Q2 2019 Earnings Call

Funneled into into their expected range.

In addition, during the second quarter, we recorded approximately 542000 additional expenses for for our various benefit plans to true up our future estimated benefit liabilities, primarily due to the increase in stock price at quarter end.

Ory expense came in at 210000 for the quarter, which is consistent for the second quarter of 2018.

Expensive 200 <unk> 294000.

The low level of net or expensive for the quarter was driven by gains on sale Hillary properties.

Given the continued low level for re expenses, we are going to hold anticipated level expense do not exceed $450000 per core.

All the other categories of Niger noninterest expense were in line with prior quarters and arts and our expectations for the second core.

We do expect a third quarter of 29 teams total recurring non interest expense <unk> expense to stay.

To the low end of the 24.6 to 25.1 million per quarter range.

Efficiency ratio in the second quarter of 2900, K. minute, 55.98% compared to 56.1% the first quarter of 2019.

As we move into the second half the 2019 will continue to focus on what we can control working to identify opportunities to make the process.

<unk> within to make more efficient.

One thing we are proud of his expense control trustco, we expect to continue this through 2019.

Oh, the Cecil front. The company continues its implementation efforts testing of various loss estimation methods and development of relevant internal controls and processes.

This will likely have the effect of increasing the allowance for a loan losses, reducing shareholders equity depended upon bouts of the company's loan portfolio economic conditions and forecasts at the adoption to the company expects to remain well capitalized institution under current regulatory calculations.

And finally, the capital ratios continued to improve.

Consorted equity assets ratio is 9.86% at the end of the second color up 33 basis points.

From the 9.53% compared to the same period and 2018.

The bank is also very proud of its ability to grow shareholder value.

Book value per share in June 30th 2019 was 5.3 do.

9.24% to $4.87 a year earlier.

Additionally, during the second quarter, it was announced that the board of directors approve the stock repurchase program.

Under their stock repurchase program <unk> purchase up to 1 million shares of its comstock or approximately one per cent of his current outstanding shares.

Repurchases can be made it managements discretion over the next 12 months at prices management considers to be attractive in the best interests of both trustco and the shareholders now scholar review the loan portfolio and nonperforming loans.

Thanks, Mike in the morning.

Total loans increased by 45 million on the quarter an actual numbers.

This included a 48 million dollar increase in residential mortgages and a decrease of approximately 3 million in our installment loans associated with the sale of our credit card portfolio.

Commercial loans were essentially flat for the court.

You're over here the loan portfolios increased 165 million or 4.4% all the growth occurring in a residential area.

On the quarter, the 45 million dollar loan increase equated to grow up to 1.2%.

All of our reading some increased activity with net growth being spread throughout.

The increased activity over the first quarter stem from several factors, including the normal seasonal pickup and the bank take any more aggressive posture with regard to loan originations.

As previously communicated in the first quarter, we pulled back some wide as we allow it deposits to catch up a bit with our recent strong loan growth.

With a drop in interest rates, we have also seen a pick up and refinance activity this quarter versus the same period a year ago.

A lone backlog has grown quickly with increased activity and now stands significantly above where we entered the first quarter.

It was behind last year's ending second quarter by more than 10%. Although this spread has continued to shrink as we progressed into July .

We look for continuum net growth during the third quarter.

Rates of coming down tribute into the industry finance activity.

And we now stand at three and three quarters percent for a 30 year mortgage.

The news regarding asset quality measurements continues to be good.

Nonperforming loans dropped from 24.7 million to 22.1 million and a quarter.

Non performing assets decreasing from 26 to 24.8 million.

Early stage delinquencies remain very solid and there was a zero percent analyze net charge operational and a quarter.

Our coverage ratio or allows for one losses to nonperforming loans now stands at 200%.

Versus 181 in March.

Thanks, Scott, we don't have an answer any questions you might have.

Our strategy to 11, and a 482 is at an average yield of tool for.

Okay, and where those are repricing today over the next three months I guess, maybe doesn't change that much where would the tool for wherever that go to in terms of the.

In terms of the rates.

So the 165 range, Alex depending on what the topic, we've been pushing six to nine months mostly.

Okay.

All right. So that's I mean, so I guess the strategy, which is to bring in a lot of deposits and then there's some pretty good opportunity.

To lower the to lower those cost of deposits over the next three months over the next year.

Which is I guess, where the margin stability is going to come from the next two quarters, but kind of as you guys project for we've seen some pretty decent margin compression over the last two quarters.

Are we going to be able to make some of that back up over the next two quarters are we really should be.

Expecting just kind of stability in sort of the north of 310 315 ish range.

That's the goal the objective we like we like to run the place the decent liquidity level. So the idea was to bring into deposit deployment to the loan portfolio.

Over the balance of the year and hopefully gain some ground on the margin.

Okay mine, how so have we also have some room in our.

Money market said or potentially get arena to users right now that would roll out of some of the teaser rates and then also we have some room in some of the savings savings.

Okay. So I mean, you think sort of.

Stability between 310, and 315 or do you think you can get higher than that based on kind of your current outlook for for what you're seeing in your markets.

I think yes, I think thats a good range.

Okay.

And then you know as we look at the capital levels Nineeighty five obviously very strong you guys run a pretty conservative balance sheet. So one where do you think the capital levels should be and then you did authorize the million shares of buyback is that something that we should expect you to go through in the next quarter or two.

Yeah, we havent as I said the.

Talk to Alex we haven't executed on the buyback plan.

We've been in a closed window period, but we definitely definitely expect to use that to our shareholders event advantages needed.

And then the capital levels I mean.

We'd like we'd like to run with a healthy capital level, you know that redeploying it to the benefit of the shareholders is something that we're looking at we've increased the dividend we increased the dividend last year, we are executing a stock buyback plan. This year. So really everything is on the table.

Okay, and then you did talk a little bit about sort of staffing levels and you say in the press release even.

They even had a targeted effort to hire and retain talent is that just kind of filling in some positions that were vacant or are there new people that you're that you're hiring to kind of extend into some other product lines.

It's a mix and we're looking at.

With branch activity, we're looking at possibly some restructures with with regard to branch management branch staffing levels transaction counts are down industry wide you know that so we're looking at other opportunities and maybe where we can redeploy some people.

And better places to serve us.

Hi, I just think that.

I think there's still room in the head count to come down, but we had an opportunity to bring some good people on especially in that manager assistant manager level over the first quarter.

Late last year and took that advantage.

Okay, and then maybe you know as you kind of relates to expenses and.

A lot of banks are talking about finding places to reduce expenses, but all that and kind of savings gets reinvested very quickly back into technology and the user interface and experience and insight that can you maybe talk a little bit about where you are in that sort of process of getting up to.

Where you need to be from your sort of digital and your mobile and all that kind of standpoint.

Well, that's that's the beauty of Trustco Bank as Mike said in his presentation, Alex and you know this from our past where August with regard to expense and what we're doing all those technology upgrades.

And our Ics our efficiency ratio was 55%.

I mean over the past year, we have a new a new mortgage origination package, we have a new teller package that we're in the process of installing backing that up that suffice or face system. We're backing that up with Appirio. So we're taking all of those technology upgrade gone in our efficiency ratio is still at 55%.

Fantastic. Thanks for taking my questions due to whine about it.

I would like to turn the conference back over to Robert J. Mccormick for any closing remarks.

Thanks for your interest in our company I Hope you all have a good day.

[noise].