Release Date: April 22, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Trustco Bank Corp N Y (TRST, Financial) reported a strong start to 2025 with significant growth in deposits, particularly in low-cost core and business accounts.
- Commercial lending increased by 8%, with total commercial loans exceeding $300 million.
- The bank's interest margin improved to 2.64%, with earnings per share, return on average assets, and return on average equity all up 27%.
- Trustco Bank Corp N Y (TRST) announced a stock repurchase program of up to 1 million shares, enhancing shareholder value.
- Non-performing loans remained low at 0.37%, indicating strong asset quality and stability.
Negative Points
- The cost of non-interest expenses increased by $1.4 million, primarily due to higher costs in salaries, employee benefits, and professional services.
- Despite the strong performance, the bank operates in a complex economic environment, which may pose challenges moving forward.
- The bank's interest income growth was partially offset by a decrease in the cost of interest-bearing liabilities.
- Home price trends in the bank's markets are stable but not increasing, which may limit growth in residential lending.
- The bank's previous share repurchase plan was not executed, raising questions about the execution of the current 5% repurchase plan.
Q & A Highlights
Q: The press release references a strong local economy. Can you expand on which markets are performing well?
A: Robert McCormick, Chairman, President, and CEO, explained that TrustCo operates in stable and strong markets, particularly in the capital district, which doesn't experience the highs and lows of other economies due to its employment base and service-based economy. Even in Florida, where they are concentrated in Central Florida, the market remains strong.
Q: What are the trends in residential home prices in your markets?
A: Robert McCormick noted that home prices are stable and not increasing. While values are not dropping, the expectation of 10% to 15% annual returns on real estate is not occurring.
Q: Regarding the share repurchase announcement, why is the plan larger this year, and is there more intention to execute compared to last year?
A: Robert McCormick stated that the 5% repurchase plan considers the fact that they didn't execute the 1% plan last year. The tone towards share repurchases is more favorable now, and the intent is to fully execute the 5% repurchase this year.
Q: With a strong capital position, what target capital ratio are you contemplating?
A: Robert McCormick did not specify a target capital ratio but mentioned that they have room to make another repurchase while maintaining a very strong capital position comfortably.
Q: Can you provide more details on the performance of your loan portfolio?
A: Kevin Curley, Executive Vice President - Retail Banking, reported that loans grew by $104.7 million, or 2.1% year over year. Residential mortgages increased by $26.2 million, home equity loans by $61 million, and commercial loans by $20.7 million. The bank remains positive about loan growth and focused on driving stronger results.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
