TRST - Earnings call transcript Q1 2021

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Operator

Good day, and welcome to the TrustCo Bank Corp Earnings Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Before proceeding, we would like to mention that this presentation may contain forward-looking information about TrustCo Bank Corp New York that is intended to be covered by the Safe Harbor and forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Actual results and trends could differ materially from those set forth in such statements due to various risks, uncertainties and other factors. Forward-Looking these press risk call XX-K release the Factors about found can and and information our XX-Q. Risk our of our in that and on as detailed updated and on quarterly factors other be in Annual by More Report sections reports Form Form Statement preceded this be law. update date company disclaims the statements valid this except The information and are applicable only hereof as required as may obligation of to by the any Today’s financial non-GAAP presentation contains measures. The release, the are at reconciliation Relations most comparable included in website such measures of to available Investor GAAP our which the our figures earnings under of press tab trustcobank.com. is being Please also event note is recorded. today’s would to over time, the I this At like turn conference to Mr. Robert J. CEO. Chairman, President and McCormick, ahead. go Please

Robert J. McCormick

everyone. Good you. Thank morning,

As of Lending I’m by Scot the Joined today CFO; President Ozimek, Chief Salvador, our Rob Bank. McCormick, Michael the our and said, Officer. host

As numbers. several loans. company billion we mark. the any crossed will that Mike hitting We’ve I up been wrap may Then will questions occurred at with have $X will events recently. summary over brief with you Scot total have. start a usually the we can do, There’ve detail positive asset talk the highlights. our Then about

deposits Florida exceed Our $X now billion.

first for now events portfolio XXXX. our than area now company $X And contributed exceeds has quarter loan Florida positive our and Our a more are These billion billion. $X financial solid very all services under to management.

and income first net Our over XXXX. greater end $XX was the year million quarter of than XXXX

and first XXXX, for first of end greater $XX.X also than million was income XXXX. year interest the net Our quarter quarter

X.XX%, quarter year XXXX the XXXX. for and interest down was net margin quarter since first first end of from flat Our essentially XXXX

$X.X than most payments. the time This categories. This were from our down is they thought cost as including see billion. Higher core they $XXX almost same growth would deposits roughly were stickier country deposits $X.X over certainly are Our us could total of been received draw be. These has year-over-year. seem all We’ve XXXX deposits in down and when quarter significantly deposits We up originally reopens. billion. million stimulus about reverse actually this

portfolio loan growth residential mortgage majority in high. almost Vast has $X.X Our grown this billion, is all-time loans. of another to

commercial had some loan mostly continue portfolio activity driven also it We runoff in at program. the a the pace. of loan equity PPP slower by be to loans Home

We part a Installment most refinances. think been being as that never loans business. of also of of is the big runoff captured have our part residential

relatively look maturities. investment We this We higher have opportunities work position at shorter these to monitored funds the large a portfolio in to with significant yields. closely position and cash for good put

and remains Non-performing loans to are asset is assets strong. to at assets flat non-performing Our to basically X.XX%. quality total loans down X.XX% total

coverage much total ratio a X.XX% to over prior allowance periods. with flat X.X is pretty times, loans the Our of

capital Our climb. continues are still ratios strong to and equity shareholder’s

to full service continue XXX operate We offices.

We are looking opportunities locations. end new a of couple may up new opening for to

also to offices. looking better existing opportunities are We relocate for

our end assets equity over on average just average return Our X.XX% on was quarter XX%. and was at return

XX.X%. is ratio Our efficiency

ratio payout XX.X%. was dividend Our

to service continue full We services a operate department. financial

and our We results first with are optimistic rest pleased the XXXX. quarter of about

Scot Mike? results. detail our Now Mike give and will on more

Michael Ozimek

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

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

average the Average new the paid commercial real AFS million was pandemic. the SBA for included during primary provision loans no XXXX. X.X% of in March in level HDM lending loss and pooled first million of million in which a in first for are million same securities from concentrated our Total XXXX in estate COVID-XX of approximately originated include quarter The first the the of geographic of losses $XX.X to economic first losses In to driven the first XXXX. over in securities, in of our decrease be was The $XX We portfolio indicators loan the X.XX% the same over the provision increased of compared a expect the It’s bank called quarter focus. quarter quarter. to million $XXX,XXX, $XX.X approximately conditions period continues compared which or quarter securities loans $XX.X to loan resulting would investment and in was decrease In XX, The $XXX period level loan the million growth $XX.X portfolio same total in the and for portfolios XXXX, of first loan period will ratio increased currently in economic X.XX% increased has in the There allowance XXXX. reflect the the continue by million period, $X as improving Provision for XXXX to down. growth as period or PPP loans. the the bank outlook expected XXXX, PPP purchased loan the million overall for by XXXX. footprint. and portfolio, or of approximately our the of same XXXX. X.X% X.X% residential of quarter. remaining As within securities $XXX.X same

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

on monitor as regular press these making XX, continues most of returned of deferments release to to As the loan XXXX, payments. mentioned bank the the March deferrals. The of in loan level banks closely

limited very loan are credit in portfolio. with may we of they quality current pleased overall in the However, the have levels impact that

regulatory by originally As in the under mentioned CARES CECL Bill on XXXX. calculations. as Act company remain adopt bank current in January X, December to will expects the the The did bank signed of provided part CECL prior and XXXX. well The not quarter, as COVID-XX Relief the capitalized adopt

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

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

XXXX. million first we of As period investments billion the $X an a result, to same held an during increase of average the of compared of in XXXX, overnight quarter $XXX

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

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

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

XXXX, services of compared rate As result first last average continue of increased the down primarily to of points. of In of mature current for under rates. income an increased up second re-price as of basis management. the will approximately at $X.X fee Non-interest million XX XXXX, we on approximately services services XXXX to in CDs and million mature through financial XX points. million an XXXX, fees quarter related earned in division move CDs for will will average larger at at a $XXX rate CDs market preparation basis our And of income came by to half tax balances of income quarter, to the second the $XXX financial quarter

of significant to income continues Our financial recurring of approximately non-interest source as most had XX, $X the of management be March services billion assets under division and XXXX.

the in of up liabilities of $XXX,XXX the $XX.X XXXX benefits to compared came couple expense item million first non-interest $XXX,XXX effect. to year result quarter the range overestimated bank as for Salary healthcare in the net and for impact primary $XX XXXX an second The increase – benefit a of an to quarter. in increased non-interest cost the ORE saw slightly to payroll $XX,XXX as $XX.X due employer a share came first $XXX,XXX Now quarter of and expense always increased of was expense costs bears expense. million, onto Total quarter expense brings and of at for increased increase took of of the the the the fourth ORE a price expense the at as million. items. contractor also compared new taxes and

we quarter. first continues TrustCo this to the level from recurring the times. Given XX.XX% throughout XX is categories equity million XX.XX% expense finally, was of the XXXX expense at the up of first shareholder other range a expect growth of $X.XX would to continued down these March expectations in in XXXX. first points level total million proud in always quarter, All value at of be first XX, value of year earlier. expense were We quarter. to proud to are $X.XX were during basis for X.X% to going increase control And Book quarter. the compared expense, not One from ratio we expect $XXX,XXX was fourth $XX.X the XXXX. of net The we due to our XXXX to to expenses, the assets. expense non-interest XXXX exceed to ORE line of X.XX% ratios. Efficiency quarter quarter of of that hold and challenging of X.XX% to continue $XX.X thing quarter the bank continue at ORE be anticipated its the Consolidated per capital ratio end in of the low XXXX’s for asset the per ability Bank, the with to per share came to compared non-interest at

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

Scot Salvador

million. loans first side. by commercial actual by regards growth grew $X.X programs. X.X% quarter or you. loan million loans numbers million consisted include total thank and $XXX Okay, bank’s Good morning. figures residential of In growth with quarter Loan of the PPP Year-over-year Commercial on increased $XX Mike, SBA the or million activity $XX lending on X.X%. ongoing have the in to

increased residential in growth Our our number. $XX by home million quarter $XX on loans the equity netting mortgage the product to [indiscernible] first million decrease

lack money Purchase The slowest strong particularly increased regions. are in growth. Activity a at are Properties levels in all modest XX-year quickly elevated, lending more the first of loan in Refinances range of active been rate areas with ranges remain quarter weeks. the regard most Interest to has occurrence. below stands and year. recent common to is rates bank our selling areas. in periods a and have of the hover typically currently over X% our in last all continued lower have the although price steadily inventory Currently is all lending X.XX%. peak

reflects above was the Our It the the purchase money level well activity. last It totals strong. is the loan backlog both year. same for at overall market year-end and quarter and of end mortgage active point both

recovery in refinance continue net million quarter, some $XX.X will quarter. standing the these and Charge to XXXX. allowance to assets for our $XX.X loans on is both March to total year growth quarter. to choppiness asset loan $XX,XXX million Overall million loans Non-Performing be offs Rob? Non-performing netted X.XX% in elevated a compared a ago. at loan the remained coverage regarding on allowance with $XX.X levels. down least compared increased continue backlog. by totaled the short-term. This December XXX%. This million strong. potential loans at with the $XX $XX.X optimistic non-performing as activity measurements Such The to in ongoing actually ratio of losses levels to totaled degree for the quality and impacted be this very we million to low current is the expected strong however or of levels the given We’re growth

Robert J. McCormick

do want I Just a before you on calls, especially poll. I year. our reader because you prior told during only this And how employees to questions, I and have performed, we pandemic [indiscernible] to a tell turn

performed. they think tribute I a So them, well very nice to that’s how shows

we’re questions might So answer you now happy any to have.

Operator

question-and-answer begin from session. We will first Please now [Operator ahead. question Alex Instructions] comes Piper Our the Twerdahl Sandler. go from

Alex Twerdahl

morning Hey, good guys.

Robert J. McCormick

Good morning, Alex.

Alex Twerdahl

the loan recent most to were making Scot, of the and your First off just etcetera. pipeline wanted with comments some start on you optimism,

would you for growth just loan lower mid-single it that a for XXXX. maybe had boil you expected – better? the to digits digits, portfolio of growth How high that? say rate to it I for mean, If bit frame right, is residential down of single kind of help all a us sort sort can you little than

Scot Salvador

to difficult Alex. forecast, it’s Well,

As the that variables. not variables else, is you a refinance a come know, everything about there into of but there the lot is volume just lot on talking when and of you’re side, angle play,

strong. it’s So being forecast. very strong and coming the activity is quarter our first said my given difficult I to typically backlog that off in our the year holidays, our as the in But is of said, marketplace slowest is quarter the remarks,

certainly going year, specific where pick quarter the it. hope I we’re are we that net but next from significantly I remainder would can’t of the to put now, for on growth numbers good – up any hopefully and and next post So the

Alex Twerdahl

you roughly that? loans And X.XX, they or was is most advertise coming bit of the where are coming little are Okay. rate out mentioned higher out than that a these

Scot Salvador

are Alex. of now, They as

have that. been We higher

As a in quarter. X recently, we were at of – most

to – the within in been down we’ve day last or that where more in we we’ve So X.XX. just but to so range, we weeks, are recent come

Alex Twerdahl

little bit that about a Mike, then cash have couple quarters. how said and just little million $XXX thinking that think in And next began the you’re the second additional sort Is the in excess the or you current a elevated, of levels. of purchases you’re that reference to the liquidity more us just being Okay. cash invest to maybe the done did you help at And get quarter? talking when first bit – quarter understanding you of I in you you balances laddering in over on about

Michael Ozimek

second sure. haven’t quarter. the far, done mean, I we so Yes, anything in

were the comments we did what initial the in So first.

a see to $X where now we’re You little pushing at over hundred billion. at or $X.X billion, a billion,

loan to going going metering a And is look money is at portfolio. We’re our how into it that. much of out

our are another spend – actually little country that, some lot – into we this been So come balances, that’s there’s what our out, market around, if we of and play. – talk starting in out but feel happens deposits comes at round as those start there’s with a to of going overall are the They in, hanging deposit of stimulus sticky. up see bit run go opens to people on of to in funds a money all

are I So they is is our would I guess say not what cash balance expect I would get larger. now. to them lot where a

if helps out little a bit. that kind that of So

Alex Twerdahl

Okay.

and go comes the $X the then more plenty longer using securities. billion some in around So in be be with would of – if quarter, expectation and the is second purchase and cash would that, not expectation sort latter to it’s the out

Robert J. McCormick

Right.

Alex Twerdahl

about XX year. the and XX cost on you talked where coming of, much points liability this terms then room know CDs you lower and more is And re-pricings And bottom Okay. think there do to new CD a later deposits? how of on at pretty basis we the in the I side, much from

Robert J. McCormick

I offering think highest XX basis is the now right rate points. we’re

Alex Twerdahl

all. That’s Okay.

Robert J. McCormick

is popular think still don’t know more I still saying bouncing or is agree re-pricing, for think bit of that room, I a it bottom it, Alex. there there’s the but saying room but were of much. with I way I little you along how way

Alex Twerdahl

Talk the during to you million bit about think the authorization then how repurchase the And or you shares little Is based do it you plan that what’s capital on X is Understood. use – and it based deployment and as about activity authorization. how a based first of that any it price? quarter. repurchase quarter sort that on again you reauthorize on million? what that X through in Did

Robert J. McCormick

in Yes. We the buyback report. the didn’t first program, annual buy a quarter problematic, a you’re is quarter proxy first the on the and because make preparing

that time. window periods close few a quite are there during So

it’s the position price times. the above, company, We are capital and based certainly in the buybacks in recent all the the of been looking has stock activity the at and on of what

Alex Twerdahl

taking questions for my all Thanks now. questions. That’s Okay. for my

Robert J. McCormick

All right. Alex. Thanks,

Michael Ozimek

Thanks, Alex.

Operator

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

Robert J. McCormick

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

Operator

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

now You may disconnect.

TrustCo Bank Corp NY (TRST) 22 Apr 212021 Q1 Earnings call transcript