TrustCo Bank Corp NY

Q3 2021 Earnings Conference Call


spk_0: the day i'm adam to the just hey bancorp earnings call and webcast or participants will be in a listen only mode could you need assistance please ignore a conference specialists by pressing the start he followed by zero or your key pads also today presentation they'll be an opportunity to ask questions to ask a question you may press star and then one to a true question you may press star amenities before proceeding we would like to mention that this presentation may contain forward looking information about trust a bank cool new york that is intended to be covered by the safe harbor as forward looking statements provided by the private securities litigation reform act of nine ninety five as a result and trends kids differ materially from nice set forth in such statements see to various risks uncertainties and other factors more detailed information about bees and other risk factors can be found in l a press release that preceded the school and in the risk factors and forward looking statements section of our annual report on form ten k and as updated file quarterly reports reform ten keys his statements about it only as of the data tables i'm the company disclaims any obligation to update this information accept as may be required by applicable law today sudden pacing contains known that vip financial measures the reconciliations of such measures the most comparable g a piece against are included in our earnings press release which is available on the investor relations top of our website at trust pay back to palm please also note today's event is being recorded at this time i would like to time the conference coo over to mister robot j mccormick chairman of president see i'm please go ahead
spk_1: thank you naughty morning everyone as the also that i am rapaport regular the basis as usual and joined by michael michael scott salvador like as or see a phone scholars are senior wanting officer as we have done in the basil run summary getting the highlights center of the my for lot of the jail numbers and scalable over the for foil years want any questions he had than we can wrap it up we had a very solid third quarter of the bankers sixteen point eight million dollar net income is a record for us and is over ninety percent greater than the same quarter last year assets at the end of the quarter were six billion one hundred thirty five million greater than last quarter and the same quarter last year the increase in as a sister by alone laundry in a residential for years commercials are down as a result the ppp forgiveness on equity loans are much less than prior periods as we have discussed in this call before we believe the reign of is being caption or residents of were folio the we're also working this product little bit harder with some new programs and encourage new and additional borrowings it's almost never materialise the bank we have a large as position in a substantial investment portfolio with pretty sure maturities swimming team both in anticipation of in preparation for a changing rate environment we like a lot of companies have a tremendous deposit girls this is afforded the opportunity to shake off some of the higher cause fine deposits was nice was nice girls in the traditional poor towns and money markets the increase or equity to over five hundred six million dollars or long for four years performing very well nonperforming loans the phone loans the point four six percent and nonperforming us to as as it's or point three for both have improved a prior periods or allows room was as to told moses one point anyway percent recovered or your two point three times and that is after recovering two point eight million dollars from the reserve we are prepared to see some of the limitation next year return an average assets equity and or efficiency ratio or showed improvement over the period we continue to pay or healthy dividend we are operating hundred forty seven full service officers after closing one and opening palm coast florida we're having the same labour difficulties is most we are exploring all production office and planned to open one in naples florida as much a longer term strategy we also have work to expand or lending areas neighboring counties in a few areas we continue to operate a full service financial services department cell turnover the michael scott scotland a lot more details like secure avenue morning everyone on how are you just goes financial results for the third quarter of twenty twenty one as we noted in a press release the companies or net income of sixteen point eight million in the third quarter of twenty twenty one st reese of nineteen point one percent over the fire your quarter was yielded return an average assets and average equity of one point or wait and eleven point four zero respectively average loans for the third quarter of twenty one through four point two percent one hundred seventy six point four million to four point four billion from the third quarter of twenty twenty as expected the growth continues to be concentrated within our primary lending focus the residential real estate portfolio which increased by two hundred and eighteen point two million or five point nine percent in the third quarter of twenty one over the same period and twenty twenty average commercial on portfolio decrease twenty point seven million or eight point nine percent of the same food twenty twenty this included approximately twenty three million of new ppp loans originated in twenty one to be currently has approximately twenty one million remaining as be a pbt won't told average investor securities which includes a fast each the and portfolios increase nineteen point two million or four point three percent during the third quarter of twenty one or the same period and twenty twenty two and the same period the bank had three surgeries call at all for value of twenty million one the maturity to par value or three point five million never actually twenty a million of food security is were pay down to the same period the bank also purchased approximately four point one million dollars is scarce reserve ross research quarter was a credit of two point eight million a decrease compared to the one million provision for long lost the senior it is one it's one as you may remember during twenty twenty management and three certain allows related quality to factors besides assessment of the impact of the turn pandemic on economic conditions as well as of receive risks merits specific industries as they really to the bank loan portfolio the decreased on the third quarter twenty one was primarily the result of an adjustment needs to send them specific provisions the ratio of the allowed for a lot more subtle nuances one point away for sense as of says of september thirtieth twenty one to bear to one point one seven for sense as of the same period in two thousand twenty the level of the provision for mosses remainder twenty one will continue to reflect overall growth or warm portfolio and economic conditions and our geographic for friends as mentioned prior quarter to support a was experiencing economic hardships the bank wants to go over nineteen financial relief program included loan modification such as deferments on residential commercial loans by request as of september thirty twenty one debate or most of his own deferments returns making regular loan payments as mentioned prior horrors of make did not adopt cecil as was originally provided by the cares acts as part of the covert nineteen really feel sign of december twenty twenties the big will adopt seize on january one twenty twenty two the company expects to remain a well capitalized financial institutions on or current regulatory totally sucks as discussed in prior calls are folks continues nontraditional lending a conservative algae management which is to him and he was produced consistent high quality retiring early our dresser portfolio isn't that has always been a source of liquidity of fun bone growth and provide flexibility for vous man as result we held an average of one point two billion of overnight investments are the third quarter of twenty one st of two hundred and twenty eight point six million to be to the same period and twenty twenty given the elevated level of cash and twenty one the bank did invest some access of twenty into the market during the beginning of years on the phone excited about his whole average deposits interests three hundred and forty point two million were seven point one percent for the third quarter of twenty one of the same period in that a year earlier the increase in deposits was a result of fifty six point three million forty point three percent increase in average money market cause it's a two hundred seven point six million or seventeen percent increase in average see these deposits of one hundred and twenty nine point four million or twelve point six percent increase in interest bearing checking account averages and are one hundred fifty seven point nine million or twenty five point four percent increase in average non interest bearing checking out these are partially offset by the decrease in average time deposits of two hundred and two point nine million or fifteen percent of the same period last year for the same period or course of total of interest bearing deposits decreased fourteen basis points from fifty two basis points this is primarily driven by decreasing money markets was to eleven faces points for thirty days thirty seven basis points in time to us to forty basis points from one hundred thirty nine basis points over the same period last year as we move into the fourth quarter of twenty one additional opportunities continue to exist cds reprice war market rates with that said the bankers approximately five hundred and twenty four million cds the will mature and average rate of forty two bases quests the first quarter twenty twenty two blocks we two hundred sixty four million and cities were mature and average rate of forty basis points in the first year for twenty two with have actually four hundred eighty million or sees will will will mature an average rate of thirty six basis points or financial services division continues to be significant regroup recurring source of knowledge distinct on the out of actually one point one billion of assets under management as of september thirtieth twenty one not now on and managers expense to manage was exposed net have already expense came in at twenty four point seven million down eight hundred thirty five thousand very that a second one of twenty one slightly below as read a range of twenty four point nine to twenty five point four million salary benefit expenses now four hundred ninety four thousand to the overall decrease in have effects of the lower start fights on benefit of rules
spk_2: already expense came in
spk_1: next came in an expensive thirty two thousand for the corners compared to an income of of sixty thousand and the prior quarter given the concede low level of henri expenses were going to continue to old he disappeared a level expenses do not exceed three hundred sixty thousand dollars for gore all the other categories and and expands where he lives their expectations for the third course we're expect that's why it's so that's why twenty one's total return non interest expense net of or expense to remain in the range of twenty four point nine to twenty five point four million for court t v situation the third quarter of twenty one stimulus sixty five twenty two for sense to to fifty three point six one percent the third quarter of twenty twenty the always been proud of expense control just make we expect us to continue throughout twenty twenty one and beyond and finally the cavalry us and saudi equity assets ratio increased slightly was not and was nine point five six percent of the end of third quarter of a eleven basis points from nine point four five percent from the second quarter of twenty one a continues to be proud of it's ability to increase your overvalued and is challenging economic times look out for sure and september thirty twenty one was thirty dollars and fifty cents or five point one percent compared to twenty i know three earlier these mouser adjusted for the river stocks with which occurred in the second quarter of twenty twenty one now scott will review review the loan portfolio enough for me once
spk_3: exploits in into morning everybody
spk_2: recorded a day continue to record strong long roots overall loans increased by forty seven million in actual numbers are one point one percent
spk_3: your we're loans increased by one hundred eighty two million four point three percent
spk_1: the residential portfolio show growth of fifty six million for your we're grow told two hundred ten million residential loans or five point three percent commercial loans decrease by nine million on the quarter which includes ongoing three downs on the banks as be a ppp program
spk_3: residential real estate remains active in all our market areas the result of increased prices are lower inventory levels have hampered to me into to bars and you're going to define secure home for purchase however overall the demand for purchase want to remain satisfactory levels on the refined refinance side of things activity is down significant words to year ago this point mortgage rates to remain low however and no doubt where she was frantic pace to still remains now have a degree refinance activities whether refine it is continue to greece decreased is to lower levels near term is uncertain and largely dependent on with a moderate begin to a free to some significant roots or mortgage backlog had come down a proxy ten percent since the second floor
spk_2: remain solid overall however and contains a good amount of new money we're pleased with where we stand entering the fourth quarter an optimistic about continuing the post satisfactory that own rules
spk_3: interest rates although haven't he up slightly of late to to remain a low levels earlier thirty year fixed rate stands at three in a court as a quality measurements remain strong on the quarter nonperforming loans dropped from twenty point eight million to twenty point two million and nonperforming assets decrease in twenty one point one million to twenty point seven
spk_1: your are slightly larger decreases were post in both categories
spk_3: early stage weeks excuse remain low our allows for loan is now stands at one point zero eight percent charge of contribute to remain very light and equated to just above zero for the koran on that basis
spk_1: the coverage racial or allowance for loan losses denounced for loans now stands at two hundred thirty five percent up from to twenty five years ago thanks scott for an answer any questions you have
spk_0: so now became the question and answer session to ask questions us past start then one unattached time saying if you are using a speaker sign up please pick up the handset before passing mccain if at any time no question has been addressed and you would like to withdraw your question taste post
spk_4: ah ben tate
spk_0: at this time will post momentarily to assemble us death our ask questions day comes from alex try it out of piper sandler alex please go ahead your line is a pin
spk_5: the morning as
spk_1: morning out for now it's as his first us rob hoping the to tackle that more about the the strategy
spk_6: the expansion strategy has a town the new geography is gonna around the residential products are the make lot of sense that maybe chuckle the more about those depredations there as well as the thought process around naples
spk_1: it's it's it's agree with by towards the water alex it's it's it's a dollar business of a much larger beds we least about eight hundred and fifty square feet and and cabinet strip center for being very little for it as long as you can get the right originators in that office week because it makes way for its size because you know the west coast of florida especially but particularly good to the bank and i just think of further expansion is is in order and and i have very good idea i also think it might be a great opportunity to expand into full service branches down along downs down the road into that area
spk_6: okay and it is it's primarily going to be originating want to for family years or other product that can be selfish yes
spk_1: yeah i remember we always for self knows englewood if you're not familiar with florida which is in the same counties as naples or next county up from naples
spk_7: self
spk_1: okay such as it continues a with our old way for i'm sorry of it i make sense and accents down and then on i also got the bridge we just open a coast is the same thing as and flagler town
spk_8: which is very close to of foreman beach and board orange
spk_6: are you seeing a lot of success and able to i'm give us some color answer to this day
spk_1: the mortgage production out of florida vs the upstate new york pieces there are a pretty colors are so as a big tilt towards the towards upstate new york
spk_8: we're very pleased were very pleased with the mortgage production of florida and it's getting very comparable to the other areas that we serve
spk_3: scott honestly said about the pipeline's going into the fourth quarter could you repeat that yeah so down for about ten percent from where we were in the second quarter alex which is not uncommon for this time study year but i it
spk_6: it's a good solid pipelines go out a new money so we will pretty please of where we stand and we think we should be able to computer posts from the growth is quarter
spk_9: okay and to a we have with a new money realm and maybe presented contacts relatives who was in the second quarter this be five vs to money
spk_1: proportions
spk_3: yeah well you know what's more if you look that a year it's probably a better comparison last year this point we have little bit higher back live with the percentage of refinances in that backlog was much more significance and i'll you know they said my presentation there's still an elevated level or refinance activity but it's nothing like a was last
spk_1: year so although that the backlog is down a little bit percentage wise last year
spk_3: the percentage of of revises down significantly vs
spk_6: purchase one in sources
spk_10: a great
spk_1: and then with the that the tenure cause has creeping up a little bit here and and just are sitting on the amount of cash and seen this or run off going to secure his portfolio make us of the maybe to toggle have enormous the thought process around actually putting a lot more cash to work and to secure it's kind of in the short time and and sir what they're sort of opportunity to waiting for right you know him
spk_6: we spent a lot of time look at your out and we get to a conscious decision of of know you know for not investing know is a little bit higher we are talking to some our guys out the field some the brokers out there to take a look at it but until until really gets sore spot where we need to invest the costs to help ourselves long we're we're going to continue over there's no downsides
spk_11: right now the way we look at it for for not putting that money to work and own six months of a higher that that's a better spot for us
spk_1: okay so it's it's days their own service or something is a specific number you're looking for in terms of when you're starts put money to worker how much of starts a ladder out snuff no not right now based on the it's based on the need that we as alex and where the rates are going where where we think the trending is going
spk_6: at that point i guess higher would be the answer
spk_8: yeah
spk_1: okay and then despite a question for me i guess it a little that the by back what what are you can't think about for those for the sherry purchase for of in stocks down down to one ten a tangible book value
spk_12: you know is there are sensitive prices take it's more attractive to to use utilize that by that more capital levels of behind her earnings the on the dividend that didn't consider allocated towards the by backers you know what's his thought processor
spk_13: now we're going to stay active in the buyback alex you know when you have a cold window period
spk_1: around around earnings time you can't buy so that we were active i think right up until the window closed and we would anticipate being active again in the future
spk_0: okay

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