TrustCo Bank Corp NY (TRST) 2024 Q1 Earnings Call Summary
September 11, 2024 
TrustCo Bank Corp NY (TRST)
| Market Cap | 0.21T |
|---|---|
| Beta | |
| P/E | 39.75452774136047 |
| EPS | 12.247158441111395 |
| Dividend | 0 |
| Dividend Yield | 0.00% |
Optimistic Highlights
- Loan Portfolio Growth
The loan portfolio surpassed the $5 billion mark, reaching an all-time high.
- Net Income Increase
Net income for the first quarter of 2024 was $12.1 million, a 23.13% increase over the prior quarter.
- Improved Return Metrics
Return on average assets and return on average equity both increased from the previous quarter.
- Stock Repurchase Program
The stock repurchase program has been reauthorized, allowing for strategic purchase opportunities.
- Exceptional Credit Quality
Non-performing loans and non-performing assets remained essentially flat, with net charge-offs resulting in a net recovery.
Pessimistic Highlights
- Net Interest Margin Decline
Net interest margin was down to 2.44%, a decrease of 77 basis points from the first quarter of 2023.
- Core Deposits Decline
Core deposits were down compared to the prior quarter.
- Non-Interest Income Decrease
Net interest income decreased by $10.4 million compared to the same period in 2023.
- Increased Cost of Interest Rate Liabilities
The cost of interest rate liabilities increased to 1.99% in the first quarter of 2024 from 0.63% in the first quarter of 2023.
- Non-Interest Expense
Total non-interest expense net of ORE expense was $24.8 million, down $4 million from the prior quarter, primarily due to lower salaries and employee benefit costs.
Company Outlook
- Positive Loan Growth
Loan growth is expected to continue, with recent activity picking up and translating to increased committed backlog numbers and net portfolio growth.
- Deposit Retention Focus
The company aims to retain deposits through competitive product offerings and aggressive marketing.
- Optimistic Rate Cycle
The bank is optimistic that it is nearing the bottom of the rate cycle, which should help stabilize margins.
- Wealth Management Division
The Wealth Management division remains a significant source of non-interest income, with approximately $1 billion of assets under management.
- Expense Management
The company expects 2024's total recurring non-interest expense, net of ORE expense, to be in the range of $26.9 million to $27.4 million per quarter.
Q & A Highlights
Q: Backlog at the end of the quarter was similar to the end of the year. Would you expect the second quarter to show similar growth trends to what we've seen in the last couple of years? (Alexander Twerdahl, Piper Sandler)
A: The second quarter normally builds upon the first quarter. Recent activity has picked up, which should translate to increased backlog and net portfolio growth as we move forward. (Scot Salvador)
Q: Amount of normal amortization in the mortgage portfolio in a given quarter? (Alexander Twerdahl, Piper Sandler)
A: Roughly $15 million to $20 million per month, about $18 million per month. (Scot Salvador, Michael Ozimek)
Q: If loan growth picks up in the second quarter, would the expectation be to fund that with deposit promotions or cash on hand? (Alexander Twerdahl, Piper Sandler)
A: It would be a good problem to have. We could step up and do more promotions or use the excess cash on the balance sheet. (Robert McCormick)
Q: Lowering the rate on time deposits, are we close to the peak on time deposit rates? (Alexander Twerdahl, Piper Sandler)
A: Yes, we are attempting to price to retain accounts at maturity and are close to the peak of time deposit rates. Customers are also asking about longer-term rates. (Robert McCormick)
Q: Additional savings in salaries and benefits, what drove that? (Alexander Twerdahl, Piper Sandler)
A: About $1 million in savings, with $600,000 from lower incentive comp accruals and $300,000 to $400,000 from revalued liability-based awards. (Michael Ozimek)