Q2 2026 TrustCo Bank Corp NY Earnings Call
Operator 3: Good day. Welcome to the TrustCo Bank Corp earnings call and webcast. 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 one. To withdraw your question, you may press star one again. Before proceeding, we would like to mention that this presentation may contain forward-looking information about TrustCo Bank Corp NY 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.
Operator: Good day. Welcome to the Trustco Bank Corp earnings call and webcast. 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 one. To withdraw your question, you may press star one again. Before proceeding, we would like to mention that this presentation may contain forward-looking information about Trustco Bank Corp NY 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.
Speaker #2: Good day, and welcome to the TRUSTCO BANK CORP Earnings Call-and-Webcast. 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 0 on your keypad.
Speaker #2: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1. To withdraw your question, you may press star 1 again.
Speaker #2: Before proceeding, we would like to mention that this presentation may contain forward-looking information about trust co-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.
Speaker #2: 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.
Speaker #2: 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 reports on Form 10-Q.
Operator 3: More detailed information about these 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 reports on Form 10-Q. The forward-looking statements made on this call are valid only as of the date hereof. 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 press release, which is available under the Investor Relations tab of our website at trustcobank.com.
Operator: More detailed information about these 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 reports on Form 10-Q. The forward-looking statements made on this call are valid only as of the date hereof. 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 press release, which is available under the Investor Relations tab of our website at Trustcobank.com.
Speaker #2: 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.
Speaker #2: 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 of our website at trustcobank.com.
Speaker #2: 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.
Operator 3: Please also note that today's event is being recorded. A replay of the call will be available for 30 days. An 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 call over to Mr. Robert J. McCormick. Please go ahead.
Operator: Please also note that today's event is being recorded. A replay of the call will be available for 30 days. An 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 call over to Mr. Robert J. McCormick. Please go ahead.
Speaker #2: As described in our earnings press release. At this time, I would like to turn the conference call over to Mr. Robert J. McCormick. Please go ahead.
Speaker #3: Good morning, everyone, and thank you for joining the call. I'm Rob McCormick, the Chairman of TrustCo Bank. I'm joined today, as usual, by Michael Ozimek, our CFO, who will go through the numbers.
Robert J. McCormick: Good morning, everyone, and thank you for joining the call. I'm Rob McCormick, the Chairman of Trustco Bank. I'm joined today, as usual, by Mike Ozimek, our CFO, who will go through the numbers, and Kevin Curley, our Chief Banking Officer, who will talk about lending. Like a well-oiled and efficiently operating machine, all of the elements of the time-tested Trustco Bank business model work together in a favorable market environment to produce another quarter of stellar financial results. Our loan and investment portfolios continue to reprice favorably as lower-yielding assets mature and were replaced by higher loan originations and better-yielding investments. The machine was fueled by growth in lower-cost deposits. Increased loan origination provided the outlet for the machine's production. In combination, these elements result in an increased net interest margin year over year. Of course, this was done without compromising credit quality.
Robert J. McCormick: Good morning, everyone, and thank you for joining the call. I'm Rob McCormick, the Chairman of Trustco Bank. I'm joined today, as usual, by Mike Ozimek, our CFO, who will go through the numbers, and Kevin Curley, our Chief Banking Officer, who will talk about lending. Like a well-oiled and efficiently operating machine, all of the elements of the time-tested Trustco Bank business model work together in a favorable market environment to produce another quarter of stellar financial results. Our loan and investment portfolios continue to reprice favorably as lower-yielding assets mature and were replaced by higher loan originations and better-yielding investments. The machine was fueled by growth in lower-cost deposits. Increased loan origination provided the outlet for the machine's production. In combination, these elements result in an increased net interest margin year over year. Of course, this was done without compromising credit quality.
Speaker #3: And Kevin Curley, our Chief Banking Officer, who will talk about lending. Michael—well-oiled and efficiently operating machine. All of the elements of the time-tested TrustCo Bank business model work together in a favorable market environment to produce another quarter of stellar financial results.
Speaker #3: Our loan and investment portfolios continue to reprice favorably, with lower-yielding assets maturing and being replaced by higher loan originations with better and better-yielding investments.
Speaker #3: The machine was fueled by growth and lower-cost deposits. Increased loan origination provided the outlet for the machine's production. In combination, these elements result in an increased net interest margin year-over-year. And, of course, this was done without compromising credit quality.
Speaker #3: While all of that good work was being done, we continued to execute on our capital deployment strategy, primarily through share buybacks. Our buyback program began in 2020 and, to date, has seen the reacquisition of more than 2.3 million shares of company stock.
Robert J. McCormick: While all of that good work was being done, we continued to execute on our capital deployment strategy, primarily through share buybacks. Our buyback program began in 2020, and to date, has seen the reacquisition of more than 2.3 million shares of company stock. The current phase of the program is expected to continue on pace, and if completed, we will have repurchased nearly 16% of Trustco's outstanding shares during 2025 and 2026. It is plain to see that we remain committed to the generation of meaningful and sustainable shareholder value. It is also plain to see that we remain convinced that the best acquisition we can make is Trustco Bank. We are also very pleased to have moved into the building in Longwood that we repurposed into our new regional headquarters for our operation in the Sunshine State.
Robert J. McCormick: While all of that good work was being done, we continued to execute on our capital deployment strategy, primarily through share buybacks. Our buyback program began in 2020, and to date, has seen the reacquisition of more than 2.3 million shares of company stock. The current phase of the program is expected to continue on pace, and if completed, we will have repurchased nearly 16% of Trustco's outstanding shares during 2025 and 2026. It is plain to see that we remain committed to the generation of meaningful and sustainable shareholder value. It is also plain to see that we remain convinced that the best acquisition we can make is Trustco Bank. We are also very pleased to have moved into the building in Longwood that we repurposed into our new regional headquarters for our operation in the Sunshine State.
Speaker #3: The current phase of the program is expected to continue on pace, and if completed, we'll have we will have repurchased nearly 16% of TRUSTCO's outstanding shares during 25 and 26.
Speaker #3: It is plain to see that we remain committed to the generation of meaningful and sustainable shareholder value. It is also plain to see that we remain convinced that the best acquisition we can make is TRUSTCO BANK.
Speaker #3: We are also very pleased to have moved into the building in Longwood that we repurposed into our new regional headquarters for our operation in the Sunshine State.
Speaker #3: The great state of Florida is a key part of our success, and this new building enhances our visibility there, and provides a foundation on which more great things can be grown.
Robert J. McCormick: The great state of Florida is a key part of our success, and this new building enhances our visibility there and provides a foundation on which more great things can be grown. Now Mike's going to go into details on the numbers, and then Kevin will take care of loans, and then we can answer questions if you have them.
Robert J. McCormick: The great state of Florida is a key part of our success, and this new building enhances our visibility there and provides a foundation on which more great things can be grown. Now Mike's going to go into details on the numbers, and then Kevin will take care of loans, and then we can answer questions if you have them.
Speaker #3: We'll start with some details on the numbers, and then Kevin will take care of loans. After that, we'll answer any questions if you have them.
Speaker #4: Thank you, Rob, and good morning, everyone. I will now review TRUSTCO's financial results for the second quarter of 26. As we noted in the press release, the company continued to see strong financial results for the second quarter of 26.
Speaker #4: Thank you, Rob, and good morning, everyone. I will now review TRUSTCO's financial results for the second quarter of 26. As we noted in the press release, the company continued to see strong financial results for the second quarter of
Michael M. Ozimek: Thank you, Rob, and good morning, everyone. I will now review Trustco's financial results for Q2 2026. As we noted in the press release, the company continued to see strong financial results for Q2 2026, marked by increases in both net income and net interest income of Trustco Bank during Q2 2026 compared to Q2 2025. This performance is underscored by rising net interest income and sustained loan and deposit growth across core lending and deposit categories. This resulted in Q2 net income of $17 million, an increase of 12.8% over the prior year quarter, which yielded a return on average assets and average equity of 1.04% and 10.22%, respectively. Capital remains strong. Consolidated equity assets ratio is 10.5% for Q2 2026 compared to 10.91% in Q2 2025.
Mike Ozimek: Thank you, Rob, and good morning, everyone. I will now review Trustco's financial results for Q2 2026. As we noted in the press release, the company continued to see strong financial results for Q2 2026, marked by increases in both net income and net interest income of Trustco Bank during Q2 2026 compared to Q2 2025. This performance is underscored by rising net interest income and sustained loan and deposit growth across core lending and deposit categories. This resulted in Q2 net income of $17 million, an increase of 12.8% over the prior year quarter, which yielded a return on average assets and average equity of 1.04% and 10.22%, respectively. Capital remains strong. Consolidated equity assets ratio is 10.5% for Q2 2026 compared to 10.91% in Q2 2025.
Speaker #4: BANK during the second quarter of '26, compared to the second quarter of '25. This performance is underscored by rising—now, Mike's going to go into net interest income—and sustained loan and deposit growth across core lending and deposit categories.
Speaker #4: This resulted in second quarter net income of $17 million, an increase of 12.8% over the prior year quarter, which yielded a return on average assets and average equity of 1.04% and 10.22%, respectively.
Speaker #4: Capital remains strong. Consolidated equity to assets ratio is 10.5% for the second quarter of ’26, compared to 10.91% in the second quarter of ’25. Book value per share on June 30, ’26 was $38.53, up 4.8% compared to $36.75 a year earlier.
Michael M. Ozimek: Book value per share of 30 June 2026 was $38.53, up 4.8% compared to $36.75 a year earlier. Trustco has also repurchased 10.5% of Trustco outstanding common stock under the 2025 and 2026 stock repurchase programs through the acquisition of over 1 million shares in 2026, following the purchase of 1 million shares in 2025. Reinforcing a disciplined long-term capital allocation strategy, 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 optimization. Credit quality continues to be consistent as we saw non-performing loans modestly increase to $21.8 million in Q2 2026 from $17.9 million in Q2 2025. Our continued focus on solid underwriting within our loan portfolio and conservative lending standards positions us to manage credit risk effectively in the current environment.
Mike Ozimek: Book value per share of 30 June 2026 was $38.53, up 4.8% compared to $36.75 a year earlier. Trustco has also repurchased 10.5% of Trustco outstanding common stock under the 2025 and 2026 stock repurchase programs through the acquisition of over 1 million shares in 2026, following the purchase of 1 million shares in 2025. Reinforcing a disciplined long-term capital allocation strategy, 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 optimization. Credit quality continues to be consistent as we saw non-performing loans modestly increase to $21.8 million in Q2 2026 from $17.9 million in Q2 2025. Our continued focus on solid underwriting within our loan portfolio and conservative lending standards positions us to manage credit risk effectively in the current environment.
Speaker #4: TRUSTCO has also repurchased 10.5% of TRUSTCO's outstanding common stock under the 2025 and 2026 stock repurchase programs, through the acquisition of over 1 million shares in 2026, following the purchase of 1 million shares in 2025.
Speaker #4: We are reinforcing a disciplined, long-term capital allocation strategy. 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 optimization.
Speaker #4: Credit quality continues to be consistent, as we saw non-performing loans modestly increase to $21.8 million in the second quarter of '26, from $17.9 million in the second quarter of '25.
Speaker #4: Our continued focus on solid and conservative lending standards positions us to manage credit risk effectively in the current environment. Average loans for the second quarter of 26 grew 3.8%, 197.5 million, to 5.3 billion from the second quarter of 25, another all-time high.
Michael M. Ozimek: Average loans for Q2 2026 grew 3.8%, $197.5 million to $5.3 billion from Q2 2025, another all-time high. This uptick continues to reflect a strong local economy and increased demand for credit. For Q2 2026, the provision for credit losses was $650,000. The ratio of the allowance for loan losses to total loans was 1.01% as of June 2026 and 0.99% for June 2025. Our focus continues to be on traditional lending, which has enabled us to produce consistent, high-quality recurring earnings. Retaining and growing deposits has been a key focus as we navigated through 2026. Total deposits ended the quarter at $5.7 billion and was up $191 million compared to the prior year quarter.
Mike Ozimek: Average loans for Q2 2026 grew 3.8%, $197.5 million to $5.3 billion from Q2 2025, another all-time high. This uptick continues to reflect a strong local economy and increased demand for credit. For Q2 2026, the provision for credit losses was $650,000. The ratio of the allowance for loan losses to total loans was 1.01% as of June 2026 and 0.99% for June 2025. Our focus continues to be on traditional lending, which has enabled us to produce consistent, high-quality recurring earnings. Retaining and growing deposits has been a key focus as we navigated through 2026. Total deposits ended the quarter at $5.7 billion and was up $191 million compared to the prior year quarter.
Speaker #4: This uptick continues to reflect a strong local economy and increased demand for credit. For the second quarter of 26, the provision for credit losses was $650,000.
Speaker #4: The ratio of the allowance for loan losses to total loans was 1.01% as of June 26, and 0.99% for June of '25. Our focus continues to be on traditional lending, which has enabled us to produce consistent, high-quality, recurring earnings.
Speaker #4: Retaining and growing deposits has been a key focus as we navigated through 2026. Total deposits ended the quarter at $5.7 billion, and was up 191 million compared to the prior year quarter.
Speaker #4: We believe the increase in these deposits, compared to the same period in 25, continues to indicate strong customer confidence in the bank's competitive deposit offerings.
Michael M. Ozimek: We believe the increase in these deposits compared to the same period in 2025 continues to indicate strong customer confidence in the bank's competitive deposit offerings. The bank's continued emphasis on relationship banking, combined with the competitive product offerings and digital capabilities, has continued to a stable deposit base that supports ongoing loan growth and expansion. Net interest income was $45.6 million for Q2 2026, an increase of $3.8 million or 9.2% compared to the prior year quarter. Net interest margin for Q2 2026 was 2.87%, up 16 basis points from the prior quarter. The yield on interest-earning assets increased to 4.27%, up 8 basis points from the prior quarter. The cost of interest-bearing liabilities decreased to 1.79% in Q2 2026 from 1.91% in Q2 2025.
Mike Ozimek: We believe the increase in these deposits compared to the same period in 2025 continues to indicate strong customer confidence in the bank's competitive deposit offerings. The bank's continued emphasis on relationship banking, combined with the competitive product offerings and digital capabilities, has continued to a stable deposit base that supports ongoing loan growth and expansion. Net interest income was $45.6 million for Q2 2026, an increase of $3.8 million or 9.2% compared to the prior year quarter. Net interest margin for Q2 2026 was 2.87%, up 16 basis points from the prior quarter. The yield on interest-earning assets increased to 4.27%, up 8 basis points from the prior quarter. The cost of interest-bearing liabilities decreased to 1.79% in Q2 2026 from 1.91% in Q2 2025.
Speaker #4: The bank's continued emphasis on relationship banking combined with the competitive product offerings and digital capabilities has continued to a stable deposit base that supports ongoing loan growth and expansion.
Speaker #4: Net interest income was $45.6 million for the second quarter of 2026, an increase of $3.8 million, or 9.2%, compared to the prior year quarter.
Speaker #4: Net interest margin for the second quarter of 2026 was 2.87%, up 16 basis points from the prior-year quarter. Yield on interest-earning assets increased to 4.27%, up 8 basis points from the prior-year quarter.
Speaker #4: And then the cost of interest-bearing liabilities decreased to 1.79% in the second quarter of 26, from 1.91% in the second quarter of 25. The bank is well positioned to continue delivering strong net interest income performance, even as the Federal Reserve contemplates rate changes in the months ahead.
Michael M. Ozimek: The bank is well-positioned to continue delivering strong Net interest income performance even as the Federal Reserve contemplates rate changes in the months ahead. The bank remains committed to maintaining competitive deposit offerings while ensuring financial stability and continued support for our community's banking needs. Our wealth management division continues to be a significant recurring source of non-interest income. They had approximately $1.39 billion of assets under management as of 30 June 2026. The majority of this fee income is recurring, supported by long-term advisory relationships and a growing base of managed assets. Additionally, as mentioned in the press release, the company marked its Visa Class C common stock to fair value and recorded a gain of $844,000 based on the conversion privilege of the Visa Class C common stock. Now on to non-interest expense.
Mike Ozimek: The bank is well-positioned to continue delivering strong Net interest income performance even as the Federal Reserve contemplates rate changes in the months ahead. The bank remains committed to maintaining competitive deposit offerings while ensuring financial stability and continued support for our community's banking needs. Our wealth management division continues to be a significant recurring source of non-interest income. They had approximately $1.39 billion of assets under management as of 30 June 2026. The majority of this fee income is recurring, supported by long-term advisory relationships and a growing base of managed assets. Additionally, as mentioned in the press release, the company marked its Visa Class C common stock to fair value and recorded a gain of $844,000 based on the conversion privilege of the Visa Class C common stock. Now on to non-interest expense.
Speaker #4: The bank remains committed to maintaining competitive deposit offerings while ensuring financial stability and continued support for our community's banking needs. Our wealth management division continues to be a significant recurring source of non-interest income.
Speaker #4: They have approximately $1.39 billion of assets under management as of June 30, 2026. The majority of this fee income is recurring, supported by long-term advisory relationships and a growing base.
Speaker #4: Managed assets. Additionally, as mentioned in the press release, the company marked its Visa Class C common stock to fair value and recorded a gain of $844,000, based on the conversion privilege of the Visa Class C common stock.
Speaker #4: Now, on to non-interest expense. Total non-interest expense, net of ORE expense, came in at $28.2 million, up $1.3 million from the prior quarter. The increase is primarily the result of higher employee benefit costs and professional fees in the current quarter.
Michael M. Ozimek: Total non-interest expense, net of ORE expense, came in at $28.2 million, up $1.3 million from the prior quarter. The increase is primarily the result of higher employee benefit costs and professional fees in the current quarter. These expense categories are expected to return to normalized levels next quarter, consistent with historical quarterly trends. ORE expense net came in at an expense of $112,000 for the quarter, as compared to $28,000 in the prior. We're going to continue to hold the anticipated level of expense to not exceed $250,000 per quarter. All the other categories of non-interest expense were in line with our expectations for Q2. We would expect 2026 total recurring non-interest expense, net of ORE expense, to be in the range of $27.3 to $27.8 million per quarter. Kevin will review the loan portfolio and non-performing loans.
Mike Ozimek: Total non-interest expense, net of ORE expense, came in at $28.2 million, up $1.3 million from the prior quarter. The increase is primarily the result of higher employee benefit costs and professional fees in the current quarter. These expense categories are expected to return to normalized levels next quarter, consistent with historical quarterly trends. ORE expense net came in at an expense of $112,000 for the quarter, as compared to $28,000 in the prior. We're going to continue to hold the anticipated level of expense to not exceed $250,000 per quarter. All the other categories of non-interest expense were in line with our expectations for Q2. We would expect 2026 total recurring non-interest expense, net of ORE expense, to be in the range of $27.3 to $27.8 million per quarter. Kevin will review the loan portfolio and non-performing loans.
Speaker #4: These expense categories are expected to return to normalized levels next quarter, consistent with historical quarterly trends. ORE expense net came in at an expense of $112,000 for the quarter, as compared to $28,000 in the prior quarter.
Speaker #4: We're going to continue to hold the anticipated level of expense to not exceed $250,000 per quarter, and all of the other categories of non-interest expense were in line with our expectations for the second quarter.
Speaker #4: We would expect 26 total recurring non-interest expense net of ORE expense to be in the range of $27.3 to $27.8 million per quarter. Now, Kevin will review the loan portfolio and non-performing loans.
Speaker #2: Thanks, Mike, and good morning to everyone. Our average loans grew by $197.5 million, or 3.8% year over year. This is an improvement over last quarter's report of year-over-year growth of $158.9 million.
Kevin Curley: Thanks, Mike. Good morning to everyone. Our average loans grew by $197.5 million, or 3.8% year over year. This is an improvement over last quarter's report of year over year growth of $158.9 million. The growth was centered in our residential loan portfolio, with our first mortgage segment growing by $142 million, or 3.2%, and our home equity loans growing by $44.8 million, or 10.4%, over last year. In addition, our commercial loans grew by $13.4 million, or 4.4%, over last year. For Q2, actual loans increased by $87.1 million compared to Q1. Purchase mortgage loans, including refinances, grew by $62.8 million. Home equity loans grew by $19.3 million, and commercial loans were higher by $5.7 million for the quarter. During Q2, mortgage rates were lower in the beginning of the quarter.
Kevin Curley: Thanks, Mike. Good morning to everyone. Our average loans grew by $197.5 million, or 3.8% year over year. This is an improvement over last quarter's report of year over year growth of $158.9 million. The growth was centered in our residential loan portfolio, with our first mortgage segment growing by $142 million, or 3.2%, and our home equity loans growing by $44.8 million, or 10.4%, over last year. In addition, our commercial loans grew by $13.4 million, or 4.4%, over last year. For Q2, actual loans increased by $87.1 million compared to Q1. Purchase mortgage loans, including refinances, grew by $62.8 million. Home equity loans grew by $19.3 million, and commercial loans were higher by $5.7 million for the quarter. During Q2, mortgage rates were lower in the beginning of the quarter.
Speaker #2: The growth was centered in our residential loan portfolio, with our first mortgage segment growing by 142 million, or 3.2%, and our home equity loans growing by 44.8 million or 10.4% over last year.
Speaker #2: In addition, our commercial loans grew by $13.4 million, or 4.4%, over last year. For the second quarter, actual loans increased by $87.1 million compared to the first quarter.
Speaker #2: Purchased mortgage loans, including refinances, grew by 62.8 million; home equity loans grew by 19.3 million; and commercial loans were higher by 5.7 million for the quarter.
Speaker #2: During the second quarter, mortgage rates were lower at the beginning of the quarter. They increased slightly and have leveled off to a 6.25% to 6.5% range over the past few weeks.
Kevin Curley: They increased slightly and have leveled off to a 6.25% to 6.5% range over the past few weeks. Our mortgage origination activity showed solid momentum during the quarter. Purchase loan volume was steady throughout the quarter. Refinance activity was strongest earlier in the period as customers moved to lock in lower rates before market rates increased. As rates moved higher later in the quarter, refinance activity moderated. Our home equity loan products produced consistent demand in all our markets throughout the quarter. We continue to offer highly competitive mortgage products with our 30-year fixed rate loans and various ARM options. In addition, our home equity products continue to offer customers low-cost alternatives to other forms of credit, such as personal loans and credit cards.
Kevin Curley: They increased slightly and have leveled off to a 6.25% to 6.5% range over the past few weeks. Our mortgage origination activity showed solid momentum during the quarter. Purchase loan volume was steady throughout the quarter. Refinance activity was strongest earlier in the period as customers moved to lock in lower rates before market rates increased. As rates moved higher later in the quarter, refinance activity moderated. Our home equity loan products produced consistent demand in all our markets throughout the quarter. We continue to offer highly competitive mortgage products with our 30-year fixed rate loans and various ARM options. In addition, our home equity products continue to offer customers low-cost alternatives to other forms of credit, such as personal loans and credit cards.
Speaker #2: Our mortgage origination activity showed solid momentum during the quarter. Purchase loan volume was steady throughout the quarter, while refinance activity was strongest earlier in the period as customers moved to lock in lower rates before market rates increased.
Speaker #2: As rates moved higher later in the quarter, refinance activity products produced consistent demand in all our markets throughout the quarter. We continue to offer highly competitive mortgage products with our 30-year fixed-rate loans and various ARM options.
Speaker #2: In addition, our home equity products continue to offer customers low-cost alternatives to other forms of credit, such as personal loans and credit cards. Overall, we are pleased with the loan growth during the quarter and remain committed to delivering strong results moving forward.
Kevin Curley: Overall, we are pleased with the loan growth during the quarter and remain committed to delivering strong results moving forward. Moving to asset quality. As a portfolio lender, we originate loans to hold through maturity. This reinforces our disciplined approach to underwriting and risk management. Asset quality at the bank remains very strong. Our early-stage delinquencies in our portfolio continue to remain within their normal range. Charge-offs for the quarter amounted to a net recovery of $88,000, which follows a net recovery of $39,000 in Q1 and a total of $317,000 in recoveries over the past year. Overall, we've had six straight quarters of net recoveries. Non-performing loans are $21.8 million at this quarter end, $21.5 million last quarter, and $17.9 million a year ago. Non-performing loans to total loans was 0.4% for the quarter end, compared to 0.41% last quarter and 0.35% a year ago.
Kevin Curley: Overall, we are pleased with the loan growth during the quarter and remain committed to delivering strong results moving forward. Moving to asset quality. As a portfolio lender, we originate loans to hold through maturity. This reinforces our disciplined approach to underwriting and risk management. Asset quality at the bank remains very strong. Our early-stage delinquencies in our portfolio continue to remain within their normal range. Charge-offs for the quarter amounted to a net recovery of $88,000, which follows a net recovery of $39,000 in Q1 and a total of $317,000 in recoveries over the past year. Overall, we've had six straight quarters of net recoveries. Non-performing loans are $21.8 million at this quarter end, $21.5 million last quarter, and $17.9 million a year ago. Non-performing loans to total loans was 0.4% for the quarter end, compared to 0.41% last quarter and 0.35% a year ago.
Speaker #2: Now moving to asset quality, as portfolio lender, we originate loans to hold through maturity. This reinforces our disciplined approach underwriting and risk management. Asset quality at the bank remains very strong.
Speaker #2: Our early-stage delinquencies in our portfolio continue to remain within their normal range. Charge-offs for the quarter amounted to a net recovery of $88,000, which follows a net recovery of $39,000 in the first quarter, and a total of $317,000 in recoveries over the past year.
Speaker #2: Overall, we've had six trade quarters of net recoveries. Non-performing loans are $21.8 million at this quarter end, $21.5 million last quarter, and $17.9 million a year ago. Non-performing loans to total loans was 0.40% for the quarter end, compared to 0.41% last quarter and 0.35% a year ago.
Speaker #2: Non-performing assets were $23 million at quarter end versus $22.8 million last quarter and $19 million a year ago. At quarter end, our allowance for credit losses remains solid at $54.1 million with a coverage ratio of 249%, compared to $53 million with a coverage ratio of 240% at the end of the first quarter and $51.3 million and a coverage ratio of 286% a year ago.
Kevin Curley: Non-performing assets were $23 million at quarter end versus $22.8 million last quarter and $19 million a year ago. At quarter end, our allowance for credit losses remained solid at $54.1 million, with a coverage ratio of 249%, compared to $53 million with a coverage ratio of 240% at the end of Q1, and $51.3 million and a coverage ratio of 286% a year ago. Rob?
Kevin Curley: Non-performing assets were $23 million at quarter end versus $22.8 million last quarter and $19 million a year ago. At quarter end, our allowance for credit losses remained solid at $54.1 million, with a coverage ratio of 249%, compared to $53 million with a coverage ratio of 240% at the end of Q1, and $51.3 million and a coverage ratio of 286% a year ago. Rob?
Speaker #2: Rob?
Speaker #4: Sorry I'm hacking a little bit, but that's our story and we're happy to take any questions you might have.
Robert J. McCormick: Sorry, I'm hacking a little bit, but that's our story and we're happy to take any questions you might have.
Robert J. McCormick: Sorry, I'm hacking a little bit, but that's our story and we're happy to take any questions you might have.
Speaker #3: We will now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.
Operator 3: We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star one again. At this time, we will pause momentarily to assemble our roster. Your first question comes from the line of Ian Lapey with Gabelli Funds. Your line is open. Please go ahead.
Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star one again. At this time, we will pause momentarily to assemble our roster. Your first question comes from the line of Ian Lapey with Gabelli Funds. Your line is open. Please go ahead.
Speaker #3: If at any time your question has been addressed and you would like to withdraw your question, please press star one again. At this time, we will pause momentarily to assemble our roster.
Speaker #3: Your first question comes from the line of Ian Lathy with Gabelli Funds. Your line is open. Please go ahead.
Speaker #4: Can we start with the expense line?
Ian Lapey: Can we start with the expenses?
Ian Lapey: Can we start with the expenses?
Robert J. McCormick: Ian.
Robert J. McCormick: Ian.
Speaker #2: Ian, Ian.
Ian Lapey: I just want to make sure, Rob, that I understood what you said. The increase last quarter you had guided to 26.7 to 27.3, and it came in at 28.2. You said that was mostly non-recurring things. Could you just go in again to what the extra expense was this quarter?
Ian Lapey: I just want to make sure, Rob, that I understood what you said. The increase last quarter you had guided to 26.7 to 27.3, and it came in at 28.2. You said that was mostly non-recurring things. Could you just go in again to what the extra expense was this quarter?
Speaker #4: I just want to make sure, Rob, that I understood what you said. So the increase last quarter—you had guided to 26.7 to 27.3, and it came in at 28.2.
Speaker #4: And you said that was mostly non-recurring things. Could you just go over again what the extra expense was this quarter?
Speaker #1: Yeah, absolutely. So I mean, two big lines salary employee benefits. About half of that was some salary increases that we pushed through, and that will be recurring.
Michael M. Ozimek: Yeah, absolutely. Two big lines, salary employee benefits. About half of that was some salary increases that we pushed through, and that will be recurring. About half of that increase in salary and benefits are related to incentive comp programs that as a large piece of that, as our stock price continues to go up, we revalue those plans. Some of that expense flushes through that Q1. If stock price keeps going up, we would see that. If it remains steady, that line item will go down to a more normalized level. Same thing with professional fees. That popped a little bit in the quarter for some consulting, legal, and accounting fees. That won't continue to recur.
Robert J. McCormick: Yeah, absolutely. Two big lines, salary employee benefits. About half of that was some salary increases that we pushed through, and that will be recurring. About half of that increase in salary and benefits are related to incentive comp programs that as a large piece of that, as our stock price continues to go up, we revalue those plans. Some of that expense flushes through that Q1. If stock price keeps going up, we would see that. If it remains steady, that line item will go down to a more normalized level. Same thing with professional fees. That popped a little bit in the quarter for some consulting, legal, and accounting fees. That won't continue to recur.
Speaker #1: About half of that increase in salary benefits are related to incentive comp programs. As one, and a large piece of that, as our stock price continues to go up, we revalue those plans.
Speaker #1: And some of that expense flushes through that first quarter. So if stock price keeps going up, we would see that. But if it remains steady, that line item will go down to a more normalized level.
Speaker #1: Same thing with professional fees. That popped a little bit in the quarter for some consulting, legal, and accounting fees. That won't continue to recur.
Speaker #4: Okay, thank you. And then you said now the guidance is $27.3 to $27.8.
Ian Lapey: Okay. Thank you. You said now the guidance is 27.3 to 27.8.
Ian Lapey: Okay. Thank you. You said now the guidance is 27.3 to 27.8.
Speaker #1: Right.
Michael M. Ozimek: Right.
Robert J. McCormick: Right.
Speaker #4: And so, is that increase basically what you said about the salary increases?
Ian Lapey: Is that increase, is that basically what you said about the salary increases?
Ian Lapey: Is that increase, is that basically what you said about the salary increases?
Speaker #1: Yeah, absolutely. And then, when you compare that really to the end of the year, it's about a 3% guided increase compared to where we were.
Michael M. Ozimek: Yeah, absolutely. When you compare that really to the end of the year, that's about a 3% guided increase compared to where we were. That's where we think is a steady kind of growth in the expenses. Nothing too out of line. You will have blips from here and there, but that's what we're seeing.
Robert J. McCormick: Yeah, absolutely. When you compare that really to the end of the year, that's about a 3% guided increase compared to where we were. That's where we think is a steady kind of growth in the expenses. Nothing too out of line. You will have blips from here and there, but that's what we're seeing.
Speaker #1: is a steady kind of growth in the expenses. Nothing too out of line. You will have blips from here and there, but that's what we're seeing.
Speaker #4: Okay. And then, pulling back—maybe a big picture question, I guess, with potential indications that rates may start moving up, short-term rates. Could you just talk about sort of how you're positioning the company now as compared to maybe before we had the last big set of Fed rate increases in '22?
Ian Lapey: Okay. Pulling back maybe big picture question. I guess with potential indications that rates may start moving up short-term rates. Could you just talk about sort of how you're positioning the company now as compared to maybe before we had the last big set of Federal Reserve rate increases in 2022? Obviously in 2023 and 2024, you had pretty significant declines in earnings. Is there anything different now that you're doing to sort of protect against that type of impact?
Ian Lapey: Okay. Pulling back maybe big picture question. I guess with potential indications that rates may start moving up short-term rates. Could you just talk about sort of how you're positioning the company now as compared to maybe before we had the last big set of Federal Reserve rate increases in 2022? Obviously in 2023 and 2024, you had pretty significant declines in earnings. Is there anything different now that you're doing to sort of protect against that type of impact?
Speaker #4: Obviously, in '23 and '24, you had pretty significant declines in earnings. Is there anything different now that you're doing to sort of protect against that type of thing?
Speaker #1: Well, Ian, we are offering a little longer CD product and making it a little bit more attractive, trying to push the maturities out a little bit further, get away from the three-month repricings, and moving on from there.
Robert J. McCormick: We are offering a little longer CD product and making it a little bit more attractive, trying to push the maturities out a little bit further, get away from the 3-month repricings, and moving on from there. We are attempting to be somewhat aggressive or reasonably aggressive in our mortgage portfolio to gain some ground there. Our home equity loans, we're very proud of the activity we've had there. The closed loans are much higher than the outstandings would show, which is pretty common in the industry. That's a prime-based or a lot of times a floating product, which is very attractive for us as well. We've been incentivizing people in a variety of ways to use the home equity credit lines more and to grow that product line. On the investment side, we always stay relatively short on our investment maturities.
Robert J. McCormick: We are offering a little longer CD product and making it a little bit more attractive, trying to push the maturities out a little bit further, get away from the 3-month repricings, and moving on from there. We are attempting to be somewhat aggressive or reasonably aggressive in our mortgage portfolio to gain some ground there. Our home equity loans, we're very proud of the activity we've had there. The closed loans are much higher than the outstandings would show, which is pretty common in the industry. That's a prime-based or a lot of times a floating product, which is very attractive for us as well. We've been incentivizing people in a variety of ways to use the home equity credit lines more and to grow that product line. On the investment side, we always stay relatively short on our investment maturities.
Speaker #1: We are attempting to be somewhat aggressive or reasonably aggressive in our mortgage portfolio to gain some ground there. And our home equity loans we're very proud of the activity we've had there.
Speaker #1: The closed loans are much higher than the outstandings, which show, which is pretty common in the industry, but that's a prime base or a lot of times a floating product, which is very attractive for us as well.
Speaker #1: So we've been incentivizing people in a variety of ways to use the home equity credit lines more, and to grow that product line. And then on the investment side, you know we always stay relatively short on our investment.
Speaker #1: Maturities, we have a tremendous amortization and opportunities to reprice the reprice our securities as they come due. So that's the other side of the balance sheet, if you will.
Robert J. McCormick: We have a tremendous amortization and opportunities to reprice our securities as they come due. That's the other side of the balance sheet, if you will.
Robert J. McCormick: We have a tremendous amortization and opportunities to reprice our securities as they come due. That's the other side of the balance sheet, if you will.
Speaker #4: Okay, great. That's it for me. Again, congratulations. Thank you very much.
Ian Lapey: Okay, great. That's it for me. Again, congratulations. Thank you very much.
Ian Lapey: Okay, great. That's it for me. Again, congratulations. Thank you very much.
Speaker #1: Thank you. Thank you.
Robert J. McCormick: Thank you.
Robert J. McCormick: Thank you.
Ian Lapey: Thank you.
Mike Ozimek: Thank you.
Speaker #4: Thank you.
Operator 3: This concludes our question and answer session. I would like to turn the conference back over to Robert J. McCormick for any closing remarks.
Operator: This concludes our question and answer session. I would like to turn the conference back over to Robert J. McCormick for any closing remarks.
Speaker #3: This concludes our question and answer session. I would like to turn the conference back over to Robert J. McCormick for any closing remarks.
Speaker #1: Thank you for your interest in our company. We hope you have a great day.
Robert J. McCormick: Thank you for your interest in our company. We hope you have a great day.
Robert J. McCormick: Thank you for your interest in our company. We hope you have a great day.
Operator 3: This concludes today's call. You may now disconnect.
Operator: This concludes today's call. You may now disconnect.
