TRST - Earnings call transcript Q4 2020

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Operator

Good morning everyone 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 zero. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one. you star question, two. your withdraw may and press To

The the to Robert the like valid Investor I’d press to is applicable earnings At GAAP event turn McCormick, is on detailed today’s are information that like release, go trustcobank.com. in may only our reconciliation and comparable contains on differ conference President set More Form Statement in J. Bank our our ahead. forth report Please reports Before provided this note Form annual law. Chairman, covered by statements that Reform other factors this the risk Sir, forward-looking time, Forward-Looking please would Today’s information various could of included due of Securities measures press available in the of Relations update are Harbor over under mention which of the Corp to Factors our the Risk tab by also this at and disclaims Safe preceded by in York XX-Q. company be the recorded. these TrustCo proceeding, uncertainties we except Mr. of to risks, about website trends statements about XX-K is can such this to those that measures. the CEO. call call found XXXX. and to being Actual as presentation other and our to materially presentation as and and be updated from information required quarterly of contain The financial sections may figures New Litigation and Private and intended most Act and by statements factors. any hereof non-GAAP be date such forward-looking obligation release as results

Robert McCormick

you more everyone. our morning Good Thank to hear on for about this company. call us morning you. joining Thank the

are and the questions. the Salvador portfolio, After and will me Ozimek on on today. the summary call and with Mike a then wrap As numbers Scot discuss brief Scot up detail usual, Mike introduction, give can with we loan will

We’re a crazy what was. of sure you’re year sick hearing XXXX

wishes good the COVID pandemic. impacted those and to by go Our out

performed during to able employees keep We like to of manner. and lots tried period. branches of this in open sanitizer departments Our PPE. champions a the were and We our most perform provided business-as-usual

We as as pretty departments worked separated guess off It moved I well, expected. seems also and can staff to well some site. or be all have

necessary customers, be As appreciate who an it. our to was to essential there it for business, seemed felt we

at to PPP our past. that by activity, though. home loans. lot drop, in pace equity portfolio. XXXX total, about and captured The do is portfolio Our driven continued growth of just was by very of as result solid net $XXX income for under year. in $XX.X driven million in about up commercial We a slower of in residential refinance our loans mortgage loan is in believe talked the a million, million growth being a it We’ve loan outstandings residential a this $XXX was The

be. deposit Our than stickier months. be growth of top, over has stimulus thought growth, The most years’ the us enhanced to much payments most, been they several like seemed unemployment in and would nine

Our net interest income is up year-over-year.

Our over is of up margin year-over-year XXXX. down quarter third the but

for X.XX% our was ROE ROA XXXX Our and X.XX. was

presentation. Mike XXXX. will for in more XX.X is ratio his have detail efficiency Our

branches. and loans not year-over-year We assets X.XXX% have to portfolio full Non-performing loan continues XXX are offices to any operate X.X% did non-performing assets performance. loans Our to both in strong respectively. and total to open to service XXXX, total down continuing

under with department operate over We management. a dollars services billion also a financial

reverse our to liquidity putting share work. and stock We split are program evaluating a buyback

we as the pleased current especially are results, look forward We our of light in and XXXX. with to are optimistic circumstances, we

Mike present, we’ll Now for Mike? time have Scot and will then questions.

Michael Ozimek

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

X.X% for and X.XX% the quarter on As assets of in $X.X be within or fourth respectively. quarter yielded release, from growth to company AFS Average fourth Total investment focus, the continues in XXXX, the over average XXXX the XX.X% portfolios, we a lending grew $XX.X The increased of our fourth loans same of of the in equity billion noted the the million estate XXXX. average the period over average The same last same decreased million the $XXX.X or XX% increased which include of X.X% securities, HDM in the real and by over quarter the or which quarter concentrated income $XXX.X $XX.X which fourth primary XXXX. average to or commercial and press residential XXXX. return period X.XX% in portfolio, million year. saw million million period an portfolio $XXX.X loan

called mentioned securities period XXXX. for environment losses resulting to to of uncertainty in the $XX.X During around and as the for in an driven X.XX% in the paid in the was in by The XXXX. quarter current to to $XX allowance approximately of The for loan $XXX,XXX December had $XXX,XXX, growth compared XXXX, continued prior loans XXXX the securities bank period total the pooled of XX, as provision fourth or The X.XX% the was provision loan quarters, and the from COVID-XX. fourth loss same the of compared compared million loans, increase the million the down. was same matured increase ratio economic of quarter the in

continue and losses increase to influence in pandemic expect continues the growth to for as could reflect geographic economic our footprint. conditions by in to overall portfolio loan We the level provision of loan XXXX

experiencing in economic hardships, commercial relief loan loans on our financial by deferments, mentioned the residential to borrowers that as support request. prior launched COVID-XX such modifications, quarters, a bank As includes program and

XXXX, on XX, months. December eight million $X in loans loan to of had one residential from bank two As ranging the deferments

have and loans being to four for or been approved borrowers. are agreements $XXX,XXX deferment addition, In deferment, sent

is or for bank reviewing the million We in loans also of process deferment. the have potential $X.X XX

loan. Lastly, $XXX,XXX bank customers The may the application four an have or an any bank for not of defer that these requested had have actually requested how to does deferment. that of has have estimating apply their an additional many customers way application

to of level originated with we $XX.X On overall the may repayment bank the December. the of by the impact closely limited The the bank have end commercial and to commercial very deferments, loan levels on had have portfolio. however, million in these continues they pleased as into total the loan commercial were are of the requests of of side, of deferrals; no our monitor loan clients back year. a the re-defer loans the credit which all quality gone at There current

quarter the regulatory during CARES in As mentioned the environment bank change. release, by the did as be not provided adopt and originally was the Act, an we of continue press CECL fourth in to

prior new As the before signed was expects part institution current will will understand decision delay capitalized to Furthermore, standard. would of engage mentioned the X, and CECL shape bank regulatory current shareholders effect losses XXXX. regulatory quarters, This for the the under the of likely allowance current now implementing well our and changes the The in the financial have December reducing to to adopt in our loan calculations. company on equity. increasing CECL COVID-XX January a remain bill XXXX, landscape as the in how that relief

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

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

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

the excess has at of at level cash Given levels. bank liquidity market the the to XXXX the already current in elevated into invest begun of year, end

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

market our points first XX cuts points points. basis time re-pricing the was as XX period in last same from points the deposits total driven the from higher a quarter decrease and compared primarily XX points deposits, with of basis were cost from result deposits basis deposits time to decreased to rate XX lower This period, to same X.XX% deposits by interest-bearing they the of This basis XX the federal money as a basis over expected. as year. rates, was in at well During

quarter the mature first mature rates. of will second quarter the fourth approximately an XX compared of at income CDs XX mature rate of of XXXX. points. continue the quarter at services $XXX CDs additional rate will a at million first will said, move at opportunities million $X.X that Non-interest came into income million to at XXXX, in as for In CDs lower as to we exist the With down As fourth re-price in half market approximately of basis XXXX, of primarily $XXX XXXX, average half In will to less points. XXXX, of quarter average last mature of result $XXX In XXXX, average second of average points. of XX of an an financial the of of CDs in X.XX%. basis in basis rate approximately rate quarter an $XXX million of million XXXX CDs the

management to significant continues the The most division source had $XXX at be services division approximately financial of million financial under income. Our non-interest services of assets XX/XX. recurring

of of in Now to the ORE by benefit $XX,XXX at quarter an quarter quarter. as was a for sales onto of the $XX expense expenses driven third expense level million quarter estimated prior the up compared non-interest of the low Total came ORE on net net over to expense XXXX at expense. compared properties. million, ORE The million of $XX.X came ORE in gains slightly in of $XXX,XXX range the for expense $X and million. to of $XX.X non-interest

to the continued anticipated other expect line non-interest quarter. to XXXX’s expenses, to that the not the expense for our we hold level low categories quarter. All per $XXX,XXX expectations to in would expenses of exceed We of with are ORE compared expenses Given were efficiency million going level continue per the the expense fourth for of fourth consistent $XX of $XX.X to in in both quarter non-interest recurring of XXXX The be net as to for ORE quarter. million remained quarters. XX.XX% total the of of at range the ratio quarter coming XXXX, fourth

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

to Finally, value XX, continues of to ratios. year assets per compared at the capital from third X.XX% down was fourth quarter, earlier. XXXX to these proud December ratio ability X.X% X.XX% its due end to equity the Consolidated in the times. bank quarter points a at challenging increase to be assets. was up Book during The shareholder economic $X.XX, in basis $X.XX of growth the XX value share

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

Scot Salvador

you morning everyone. thank Mike. Okay, Good

quarter, increase mortgages in The of on mortgages property X.X%. customers. solid approximately million commercial forgiveness commenced, existing X.XX%. loans in increased decrease to Year-over-year tied actual a by loans sales loans decrease have decreased million loan $XX SBA loan showed by Residential the million process majority $XX our to PPP $XX by quarter million. category. dropping the in as residential is or smaller increased offset $XXX by by some attributable with For commercial commercial numbers total The a quarter’s increased somewhat loan with a the by the also results our the amount or fourth loans the

$XX with residential which the portfolio. increase in quarter’s approximate an residential million growth, We represents X.X% in are the pleased loan

as by was This quarter in loan approximate demand mortgages see the First category. the purchase solid market offset home decrease all continue our money by increased in areas. to strongly approximately million $XX an increase $XX million equity across we

in prior moderation as refinances however, challenge year, of somewhat will quarter is levels Our which but backlog money. from growth; of progresses. elevated, and net backlog we September, time solid. and last this is above for decreased with to hopeful of months which a forecasting It always that normal have a December contains has good is from the regard this amount Refinancings continue the seen remains decreased remain new are

recent most rates Our XX-year [indiscernible].

commenced. although round As round that we new guess is it SBA up earlier you Demand aware, a our SBA hard are the a has is than best what may obviously experienced less lending of being the PPP overall program. of end to forecast, bit in

who during pandemic normal mentioned, almost the customers status. have had As payment all payments the returned to deferred previously

versus for Rob? XXX% low for million. to quality overall current or $XX.X loan very million decreased from bank’s the assets dropping the to the now in at good. dropped approximately The loans XXX% remain the assets allowance $XX.X at loss non-performing charge-offs million year non-performing Additionally, asset $XXX,XXX a remain Year-over-year, quarter. $XX.X have ratio Net ago. million quarter Non-performing loans to coverage $XX.X million. non-performing $XX.X stands on measurements $XX.X million from from with

Robert McCormick

Any Thanks Scot. questions?

Operator

first today from question. from your Our Sandler. comes Alex go Twerdahl Please ahead question instructions] [Operator with Piper

Alex Twerdahl

Hey, good morning guys.

Robert McCormick

are how Alex, Hi you?

Alex Twerdahl

thanks. I’m well,

for First do that per you to talked how some on you could the strategy off, what prepared quarter, in XXXX. just and in to your is rate is liquidity the that laddering clarify you’re what Mike, about if at. securities, uses that into liquidity you put able current remarks, plan wondering I much was of early

Michael Ozimek

about what in, a average you agencies what limited put basis give we’ve kind $XX feel a little very pooled done of XX, an we’ve That’s rate of of and did in securities, north of spread so far. XX, I’ll corporates, We say million far. Sure. so far, XX that so we I’d points. done about around

are sit at it we’re--what We’ve balance rates that range around and said doing is to Having of we we few to where what million weeks, going down. the where million that to is a think watching it, don’t will that, liquidity of--every $XXX million doing kind year are so XXX I I is always going chunk what watching bring $XXX is of to to If a kind get we’re put think strong so and at. XX going, we’re look we’re take think we’re like at, - know, another to see take will don’t high. let that balance said that out. kind you likelihood is come funds of additional bringing too that we level, that we to down stimulus us how $XXX increase there down where from want but I may we much happens, We work. cash we’re liquidity the would bring do

us into the You see at a actual but bit kind can we’ve was that see balance for the triggered move end the year, where cash got of know, put little quarter, where a little we average the to bit, the of--you and market. ended you can

Alex Twerdahl

can matures? the quarter, and comes Right, how remind of or you due per much us securities portfolio

Michael Ozimek

portfolio, million of a on have $XXX could cash you’ve lot, do of got just flow of kind in elevated are worth Yes, levels, million, quarterly at the we’re then on prepayment from That basis. neighborhood the to calls looking anywhere spins Right right to $XX $XX to million somewhere in pooled that on of--so off prepayments flat. million keep million a between now, that to that’s securities you’re a $XXX amount there, decent neighborhood $XXX side. you another the so pushing so

Alex Twerdahl

right reinvest that so to Okay, prepays, the every rolls at think then it? far some Is the so way to what and the liquidity at $XX putting additional first about couple work what you’ll in least quarter, million weeks? stabs take or

Michael Ozimek

Yes, yes.

Alex Twerdahl

Okay.

Robert McCormick

as having activity great to a and that, to there’s to more year regard our We’re with mortgage lending. backlog hopefully building also approaches Alex, loan and with spring regard up looking forward,

Alex Twerdahl

how I because the the What sort loans, Right. of don’t is the, clearly know, could restraining the that factor be would of in you additional use liquidity? excess much grow liquidity, best

Robert McCormick

not hurt capital, us The are presentation, growth that, but - is a in do only that’s refinances. way XX-year alluded the because we lose regard it we’re term lowest you to we to his what that to really the to tend the company very would is portfolio factor be refinancing, restraining people so and rate, shopping lender, short sometimes for of possible regard with itself loans, with Scot the and only know

Alex Twerdahl

yields mortgages as the you of coming--you the for mortgage in if then of and bit, on on broke Scot, think repeat the guys was and just residential portfolio, forward could the an it. rate what you how compression new know, terms there’s progression today. the you was sight but sort that, yield little on Okay, the you end line then the to a look in said compression I missed mortgages hoping up about I

Scot Salvador

Alex, say We’ve seen X%, to It’s We’ve we’ve We’ve that, rate, has hovering slightly with XX-year been seen slightly what’s X% that it--obviously their seen bit the competitors encouraging. to we’ve of but rate. seen the to bit, on Alex. above rate. hard flipside competitively than it’s as going Yes sticking both to honest on the right the it it, ways, driven, But would raise kind know rate up higher for you. around as you it, XX-year around and right the be reluctance lenders XX-year down, kicked below been happen we real it’s have a thought, little little XX-year which has with been some there’s we’ve gone the a of was rates.

the up but of going that’s to going so not everyone’s each as to much I sure, other not soon, think what’s forward, we’re either. see for looking move more see we’re rates shoot expecting anytime hopefully at happen kind we to compression to

Alex Twerdahl

the sitting you’re with X.X% of know, finally Got on equity and--you tangible at year. it. the Then end capital common

excess basis you we down had least it the growth argue more you excess of What’s that weighed probably that with holding bit capital liquidity, the a due look with aggressive buyback? the at XXX to Why by so probably not a lot this at points get from point? doing coming. at little potential could You that’s back way

Robert McCormick

went will looking it alluded to Alex, goes buyback back I process and were that along think us summarize there back it, you and to with in that approval that think an program than out in I we’re we I the and of comments, get favor, that. into aggressively Does buybacks Mike? but more my see before. is

Michael Ozimek

Yes.

Alex Twerdahl

taking my for well you Great, questions. thank

Robert McCormick

Thank you.

Operator

no additional the Ladies showing remarks. to any Robert and I’m I’d to McCormick for closing J. back gentlemen, over questions. floor turn like

Robert McCormick

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

Operator

gentlemen, with We and Ladies attending for thank today’s that conclude do conference call. we’ll today’s presentation. you

You may now disconnect your lines.

Robert McCormick	President, Chief Executive Officer
Michael Ozimek	Executive Vice President, Chief Financial Officer
Scot Salvador	Executive Vice President, Chief Lending Officer
Alex Twerdahl	Piper Sandler

TrustCo Bank Corp NY (TRST) 22 Jan 212020 Q4 Earnings call transcript