TRUSTCO BANK CORP N Y Q4 FY2024 earnings call

• Efficiency ratio was 61.5%, capital 10.84%, return on average equity almost 7.5%, net income $48.8 million in 2024.
• Home equity lending exceeded purchase mortgage volume in 2024. Entering 2025, liquid, well capitalized, ready to lend without borrowings/brokered deposits.
• Invested in technology to enhance efficiency and customer experience. Offered products/services to cannabis industry, leveraging branch network for cash-intensive retail outlets.
• Credit quality strong: non-performing loans to total loans flat YOY, net charge-offs to average loans 0.01% in 2024 vs 0.02% in 2023.

For the fourth quarter of 2024, average loans grew 2.1% to $5.1 billion, an all-time high. Home equity lines of credit portfolio increased $61 million (17.9%). Residential real estate portfolio increased $34.9 million. Average commercial loans increased $11.7 million (4.3%) while installment loans decreased $2.6 million. Net interest income was $38.9 million, up $231,000 from prior quarter. Net interest margin was 2.60%, down 1 basis point. Total deposits ended the quarter at $5.4 billion, up $127 million from prior quarter. Wealth management division had ~$1.2 billion of assets under management.

• Anticipate optimism returning to real estate business, actively participating in home shows and real estate brokers to capture purchase money mortgages.
• Potential to increase commercial loan exposure in the future, looking to seize opportunities in 2026 and 2027.
• Continue to invest in technology to enhance efficiency and customer experience across business lines.

Q: How is TrustCo thinking about 2025 with fixed rate mortgage at 6.875%?

A: Optimistic about purchase money mortgages and non-TrustCo refinances, seeing more pre-approvals and participating in home shows/brokers.

Q: On NIM, with 100 basis points of cuts since September, what's the spot NIM now?

A: Holding steady, repricing CDs down, and flattening out as Fed cuts may affect asset side but currently flattening.

Q: Why did equipment expense and outsourced services jump?

A: Due to closing out branches, installing new ATMs, and existing fit-ups being amortized/written off, not expected to continue at that level.

Q: What's being watched on credit quality for 2025 and 2026?

A: Not concerned about credit quality, keep modest commercial portfolio, maintain lending standards.

Q: Any opportunity to increase commercial real estate exposure?

A: Yes, would like to push up commercial loan portfolio, being contrarian but seeing opportunities in 2026 and 2027.

Q: How does the cannabis opportunity work?

A: Open to all states, most activity in NY and MA, targeting small retail operators in cash-intensive businesses.