TRST - Earnings call transcript Q4 2019

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Operator

Good morning and welcome to the TrustCo Bank Corp Earnings Call and Webcast. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation there will be an opportunity to ask questions. [Operator Instructions].

by like about that York the TrustCo intended be would contain presentation that Private we and to information Harbor Act forward-looking Bank covered Securities proceeding, Litigation to provided of this mention may is forward-looking Reform Before statements Safe XXXX. by the Corp New statements and risks, uncertainties, various trends from Actual to differ results those set other factors. due materially could forth in such and that these about Forward-Looking in and other preceded can in factors and found XX-Q. release our Statements Annual and information risk our Report XX-K be the press our by on of detailed updated quarterly has of Factors Form call this Form More Risk as reports and sections company may obligation except disclaims this information, The required be update any the are statements only the as to as valid applicable of law. by and date hereof,

at under reconciliations Today's such which event I are in trustcobank.com. Please measures. our of to President, ahead. recorded. CEO. earnings Robert GAAP of measures to the turn J. available being today's Investor call Mr. conference presentation financial and is note release, figures contains most comparable our like to time website McCormick, included would the go this non-GAAP Chairman, press Relations tab At also Please over The the is

Robert J. McCormick

Thank bank. McCormick, you. Rob Good the morning, President of everyone. I'm

numbers, leaving questions who will Scot room, today about us answers. me quarter, on the to of for then Chief Scot, the our Salvador Lending to line. turn talk a the and over lot Michael on give portfolio Mike and time also Officer. probably summary CFO loan in keep know Joining it detail the for in the I'll McGuire our then, call suspects, are of usual Ozimek Andrea is you the a

down assets, equity and We had net of was deposits. XXXX increased total income all at than year-end Loans, a bank. were XXXX. to driven shareholders by compared a cost greater good XXXX deposits, the record XXXX very

good by billion, X.X topped assets loan driven growth. total Our

Our billion. total $X loans were over

portfolio We residential believe has of is X.X being grown of runoff portfolio year. equity billion part in loans a over ground XXXX. and the lost the to home refinances. in commercial residential growth as the do that for Our in We lot showed modest captured area

testing ideas participated to reverse note, also too, couple It's equity all the areas a important are trends. We growth. home of that the service in to

at Interest-bearing year-end. time in billion The money was deposits the almost reached market categories. growth $X deposit and

On solid the non-interest-bearing demand about growth XXX posted good side, deposits million. also to

over interest net X%. margin Our remained

downward, lot discussed calls, previously reprice of As have will to area. deposits these detail a on in see Michael this we're starting

maintain to year We We relatively with loans a continue reserve ratios that a a improvement XXXX. showed loan the new of did XXX%. of not open ratio coverage large investment We of asset quality in any short with with loss in portfolio was offices X.XX% all maturities, total our ended XXXX.

Our and return XX.XX% respectively. equity X.XX% were on and assets

continue We financial services traditional department. to operate a

and Mike we Now, portfolio to for at loan Mike. end. the detail cover the the and some the going questions time Scott numbers and will give will leave is

Michael M. Ozimek

I'll everyone. results now review morning, for Thank good TrustCo's you, Rob and financial XXXX.

XXXX. from income Average respectively. TrustCo grew XX, December quarter or of loans in for billion noted and fourth quarter of fourth saw XXXX the million the press the quarter and year-ended net XXX.X release, for million XXXX, X million to As the XX.X XX.X X.X% of

XXXX quarter lending portfolio. residential XXX.X in estate period million growth within our primary real The the increased same the fourth be the to of focus, average the in or by residential portfolio expected, XXXX. over As X.X% continues concentrated

growth our to XX, of for the our X.XX% in lending XXXX XXXX or was XX.X% the continue The in continued of the quarter portfolio, geographic throughout losses in for decrease period the $XX over loan XXXX. the ratio would conditions conditions areas. XXXX year. expect fourth as loans the period. loan net quality, average X.XX% in loan increased total the reflects million provision in last is for as and Total securities securities, growth portfolios We December improvement asset level to and to AFS This same our year. trends of approximately compared in period overall quality purchases reflect loss investment to which HTM compared include loan by was by This in same The economic and million XXXX of losses in $XXX,XXX driven the of in the the loan loans same in to and the XXX,XXX, in of during economic recorded primarily allowance for provision was a driven the XX.X footprint. period

in As our high-quality conservative on enable to traditional balance us continued which and consistent, continues calls, management, sheet lending be produce discussed recurring prior has to focus earnings. to

management. always been is loan for Our sheet and to a source growth has investment flexibility portfolio balance of and provide liquidity fund

million result, hold million same in overnight investments the XXX.X average XXXX, XX.X the an of of XXXX. to of quarter decrease As continue to a a of we fourth period compared during

the the matured million securities paid pooled XX.X of had of of down. XXXX, million approximately fourth bank XX and During quarter or securities called

by the in a On fourth increase in increased of balance earlier. a increase XXXX XX.X in year savings checking the deposits a of sheet, increase XXX in same an market interest-bearing deposits. was funding The result average of XXX.X $XX.X of offset million the or million total were $XX.X and demand million increase in quarter million money X.X% deposits, period and the the $XX.X time respectively. side deposits, decrease deposits They over and million million from

the which liquidity deposits. share TrustCo's offer significant our of us market to to and as arise. they new well rates of portion allow allowed we as During core This relationships competitive existing and relatively take to retain cross-sell low continue gain XXXX, to help will opportunities a as time a position continued sustain quarter at cost us strategy advantage fourth of strong

Money to XX XX of total increased from points XX points cost our period, market same basis basis increased interest-bearing XX basis points. to the deposits deposits basis During points. from

However, last for X.XX% of core the cost deposits remained time more from increased quarter same X.XX% deposits a X to cost to the importantly, X.XX% continues year. points the discipline The CDs We XXXX. average the period over pricing the reflect unchanged to basis over feel deposits. compared fourth same quarter this from third with average while cost of relatively decreased period, XXXX non-maturity of respect and to

XXX rate first in X.XX%. of XXXX, an the of mature X.XX%. approximately will average will first mature average an XXX the quarter rate at approximately half In at million in total, of In in CDs million XXXX CDs of

quarter compared to of the from X.XX% X.XX% in third fourth XXXX. of XXXX Our net quarter interest margin decreased slightly to the

the Our equivalent fourth quarter or XXXX, a XX.X quarter was decrease interest net taxable income million XXX,XXX compared the to of X.XX% XXXX. of third for of

legal Non-interest recoveries approximately quarter for the year in from X.X prior of $XXX,XXX came quarter of in at fourth the XXXX primarily quarter to to third in income XXXX. down million compared due settlements last

recurring financial Our the of million The services division continues of approximately XXXX. non-interest services December XX, source be assets had of division XXX significant to financial under most income. management as

We the level came a net to The XX.X non-interest net quarter of sale was ORE expenses to ORE lower for the of third estimated XXXX. compared ORE expense ORE up range benefit of of in million, on of for fourth gains driven our of quarter the properties. XXX,XXX on expense below the by recorded non-interest XXX,XXX XXXX. net quarter at expense. Now Total

with would level line we level expense to first quarter. in of XXXX's non-interest continued the not total anticipated the XXXX per All fourth our the prior going Efficiency non-recurring $XX.X ratio came for of to million the quarter of the are XX.XX% of to ORE hold quarter quarter. expect net categories Given low range the level of We in were XXXX. $XXX,XXX and the expectations of -- recurring ORE other of quarter. expense in non-interest fourth the exceed third expenses, same the $XX.X quarter at compared for expense of XX.XX% to million in of expense quarters

we what As past, identify are to make through the thing on by to expense continue processes efficient. can One and at of working proud TrustCo bank we've within control we continue to to the this opportunities stated XXXX. the control Bank we expect more is in focus we'll

economic loan from portfolio, forecasts losses implementation The On company will company's capital of the a per at value under have and the reducing of end the ratios ability increasing continues Tangible and the This likely share allowance relevant testing controls assets internal December the basis shareholders date. Consolidated processes. its the finally, XX adoption the and X.XX% up the conditions, continued same also for methods, improve. loss X.XX% $X.XX, year very equity is grow depending And quarter loan XXXX. value. of and estimation to the effect compared period CECL The current calculations. balance proud its equity front XXXX ratio completion upon compared remain to to to earlier. the the of XX, up efforts, book various XX.XX% of fourth was shareholder well-capitalized regulatory points in $X.XX on to of company at bank expects was to

portfolio will loans. non-performing Scot Now loan review and the

Scot R. Salvador

Mike you, Thank morning. and good

totals commercial advances, commercial was portfolio starting the XXXX. have and increased a the loans facilities. million the attributable several Growth stated loan quarter divided both million portfolio XX just continuation This the Year-over-year did million numbers. total Rob quarter of over Overall composed residential in As new residential a growth have the in months some loans. to quarter year-line final results solid increased bank last include XX a over but XX and under Mike by loans of and and was in the million was or temporary majority X%. demand. the actual posted This in the steady between $X topped last the in of of good backlog fourth several increase in years. The term is loan XXX the final of million strong

outstanding. pleased bank the residential loan the majority Florida region to mortgages. We're our of in surpassed Loans quarter total XX% milestone of to our the billion X loan which in Florida as approximately of achieved constituted total book, now is vast first a in report comprised

purchased you have continued Florida our have forward we and network. loans branch through of no for achievement this look everything As our to in growth. portfolio know, We're been most originated loan with of proud

has the late but from end normal third backlog activity as of as stood through at and remains where above for Overall the in XX/XX/XX quarter, XXXX loan XX% XXXX. holidays more the in of dropped The slowed this we point year. than the is

loans. of slower For we the first increased having growth loan net backlog net the loan decrease we're demand, quarter, quarter for the a year given small remains a although continued of XXXX, part recorded hopeful it positive first the in of cycle. This and

X.XX%. year at Our stands rate fixed current XX

non-performing with and to as by quarter, decreased XX non-performing XX.X news are concerned, from loans delinquencies approximately total XX.X XX.X slightly. assets X.XX the Year-over-year As decreasing $X dropped to decreased Non-performing from of Non-performing far year-over-year. million non-performers million in loans. million million loans or good. % remains assets the

low and for stage loan up remain or quarter to losses net Early from charge allowance all coverage Rob. XXX,XXX year. year-end loans delinquencies offs XXX,XXX XXX% stands very The to non-performing as for last XXXX. only for of and ratio totaled the at XXX% now

Robert J. McCormick

happy Thanks, to respond questions have. Scot. any We're to you might

Operator

question comes first go from our with Piper Alex And today ahead Instructions]. Sandler. Please your Twerdahl from question. [Operator

Alex Twerdahl

Hey, guys. good morning,

Robert J. McCormick

Alex. morning, Good

Alex Twerdahl

I buyback know on just now Just haven't of well is you sort about you’ve and level to whether be used quarter, year at thinking guys TCE is place I wondering need the but that just about due see that run touch to to I I in what of a how or capital, capital first any, or off, go seems to so? ask got the think price. which and question down the am if XX.X% obviously not above you're the with want I comfort share in and at to every time any what much, going range we're kind next

Robert J. McCormick

have on really that as been program it we the hasn't has in said obviously that. regard share so buyback executed. so the to the Yeah, table has -- been executed past, been approved The strong everything's with in call Alex, price

like the we let's options then other capital seeing at in looking confident we're level you that. said, So it that we're But overly and way. put have,

Alex Twerdahl

have M&A done on guys like you table, acquisitions? it's Things the been long back a any time since

Robert J. McCormick

of know, the work you for We felt don’t shareholders always we've like companies. our We Yeah, that. how for shareholders. other work

sitting can we'd So, I would to more deal. our another table, to tell to but right be acquisition the people be of like an company. right shareholders, the nobody you have for not would have do in the this accretive shareholders than at it

Alex Twerdahl

them are those interesting Upstate in the and have you been all not announced guys? Okay, geography, your of I deals would in mean that some any New have to of been of York but

Robert J. McCormick

because in idea we your Columbia think you a a might have Also, I for marketplace. that nice do nice toe would've it been pointed our in been extension a as acquisition would particularly the done one water. to a current small while, us in so County, probably of an be the Yeah, out, haven't dip nice one, it

Alex Twerdahl

bit. it then talk go just little margin and a Got wanted about to the

no as yield environment? the You change we X-basis-point do cetera, decline out pipeline, coming I the right et now. pretty production, in is look envision couple Scot, yield quarters the over refi's, next production residential assuming know, But in yield new is of the Obviosuly kind down the X.XXX%, on rate saw the you kind of coming on book at a overall that trajectory mentioned decent real you how you of below of which the mortgages. guess well new

Scot R. Salvador

a mean, if I could like is math. to does I to move continue it you dinosaur. it – big think were so tick does portfolio, do a that down the

start the come are that We down. and putting we that basis, will on to a putting a monthly on, are quarterly and volume

Robert J. McCormick

not couple also as stem equity said, of part that, run also a But lines helps $XXX we my holding also to And down. I in and with we're deposits can volume, of which see that, portfolio, the So, the also to bringing looking presentation, quickly. home return on said a loan as helps that [ph] if move of portfolio if we're on credit large in different and the new off that. it's avenues Mike million even commercial that's into going

X You points, know, a by of front we've X down anything the we're brought the CD portfolio in basis with it. not offering

So, as downward imagine that CD reprice and would from I to there'll to going that be you're benefit portfolio continue well. see

Alex Twerdahl

Yeah.

the I basis rates first much I mortgage basis going we of than -- more of the fourth down the any So, we rest new that in XXXX, they we X, stays -- as quarter activity less. come to resi it like points production would where in just not have X saw My I the points we're refi typically so guess to quarter are I of Was we into mean, compression kind yield caused thinking, guess that to going of see quarter. outsized going more and mean look where the kind production X per be be are quarter is? points have, kind and the of is in fourth compression going over or to is basis is it where more it new of X, X if quarter stay assumption

Scot R. Salvador

that quite -- of the and And as it put production good But see and part was as came the was loans slower quarter say, net ago so strong in think of the was of the thankfully, we've second in and first fourth a a than production. cycle growth, higher was so just mean, there you the loan play loan activity books I combination into the you the Alex. we put I year a half a is refinance quarter overall, of year on few significantly terms year things had too.

you're going quarter. dollars less see the on So to going first in

less So, correspondingly, to have of you're just an going effect.

Alex Twerdahl

relative in that the you mean the Okay, to production, would be HELOC pretty residential potatoes when and talk then different of size small avenues, I about the correct?

Robert J. McCormick

run so HELOCs a outsized on I at exactly but that on rate have rate are right those most return. prime. prime it you -- know based of don't right have look could what you and an those when I prime the now, think but those Yeah, I exactly numbers is an it the where now, impact haven’t

it have think more an of overall. I impact could So,

Alex Twerdahl

understood. Okay,

Robert J. McCormick

Also so little looking portfolio some it and the a growth, that’s at our to wouldn't of runoffs, able thing if the the be stem had runoff that worst world. you posted are in bit and

Alex Twerdahl

as of last I CDs, pretty basis sense. were And about that scheduled over to the meaningfully CDs up the think bit makes offer repricing you a new something quarter talking come Is had lower That conference of of or XX saw, the like that in wind what you up you as through of XXX that did or higher like lower, the the just rolled little see expected to to do back over points rates going CDs the on order call. some all you as to activity million reprice some then having keep in them they bank?

Robert J. McCormick

a the saw in combination portfolio. you think I

move it some shopped X% money still market and account, a are that CD. portfolio some within went of of some CD saw then offering it You it some to reprice of and places the

off So result changes we with to in of and the run did regard some that some a as that portfolio have repricing.

Alex Twerdahl

to you would XXX in is sort that that stay how that of the keep much and the XXX, to the what of in bank have rate so Okay, would first you of you from the to of staying offer at how what anticipate kind reprice to new a tried scheduled quarter bank? much --

Scot R. Salvador

So you are right.

of the million to this at first Obviously dependent push of go, XXX higher the term XXX they quarter the the year. -- And out to whether overall that go lower if end tried come we of on that XXX. is choice, on the have they with going are be offer now whether XXX what in customer's the right We to rates of that it range. the CDs to range end or we

portfolio, decent as retaining luck that quarter. what in had we've evidenced happened most on -- by been we've of fourth So, the

Alex Twerdahl

for my now. alright Okay, all that's questions

Scot R. Salvador

range estimated at. look to The

Alex Twerdahl

color, the all the for the my questions color day. That's great guidance. Have all and appreciate I a additional Yeah, now. all

Robert J. McCormick

Alex. Thanks

Operator

the additional remarks. to no any showing Robert questions, closing for call am I gentlemen and to ladies I'd turn over McCormick And back Instructions]. conference [Operator like

Robert J. McCormick

a and great your Thank in interest you our day. for have company

Operator

do concluded. the for attending you gentlemen, has We thank now and conference today's presentation. Ladies

now your may You disconnect lines.

TrustCo Bank Corp NY (TRST) 22 Jan 202019 Q4 Earnings call transcript