1 million in September and $19.6 a year ago. However, non-performing loans have remained relatively flat at $17.7 million, down approximately $200,000 from last quarter and up about the same amount from a year ago. This total equates to 0.35% of non-performing loans to total loans, down slightly from 0.37 prior year. Net charge-offs for the quarter totaled $248,000. For the full year, our charge-ups equated to a net recovery of $46,000. The Loan Loss Allowance now stands at 0.97% of total loans as of year end.

Thank you.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Our next question comes from the line of Ian Lapey with Gabelli Funds. Ian, please go ahead.

Our next question comes from the line of Ian <unk> with Gabelli funds. Ian Please go ahead.

Speaker Change: So it's interesting to watch how the consumer is reacting to that, and I do hope we are optimistic with regard to repricing deposits through the balance of the year.

Ian Lapey: Hi, good morning, Rob. Congrats on a solid year in a tough environment. Good morning. A few questions. First, you talked last quarter about a split-the-difference loan product. Can you give an update on how that's going?

Hi, good morning, Rob Congrats on a solid year.

Robert Joseph McCormick: And good morning, Ian.

Speaker Change: Okay, I mean, I take from your tone that you'd expect that, sort of, the pace of repricing of the deposits, the rate which accelerated a little bit in the fourth quarter, that that should abate in the first quarter. Is that a reasonable expectation?

Ian: Good morning, a few questions first you talked last quarter about a.

Ian: Flip the difference loan product can you give an update on how thats going.

Speaker Change: was not very well received Ian and we kind of walked away from that. I was actually shocked how

Ian: Was not very well received in and we kind of walked away from that.

I was actually shocked how.

Speaker Change: That would be the hope.

Speaker Change: Thank you for joining us.

Speaker Change: Okay, and then when I look at the ACL, it went up about two basis points during the quarter, and I think you alluded to just some macro, some changes in macro forecasts.

Ian: Poorly poorly received it was I do have to say if you talk to our mortgage originators. They would say it did introduce us to questions and comments on a lot of real estate transactions, but we didn't get a lot of people to bite on it.

Operator: And finally, the coverage ratio or allowance for credit losses to non-performing loans was 275% in December, compared to 263 a year ago. Drop, Thank you. As a reminder, if you would like to ask a question today, you may do so now by pressing star followed by the number one on your telephone keypad. If you change your mind and would like to be removed from the queue, please press star and then two. When preparing to ask your question, please ensure that your device and your microphone are unmuted locally.

Speaker Change: You know, what specifically, I guess, is it one geography versus the other, or what specifically has been driving that ACL, and is that something that I guess should creep higher a little bit, you know, as maybe a little bit more uncertainty develops in 2024? Well, that certainly could creep higher if uncertainty continues. I can tell you that it is. I mean, you can see the non-performing numbers. They're better. I mean, they really are flat, so that's not what's driving the calculation. It is, however, some of the macro numbers, as you alluded to, on some of the unemployment forecasts, some of the housing numbers, that type of thing. That's what drove it a little bit, so if to the extent that that gets worse, we could see a little more, but I think that was a healthy provision for the fourth quarter, and I don't see us trending much above 1%, but I think I'm comfortable where we are now. We've been in a net recovery position for a very long period of time now. At some point, yeah.

Ian: Okay.

Speaker Change: Okay. Yeah, it seemed like a sensible thing, but... Okay. I thought so, too. Next on...

Speaker Change: Yeah, It seems like a sensible thing but.

Speaker Change: I thought so next one.

Speaker Change: Yeah, on credit,

Speaker Change: Yeah on credit.

Speaker Change: obviously terrific 46,000 in net recovery.

Speaker Change: Obviously terrific 46000 net recovery.

Speaker Change: What do you expect, though, over the next couple years for charge-offs? I mean, I assume that it can't stay this good, but when you're underwriting,

What do you expect over the next couple of years for charge offs, I mean, I assume that it can't stay this good but when you're underwriting.

What type of particularly with higher rates now what.

Speaker Change: particularly with higher rates now, what would be a good expectation for chargers?

Speaker Change: What would be a good expectation for charge offs.

Speaker Change: <unk> been with us for several years, we're pretty conservative company and I certainly agree economic conditions in some of the changes.

Speaker Change: You've been with us for several years. We're a pretty conservative company, Ian, and I certainly agree economic conditions and some of the changes could drive a little bit more with regard to charge-off, but we don't see them skyrocketing. Our backlog and our shorter-term delinquencies are not climbing.

Could could drive a little bit more with regard to charge off but we don't see them skyrocketing our backlog in our shorter term delinquencies are not climbing.

Operator: Our first question comes from the line of Alex Twerdahl with Piper Sandler. Alex, please go ahead; your line is now open. Good morning, guys. Good morning, Alex. Good morning, Alex.

Speaker Change: We have a very good handle on our collections and we just don't see them skyrocketing over time.

Speaker Change: We have a very good handle on our collections and we just don't see the skyrocketing over.

Speaker Change: Correct. That's correct.

Speaker Change: the near term or really even increasing markedly over the near term.

Speaker Change: The near term.

Speaker Change: Yeah, I guess just back to sort of the deposit strategy. You guys have always kept a pretty healthy level of cash on the balance sheet, and that looks like it grew into the end of the year. As I think about that, just relative to the amount of capital you have, it seems like you have so much capital that gives you a lot of flexibility to sort of create liquidity if needed. You know, I guess, do you need to carry such a high level of cash, or is that something that, you know, maybe can run down and give you a little bit more? Just a little bit more flexibility with deposit pricing and maybe a little bit more aggressiveness in lowering your deposit costs, as you know, as maybe we're now at a peak in rates. I mean, you know as much or more about that than we do.

Speaker Change: Or really even increasing markedly over the near term.

Robert Joseph McCormick: I was just hoping that maybe you could sort of just help us get a sense for how the NIM might react to some Fed rate cuts. I think the first one is not modeled in for May, according to the forward curve. And as you kind of think about the CDs that, Mike, you alluded to repricing, you know, relatively quickly versus some of the assets that are more tied to the short end of the curve, you know, like how should we expect the NIM to react to the first couple cuts, you know, if and when we get them? We've already started backing CD rates now from their high, Alex, and most people are going very short with regard It's interesting if you offer... a 4, you know, just a 4.9% CD for three months or a 4.75% for six to nine months. Everybody takes the 4.9%.

Speaker Change: I think we're pretty comfortable with where we're at as far as a net recovery we've been in a net recovery position for so long now I don't know how long that can continue but

Speaker Change: So I think we're pretty comfortable with where we're at as far as the net recovery we've been in a net recovery position for so long.

Speaker Change: Excuse me I don't know how long that can continue but we.

Speaker Change: We don't see that turning dramatically to a significant loss.

Speaker Change: We don't we don't see that turning on turning dramatically to a significant loss.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Great, and then lastly

Speaker Change: Great and then lastly on okay.

Speaker Change: So you've got about $238 million in residential mortgage-backed securities.

So you've got about $238 million in residential mortgage backed securities.

Speaker Change: and I know this is most other banks have much more proportionally but like what why for you would you buy any of these

Speaker Change: And I know this is the.

Speaker Change: Most other banks have had much more proportionately, but like what why for you would you by any of these.

Speaker Change: Given that the core business.

Speaker Change: given that the core business is to hold fixed rate mortgages.

Speaker Change: Business is to hold fixed rate mortgages.

Speaker Change: Maybe that is generally what you're saying why.

Speaker Change: And generally what you're saying

Speaker Change: Yes, generally we agree with what you are saying that but we see good opportunities in the mortgage backs and thats, when we jump in and out of them.

Speaker Change: generally we agree with what you're saying but we see good opportunities in the mortgage backs and that's when we jump in and out of them

Speaker Change: Liquidity certainly keeps the wolves at the door and gives you great flexibility to do what you have to with regard to deposit pricing, so I wouldn't want to see a crazy increase in cash levels. But where we're at right now is not a bad position for the economic conditions and some of the things we're facing in the industry.

Speaker Change: Sometimes, along your line of thinking, the agencies work pretty well for us, but there have been opportunities to grab some rate on mortgage-backs and have jumped in. But, I mean, the bank's portfolio is really a big mortgage-backed security, so generally speaking, we agree with you. Right.

Speaker Change: Sometimes along the your line of thinking the agencies worked pretty well for us, but there had been opportunities to grab some rate on mortgage backs and I've jumped in.

Robert Joseph McCormick: So it's interesting to watch how the consumer is reacting to that, and uh... I do hope we are optimistic with regard to repricing deposits through the balance of the year. Okay, so I mean, I take from your tone that you'd expect that, sort of, the pace of repricing of the deposits, the rate, which accelerated a little bit in the fourth quarter, that that should abate in the first quarter. Is that a reasonable expectation? That would be the hope. OK, and then, when I look at the ACL, it went up about two basis points during the quarter, and I think you alluded to just some changes in macro forecasts. What specifically, I guess, is it one geography versus the other, or I guess what specifically has been driving that ACL?

Speaker Change: I mean, the bank the bank's portfolio is really a big mortgage backed securities. So generally speaking we agree with you right.

Speaker Change: Okay. And then just a final question for me, just on expenses.

Speaker Change: So why not then 'cause it.

Speaker Change: So why not then, because I've been struggling with all banks owning this security given

Speaker Change: Struggling with all bank, so owning the security.

Speaker Change: You know, you guys talked about closing three branches and making some tough decisions.

Speaker Change: Given.

Speaker Change: short-term funding.

Speaker Change: Short term funding.

Speaker Change: Thank you.

Speaker Change: So for you it looks like yours are yielding about two 3% why why wouldnt you sell those and get it.

Speaker Change: So for you, it looks like yours are yielding about 2.3%. Why wouldn't you sell those?

Speaker Change: Obviously, it's a challenging revenue environment. That makes a lot of sense. Are there more initiatives underway? I mean, I know you gave the guidance for the year, but, you know, are there more things you're looking at if the revenue environment remains challenging to be able to trim expenses?

Speaker Change: and get a tax refund and then you could reinvest

Speaker Change: Tax refund and then you can reinvest in.

Speaker Change: either keep it in cash or one or two year treasuries earning double.

Speaker Change: Keep it in cash or one or two year treasuries, earning double and then position yourself.

Speaker Change: and then position yourself as you said in the release

Speaker Change: Yeah, there are a number of relocations that are pending right now in our branch network, not necessarily closures, and every branch that comes up for maturity is evaluated, and all options are open at that point in time, an analysis is done on profitability and influence on the company and everything else, and a decision and a risk assessment is made, and then the decision is made whether we should continue with that lease or not. We have two, two, or three Last year, I don't know how closely you track us, but we moved our Wilton branch up the road next to a very popular convenience store, and it's been a great move for us out of a former and closed mall. So those types of things are opportunities for us, and we're very happy to take advantage of them. We have further consolidation you'll see in our Rotterdam location; we are closing a branch there and selling that. We will see more coming.

Robert Joseph McCormick: Is that something that I guess should creep higher a little bit, you know, as maybe a little bit more uncertainty develops in 2024? Well, it certainly could creep higher if uncertainty continues. I can tell you that it is. I mean, you can see the non-performing numbers; they're better. I mean, they really are flat, so that's not what's driving the calculation.

Speaker Change: As you said in the release.

Speaker Change: you know there could be a number of different interest rate environments we don't really know but

Speaker Change: There could be a number of different interest rate environments, we don't really know, but it is.

Speaker Change: seems like that would protect you from a risk management

Speaker Change: It seems like that would protect you from a risk management standpoint as well.

Speaker Change: as well.

Speaker Change: that certainly gets tempting

Speaker Change: That's certainly gets tempting.

Speaker Change: with the way the rate situation is right now. And we do evaluate that pretty regularly. We've looked at that portfolio a number of times and what the tolerance is for that loss.

Speaker Change: With the way the rate situation is right now and we do evaluate that pretty regularly we've looked at that portfolio, a number of times and what the tolerances for that loss.

Speaker Change: but overall we're pretty comfortable with where we're at but any opportunity we have to do something like that

Robert Joseph McCormick: It is, however, some of the macro numbers, as you alluded to, on some of the unemployment forecasts, some of the housing numbers, that type of thing. That's what drove it a little bit. So, to the extent that that gets worse, we can see a little more, but I think that was a healthy provision for the fourth quarter, and I don't see us trending much above one percent, but I think I'm comfortable where we are now. We've been in a net recovery position for a very long period of time now. At some point, you have to put them all together.

Speaker Change: Overall, we're pretty comfortable with where we're at but any opportunity we have to do something like that.

Speaker Change: We would try and take advantage.

Speaker Change: We would try and take advantage of us want to add any color to that Mike I agree with you.

Speaker Change: Do you want to add any color to that, Mike? Oh, I agree with you. We definitely look at it. I mean, when we've looked at it in the past, you know, the loss that that would generate

Speaker Change: We definitely look at it I mean, when we looked at it in the past loss.

Speaker Change: That would generate.

Speaker Change: When we bought higher Securities. If you were to go up by higher Securities that was just longer than what I guess, our <unk> tolerance RASM or payback window, we thought was appropriate.

Michael M. Ozimek: When we bought higher securities, if you were to go out and buy higher securities, it was just longer than what I guess our tolerance was and our payback window we thought was appropriate.

Michael M. Ozimek: But we definitely look at that. We've looked at that

Speaker Change: But we definitely look at that we've looked at that in the past.

Speaker Change: Okay, that's helpful. And actually, one more question, if I could, just on capital, you guys have a pretty healthy level of TCE stocks, still trading below tangible book value; is buyback something that you would put back on the table in the near term?

Speaker Change: Certainly others have done that, Ian. Okay, great.

Speaker Change: Certainly others have done that Ian Okay great.

Speaker Change: Okay, Yeah, no I just I.

Ian Lapey: Yeah, no, I just, I've been surprised with how much.

Speaker Change: Ben.

Robert Joseph McCormick: Correct. Yeah, I guess just back to sort of the deposit strategy. You guys have always kept a pretty healthy level of cash on the balance sheet, and that looks like it grew at the end of the year. As I think about that, just relative to the amount of capital you have, it seems like you have so much capital that it gives you a lot of flexibility to sort of create liquidity if needed. You know, I guess, do you need to carry such a high level of cash? Or is that something that, you know, maybe can be run down and give you a little bit more flexibility?

Speaker Change: Prize with how much.

Ian Lapey: Like I said, you've done much better.

Speaker Change: Like I said, you've done much better than.

Speaker Change: The vast majority of others, but it just seems like a strange investment for a bank to make.

Ian Lapey: and the vast majority of others but it just seems like a strange investment for a

Speaker Change: Yeah, we like the idea of the buyback. You know, we have an approved program, Alex, and we've been active in the past with regard to buybacks. We like that idea, especially with regard to book value.

Ian Lapey: Uh-huh.

Speaker Change: Okay, well, great. Thanks, guys and again congrats on a good year.

Speaker Change: Okay, well, great. Thanks, guys. And again, congrats on a good year.

Speaker Change: Thanks. Thank you.

Speaker Change: Thank you same to you.

Speaker Change: Our next question comes from the line of Greg Roeder with Adirondack Funds. Greg, please go ahead, your line is open.

Speaker Change: Our next question comes from the line of Greg <unk> with <unk> funds. Greg. Please go ahead. Your line is open.

Speaker Change: Okay.

Speaker Change: Great, appreciate you taking my question.

Speaker Change: Thank you. Our next question comes from the line of Ian Lapey with Gabelli Funds.

Speaker Change: Okay.

Good morning.

Greg Roeder: Good morning. Hey, just a question on time deposits. You know, good morning. Time deposits in the quarter were up like 16%.

Greg: Just a question on time deposits.

Ian Lapey: Ian, please go ahead.

Ian Lapey: Hi, good morning, Rob. Congratulations on a solid year in a tough environment.

Greg: Good morning time deposits in the quarter were up like 16%.

Speaker Change: Good morning.

Speaker Change: A few questions. First, you talked last quarter about a split-the-difference loan product. Can you give an update on how that's going?

Greg Roeder: or sequentially

Robert Joseph McCormick: Yeah. Yeah, just a little bit more flexibility with deposit pricing and maybe a little bit more aggressiveness in lowering your deposit costs as maybe we're now at a peak in rates. I mean, you know as much or more about that than we do.

Greg: Well sequentially.

Greg Roeder: Total deposits were up for the first time, you know, meaningfully. So I'm curious, is you saying that, you know, it's a move from core to time? And I get that, but it was probably a little bit more than that. I'm just curious if you could provide some more colors to, you know, new accounts, bigger accounts. Did you go out longer on the term?

Greg: Total deposits.

Greg: We're up.

Greg: For the first time meaningfully so I'm curious if you're seeing that.

Speaker Change: was not very well received, Ian, and we kind of walked away from that.

Speaker Change: I was actually shocked how Thank you for joining us.

Greg: It's a move from core to time.

Speaker Change: Okay. Yeah, it seemed like a sensible thing to do, but...

Robert Joseph McCormick: Liquidity certainly keeps the wolves at the door and gives you great flexibility to do what you have to with regard to deposit prices. So I wouldn't want to see a crazy increase in cash levels. But where we're at right now is not a bad position for the economic conditions and some of the things we're facing in the industry. Yeah, there are a number of relocations that are pending right now in our branch network, not necessarily closures, and every branch that comes up for maturity is evaluated, and all options are open at that point in time. An analysis is done on profitability and influence on the company and everything else, and a decision and a risk assessment are made, and then the decision is made whether we should continue with that lease or not.

Greg: But it was probably a little bit more than that and I'm. Just curious is if.

Speaker Change: Okay. I thought so, too.

Greg: If you could provide some more color as to.

Speaker Change: Next on... Yeah, on credit, obviously a terrific 46,000 in net recovery. What do you expect, though, over the next couple years for charge-offs? I mean, I assume that it can't stay this good, but when you're underwriting, particularly with higher rates now, what would be a good expectation for chargers? You've been with us for several years.

Greg: New accounts bigger accounts.

Greg: Did you go out longer.

Greg: On the term.

Speaker Change: we're very much relationship driven Greg so a lot of the

Speaker Change: Oh well.

Speaker Change: We're very much relationship driven Greg so a lot of the.

Speaker Change: A lot of the time deposit accounts come with the requirement for core and I said in my part of the presentation that we work with our existing customers and work those relationships as much as we possibly can and work our customer base and our portfolios to see who has what product and try and cross sell additional products to those customers.

Speaker Change: A lot of the time deposit accounts come with the requirement for core and I said in my my part of the presentation that we work with our existing customers and work those relationships as much as we possibly can.

Speaker Change: We're a pretty conservative company, Ian, and I certainly agree that economic conditions and some of the changes could drive a little bit more with regard to charge-off, but we don't see them skyrocketing.

Speaker Change: Work, our customer base and our portfolios to see who has what product and try and cross sell additional products to those to those customers. So I think certainly core has risen.

Speaker Change: so I think certainly core has risen

Speaker Change: Our backlog and our shorter-term delinquencies are not climbing.

Speaker Change: as a function of the time deposits coming in.

Speaker Change: As a function of time deposits coming in.

Speaker Change: We have a very good handle on our collections, and we just don't see them skyrocketing over time, in the near term, or really even increasing markedly in the near term. I think we're pretty comfortable with where we're at as far as net recovery. We've been in a net recovery position for so long now. I don't know how long that can continue, but we don't see that turning dramatically into a significant

Robert Joseph McCormick: We have two or three pending relocations right now. Get out, we think are great opportunities for our last year. I don't know how closely you track us, but we moved our Wilton branch up the road, next to a very popular convenience store, and it's been a great move for us out of a former premises in Closed Mall, so those types of things are opportunities for us, and we're very happy to take advantage. We have further consolidation you'll see in our Rotterdam location. We're closing a branch there and selling that, so we'll see more coming.

Speaker Change: And I would say that it's much of a shift.

Speaker Change: and I would say that it's as much a shift as it is

Speaker Change: <unk>.

Speaker Change: Newtime Deposits. You know, there was desperation. The rates had been so low for so long, there had been a lot of desperation.

Speaker Change: New time deposits.

Speaker Change: <unk> the rates had been so low for so long there had been a lot of desperation.

Speaker Change: in the population for higher rates so that you saw a lot of people take the jump into time at that point in time.

Speaker Change: The population for higher rates so that.

Speaker Change: You saw a lot of people take the jump into time at that point in time.

Speaker Change: Okay. Great, and then lastly, So you've got about $238 million in residential mortgage-backed securities, and I know this is most other banks have much more proportionally, but why would you buy any of these given that the core business is to hold fixed rate mortgages?

Speaker Change: So.

Speaker Change: Thank you so much for your time, and I'll see you next time.

Speaker Change: but I think our relationships are generally strong.

Speaker Change: But I think our relationship totally on early strong win perhaps.

Speaker Change: Yeah.

Speaker Change: Yes.

Speaker Change: Yeah.

Speaker Change: So perhaps when the 10 years started kind of moving back down, people kind of made the jump and tried to lock in. Is that?

Speaker Change: So when the 10 year started kind of moving back down people kind of made the jump in and tried to lock in as Ed.

Operator: And actually, one more question, if I could, just on capital. You guys have a pretty healthy level of TCE, but still trading below tangible growth value. Is buyback something that you'd put back on the table in the near term? Yeah, we like the idea of the buyback. You know, we have an approved program, Alex, and we've been active in the past with regard to buybacks. We like that idea, especially with regard to book value. Great, I appreciate you taking the time to answer my question. Thank you. Our next question comes from the line of Ian Lapey with Gabelli Funds. Ian, please go ahead.

Speaker Change: And generally what you're saying; generally, we agree with what you're saying, but we see good opportunities in the mortgage backs, and that's when we jump in and out of them. Sometimes, along your line of thinking, the agencies work pretty well for us, but there have been opportunities to grab some rates on mortgage-backs, and we have jumped in.

Speaker Change: I would agree with that. I would say I think we were slower to move than most, and I think that speaks to our customer base and the strength of our customer base.

Speaker Change: Fair.

Speaker Change: I would agree with that I would say.

I think we were slower to move than most and I think that speaks to our customer base and the strength of our customer base.

Speaker Change: Sure.

Speaker Change: I do think we were slower to move but when the rates did start to drop and you saw a significant change I think people looked at opportunity.

Speaker Change: I do think we were slower to move, but when the rates did start to drop and you saw significant change, I think people looked at opportunities.

Speaker Change: But, I mean, the bank's portfolio is really a big mortgage-backed security, so, generally speaking, we agree with you.

Speaker Change: Great. Well, thank you very much and good year.

Speaker Change: Great.

Speaker Change: Thank you very much and good year.

Speaker Change: Thank you.

Speaker Change: Thank you. Thank you same to you.

Speaker Change: Teal.

Speaker Change: Right. So why not then, because I've been struggling with all banks owning this security given short-term funding.

Speaker Change: We have no further questions. So I'll hand, the call back to Robert for closing comments. Thank.

Speaker Change: We have no further questions so I'll hand the call back to Robert for closing comments.

Robert Joseph McCormick: Thank you for your interest in our company and have a great day.

Speaker Change: Thank you.

Speaker Change: So for you, it looks like yours is yielding about 2.3%.

Robert Joseph McCormick: Thank you for your interest in our company and have a great day.

Speaker Change: Why wouldn't you sell those? and get a tax refund, and then you could reinvest either keep it in cash or one or two year treasuries earning double, and then position yourself, as you said in the release, there could be a number of different interest rate environments. We don't really know, but it seems like that would protect you from risk management as well, which certainly gets tempting with the way the rate situation is right now.

Speaker Change: Thank you everyone for joining us today. This concludes our call and you may now disconnect your lines.

Operator: Hi, good morning, Rob. Congratulations on a solid year in a tough, tough environment. Good morning, Ian. Good morning.

Speaker Change: Thank you everyone for joining us today. This concludes our call and you may now disconnect your lines.

Speaker Change: [music].

Speaker Change: © transcript Emily Beynon © transcript Emily Beynon

Robert Joseph McCormick: A few questions. First, you talked last quarter about a split the difference loan product. Can you give an update on how that's going? It was not very well received, Ian, and we kind of walked away from that. I was actually shocked at how... poorly received it was.

Speaker Change: Okay.

[music].

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: And we do evaluate that pretty regularly.

Speaker Change: [music].

Robert Joseph McCormick: I do have to say, if you had talked to our mortgage originators, they would say it did introduce us to questions and comments on a lot of real estate transactions, but we didn't get a lot of people to bite on it. Okay. Yeah, it seemed like a sensible thing, but... Okay. I thought so too.

Speaker Change: We've looked at that portfolio a number of times and what the tolerance is for that loss, but overall, we're pretty comfortable with where we are, but any opportunity we have to do something like that, we would try and take advantage of. Do you want to add any color to that, Mike?

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Michael M. Ozimek: Oh, I agree with you. We definitely look at it. I mean, when we've looked at it in the past, you know, the loss that that would generate when we bought higher securities. If you were to go out and buy higher securities, it was just longer than what I guess our tolerance was and our payback window we thought was appropriate. But we definitely look at that.

Robert Joseph McCormick: Next on... Yeah, on credit, um... Obviously, a terrific 46,000 in net recovery. What do you expect, though, over the next couple years for charge-offs? I mean, I assume that it can't stay this good, but when you're underwriting... You know, what type, particularly with higher rates now, what would be a good expectation for charging? You've been with us for several years, we're a pretty conservative company, and I certainly agree that economic conditions and some of the changes could drive a little bit more with regard to charge-off, but we don't see them skyrocketing Our backlog and our shorter-term delinquencies are not climbing.

Speaker Change: We've looked at that. Certainly others have done that, Ian.

Ian Lapey: Okay, great. Yeah, no, I just, I've been surprised by how much.

Ian Lapey: Like I said, you've done much better than the vast majority of others, but it just seems like a strange investment for a Uh-huh.

Speaker Change: Okay, well, great.

Speaker Change: Thanks, guys.

Speaker Change: And again, congrats on a good year.

Speaker Change: Thanks. Thank you.

Robert Joseph McCormick: We have a very good handle on our collections, and we just don't see them skyrocketing in the near term or really even increasing markedly in the near term. I think we're pretty comfortable with where we're at. As far as net recovery, we've been in a net recovery position for so long now, I don't know how long that can continue. We don't see that turning dramatically to a significant loss.

Speaker Change: Our next question comes from the line of Greg Roeder with Adirondack Funds.

Greg Roeder: Greg, please go ahead; your line is open.

Greg Roeder: Good morning. Hey, just a question on time deposits.

Greg Roeder: You know, good morning. Time deposits in the quarter were up like 16%, or sequentially, total deposits were up for the first time meaningfully. So I'm curious, are you saying that, you know, it's a move from core to time? And I get that, but it was probably a little bit more than that. I'm just curious if you could provide some more colors to, you know, new accounts, bigger accounts. Did you go out longer on the term?

Robert Joseph McCormick: Okay. Great. And then lastly, on...

Robert Joseph McCormick: So you've got about $238 million in residential mortgage-backed securities. And I know most other banks have much more proportionally, but why, for you, would you buy any of these? It's generally what you're saying. Yeah, generally we agree with what you're saying, but we see good opportunities in the mortgage backs, and that's when we jump in and out of them. Sometimes, along your line of thinking, the agencies work pretty well for us, but uh... there have been opportunities to grab some rates on mortgage backs, and we have jumped into the bank's portfolio is really a big mortgage-backed security So for you, it looks like yours are yielding about 2.3%. Why wouldn't you sell those?

Speaker Change: We're very much relationship-driven, Greg, so a lot of the time deposit accounts come with the requirement for core, and I said in my part of the presentation that we work with our existing customers and work those relationships as much as we possibly can and work our customer base and our portfolios to see who has what products and try and cross-sell additional products to those customers, so I think certainly core has risen as a function of the time deposits coming in, and You know, there was desperation.

Speaker Change: Since rates had been so low for so long, there had been a lot of desperation in the population for higher rates, so you saw a lot of people take the jump into time at that point in time.

Robert Joseph McCormick: and get a tax refund, and then you could reinvest, either keep it in cash or one or two year treasuries earning double, and then position yourself, you know, as you said in the release. There could be a number of different interest rate environments, we don't really know; things like that would protect you from a risk manager. That certainly seems tempting, with the way the rate situation is right now, and we do evaluate that pretty regularly. We've looked at that portfolio a number of times and what our tolerance is for that loss. But overall, we're pretty comfortable with where we're at. But any opportunity we have to do something like that,

Speaker Change: Thank you so much for your time, and I'll see you next time, but I think our relationships are generally strong.

Speaker Change: Yeah. So perhaps when the 10 years started kind of moving back down, people kind of made the jump and tried to lock in. Is that it?

Speaker Change: I would agree with that.

Speaker Change: I would say we were slower to move than most, and I think that speaks to our customer base and the strength of our customer base. I do think we were slower to move, but when the rates did start to drop and you saw significant changes, I think people looked at opportunities.

Speaker Change: Great

Speaker Change: Well, thank you very much and have a good year.

Speaker Change: Thank you.

Speaker Change: Teal, we have no further questions, so I'll hand the call back to Robert for closing comments.

Robert Joseph McCormick: We would try and take advantage of that. I agree with you. We will definitely look at it.

Robert Joseph McCormick: Thank you for your interest in our company, and have a great day!

Robert Joseph McCormick: I mean, when we've looked at it in the past, you know, the loss that that would generate. When we bought higher securities, if you were to go out and buy higher securities, it was just longer than what our tolerance was and our payback window we thought was appropriate. But we definitely looked at that. Certainly others have done that, Ian.

Speaker Change: Thank you everyone for joining us today.

Speaker Change: This concludes our call, and you may now disconnect your lines.

Speaker Change: transcript Emily Beynon transcript Emily Beynon

Operator: Okay, great. Yeah, no, I just, I've been surprised with how much... Like I said, you've done much better than the vast majority of others, but it just seems like a strange investment for. Okay, well, thanks guys, and again, congrats on a good year. Thanks.

Operator: Thank you. Our next question comes from the line of Greg Roeder with Adirnak Funds. Greg, please go ahead; your line is open.

Operator: Good morning. Hey, just a question on time deposits. You know, good morning.

Robert Joseph McCormick: Time deposits in the quarter were up like 16% sequentially, and total deposits were up for the first time, you know, meaningfully. So I'm curious, you're saying that, you know, it's a move from core to time, and I get that, but it was probably a little bit more than that. I'm just curious if you could provide some more color to, you know, new accounts, bigger accounts, did you go out longer on the term? Well, we're very much relationship-driven, Greg, so a lot of the time deposit accounts come with the requirement for CORE. And I said in my part of the presentation that we work with our existing customers and work those relationships as much as we possibly can and work our customer base and our portfolios to see who has what products and try and cross-sell additional products to those customers.

Robert Joseph McCormick: So I think certainly CORE has risen as a function of the time deposits coming in. And I would say that it's as much a shift as it is... new time deposits. You know, there was desperation. The rates had been so low for so long. There had been a lot of desperation in the population for higher rates, so you saw a lot of people take the jump into time at that point in time. But I think our relationships are generally strong. Yeah. So perhaps when the tenures started kind of moving back down, people kind of made the jump and tried to lock in? I would agree with that. I would say we were slower to move than most, and I think that speaks to our customer base and the strength of our customer base. I do think we were slower to move, but when the rates did start to drop and you saw significant changes, I think people looked at opportunities.

Robert Joseph McCormick: Great. Well, thank you very much and good year. Thank you. To you. We have no further questions, so I'll hand the call back to Robert for closing comments. Thank you for your interest in our company and have a great day. Thank you everyone for joining us today. This concludes our call, and you may now disconnect your lines.