Q2 2025 TrustCo Bank Corp NY Earnings Call
Operator: TrustCo Bank Corp earnings call and webcast. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero on your keypad.
Good day, welcome to the Trustco Bank. Corp earnings call and webcast.
All participants will be in listen-only mode.
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Operator: Before proceeding, we would like to mention that this presentation may contain forward-looking information about TrustCo Bank Corp New York that's intended to be covered by the Safe Harbor for Forward-Looking Statements, provided by the Private Security 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. 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 uploaded by our quarterly reports on Form 10-Q.
to withdraw your question, you put you may press star followed by 2
Speaker Change: Before proceeding we would like to mention that this presentation may contain forward-looking information about about trust code Bank Corp, New York. That's intended to be covered by the Safe Harbor for forward-looking statements provided by the private security litigation Reform, Act of 1995
Speaker Change: 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.
Operator: 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 and reflect any events or developments after the date of this call. except as may be required by applicable law.
Speaker Change: More detailed information about these 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 for our annual report on form 10K and as uploaded by our quarterly reports on form 10 Q.
Speaker Change: The forward-looking statements made on this call.
Speaker Change: Are valid only as of the date hereof and the company disclaims. Any
Speaker Change: Object oblig obligation to update this information and reflects reflect any events or developments after the date of this call.
Operator: 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 press release, which is available under the Investor Relations tab on our website at TrustCoBank.com.
Speaker Change: Except as may be required by applicable law.
Speaker Change: During today's call we will discuss certain Financial measures. Derived from our financial statements that are not determined in accordance with us gaap.
Speaker Change: The reconciliations of not such non-gaap Financial measures.
Speaker Change: For the most comparable, gaap figures are included in our earnings press release.
Operator: Please also note that today's event is being recorded. The 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.
Which is available under the investor relations tab on our website at trustcobank.com.
Robert McCormick: At this time, I would like to turn the conference over to Mr. Robert J. McCormick, Chairman, President and CEO, to begin. Please go ahead, Robert. Thanks, Sammy. Good morning, everyone, and thank you for joining the call. I'm Rob McCormick, the president of the bank.
Speaker Change: Please also note that today's event has been recorded the replay of the call will be available for 30 days and an audio webcast will be available for 1 year as described in our earnings press release.
Speaker Change: At this time, I would like to turn the turn the conference over to Mr. Robert J. McCormick chairman president and CEO to begin. Please go ahead. Robert.
Robert McCormick: I'm joined today, as usual, by Mike Ozimek, our CFO, who will go through the numbers, and Kevin Curley, our chief banking officer, will talk about lending. We are very pleased to announce the outstanding year-to-date and year-over-year performance results. Mike will provide the details, but the net income of $15 million for the quarter and nearly $30 million year-to-date is nothing short of stellar. This is, and the numbers support it, our time to shine. The strategy we developed and deployed over the past several years has been to amass capital for the purpose, at least in part, of having low-cost funds available to lend out exactly at this moment.
Speaker Change: Thanks Sammy. Good morning, everyone and thank you for joining the call. I'm Rob McCormick, the president of the bank. I'm joined today as usual by Mike our CFO who will go through the numbers and Kevin Curley. Our chief banking officer will talk about lending.
Speaker Change: We are very pleased to announce the outstanding year to date and year-over-year performance results. Michael will provide the details, but the net income of 15 million for the quarter and nearly 30 million dollars.
Speaker Change: Uh, year to date is nothing short of Stellar. This is and the numbers supported our time to shine.
Robert McCormick: When the interest rate environment is favorable, loan demand is up, and our competition is scraping to borrow funds to lend out, it is a fundamental principle of TrustCo Bank that we take in deposits and lend those funds right back out into the communities where they were gathered. Average deposits are up. over the year and meaningful margin expansions contributing to our success. compared to this time last year, margin increased by a solid 7%. Our increased income is of course affected by increased loan volume over the period. On the residential side, home equity products led the way because of the flexibility offered customers looking to preserve favorable first lien rates.
The strategy we developed and deployed over the past. Several years has been to a mass capital for the purpose, at least, in part of having low-cost funds available to lend out exactly at this moment.
Speaker Change: When the interest rate environment is favorable loan demand is up.
Speaker Change: And our competition is, uh, scraping to borrow funds to lend out. It is a fundamental principle of trust call bank that we take into deposits and lend those funds right back out into the communities where we are, where they were gathered.
Speaker Change: Average, deposits are up.
Speaker Change: Over the year and meaningful margin expansion is contributing to Our Success.
Speaker Change: Compared to this time last year. Margin increased by a solid 7%.
Robert McCormick: and increased by 18% year over year. In fact, our team got so good at originating equity loans that we were able to offer a product that promises and delivers a closing within seven days of application. We also successfully executed strategy of growth in our commercial loan portfolio. That program grew by 11% over the past year. And in trademark TrustCo fashion, all of this was accomplished while preserving credit quality. We saw net recoveries for the second quarter, second consecutive quarter. in 25. These successes have served our owners well. All return metrics are up significantly. Return on assets, return on equity, earnings per share, and efficiency ratio.
Speaker Change: Our increase in income is of course, affected by increased loan, volume over the period. On the residential side home equity products, led the way because of the flexibility offered customers looking to preserve favorable first lean rates.
Speaker Change: And increase by 18% year-over-year. In fact, our team got so good at originating Equity loans that we were able to offer a product that promises and delivers a closing within 7 Days of application.
Speaker Change: That program grew by 11% over the past year. And in trademark Trustco fashion, all of this was accomplished while preserving credit quality, we saw net, recoveries for the second quarter, second consecutive quarter
Robert McCormick: Also a double-digit improvement from this time last year. The beauty of our deployed capital strategy is that we can support the lending in the way we have while preserving our ability to execute on authorized share buyback programs, which we have done and likely will continue.
And, uh, 25 these successes have served our own as well, all return metrics are up. Significantly return on assets, return on Equity, earnings per share, and efficiency ratio. Also, a double-digit improvement from this time last year.
Robert McCormick: I will conclude where I started. Performance has been stellar. The results in the first half of 2025 established positive momentum that we believe may extend into 2026.
Speaker Change: The beauty of our deployed Capital strategy is that we can support the lending in the way we have while preserving our ability to execute on authorized share buyback program which we have done and likely will continue.
Michael Ozimek: Now, Mike will go into the details. Mike. Thank you, Rob. And good morning, everyone. I will now review TrustCo's financial results for the second quarter of 2025. As we noted in the press release, the company saw standout results for the second quarter of 2025, marked by increases in both net income and net interest income of TrustCo Bank during the second quarter of 2025 compared to the second quarter of 2025. This performance is underscored by rising net interest income, continued margin expansion, and accelerated loan growth across key portfolios.
Speaker Change: I will conclude where I started performance has been Stellar the results in the first half of 2025 established positive. Momentum, that we believe May extend into 2026. Now, Mike will go into the details. Mike, thank you, Rob and good morning everyone. I will now review trust Go's Financial results for the second quarter of 2025
Mike: As we noted in the press release, the company saw a standout results for the second quarter of 2025.
Mike: Marked by increases in both net income and net interest income of Trustco Bank. During the second quarter of 2025 compared to the second quarter of 2024.
Michael Ozimek: This results in the second quarter net income of $15 million, an increase of 19.8% over the prior year quarter, which yielded a return on average assets and average equity of 0.96% and 8.73% respectively. Capital remains strong. Consolidated equity to assets ratio was 10.91% for the second quarter of 2025, compared to 10.73% in the second quarter of 2020. Book value per share at June 30, 25 was $36.75, up 6.6%, compared to $34.46 a year earlier. During the second quarter of 25 TrustCo repurchased 169,000 shares of common stock under the previously announced stock repurchase program. And as always, we remain committed to returning value to shareholders through a disciplined share repurchase program, which reflects our confidence in the long term strength of the franchise and our focus on capital capital optimization.
Mike: This performance is underscored by Rising net. Interest income continued margin expansion and operated a loan. Growth across keyboard. Folios
Mike: Results.
In the second quarter, net income of 15 million. An increase of 19.8% over the prior year quarter, which yielded a return on average assets and average Equity of 0.96%, and 8.73% respectively.
Mike: Capital remains strong Consolidated Equity to assets. Ratio was 10.91% for the second quarter of 2025 compared to 10.73% in the second quarter of 2024.
Mike: Book value per share at June, 3025 was 36.75 up, 6.6% compared to 3 4. 4 6.
Mike: During the second quarter of 25, truss repurchased, 169,000 shares of common stock under the previously announced stock repurchase program.
Mike: And as always, we remain committed to returning value to shareholders through a disciplined share repurchase program, which reflects our confidence in the long-term strength of the franchise and our focus on capital capital optimization.
Michael Ozimek: Average loans for the second quarter of 25 grew 2.3% or $115.6 million to $5.1 billion from the second quarter of 24, an all-time high. Consequently, overall loan growth has continued to increase, and leading the charge was home equity lines of credit portfolio, which increased by $64.7 million, or 17.8% in the second quarter of 25 over the same period in 24. The residential real estate portfolio increased $27.9 million, or 0.6%. The average commercial loans increased $25.8 million, or 9.2%. And installment loans decreased $2.9 million over the same period in 2004. This uptick continues to reflect a strong local economy and increased demand for credit.
Mike: Average loans for the second quarter of 25 grew 2.3% or 115.6 million to 5.1 billion dollars from the second quarter of 24, an all-time high.
Mike: Consequently overall, loan growth has continued to increase in the in leading, the charge with home equity lines of credit portfolio, which increased by 64.7 million or 17.8% in the second quarter of 25, over the same period in 24.
The residential real estate portfolio increased 27.9 million or 6%, the average commercial loans increased, 25.8 million or 9.2% and installment loans decreased 2.9 Million over the same period in 24.
Michael Ozimek: For the second quarter of 25, the provision for credit losses was $650,000. Retaining deposits has been a key focus as we navigate through 2025. Total deposits ended the quarter at $5.5 billion and was $213 billion compared to the prior year quarter. We believe the increase in these deposits compared to the same period in 2024 continues to indicate strong customer confidence in the bank's competitive deposit offer. The bank's continued emphasis on relationship banking combined with competitive product offerings and digital capabilities has continued to be a stable deposit base that continues to support ongoing loan growth and expansion.
This uptick continues to reflect a strong local economy and increased demand for credit.
Mike: For the second quarter of 25, the provision for credit losses was 6555 650,000.
Mike: Retaining deposits has been a key Focus as we navigate through 2025 total deposits, end of the quarter. At 5.5 billion and was 200, was up 213 million compared to the prior year quarter.
Mike: We believe the increase in these deposits compared to the same period in 24 continues to indicate strong customer confidence in the bank's competitive deposit offerings.
Michael Ozimek: Net interest income was $41.7 million for the second quarter of 25, an increase of $4 million or 10.5% compared to the prior year quarter. The net interest margin for the second quarter of 25 was 2.71% of 18 basis points from the prior year quarter. Yield on interest earning assets increased to 4.19% of 13 basis points from the prior year quarter. The cost of interest earning liabilities decreased to 1.91% in the second quarter of 25 from 1.97% in the second quarter of 24. The bank is well positioned to continue delivering strong net interest income performance even as the Federal Reserve signals a potential easing cycle in the months ahead.
Mike: The banks continued emphasis on the relationship banking combined with competitive product offerings and digital capabilities. As continued, to be a stable deposit base that continues on to support ongoing loan growth and expansion.
Mike: And interest income was 41.7 Million for the second quarter of 25, an increase of 4 million or 10.5%, compared to the prior year quarter.
Mike: The net interest margin for the second quarter of 25 was 2.71% of 18 basis points from the prior year quarter.
Mike: yield on on uh, interest earning assets increased 4 to 4.19% up 13 basis points from the prior year, core
Mike: The cost of interests, ranging liabilities decreased to 1.91% in the second quarter of 25 from 1.97% in the second quarter of 24.
Michael Ozimek: The bank remains committed to maintaining a competitive deposit offerings while ensuring financial stability and continued support for our community's banking needs.
Michael Ozimek: Our Wealth Management Division continues to be a significant recurring source of non-interest income. They add approximately $1.2 billion of assets under management as of June 30, 2025. Non-interest income attributable to wealth management and financial services fees increased 13% to $1.8 million driven by strong client demand and higher assets under management. These revenues now represent 37.5% of non-interest income. The majority of this fee income is recurring, supported by long-term advisory relationships and a growing base of managed assets.
Mike: Our wealth management division continues to be a significant recurring source of non-interest income. They had approximately 1.2 billion of assets under management as of June, 3025.
Mike: Not interest income attributable to wealth management and financial services fees increased 13% to 1.8 million driven by strong client demand and higher assets under manager.
These revenues now represent 37.5% of non-interest income.
Michael Ozimek: Now on to non-interest expense. Total non-interest expense, net of ORE expense, came in at $25.7 million, down $600,000 from the prior year quarter. ORE expense net came in at an expense of $522,000 for the quarter, as compared to $16,000 in the prior year quarter.
Mike: The majority of this fee income is recurring supported by a long-term advisory relationships and growing and a growing base of managed assets.
Mike: Now, on to non-interest expense, total non-interest, expense, net of worry. Expense came in at 25.7% from the prior year quarter.
Michael Ozimek: We're going to continue to hold the anticipated level of expense not to exceed $250,000 per quarter for ORE expenses.
Mike: Or we expense. Net came in at an expensive 522,000 for the quarter as compared to 16,000 in the prior year quarter.
Michael Ozimek: all the other categories of non-interest expenses. We're in line with expectations for the second quarter.
Mike: We going to continue to hold the anticipated level of expense not to exceed 250,000 dollars per quarter for or expense. All the other categories of non-interest expense.
Kevin Curley: Now, Kevin will review the loan portfolio and non-performing loans. Thanks, Mike, and good morning to everyone. Our loans grew by $115.6 million, or 2.3% year over year. The growth was centered on our home equity loans, which increased by $64.7 million, or 17.8% over last year, and residential mortgages, which increased by $27.9 million. In addition, our commercial loans grew by 25.8 million or 9.2% over last year. For the second quarter, actual loans increased by $40.6 million as total residential loans grew by $29.4 million, and commercial loans were also higher, increasing by $11.5 million for the quarter.
Mike: We're in line with the expectations for the second quarter. Now, Kevin will review the loan portfolio and not performing loans. Thanks Mike and good morning to everyone our loans grew by 115.6 million or 2.3% year-over-year.
The growth was centered on our home equity loans, which increased by 64.7 million or 17.8% over last year and Residential Mortgages, which increased by 27.9 million.
Mike: In addition, our commercial loans grew by 25.8 million or 9.2% over last year.
Mike: For the second quarter actual loans, increased by 40.6 million has total residential loans grew by by 29.4 million.
Kevin Curley: Overall, residential activity trends remain similar to those discussed in recent quarters. Our home equity credit lines continue to see consistent demand as customers continue to use their equity in their home for home improvements, education purposes, or paying off higher cost loans such as credit cards. For purchase and refinance activity, we are well situated in the market and are ready to capture more growth as these segments pick up. Also, as a portfolio lender, we are uniquely positioned to manage pricing and implement promotions to increase lending volume. In all our markets, rates continue to be moving in approximately 50 basis point range and our current rate is 6.5% for our base 30 year fixed rate loan.
And Commercial loans were also higher increasing by 11.5 million for the quarter.
Mike: Overall residential activity Trends, remained similar to those discussed, in recent quarters, our home equity credit lines. Continue to see consistent demand, as customers continue to use their equity, in their home for Home. Improvements education purposes, or paying off higher cost loans such as credit cards.
Mike: For purchase and re Finance activity. We are well situated in the market and are ready to capture more growth as these segments pick up.
Mike: Also, as a portfolio lender, we are uniquely positioned to manage pricing and Implement promotions to increase lending volume.
Kevin Curley: In addition, our home equity products remain a very attractive option for customers with rates starting below 7%. Commercial loan activity remains strong this quarter and continues to contribute to our portfolio growth. Overall, we are encouraged about our long growth this quarter and are committed to driving stronger results moving forward.
Mike: In all our markets rates continue to be moving at approximately 50 basis, point range. And our current rate is 6.5% for our base 30-year fixed rate loan.
Mike: In addition, our home equity products remain, very attractive option, for customers with rates, starting below 7%.
Mike: Commercial loan activity. Remains strong. This quarter and continue to continue. Continue to contribute to our portfolio growth
Kevin Curley: Now moving to asset quality. Asset quality at the bank remains very strong. Our early stage delinquencies for our portfolio continue to be steady. Chargeoffs for the quarter amounted to a net recovery of $9,000, which follows a net recovery of $258,000 in the first quarter. non-foreign loans were $17.9 million at this quarter end, $18.8 million last quarter, and $19.2 million a year ago. Not performing loans, the total loans decreased to 0.35% at this quarter end, compared to 0.37% last quarter and 0.38% a year ago. and non-performing assets also decreased to $19 million at quarter end versus $20.9 million last quarter and $21.5 million a year ago.
Mike: Overall, we are encouraged about our long growth, this quarter and our committed to driving stronger results moving forward.
Mike: Now, moving to asset equality.
Mike: As a quality, at the banker means very strong. Our early stage delinquencies for our portfolio, continue to be steady.
Mike: Charge offs for the quarter amounts to a net recovery of 9,000 which follows a net recovery of 258,000 in the first quarter.
Mike: Non-performing loans were 17.9 million at this quarter end, 18.8 Million last quarter and 19.2 million a year ago.
Non-performing loans to Total loans, decreased to 0.35% at this quarter, end compared to 0.37% last quarter and 0.38% a year ago.
Kevin Curley: At quarter end, our allowance for credit losses remains very solid at $51.3 million with a coverage ratio of 286%. compared to $50.6 million with a coverage ratio of 270% in the first quarter and $49.8 million at a coverage ratio of 259% a year ago.
Mike: And not performing assets. Also decreased to 19 million at quarter end. First 2920.9 Million, last quarter, and 21.5 million a year ago.
At quarter, end, our allowance for credit losses remains very solid at 51.32%.
Robert McCormick: Rob? That's our story.
Operator: We're happy to answer any questions anyone might have. We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone.
Speaker Change: Compared to 50.62% in the first quarter and 49.8 million and a covered ratio of 259% a year ago. Rob, that's our story. We're happy to answer any questions. Anyone might have
Speaker Change: We will now begin the question and answer session.
Operator: If you're using a speakerphone, please pick up your handset before pressing the If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time we will pause momentarily to assemble our roster.
Speaker Change: To ask a question, you may press star then 1 on your touchtone phone. If you're using a speaker-phone please pick up your handset before pressing the keys. If at any time your question has been addressed and you'd like to withdraw your question please press star then 2
At this time, we will pause momentarily to assemble our roster.
Ian Lapey: Our first question comes from Ian Lapey from Gabelli Funds. Your line is open, please go ahead. Good morning, gentlemen. Congratulations. Great, great quarter. Just a couple. Thank you. Good morning, Neil. Um, Rob, you're talking about strong local demand. Is that?
Our first question comes from Ian Ley.
Speaker Change: From Delhi funds, your line is open, please go ahead.
Robert McCormick: I missed the first part of the questioning. I'm sorry. There's something you must have came faded in and out. The strong local demand that you referred to, is that in Florida as well as in the Northeast? across the markets. Yeah, the best demand the better of the two categories has been Florida Ian, but we've had very strong demand locally as well.
Speaker Change: Um, rob you, you talked about strong local demand, is that in in Florida as well?
Speaker Change: I missed the first part of the question, you know, I'm sorry there's something you must have became faded in and out. Oh sure. It's the, the strong local.
Speaker Change: To is that?
Speaker Change: Northeast.
Speaker Change: Across the markets. Yeah, the the best demand, the better of the 2 categories has been Florida Ian, but we've had very strong demand locally as well.
Ian Lapey: Okay, great. And then what is the in terms of the CDs that will be maturing in the next quarter? What what is the rate? for maturing CDs as opposed to ones you're currently issuing. We're still gaining ground, but not as much ground as we were gaining in. Do you have the number? Yeah, sure. We have what's come and do is about the average rate is three ninety one. Okay. And what are you paying now? The highest is four. That's for three months.
Okay. Great. And then what is the in terms of the CDs that will be maturing in the next quarter, what what is the rate?
Speaker Change: um, for maturing CDs as opposed to 1 of your currently issuing
Speaker Change: We're still gaining ground, but not as much ground as we were gaining in. Do you have the the number? Yeah. Sure. We have a, what's coming to do is about at the average rate is 391.
Speaker Change: Okay.
Speaker Change: And what? What are you paying now?
The highest is 4.
Speaker Change: But that's for uh, 3 months.
Robert McCormick: Okay, and then last one. And one thing is, you know, as we go... Ian, I'll just add to that. I mean, you know, that's over the next quarter. But as you look out, we gain some ground in future quarters. And what's coming due in Q4 and Q1 of next year are lower. They're in the 360 range. So we're going to make some more ground up as we go forward.
Speaker Change: Okay. And then last 1 um and and 1 thing is, you know, as we go
Speaker Change: You know, just add to that. I mean, you know, that's over the next quarter. But as you look out, we gain some ground in future quarters. And what's coming due in Q4 and q1? And next year are lower. They're in the 3, 6 0,
Ian Lapey: Okay, great.
Robert McCormick: And last one in terms of a strong commercial loan growth, what types of borrowers lending, and what's the rough mix between secured and unsecured? The vast majority in probably in the 90 over 90% range is real estate related in commercial loans, and we're doing smaller multifamily projects and very small office offerings, some owner occupied and some investment. But the vast majority of the commercial portfolio is secured by real estate. Okay, great.
Speaker Change: Okay, great. Uh, and last 1, in terms of the strong commercial loan growth. What what types of borrowers are you lending? And what's the rough mix between secured and unsecured?
The, the vast majority in.
Speaker Change: Probably in the 90 over. 90% range is real estate related in commercial loans and uh we're doing smaller multifamily projects and uh, very small office offering some owner occupied and some investment. But the vast majority of the commercial loan portfolio is secured by real estate.
Ian Lapey: Thank you very much. Thank you.
Speaker Change: Okay, great. Thank you very much.
Speaker Change: Thank you.
Operator: As a reminder, to ask a question, please press star followed by one on your telephone keypad.
Speaker Change: As Amanda to ask your question. Please press star. Followed by 1 on your telephone keypad.
Robert McCormick: We currently have no further questions, so I'd like to turn the conference call back to Robert J McCormick for any closing remarks. Thank you for your interest in our company and we appreciate you spending a couple minutes with us. Have a great day.
Speaker Change: And this.
Speaker Change: We currently have no further questions so I'd like to turn the conference call back to Robert J McCormick for any closing remarks.
Speaker Change: Thank you for thank you for your interest in our company and we appreciate you spending a couple minutes with us this morning. Have a great day.
Operator: This conference call has now concluded. Thank you for attending today's presentation.
Operator: You may now disconnect your line.
Speaker Change: Conference call has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.