• Net Income: $11.3 million for Q4 2024, a 14.6% increase over the prior year quarter.
• Return on Average Assets: 0.73% for Q4 2024.
• Return on Average Equity: 6.70% for Q4 2024.
• Equity to Assets Ratio: 10.84% for Q4 2024, up from 10.46% in Q4 2023.
• Book Value Per Share: $35.56 as of December 31, 2024, up 4.8% from $33.92 a year earlier.
• Average Loans: $5.1 billion for Q4 2024, a 2.1% increase from Q4 2023.
• Home Equity Lines of Credit Growth: Increased by $61 million or 17.9% in Q4 2024 over the same period in 2023.
• Net Interest Income: $38.9 million for Q4 2024, an increase of $231,000 compared to the prior quarter.
• Net Interest Margin: 2.60% for Q4 2024, down 1 basis point from the prior quarter.
• Total Deposits: $5.4 billion at the end of Q4 2024, up $127 million compared to the prior quarter.
• Non-Performing Loans: $18.8 million at the end of Q4 2024, representing 0.37% of total loans.
• Allowance for Credit Losses: $50.2 million at the end of Q4 2024, with a coverage ratio of 267%.

• Warning! GuruFocus has detected 7 Warning Sign with BKU.

Release Date: January 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 (NASDAQ:TRST) achieved a net income of $48.8 million for 2024, reflecting strong financial performance.
• The bank's efficiency ratio improved to 61.5%, indicating effective cost management.
• Home equity lending saw significant growth, surpassing purchase mortgage volume, showcasing the bank's ability to leverage its branch network.
• Trustco Bank Corp N Y (NASDAQ:TRST) remains well-capitalized with a capital ratio of 10.84%, positioning it strongly for future lending opportunities.
• The bank's credit quality remains strong, with non-performing loans stable and net charge-offs at a low 0.01%.

Negative Points

• Net interest margin decreased slightly to 2.60% in the fourth quarter of 2024, indicating pressure on profitability.
• Non-interest expenses increased by $1.7 million from the prior quarter, driven by higher costs in equipment and outsourced services.
• The cost of interest-bearing liabilities rose to 1.97% in the fourth quarter, reflecting increased funding costs.
• Despite growth in deposits, the net interest income only saw a marginal increase of $231,000 compared to the prior quarter.
• The bank's residential loan activity saw a decrease of over $21 million in the fourth quarter, indicating potential challenges in this segment.

Q & A Highlights

Q: How are you thinking about 2025 with the fixed-rate mortgage at 6.875%? Is it becoming more attractive? A: Robert McCormick, CEO: Optimism is returning to the real estate market. We are seeing more pre-approvals than in the past 18 months, suggesting a potential spring market. We are actively engaging with home shows and real estate brokers to capture purchase money mortgages. We are optimistic about both purchase money mortgages and non-trust refinances.

Q: With 100 basis points of cuts since September, why did the net interest margin (NIM) fall slightly? What is the current spot NIM? A: Michael Ozimek, CFO: We are repricing some CDs down, which helps. If the Fed continues cutting, it will affect the asset side. We are flattening out. Current CD rates are 4.15% for six and nine months, and 4% for 12 months.

Q: Equipment expense and outsourced services increased significantly. Is there anything unusual driving these increases? A: Michael Ozimek, CFO: We closed some locations and installed new ATMs, which increased equipment expenses. Outsourced services expenses hit in the fourth quarter, but we do not expect these levels to continue.

Q: What are you worried about regarding credit quality as you look forward to 2025 and 2026? A: Robert McCormick, CEO: We are not concerned about credit quality. We maintain a modest commercial portfolio and adhere to reasonable lending standards, so we are comfortable with our current position.

Q: Do you see opportunities to increase exposure in commercial real estate as other lenders pull back? A: Robert McCormick, CEO: Yes, we see opportunities to increase our commercial loan portfolio, potentially to $300 million or $325 million long-term. We prefer a slow and steady approach and will seize opportunities, especially in 2026 and 2027.

Q: Can you elaborate on the cannabis opportunity? Is it confined to certain states? A: Robert McCormick, CEO: We are open in all states within our market, but Florida is still medical only. Most activity is in New York and Massachusetts. We are focusing on banking small retail operators on the deposit side.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.