- Earnings call transcript Q3 2022

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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].

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 section Reports Form Form statements 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 reconciliations 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 call time, the I this At like Mr. turn conference over to Robert J. and CEO. President McCormick, Chairman, ahead. go Please

Robert J. McCormick

for and today bank. Good us our about you to more morning, everyone joining hear thank

news work interest to maintaining to record, dropped downtrend about in installment at take million participated in We ago. commercial quarter XX.X our the equity Most while in on and Ozimek the put year earned highlights, front, with place me joining brief level As then on on income. loans in you Deposit the result home took we non-performing some color million CFO is quarter-over-quarter Good saw grow loan did and opportunity cash up the growth. focusing driven on summary, lending, can will year-over-year. back the loans loans, After and detail time loans may -- able to assets CD and will questions net usual to month was pricing mostly to give We the Mike positive our deposit category. lose from relationship the hitting good saw opportunity We of were some our give today. the had runoff the performance continued Loans The X.XX% Mike non-performing our a was Salvador another it balances X.XX% bank, loan on in in by and category. lot and We adjusted on by about increased dollars of growth a wrap Scot another is have. all any the took Scot end at our more call the X.X% numbers, driven a portfolio of loans, deposits. categories was a of some the assets Most residential and grow. total products. total the even place margin had X.XX%. strong of reversed effort some to discipline the

The Our at X.XX% covers allowance $XXX,XXX contribution. is X.X under X% times. loans allowance after just non-performing

last ratio Our equity end Efficiency better XX.XX% than on than position. return funds prior a was was periods. and for fit last average under on at which assets quarter true average is sold well investment with was return portfolio strong greater a Same large end. quarter at XX% year. X.XX% We quarter

is loan have taking stay news is cautious our pricing but competitive, We to to we expect approach. are will we up. a raise Good depositories

very through in not records, kind send new pleased like strong out decent has are handled our shareholders, loans admirably our We employees construction words performed a both Ian been customers, to to Hurricane also to and I setting Florida. how volume employee that with any storm. and would State close. backlog waiting base of They mostly the we're

year. our pleased a results We end strong to are forward look with and of

leaving will time Scot Now Mike. talk loans detail the for numbers, questions. will Mike

Michael M. Ozimek

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

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

be the increased to XXX continues residential XXXX The our within growth portfolio the in quarter lending which over same business commercial estate impact focus, loan to period in assess concentrated in. real in primary same or or on third the X.X expected average in the we XXXX. portfolio In million As of the to the the decreased X.X% counties response continues the XXXX. Florida, Ian period bank that over Hurricane do X.X%

would on not increased monitoring currently during Total have XX.X% a which are performance quarter contact and investment and of impact circumstances average material XX.X million second XXXX. our quarter customer that have adverse AFS the portfolios, third all portfolio. securities of XXXX the include identified the over in to HCM or of date We the affected the counties loan

X.X of million the million and of $XX.X securities. of the down, During same maturity period securities had pooled X million, approximately bank and approximately one purchased pay

XXX,XXX as in credit of compared losses of The loans X.XX% same for the was a XX, commitments losses of third of provision provision on of total unfunded September ratio was credit at a X.XX% also on result for losses includes for quarter the a provision This the credit XXXX. to loan For to and for XXXX loans period losses $XXX,XXX. XXXX loans. increases allowance at XXX,XXX in unfunded

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

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

investments quarter XXXX. compared million during a we XXX a same XXXX, average held of of decrease the period As result, in third to in an have of million XXX the overnight

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

During points period our points same deposits decreased XX XX basis time total interest-bearing primarily year. of deposits the cost points. basis same period, over a basis was points from in decrease by basis to driven XX the from last XX This

an basis of quarter As quarter the into mature million rate of basis XX in fourth And million mature CDs average of approximately $XXX of an of $XXX of average CDs XX bank will XXXX, move the half points. In the an first that XX at we in the at in at points. million first mature basis of $XXX rate approximately has points. approximately XXXX, will CDs rate average will XXXX,

of Financial Our income. source to Services recurring division significant non-interest be a continues

of XXX under management as XX, of million have We assets approximately September XXXX.

non-interest up Now increase ORE high estimated X.X and is by of salaries of The employee compared primarily increase in decreases other net non-interest the expense. expense outsourced partially and and million of expense, prior professional in benefit XXXX range. offset a to in second services, on at result of equipment, expenses expense to at occupancy quarter the services. XX quarter Total an net million, the came in end our

improvement income expenses more revenue, in mentioned $X non-interest interest an was than million quarter. which offset As notable expense came increase at for of expense prior bottom of for by the XX,XXX the income as line. in in compared in ORE increase an modest a the net net the in of an expense quarter and press $XXX,XXX to consists in plus release, the resulted

be expenses, of quarter. expense XXXX. compared in third came level of ratios. per range line to was quarter And expense non-interest net X.XX% to to $XXX,XXX at fourth as categories expect the equity of with the asset million quarter XX.X% to of We'd to level $XX.X compared finally of the quarter not XX.X% of September third X.XX% in XXXX a third year $XX.XX low capital in $XX the of to hold quarter Given during to value of times. Consolidated total shareholder the XXXX per XXXX. the quarter. the to quarter. continue the we're Book share million our maintain these to economic expectations ratio were compared of in ORE value be to the continued XXXX third XXth ORE other in proud ability going of Efficiency expense third was at up quarter for the expenses ratio The achieve to of non-interest X.X% its continues earlier. to per recurring challenging bank up All $XX.XX, for anticipated in

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

Scot R. Salvador

in million quarter. Year-over-year grown and everyone Bank the for increased under Mike. million to just actual in growth or Good XXX third by loan thanks, loans produce or numbers XX morning, strong Overall loans X.X%. quarter have by X%. the continued

were portfolio. meaningful XX a lending growth showed in of particularly our our consisted of residential results. put commercial trend by million continues growth XX loans million, in loans which Overall, All all increase to a category. in loan equity in of and pleased growth, in million regions in strong Home increased post Florida the XX to that a although areas. million increase we forward loan quarter continued the XX growth

contributed [ph]. at to on the to rate their well X% This as fall in XX-year year volume. enter As role stands Currently, we trend season. quarter. The everyone continued is aware, slowing a upward X% our of the movement purchase time a area sharp plays upward also rates X% has of our residential base the recent and

remains standard included we of between and lot heavy have a a volume backlog solid, year. construction loan [Cough]. and by booking and our a earlier in origination benefiting time volume lag purchase longer the nature, this their loan However, That from experienced loans,

end and quarter of to above is that Our quarter where year. backlog equivalent second ended at the last about we

expect marks Although do the continue we traditionally beginning time posting a growth. fourth quarter to period, the slower of net

Branch a number As in to have recent our Managers. originators of meetings, we mentioned loan at complement times added limited prior

our the the assets quarter Over loan solid and XXX% pattern. year-over-year market move, we quality XXX% for loans us quarter as feel finally, on to originators coverage $XX.X these good. decreased be $XX.X regard enable will and ago. slightly increase loans and share from news coverage several We positive efforts last posted recovery to a a quarter of Early-stage versus next loan a have Non-performing and additional of a to The in a or non-performing of to end and in with network. larger remains followed Non-performing should the similar year to and our remain Charge-offs all this months, Rob? ratio asset expand loss capture delinquencies dropped add quarter net regions. which plan the September. XXX,XXX. allowance XXX% million was million as

Robert J. McCormick

Scot. Thanks,

any are happy field questions to have. We you

Operator

you. Instructions]. Thank [Operator

Sandler. Piper Alex, go from Our ahead. Twerdahl comes please first question from Alex

Alexander Twerdahl

Hey, guys. good morning

Robert J. McCormick

Alex. morning Good

Alexander Twerdahl

first Hey, much with about off, loan the X%, X%, wanted it's market. line talked seems just X% and and growth your loan you here at think about pretty new to yields like in

different why you is much higher loans not guys And bit out sheet you're of just I'm remixing kind have a well that little there, thinking, other more slightly However, balance that production lot carrying a rate than the with in below of and kind faster? that. bring banks yields a expedite lot the of just yield loan to and yield, drop of a of book

Robert J. McCormick

we're some weeks on markets daily We is that rate pretty serving, The basis. a shop Alex, good. our almost

of around X% X% Most right competitors them in markets we're is pretty our think we So to the business good and are hanging doing compared X%. the [ph] X% in. and

Alexander Twerdahl

if were Okay. kind a And turned of that like do been can bring if of volume when more below stuff, drop a the discern be have on to you could you X% to? are able -- you been is potentially there sort you out you that able whatever how have market, -- of kind what quickly half is how if wanted spike there rates off, the to and -- figure or you of you or and much much you in

Robert J. McCormick

change because is I thing. a mortgage applications, like spiking any shaking which good trees the I produces actually, say, Alex.

have fence who go if sitting want on as been the even X we to or well. those in. the same get rate application So And if on all drop up the so, people the you Alex happens

benefit really staying So time same the rate prolonged doesn't at for periods of anyone.

market couple is, relatively I the of in of me pick the of the situation you where change rate. like rates two if or but multiple the are what three in could and up a idea you volume time. of slug I guys for a stop opening of disagree, that depending on if make period or to times think a the spigot trees shaking your days significant So a by next loans And get short the

Alexander Twerdahl

very your quick thinking characteristics and and low pick us deposits, about Okay. starting start a characteristics lot lag on topic deposit the third to maybe That's in a going expectations in kind the helpful guys you've granularity color. the some are your of of in keep seeing profile, deposit of the you rates, could ability you the continue And then are the I'm of other your given and really to how to here. deposit deposit obviously competitors costs, can costs interest rise of through costs some been able terms very run up to? of why hot and just maybe very and from rise, to on are it's curious quarter

Robert J. McCormick

different. the rates. We Well, you it sheet earlier, increasing sheet said bit balance a little contemplating balance built our is

take while and of held on of pause kind kind back to a market able were we the we adjust let increases. So

long going on cautiously for our but think looking to basis. have do rates, relationship necessarily us hopefully, term, see and we're to raise you're money. We're going hot to customers a I not so

Alexander Twerdahl

cash at going couple end the you of Great. still down expected, and curious, the of I quarters, rates relative That's the think, decline guess rate couple have pretty what elevated, your in low meaningfully to normally somewhat position, that of the to just obviously, sensitivity, rise you position about run. way months? get environment, other next is or which rates cash over elevated, XX% a start have as certainly, we to is which that I'm still much let the point at worrying different last it's it's as asset XX% some quarter. I point, going would you're because how we the into to

Robert J. McCormick

look simple give couldn't what position bit to is, that dropping our fund a certainly think it, a but I to that of money volume But we the number, the factors as guess even just go how go at of ratio, much need factors. future little with we lower. I see There you the number And to to that we're going all Yes, a prepared that as drop little loan we're although is, not end. has are deposit bit, slowed a specific see loan-to-deposit are a commitments. along certainly the putting what on liquidity it. since prepared It's quarter I number runoff

Alexander Twerdahl

the a think just just hiring these for changed inflationary new the I'm of huge to curious earlier? that guidance fourth amount. programs expense in your thinking don't additional how Mike, about But pressures into Okay. alluded that and quarter, the you're I you it's with people heading XXXX, some branches given all

Michael M. Ozimek

more I a mean it's mean we the the of when mean I Yes. salaries we have. people we take look that I that have at benefits, lines have, secret, pay some no you to for and

little Our FTEs bit, paying are a down up. we're but

And benefits and where range, talk going a right. one about. I that's probably then are is that's salaries normal right -- more the the be to to think So now really

really up, notable. up stuff. expenses Other type lines are just other of were of the The seasonality nothing more, bit but a ones expense little some some

-- So bit, I a will guess and now. think attract range. salaries all comfortable have I It's new kind back we that it's the little keep that so in paying ones. pull people of to that about we're But but right

Alexander Twerdahl

Okay.

with and salaries kind next benefits, annual the creeps up an a so everything XX of is million mid-single or and of digits up over percentage kind the maybe -- bit $XX inflation? basis else in little on over So that moves year

Michael M. Ozimek

said, that but... is inflationary don't see me I than rate. less like that type really on even I would pause than see high, there's anything normal, I nothing see too I lines that you more that guess, been Even give inflation Yes, -- other yes. the

Alexander Twerdahl

Okay. to And then capital for the relates just position. final question just me

you're just book our part the You a a value. position in but just tangible been almost guys on story buybacks, stock have common not huge above going that's with how I'm which curious things of like pretty market. equity here the just just about tangible of if what's in given is healthy the a really wondering has bit XX%. ever capital And thinking changed little kind account hovering

Robert J. McCormick

are and dividend and mean of dividends, everything buybacks like in our I we're we in dividends, funds shareholders Yes. both very lot A and interested Alex. else.

both buybacks to are combination and under and constant So a of us dividends are important consideration. certainly

Alexander Twerdahl

Okay. questions. Well, thank you for my taking

Robert J. McCormick

Thank you.

Operator

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

Robert J. McCormick

season. have great interest and your for you holiday Thank company, a in our

Operator

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

You may now disconnect.

TrustCo Bank Corp NY (TRST) 25 Oct 222022 Q3 Earnings call transcript