TRST - Earnings call transcript Q2 2020

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Operator

Good day, and welcome to 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 Statements in and other this can the factors in found release Annual section Report Forward-Looking information risk our on and be Risk press quarterly our Form Form detailed by reports preceded our and XX-Q. and call XX-K More Factors updated of as of any obligation update except are required applicable may information, valid by to be as as statements date only disclaims hereof, law. the this The company of and the contains Today's measures. financial presentation non-GAAP our most The GAAP Relations release, is reconciliations available comparable under earnings figures are of site to such Investor press measures in our which Web of the at trustcobank.com. the included tab also note today's recorded. being is Please event that like I to over this Mr. time, conference the to turn At would J. Robert McCormick, President, CEO. and Chairman, ahead. go Please

Robert McCormick

good and second events especially are a the pretty us. light you at the Thank everyone. Bank, We quarter in around happening that of morning, had solid

staff pandemic. to through took our very amazing being the First when and foremost, branches. we there been seriously us which Their has this for need Much in essential this of to for fell meant us. being performance they customers our the burden

Our have back great office especially staff loan departments been too.

so can on can lot vast Michael today, let questions and highlights detail. handled give business times. our may have. of any call Ozimek hit they We’re Then have of then the the are during Salvador how majority we you a of me very members answer staff and proud Scot these the

solid the for down income is very putting a perspective, This million is net was roughly but number. it XX.X in quarter. it Our

expense million Our for X.X quarter. net was interest the down about to

funds. lost we in been flat. especially except we Tied our time the categories, portfolio fantastic, which the our investment to interest has on growth Fed Where income posted been earned loan interest growth, on on nice all ground deposit Our portfolio, essentially had the was accounts. we interest has

funds those areas. would expected, than by the have our driven probably lot a of we also sticker nature Assuming been have service

On been the growth side, mostly We has PPP residential active loan loans. by with loans. driven were

X.XX% We with both the and $XX commercial also an deferral over funds a on We loans two the in is of resulting had side. ratio past put our total of share of coverage for allowance allowance requests of payment into the X.Xx. extra quarters which million residential

beginning are will off PPP deferral We to for repayment both or on forgiveness their the Details see working customers programs. and on customers follow call of come of these are we with loans.

have and to about Our through Financial million done well management. pretty Services this continues has XXX under Department

is Our X.XX% end. capital at quarter ratio

suspended the quarter to time. even it to have forward increasing but what buyback good look it right and a and We our resuming the we had future program are Overall, fully holds. at committed

Mike? Scot the can questions. detail will numbers, then deal loans, respond will we Mike with to Now

Michael Ozimek

quarter morning the good review everyone. and I Rob, now financial results for you, of Thank second will TrustCo’s XXXX.

X% of second in quarter a Average second billion to noted yielded assets XXXX X.X return a or which quarter from on we XX.X of respectively. million As million average and press for the company net the loans XXX.X release, the XXXX. income the equity average and of saw of X.XX% grew X.XX%,

include XXXX. increased same estate residential million loan the focus, loans. same XX.X% average the growth the million within portfolio. period funding million in over PPP XX period HTM As securities, of year. the decreased and included The SBA The residential which XX.X XXXX, AFS XXXX million which primary our quarter portfolios, of commercial last or over in period in XXX.X real increased concentrated the same or average or expected, X.X% portfolio over portfolio be Average XXX.X the the to the XX.X% continues in investment lending second

total same the or of quarter in pooled expect to million matured for of During from loans for compared current an of to resulting to to the X.XX% the added the of the overall The loan loans which in as in our the geographic losses to of XX.X loss Bank the COVID-XX. driven XXX,XXX provision allowance loan XXXX down. will million year. XXXX. the called XXXX level period the quarter footprint. by of economic card XX, approximately securities in the pandemic continues influence credit and the was XXXX, was the and would for reflect our as XX.X loan by in could last ratio continue was compared securities credit and the of for XXXX, Provision second portfolio increase loan X the portfolio conditions X.XX% June growth Increasing same continued the driven to million, sale second economic environment loss provision We in to of uncertainty paid the period growth as the around increase was

modifications last COVID-XX mentioned residential and by our such loans launched request. as borrowers experiencing Bank support quarter, economic the a Financial Relief to which includes commercial deferments Program, As hardships, loan on

ranging Bank the XXX As months. XXX on residential to deferments loans of three one June from had XX, loan XXXX,

closely the XX customers. has commercial level side, both of on XX from and The to commercial continues deferrals loans. the million in commercial residential On monitor deferments Bank the Bank loan

loan at environment The of second have the change. regulatory as first be end the continue we during not or regular did Some an in reached residential and CECL adopt the have quarter end. deferral to and commercial of Bank payments period making customers quarter begun

decision standard. of National for allowance and to COVID-XX expects to loan to under current current the company will concerning before understand have delay implementing will Emergency termination or increasing our December required the the shape of As the current to the was CECL changes This XXXX. losses quarter, equity. the as of Bank would The CARES new last reducing our regulatory in earlier that how the mentioned well-capitalized calculations. XX, engage CECL at the The shareholders’ and remain effect adopt regulatory by likely Act landscape

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

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

XX.X% funds continue an during As of of compared increase quarter of of to the first and an to a hold result, same XXXX second or the XXXX. in of million XXX the XXXX, increase of period quarter XXX.X million we overnight XXX.X an average to compared million

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

market XX period from last year. points driven interest-bearing cost by our basis a in deposits basis from period, deposits basis money deposits X.XX% to from and XX points total XX same from points. is XX points basis the time decreased same X.XX% of This the decrease For over

of a an the additional lower of quarter rate security million X.XX%. repricing third of will mature of from we decreasing opportunities continue CDs gains As down second approximately Bank CDs the In $XXX,XXX income second of quarter to the the result $XXX,XXX XXXX, [ph] of the fees that XXX XXXX. first and last million In primarily X.X%. rates. overdraft said, XXX net quarter, down With average X.XX%. of XXXX, XXXX, to of XXX approximately in CDs compared the came into of at at fees from half fourth has an Non-interest financial quarter the an exists, million quarter at average CDs to will were rate mature XXXX, of total, services of mature market approximately in million X.X at as in move that average rate will approximately

income. under million Our Financial be continues significant June XXXX. XX, of had the Division Financial approximately Services securities of non-interest The source as recurring Division XXX to management to most Services

net ORE quarter, for expenses non-interest expense properties. came and XX,XXX The of from the expense ORE quarter was XXXX. first onto at gains at quarter range net driven low estimated which level expense. expense of of our credit non-interest below the was of of first level of ORE to lower XX than in slightly the came quarter in ORE existing by of of of low Now the properties sale Total XXXX XXX,XXX the compared the on expense ORE down million, a XXX,XXX.

per not expense in other expenses, we ORE of of continued All quarter going decrease the the forward. the anticipated were to with going low for $XXX,XXX level non-interest expenses of the Given level second expectations quarter. are our to exceed line categories

We ORE a total to the the efficiency XX.X% first end The at of range XX.X came recurring of million in non-interest to per expense continue quarter to of ratio in XX.XX% to million of expenses net second quarter. in the compared XXXX expect the XXXX low stay in quarter XXXX. XX.X of

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

compared was assets value compared was to a very earlier. from its book up second value. X.X% Consolidated share proud $X.XX same capital end equity to June XXXX. is the Tangible to the ratio the Bank at slightly also to XXXX quarter, The Finally, the at year in X.XX% ratios. grow down shareholder XX, period X.XX% $X.XX, the of per of ability

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

Scot Salvador

Thank able PPP quarter XX post Good and Overall, Year-over-year, continued total during production growth. quarter have Mike. loans. loans loans by we SBA second increased a million. or PPP of the pace X.X% XX in were the net you, actual on approximately morning, included including million increased solid the million everyone. steady at This Loan loans numbers. XXX to SBA

by approximately fixed as growth loans loan first continued X.X% non-SBA combined quarter’s and Commercial other SBA, XX XX residential push by totaled was the on the decreased which million increased million loans quarter, product. by of Then Home to low decreased million centered towards or loans. growth rates year-over-year. first SBA million. activity in a the XX XX Excluding excluding mortgage equity loan million factors interest XXX mortgages

monitor closely activity however, in We the first marketplace benefit. COVID pleased with market numbers million New XX picked situation. presented residential the restrictions and loosened have closing have effectively real will challenges staffs Florida the our Despite continue York Restrictions active. aware, in and have Florida by The deal the with with as we our situation. up in loan are to expect this, somewhat market the reduction quite growth COVID as quarter’s historic has estate lows combined up and decreased accompanied is to production and accordingly. remains Interest continue the stepped refinancing rates, mortgage everyone we’ll to the that

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

lender, present portfolio such a conditions As market challenges.

our interest Although been successful managing we very have continuing net rates overall growth, carefully. we’re in

It last above point same backlog do is Our purposes solid. greater for the a first quarter both stands numbers skew of at the backlog the of comparison. which comprise year. the end can current Refinances portion quarter and

the net the continued backlog posting solid months. with hopeful and pleased are we coming of remain over growth However,

of there COVID. does put and closely future. to obviously about loans exists continue uncertainty to is deferment on relative We The monitor lot fluid previously a situation the

move X.X down to not amount primarily portfolio. average Relatively deferment. be of on measurements XXX,XXX quality asset by of year-over-year. And off modest-sized approximately we begin to our million Non-performing deferment borrowers residential on the quarter have as commercial factors by overall and excessive established the to good. relative our borrowers approximately are Bank the do Overall, on increased well and customers. side continue loans mortgages However, mitigating loans are an

loans, essentially the low of million. million the levels quarter non-performing and by quarter. Net expected. in is X degree decreased were million from zero Given by increased in XX.X XX.X choppiness the of XXX,XXX overall some to year-over-year assets charge-offs Non-performing

the allowance or loan ratio XXX% at Our at versus loan to loss solid. loss stood quarter is Rob? coverage end, a reserve XXX% And year non-performing for loans ago.

Robert McCormick

to happy have. you be We'll questions Scot. any Thanks, answer

Operator

We begin question-and-answer session. Instructions]. [Operator the will now

Our is Piper Sandler. Alex ahead. from Go first from question Twerdahl

Alex Twerdahl

guys. Hi. Good morning,

Robert McCormick

Alex. morning, Good

Michael Ozimek

Good morning, Alex.

Scot Salvador

Alex. Good morning,

Alex Twerdahl

put help maybe balances the was more if as I portfolio TrustCo loan bit able much activity the well kind the little more talk that Scot, wondering off, get better us sense trajectory just that you to refi maybe that the of and of And First maybe activity loan give trajectory about one, second you in to just pipeline – the terms of and from from the relate here a little the and a quarter. retain? portfolio in for, two a refi can How of us yield saw try bit on color the on two as bit here. little the was of

Scot Salvador

Right. now in big Alex, a refinance of the market. real story part estate Well, is say, as you right the

looking to last about Just this quarter loans you think for but refinances. you’re and consistent were country, the where around a feel approved the we give XX% is I pretty of the

XX% loan, refi, us. you of that to right XX% non-TrustCo a TrustCo XX% now is new go yield the split, our XX% which thing back refi good money refis a about the than obviously year, If TrustCo drops was And obviously. less XX/XX; be roughly it’s but running that’s it non-TrustCo. probably having keeping refis versus year-over-year. we’re And The

on, far as some us activity, good Rob everything as that confidence going net Florida going in post over growth considering it’s not growth, as we is that’s it’s it coming to purchase net net year-over-year considering especially can although does picking decent And on. down impact So non-TrustCo market. bad refis said, we’re that the everything amount backlog up that’s of It but money the been in months. the gives continue our growth,

Alex Twerdahl

this or of other liquidity you behavior, But of can – sort stimulus to that. there’s level rates that are you you sort in do cetera. And factors you obviously then plan have Thanks do you that kind levers does on environment? have it just number are bring normalize? aggressive how of that Where et down? it liquidity swimming and obviously normalizing lowering CD see for Great. right I more kind mean liquidity that; to And of other now of for that in a know to customer caused deferrals, that level get there deposit and guys

Robert McCormick

– with at a balance least week that no agree all on the we rate you’re we kind there’s money probably down, rates lot Alex, with rates lowering swimming and trajectory on question. we’re every and definitely, Yes, of deposit liquidity. when committee There’s sheet is our have the virtually

side, the and said and the nature customers upstate especially I in areas haven’t our little New I a – service think place conservative to the conservative, nature of the that more York, had is people it the money. the introduction we spend probably on any really

has And stimulus So is the have problem again, It’s our was lot much that on that a I’d have expected. great nature though, us longer because a sticker we customer I think of a of the of would thought. that than with and than money us our rather than which core stayed good Alex. other deposits, benefit, problem side. any

Alex Twerdahl

think next products, where you CDs other with going if million to into rate those about of agree X.XX, to over those you would CD do what be But Totally today? envision that. are on the the going reprice as months that at – the XXX go are six

Robert McCormick

less. basis points, maybe XX

Alex Twerdahl

the those in going the deferrals Great. in you percentage coming the days guess of versus that that extended that be sense XXX due or to do have July? are terms ones the to so, month in would for could off I roll And next then be of

Robert McCormick

us commercial we pretty think to don’t we’re right our the loan is group, sheet deferrals could compliment well our If we – I proven on a very also that it’s have peer a a X% company’s high take bar are if and money to balance now. conservative delinquent lending know a set. you compare shareholders underwriter on our you this, And under our which because and just I pay And a we’re and back I think about step and cautious money.

to that team groundwork So years. for our speaks the that done past three has the

the can of company, very So if compliment, Alex. strong on give a that them I a that’s this or starts which pat with hallmark it. little bit And back underwriting standard, a is

that. with comfortable very we’re So

even the we’re amazed first many as far time. of people and a people quietly As up days repaying. that begun only how additional deferral are about the the XX% are And that at coming XX requesting just deferrals go, XX-day have doing off deferrals I’m

paying with process comfortable have at about we’re commercial deferral lending. conservative think as and I you a can you to deferral. and don’t a have we that say you, with So pretty as loan think also not on position. people be the know I total people loans regard commercial to we’re I that’s commercial

those paying one escrow, Most they’re paying they’re think of are I interest principal, paying interest, they’re only paying escrow. with items.

lending So to it’s total regard deferral on either. not with commercial like the we’re

as be but I you, no So I comfortable position. paying people banker’s think could we’re as with not guess that anybody in comfortable

longwinded Sorry the answer. for

Alex Twerdahl

helpful. it’s if your And where average you average now? have right for us just mortgage No, the – that payment the remind is it, customers,

Scot Salvador

It’s Scot, Alex.

origination at average to size, If that’s it average zero XXX,XXX on in we’re originations. of far the above smaller XXX,XXX the terms you if The – books obviously than a look little as want about loans – new as are in on that. you

concerned. into if residential you to rates as the back at in can come So modest want as you far XXX,XXX side interest average on is. is the with It is figure payment where mortgage X.XX%, the your off payment

Alex Twerdahl

say. third Yes, of rebound down fees in Have obvious seen then from the just quarter, customer of great. you at me for the just any final reasons in second service that And quarter? looking fairly I question the would sort

Robert McCormick

a month started saw kind when of really that fees, a One COVID right? it two thing also that – really was but fees hit. short-term a was or to interchange took we dip, Interchange dip

that that balances good we side about. people did money. a back kind positive. have of being that a in Overdraft that the spending and is that was talked the come Bank are the of the function we So But that’s down,

it interchange. in We are seeing

Michael Ozimek

Alex, a doesn’t our so the know. fees phenomenal, time. up next we’ve several just for over But in out nice fees, be amortize fees of overdraft that we have our a over loan been we’ll Obviously you make And over years. backlog loan – it’s up because taking period that it built certainly spread

Alex Twerdahl

my Thanks for questions. taking Great.

Robert McCormick

Thank you.

Scot Salvador

Thanks.

Michael Ozimek

Thanks.

Operator

session. question-and-answer McCormick I remarks. would Mr. to our concludes the over like This to turn for closing now back conference

Robert McCormick

have joining day. more Thanks hear to a and our about for company today in great

Operator

has attending presentation. Thank conference today’s for now The concluded. you

disconnect. may now You

TrustCo Bank Corp NY (TRST) 22 Jul 202020 Q2 Earnings call transcript