TRUSTCO BANK CORP N Y Q1 FY2025 earnings call

• 2025 started strongly with deposits up across all categories, including low cost core and business accounts. - Lending is up, with commercial lending up 8% and total loans up over $100 million from Q1 last year. - Net interest margin is 2.64%, with all return metrics up significantly (EPS $0.75, ROAA 0.93%, ROAE 8.49%). - Asset quality remains excellent with non-performing loans to total loans at 0.37%. - Focus on digital channels for account openings and maintaining strong customer relationships. - Strategic focus on relationship banking and solid financial practices for continued success.

For the first quarter of 2025, average loans grew 2.1% or $104.7 million to $5.1 billion, an all-time high. Home equity lines of credit portfolio increased by $61 million or 17.3%, residential real estate portfolio increased $26.2 million, and average commercial loans increased $20.7 million or 7.5%. Total deposits ended the quarter at $5.5 billion, up $142 million compared to the prior year quarter. Net interest income was $40.4 million for the first quarter of 2025, an increase of $3.8 million or 10.4% compared to the prior year quarter. Non-interest income attributable to wealth management and financial services fees increased by 16.7% or $2.1 million, representing 42.6% of non-recurring income.

• Anticipates lower interest rates in 2025 will provide opportunities to manage deposit costs effectively. - Stock repurchase program of up to 1 million shares (5% of current outstanding shares) as part of capital management strategy to enhance shareholder value. - Preparing to navigate evolving rate environment.

• Complex economic environment poses risks to the bank's operations and performance.

Q: Hi. Good morning. Congratulations on a good start to the year. The press release references a strong local economy. I'm just curious, is that the capital region or is that all of your markets? Maybe you can just expand a little bit on that because, the market is telling us maybe not so strong economy.

A: I would say -- yeah, I would say we're located Ian. We're very stable in strong markets. In the Capital District, we don't have the highs and lows that a lot of other economies and a lot of other markets have because of the employment base here and the service based economy. But even the locations where we are in Florida, we're not really in South Florida, the Naples area, and Bonita Springs, and some of the places we've heard other difficulties, we're more concentrated in the Central Florida area, and that still remains pretty strong.

Q: And what are you seeing as sort of a follow-on in terms of home price -- residential home price trends? Are they stable? Have they been increasing over the year in most of your markets?

A: Stable and not increasing. You're not seeing values drop, but the expectation of 10% and 15% annual returns on real estate are not happening.

Q: And then my other topic is the share repurchase announcement. Just curious a couple of things because at around the same time a year ago, you announced a plan for about 1%, but didn't repurchase any shares. Now you're doing up to 5%, so significantly bigger, maybe what changed in terms of the size and do you have more of an intention to execute as compared to a year ago?

A: Yeah. I think the 5% kind of contemplated the fact that we didn't execute on the 1%. And I think the tone and tenor towards share repurchases is more favorable this year and now than it was in prior periods. So with -- our intent would be to fully execute on the 5% this year.

Q: And then maybe as a follow-up, in terms of capital, obviously very strong 10.84 TCE. Even if you did all the 5% right away, that would still only drop to about 10.4. What sort of target capital ratio is -- are you contemplating?

A: Well, I don't know if we want to tell the target capital ratio that we have, but we would certainly have room to make another repurchase and still maintain a very strong capital position comfortably. That's a good way of answering that Ian.