Q3 2024 TrustCo Bank Corp NY Earnings Call

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Speaker Change: Before proceeding, we would like to mention that this presentation may include Ford looking information about Trosco bank club in New York that is intended to be covered by our safe harbour for looking forward statements provided by the private security classification reform act of 1995. Actress results performance or achievements could differ materially from those expressed.

Speaker Change: in or implied by such statements due to various risks, uncertainties and other factors. More detailed information about these other risks and factors can be found in our press release, the proceeds this cool.

Speaker Change: and in our research and forward-looking statement section of our annual report on Form 10K as updated on our course lead reports Form 10K. The forward-looking statement is made in this core valid only at a bit of a hero, and the company disslames any obligations to update this information to reflect.

Speaker Change: events under Bellaments after the date of this call except as maybe a flick of wolf eye law.

Speaker Change: During today's call, we'll discuss several financial measures derived by financial statements that are not the time and in accordance with the U.S. cap.

Speaker Change: The reconciliation such non-gap financial measures but to the most comparable gap figures are included in our earnings press release, which is available under the Investor Relations tab or website at TrustCopebank.com. Please note also today's event has been recorded and a replay of this call be available for 30 days in an audio webcast will be available for one year after the spread of the earnings press release.

Speaker Change: At this time I like to turn the conference call over to Mr. Robert J. McCormick, Chairman President C. E.o. please go ahead.

Speaker Change: Thank you, good morning everyone and thank you for joining the call.

Robert McCormick: As the host said, my name is Robert McCormick, I'm the President of the Coastal Bank. I'm joined today as usual by Michael Ozimek, our CFO, we'll give detailed numbers, and Kevin Curley, we'll give color on lending.

Speaker Change: on behalf of the entire Tropical Bank family, I'd like to express thanks to the many expressions of concern and well wishes of Hurricane Milton towards way across a geographic footprint in Florida.

Speaker Change: We are happy to report that our people came through the storm and good shape, although a little worse for the wear, likewise, the facilities with the debattering, with many opening with a day or so of the storm and all locations open now.

Speaker Change: I results this quarter or like those of baseball teams that reliably hit singles and doubles.

Speaker Change: There's no grand slam or even a home run, but at the end of the day we've scored runs and posted a win.

Speaker Change: The solid glaze that we executed consisted of holding the line on the cost of the bozzets, originating new loans at better interest rates and controlling expenses over the year.

Speaker Change: We grew our deposit from the third quarter of last year. This was done in part by capitalizing our strong customer relationship to the Navalist's direct and core deposit outflow.

Speaker Change: with Bryce C.D. and we mostly grew demand deposits, with that said, we're happy to report an increase in our managed as margin over the quarter. Mark and conditions continued to drive customers to home equity products.

Speaker Change: and we realized the 6% increase to that portfolio over the corner adding to growth of 18% over the year.

Speaker Change: The new volume was booked at slightly higher rates.

Speaker Change: He's fact as all combined to increase our margin over the quarter.

Speaker Change: We also saw total loans reach another all-time high, and nearly $5.1 billion, which is a win-and-it-shelf, and also highlights the symmetry that we are so proud of between our deposit portfolio and our loan portfolio. We gathered the deposit in our areas of operation and learned those same forms right back into those communities.

Speaker Change: is a product quality on the mind of a lot of investors and analysts, Howard's remains stellar.

Speaker Change: As it has been over a long period of time, non-performing one's total one, so it's steady at 0.38% over the quarter. This speaks to our high underwriting standards and the diligent and effective efforts of our long processing operation.

Speaker Change: Most importantly, we posted with a very respectful 12.9 million dollars in net income.

Speaker Change: Now, Michael Dive into the numbers, Kevin will provide an update on the home portfolio, and then we can take your questions if you have any.

Speaker Change: Thanks.

Speaker Change: Thank you, Robert McCormick, everyone.

Michael: Now review TrustCo's financial results for the third quarter of 2024. As we noted in the press release, the company sought third-quarter net income of $12.9 million dollars, an increase of 2.6% over the prior quarter, which yielded a return in average assets and average equity of 0.84% and 7.74% respectively.

Michael: Capital remains strong. Consolidated equity to assets ratio was 10.95% for the third quarter of 2024, compared to 10.31% of the third quarter of 2023. Booked value per share at September 30, 2024 was $35.19, up 7.3% compared to $32.80 a year earlier.

Michael: Average loans for the third quarter of 2024 grew 2.6% or a $127 million to 5 billion from the third quarter of 2023 at all time.

Michael: Overall, loan growth is contingency increase, and leading the charge was a residence of real estate portfolio as usual, which increased by $50.4 million, a 1.2% third quarter of $24 over the same period in 2023.

Michael: and like what he wanted to credit increased $60 million for $8.7%.

Michael: at Restroversial Loans increased 18.1 million or 6.9% and its storm at Loans decreased 1.5 million or 9.5% over the same period in 203.

Michael: For the third quarter of 24th of the revision for credit loss, it's worth $500,000.

Michael: Retaining deposits has been a key focus throughout 2024. Total deposits end in the quarter of $5.3 billion. And as we move forward, our objective is to continue to offer competitive product offerings of the bank through aggressive marketing and product differentiation.

Michael: and interesting company was $38.7 million for the third quarter of $24.00 and an increase of 883,000 or 2.3% compared to the prior quarter.

Michael: The net interest margin for the third quarter of 24 was 2.61% of eight basis points from the second quarter of 24, resulting in two consecutive quarters of an increase in net interest margin.

Michael: The yield on interest to earning assets increased to 4.11% of 5 basis points from 4.06% in the second quarter of 24. The cost of interest-praying liability is decreased to 1.94% in the third quarter of 24 from 1.97% in the second quarter of 24.

Michael: Throughout 2024, we have been able to lower the rates of offered on times of harvest while continuing to retain a significant portion of the product quarter over quarter, which are continues to bring down the cost of times of harvest. Bank of Senior Rosen of Margins begin to turn around last quarter and we are optimistic going forward.

Michael: Our welcoming management division continues to be a significant recurring source of not interested in income. They had approximately 1.3 billion of assets under management as of September 30, 24.

Michael: Now I want to not issue success.

Michael: Total Manager's expense, Net of Order E expense, came at 26 million down for it in 47,000 from the prior quarter.

Michael: The decrease is the results of lower-possent showers and benefits that occupancy equipment expense, outdoor service and advertising expense, spark partially offset by the increase in professional services and FDIC and other insurance during the quarter.

Michael: or re-attempts net, came in at the expense of 2400 dollars for the quarter, it's fair to 16,000 in the prior quarter.

Michael: Given the continued low level of ORE expenses, we are going to continue to hold the anticipated level of expenses to not exceed $250,000 per quarter.

Michael: All the other categories of administrative expense were in line with our expectations for the court.

Michael: would expect 24 total recurring non-ishish expense, net of already expense, to be the range of 26.9, the 27.4 million dollars for quarter. Now, Kevin will review the one portfolio with a non-performing loss.

Kevin Curley: Thanks Mike, and good morning to everyone. I've been doing all in school by 127 million or 2.6% year over year.

Kevin Curley: The growth center on residential mortgages, which increased by 40 million over the last year, and our home equity loans, also increased by 61 million or 18.4%. In addition, our commercial loans grew by 12 million year over year.

Kevin Curley: For the third quarter, actual loans increased by 33 million. Presidential loans increased by 35 million with both first mortgages and home equity credit lines posting increases. Commercial loans and some loans were slightly lower for the quarter.

Kevin Curley: We remain well positioned in the market and seek to capitalize as market activity develops. Our portfolio products combine with the flexibility to utilize our control on pricing, and our ability to offer various promotions produce in a great position.

Kevin Curley: We've been keeping our rates very competitive with the goals and increasing volume, rates in the market have increased in recent weeks and our current rate is 6.25% for our base 30 year fixed rate long. In addition, we have very competitive adjustable rate mortages with rates below 6%.

Kevin Curley: Our home equity product continues to be steady demand as they remain attracted to many borrowers that may have low-read mortgages, but may also want to use their home equity for various projects or large purchases.

Kevin Curley: Overall, we are pleased to long growth in the quarter and we made focus on driving strong results.

Kevin Curley: and that will be passed at quality. As the quality at the bank remains strong, not performing loans were at 19.4 million at quarter end, 19.2 million last quarter and just under 18 million a year ago.

Kevin Curley: Now, performing law is now standing at 0.38% of total owns, compared to 0.38% last quarter, and 0.36% a year ago.

Kevin Curley: Not performing assets, total 21.9 million as a September 30th versus 21.5 million last quarter and 19.1 million a year ago.

Kevin Curley: Our early stage link with these also go to me to be steady and charge off for the quarter amount to 222,000 and a year to date total of only 128 hours.

Kevin Curley: I quarter-end our allowance for long losses was a solid $50 million, but the coverage ratio of 250-7% compared to 47.2 million, the coverage ratio of 264 percent is September of 2023, Rob.

Speaker Change: That's our story. We're happening at three questions you might have.

Speaker Change: Thank you very much. We'd now let's open the line to Q&A. If you would like to ask a question, please press star for look by one on the telephone keypad and to remove yourself the line of questioning it's star for look by two. We all allow just a moment for any questions to filter for you.

Speaker Change: Thanks for watching!

Speaker Change: Our first question comes from Ian Laptik of Capelli Funds, Ian Jolantzau opens.

Ian Laptik: Hi, good morning, Rob and team congrats on your good quarter. Yeah, a few questions. I guess first on the hurricanes, good to hear the people and your properties are okay. Any thoughts about credit issues that might result from damage to maybe some of the homes that you have.

Speaker Change: We've been through quite a few of these storms unfortunately at this point and we've never had those types of issues before.

Speaker Change: We do establish, so people will have had losses in one way or another that we have the mortgages on their homes. We do establish reserve accounts at the bank and disfers those funds as they complete the work to restore their home. But we're not even seeing a lot of that this time around you. So it seems like it's not going to be a big impact overall.

Speaker Change: Okay, good.

Speaker Change: On the CDs, can you just review sort of what the pricing is?

Speaker Change: and I love for maturing CDs compared to new CDs that you're in.

Speaker Change: and join now.

Speaker Change: Most of our customers like the three months believe it or not, right, that may end. So most of the customers that have maturity are going into a three month break. We are offering a pretty attractive 12 month break too, but it's about 60, 40 split right now between people taking the three months and the 12 months.

Speaker Change: and how much are you saving when you know versus when...

Speaker Change: when you have one maturing and versus issuing it.

Speaker Change: and the rate for three months is in the four and a half range and the rate for 12 months is in the four percent range.

Speaker Change: Um...

Speaker Change: and then on the financial services, really strong quarter and...

Speaker Change: in revenues from financial services was that driven by higher AUM or was there anything?

Speaker Change: on U-Zolem Court.

Speaker Change: As this intervention are up year over year and we are proactive with regard to our feast.

Speaker Change: So, the combination of the two...

Speaker Change: has been a very positive effect in our financial services or in trust. And I go to tell you, and he has assembled a very patler-forwarder run that unit for us, and on a pat in Kevin have assembled a very strong team.

Speaker Change: and the trust department of the financial services area, so they're doing a lot of seminars and a lot of customer contact, and I hope it continues, I really do because they're on a very good trend right now.

Speaker Change: Great, and then last question, so obviously the capital position is, I think.

Speaker Change: and the strongest of any bank, I follow. As you sort of have maybe reached an inflection point with your name now starting to improve. What do you think about in terms of capital? How do you prioritize growth? I see your branches are down year over year. Is it something you want to add branches or increase dividend or share repurchases?

Speaker Change: with the start below the tangible just sort of.

Speaker Change: Maybe we can talk about how you're thinking about those options.

Speaker Change: As we see that light at the end of the tunnel and it gets brighter over time, we're certainly going to look at all of those things where we are an advocate in the fan of a share by back program and there are a couple of areas generally that we're looking at.

Speaker Change: Proposal New Branch Expansion. So those would be tubby the two biggest priorities that we would have.

Speaker Change: is trying to look louder to rise through the spirit of time to go. Okay, that's great. Okay, congrats. All right, Ian.

Speaker Change: Thank you very much, Ian. We currently have no further questions, so I'd like to hand back to Robert J. McCormick for any closing remarks.

Speaker Change: Thank you for your reach to our company, hope you have a great day.

Speaker Change: Thank you for watching!