TRST - Earnings call 1 2023 | TrustCo Bank Corp NY

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Operator

Good day, and welcome to the TrustCo Bank Corp Earnings Call and Webcast. [Operator Instructions] Before proceeding, we would like to mention that this presentation may contain forward-looking information about TrustCo Bank Corp NY that is intended to be covered by the safe harbor forward-looking statements provided by the Private Securities Litigation Reform Act of 1995.

Actual results, performance or achievements could differ materially from those expressed in or implied by such statements due to various risks, uncertainties and other factors. More detailed information about these and other risk factors can be found in our press release that preceded this call and in the Risk Factors and Forward-Looking Statements section of our annual report on Form 10-K and as updated by our quarterly reports on Form 10-Q.

The forward-looking statements made on this call are valid only as of the date hereof, and the company disclaims any obligation to update this information to reflect events or developments after the date of this call, except as may be required by applicable law.

will that financial accordance are U.S. we our derived with call, statements financial not today's discuss measures certain from the During determined in GAAP. reconciliations website which is most under the measures included The tab our available non-GAAP of Relations figures our in release, GAAP trustcobank.com. are to press earnings Investor such of at comparable financial

X days, note year be will be call that of replay the will our in today's Please described webcast for as event and XX press A available audio is for being recorded. an available release.

to turn At Robert this like CEO. would Chairman, time, Please McCormick, I the to conference go ahead. call over J. President, Mr.

Robert McCormick

everyone. you, good morning, Thank and

As host the I'm of President bank. the Rob said, McCormick,

appreciate the Joining hear call company. about to today me our Salvador. more CFO; on We taking you Ozimek, time Mike our are and Scot

the of the had very solid time At quarter changes a any industry, have XXXX. of first we banking in

stability conditions. face numbers demonstrate the of are in difficult great some and strong Our

Our Deposits loan net about from income of both year-end. million also $X.X almost were up to billion X% $XX were growth up $XX.X million and year-over-year.

since seen see surprise, accounts have lot million of over time No These we deposits as $XXX risen. -- to shift rates we have are a year-end.

year-over-year. was portfolio $XXX up loan about Our million

set all-time also loans. for We another high

position in charge-offs. remained strong X.XX% recovery with in loans Asset to quality of the nonperforming regarding loans remain X.X% net a compared drop total to last We year.

income of year. was portfolio investment million with remains relatively Our $XX.X in Net decent under maturities. from just short up X% last shape

million interest income for to was the net up quarter. $XX Our significantly

up both XX.XX% ROE first and of the from 'XX, ROA X.X% XX%. and for Our were quarter

last book in had $XX.XX an We value from increase $XX.XX also year. to

approached a and position X.XX% up capital from the cautious last XX.XX%, we year. of solid Overall, We balance with year continued optimism. the strong quarter, the at

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

Michael Ozimek

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

net average return income and first of release, over equity press year a X.X% increase average of company and X.X% prior $XX.X in noted the on you an assets the respectively. yielded As million, quarter XX.XX%, saw of the which quarter,

Consolidated first was XX.XX% of the XXXX. assets strong. for quarter in XXXX remains the quarter of to compared equity X.XX% Capital first ratio to

XX, to share a March year $XX.XX, quarter up the X.X% grew value $XXX for Book 'XX, million quarter first Average to loans for per billion was of at $XX.XX $X.X X% compared of earlier. first or the XXXX. 'XX

As of in within in increased estate expected, residential the 'XX lending quarter real our which growth focus, the the concentrated portfolio, first same over X.X% be or million continues the period to primary $XXX 'XX.

Average commercial million or XXXX. XX.X%, and equity home and $XX.X million also or lines credit $XX.X same the period XX.X% over loans respectively, in of increased

first quarter of $XXX,XXX. losses the 'XX, for For credit provision was

quarter-over-quarter XX, deposits, evident XX, deposits March results. of increased the We as $X.X is $XX.X are in 'XX, actively now retaining from December 'XX. to million which Total billion

move and forward, our through to continue retain product funds to we bank the differentiation. encourage As in product aggressive the to expanded these offerings of marketing objective is customers

is that us of core start would not retaining the the loans the absorb into or price we when why customers. pandemic invest funds. to sheet liquidity balance securities This the that and to while understood depositors retain were big inflows liquidity during temporary, the on We deposits, strategically gave for deposits did or flexibility

the increases million driven first and was 'XX, in rate. compared of quarter the the of same Net an XX.X% target interest solid liquidity, funds income the in or $X.X 'XX, to $XX recent increase loan million Fed for by growth period

in of The points up net 'XX. the quarter the margin basis interest X.XX%, X.XX% first quarter XX for of was from first

increased 'XX. the up the quarter basis assets in 'XX. the to liabilities of the X.XX% first points quarter same XX in earnings The increased time, only basis on the XX to first At from first basis quarter 'XX of of of from interest XX points X.XX%, yield points for interest-bearing cost

income The first Federal $XXX.X Bank interest and balance retain $X.X is average at increase quarter of at our in to million the ability Reserve low-cost net balances million cash of during able competitive result market of the primarily 'XX deposit being maintain to a a rates.

Services Financial management $XXX XX, income. of a division Our assets had March to be under source continues significant 'XX. of approximately of They as noninterest recurring million

$XX.X from and expense. a result noninterest prior noninterest annually, in benefit expense as quarter typical of reset Total expenses the is employee came an million. to benefit of at expense, of increase the on increase expense net ORE is salaries which Now QX some and and in primarily tax The in payroll adjust.

the in came quarter. quarter for the compared expense as prior an expense in $XXX,XXX at $XXX,XXX of to ORE

Given the low expenses, level exceed the quarter. level we're continued going to to anticipated continue of to ORE per expense of $XXX,XXX hold not

expect other total 'XX's expense categories expense, line ORE $XX.X of expense, noninterest quarter. to All in quarter. range per first of the the our to noninterest the recurring of were million expectations in with be million would $XX.X net We for

and the nonperforming will loans. loan portfolio Scot Now review

Scott Salvador

morning. Thanks, good and Mike,

quarter, Year-over-year, million the by actual $XXX totaled For loans in increased the increase number. million. first total a $XX combined

The increase first X.X%, to annual while quarter's growth was X.X%. equated the

well and of net gratified We in are $XXX continued pleased increase quarter with annual post to growth over especially million. the an

all by by by both and the increased pattern, by in quarter loans increasing $XX spread was for in year-over-year. in and a categories. similar million million year showed million $XXX loans year-over-year. across $XX $XX lending Commercial Residential the quarter the million our The the growth quarter

$XX million the prior quarters, Home equity by by year-over-year. a growth continued loans on $XX discussed also in quarter and as trajectory, million in increasing

Overall rates similar in ago arena activity year a volume is versus that down interest residential a market I quarter. pattern purchase continues to the on discussed due increased market conditions. last General and

summer have this activity we overall early and seen application however, season, increase selling recent volumes. As the regard early some expect signs we enter and will spring already that in with

end. of solid quarter was Our as backlog

year. books. is that backlog point we loan at year outstanding and on current volume construction last heavy The the to completed result captured been stands where roughly has of was it end last the our equivalent to Some our same closed

last moved fixed bit have several as stands over aware. the is well a rates our everyone rate quite Interest at XX-year X.XX%. Currently, months

remained Asset quality low down slightly ago and $XX.X the Nonperforming totaling million X.XX% $XX.X year Nonperforming assets levels, to loans X.XX% a up the strong. assets versus on were at of quarter. to million versus start measurements continue balance year. of at the also

the and remain year XXX% nonperforming quarter. ago. a delinquencies recovery loans a low, allowance coverage now XXX% Early-stage slight loan The loss versus charge-offs for net or ratio stands at in totaled and

Rob?

Robert McCormick

questions? Thanks, Scot. Any

Operator

our from Funds. We [Operator Instructions] have Lapey first from question Ian Gabelli

John Lapey

considering few -- Yes, so crisis. good a obviously, a you little impressive. talk performance Really -- just congratulations. team, deposit the and earnings the banking was can Rob bit

the see so was your Can on what far quarter you in as did the just of going of sort What generally that about and in during business? April that talk failures? how you the impact and trended bank

Robert McCormick

Well, to his decisions Ian, us allowed said we do we And Mike run had we to ability let to -- did if stuff position the presentation, as kind higher-priced liquid of some stayed we that make And in afford the and that. liquidity position appropriately. to had it. off,

to trends do So walk been door. good. been we've have we our very out them deposit trying let and is the not -- retain customers What

been selectively offering programs. we've So

a very have special that to We seems XX-month X- to effective. be

money pretty to sticking that's with to a stability. well they're maybe they Ian, some crazy seems and offered customers with specials for coming period, of doing group and actually we're core X-month expiring, more be so us, bringing them and that back, were our now back And

right pleased now. pretty trends our deposit with we're So

John Lapey

your period branch a through in your -- is there's and of then quarter. certainly And network opportunity, came think I Okay. benefits crisis, the this of sometimes --

Any that some it's opportunities to or present themselves? other expand sort thoughts services products maybe financial whether about of your offerings, utilizing core as loan

Robert McCormick

and strong it, And used It's the company. Florida. people is product Bauer -- think with things And I our constantly we to Home said, a run in Ian. safety, as to branding and where also evaluation. are seem about is question our thing certain polling at We regard No that. to very, flight parts, offerings is with Come And like, very our phrase how customers the I in the especially that there's we're and big something a rating under Trustco! very comfortable

we're certainly, contact think and lot and I welcomed. a with customers, more doing more lot and -- So calling it's our a

John Lapey

the to a benefits X%. Okay. it expenses, I of most I only understand year XX%, on compare year I up are headcount like is guess, increase and And then And by employee said -- salary compare if the there's it a and I ago, you But was looks salaries. up if in it the to seasonality. some

increase... is just if strong unusual is comparison? So maybe results, talk a I'm incentive And year-over-year maybe playing that comp assuming could there you the role given about big the anything but in

Robert McCormick

to the labor poaching we a having more other is more lot a little and There detail. was as -- lot a you our go we're of Mike are pension companies every retain true-up issues same are couple them. a bit us. but that mean adjustments industry people that we funds market, well. we're have where give Ian, pay can And into of generally that the with a some can of that of I impacted more to money Mike having detail, having some having

to that, touch on want You Mike?

Michael Ozimek

the that downward 'XX. would Yes. $X the said, adjustment of kind XXXX, The in everything add I first quarter thing rolled Rob, about a through but had of is million from you only we of

And -- to really now. that $XX.X where on you would are we really to million number when so closer compared -- was be it apples-to-apples,

our So that first quarter of 'XX down. was pushed -- was

John Lapey

Good. Okay.

missed I that. Sorry,

last So And that -- reasonable. then more yes, that's question.

it So crisis. of on announced mid-March, sort in repurchase, noticed in middle the you of I share the the

on change generally about versus there And the do it's amount, shares. current environment? feel know capital of feel the Is in you about that do a how about not But I any that? your position? how retaining you capital thoughts X% big in

Robert McCormick

that, I the I If Ian. we move year. with that would later with we're when we be move probably timing. about committed to share in repurchase, forward or that it forward would the know say the don't

Operator

from from Piper comes Sandler. question Twerdahl next Our Alex

Alexander Roberts Twerdahl

sit on complexion of curious, Obviously, cash question, of sort updated the still. any a the overall lot First of sheet? balance just thoughts you on

have pretty fair sat always cash. guys amount a of on You

But see XX.X% deposits just of stay of just done position And is to higher like or down its if the that absorb maybe job. it's couple that we that, given it's can quarters. on there -- and over I'm just Or that deposit guess, impact next or the a you I'm all -- to there. a to when use come that been some bit growth rates. if can manage curious, cash lot to has with pressure curious I dampen loan number liquidity little the that anything of or,

Robert McCormick

do to -- that. down, opportunity bring if plan it's it be felt would was but there's Alex, an to no Well, certainly reason we that there certainly

the said, position you us help could be through us continues certainly helped challenging As to what liquidity some has times. and

pretty conditions, we're at based with So crazy we're bit market can is doing that. that little now, if somebody comfortable right obviously, something with and and like deposits things where fluctuate, on

buys with the in But credibility of comfortable overall, we're we're markets and like and we the in. us things pretty that. a lot And regulators feel position it with

we're at. where pretty comfortable with we're So

Alexander Roberts Twerdahl

Okay. being payoffs. portfolio, pipelines terms the And into the appreciate, and residential then buying of on spring I mortgage the Scot, in as on think side what I'm you're the we healthy just about seeing curious going season, your other comments

book how slow as just on out on what's given But about just I'm coming new quickly the you're could just plus books, that both coming new with think the rates. seeing here loans to what's on that's trying off originations, versus what overall what's books. rise figure from just Presumably, happened yields given we

Scott Salvador

pricing, some as very are do imagine, the probably selling going low some mean, mean, motivated might people are are them Alex, that as you been refis well. I I have on. the the since But with their increasing you Yes. I've I've I mean sell never as house. here. to seen have payoffs, you

roll So of some you that selling. people because have that, payoffs do through

coming into purchases low. But you in I in is down, general, the And But said conditions. because sheet as the of pretty remarks, season, market is my as the volume said. we're just payoff balance side of

we pickup a as see So next months, forward. move of that over we should couple the on

Robert McCormick

return, a doing We've in lot portfolio. interest positive Alex. think rates the improves this that also could our of change also equity home a score equity And be home with prime-based lending, very impact credit I been on which certainly

Alexander Roberts Twerdahl

Yes.

in that quarters, by, think that, just as the just the piece, mid-XXXX? early of higher been pick residential could Okay. the over of new But quarters, and , of the chunk which is call they kind points biggest moving it, higher up the moving have quarter with think basis X I per volume couple next portfolio last you about yields over do the you few guess,

Robert McCormick

Yes. that a but with pretty it. I saying I where going. number, way going we're not mean, think to of forecast That's happy good we're that's

Michael Ozimek

absolutely. Yes,

the that So of higher when lower loans kind ones rate those the through are closed. pushed are pipeline closing through are

Robert McCormick

Correct.

Alexander Roberts Twerdahl

Okay. just in of any banks really that's you lot today. I'm question. a reported haven't anything seen credit curious just your so then concerning we markets that And across final Anything issues -- far. there's have of if with the

office. You have don't lot a of

Just that about. anything should we be thinking

Robert McCormick

The residential portfolio, diversified it's small chunks, by nature. and it's its

So lot many like it portfolio, different many nature properties we different of with -- reason the in the by residential that's because -- diversified we of part places. of just it borrowers, the located lending a like different is

So good of that's why a us. appeals to part it

Operator

Management. from Ripostella Nick from comes question next NR Our

Nick Ripostella

Okay. the TrustCo I'm new here. situation to

I Leesburg the what you here was you could, XX wondering me give picture, the see I big see, right or over just challenges And X X kind XX far, like from And months. branch. I'm not in next top your your of far if so to

And then value question. equal, things north that other to price of In some let's know repurchase, words, being it with sensitive the share say XX... if But isn't you book answered I degree? all

Robert McCormick

the Nick, second a time I'm on tough having you hearing question.

You seem to breaking. be

Nick Ripostella

more this that in all book with value -- were kind that better? not the than it or be it in words, not until in would XX something you would some other if at something be like of year? later -- advantageous Is XX, the things north environment, if the is waiting equal, this being stock if Yes,

is is there actually thing you regard final the hope any increase the then the with And this to dividend, for might year? dividend

Robert McCormick

would I will, have staffing if them, question, two interest I I'm think one of rates first Nick. rate sure you put where not and either and you the #X the to Well, as priorities,

us can our alert. comfortable how high certainly pretty position rate But we're even on and interest with environment though rates, puts with changing interest we deal a a

staffing, that. said I the own and industry business, see wanted I does mean, constantly every I'm earlier you in sure, have with in changes as even issues And like I help see you like call, the staffing, now. we signs, your know

concerns think as going I also of So have to you cost Ian in And include staffing forward. the up well. that brought something

when noticed I that I then hedged repurchase, little And share with question regard a to earlier. the you answered bit

to timing it It's the fully appealing the certainly, committed the of us. when I it. a As value program. to price said, we lower moves more And are share share repurchase book just compared makes certainly to

the and fact We we work of best our to are for deal for them possible. cognizant want that we shareholders, the make

balance and on retaining share So deal a the the liquidity a and the there's great capital getting repurchase. between

in of -- And we much. dividend. dividend a are play are then number lot the dividend A the very our shareholders it three, for

and group. to dividend and go, up. that's our Our would much that one peer our dividend than there's now return right like astronomical, only I way is payout see higher But is

any We dividend and our to dividend regard dividend, increases never the think make the shareholders with forward-looking like returns. promises cash statements but I like or make

Operator

no currently questions. back to further the hand have team. to floor the like would We management I

Robert McCormick

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

Operator

gentlemen, Ladies today's call. concludes and this

You can lines. Thank your you. disconnect now

TrustCo Bank Corp NY (TRST) 25 Apr 232023 Q1 Earnings call transcript