TrustCo Bank Corp NY

Good day and welcome to Trust Code Get Bankrupt Earnings call and broadcast. All participants will be in a listen-only mode. Should you need assistance, please signal your commerce specialist by pressing the star key followed by zero on your keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one. To draw your questions, you may press star and two. Before proceeding, we would like to mention that this presentation may contain forward-looking information about Trust Code Bancroft, New York. It is intended to be covered by the Safe Harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Actual results, performance, or achievements could differ materially from those expressed in or implied by such statements due to various risks, uncertainties, and other factors. More detailed information about this and other risk factors can be found in our press release that preceded this call and in the risk factors and forward-looking statements session of our annual report on Form 10-K and as updated by our quarterly reports on Form 10-Q. The forward-looking statements made on this call are valid only as of the date hereof, and the company disclaims any obligation to update this information to reflect events or developments after the date of this call, except as may be required by applicable law. During today's call, we will discuss certain financial measures derived from our financial statements that are not determined in accordance with U.S. GAAP. The consideration of such long gap financial measures to the most comparable gap figures are included in our earnings press release, which is available under the investor relation tabs of our website at trustcobank.com. Please also note that today's event is being recorded. A replay of the call will be available for 30 days, and an audio webcast will be available for one year, as described in our earnings press release. At this time, I would like to turn the call over to Mr. Robert J. McCormick, Chairman, President, and CEO. Please go ahead.

Good morning, everyone, and thanks for joining the call. I'm Rob McCormick, the President of Trustco Bank. With me, as usual, are Mike Ozemek and Scott Salvador. We'll follow our regular format for the call. I will provide highlights. Mike Garcia-Paul will provide a detailed review of the numbers, and Scott will cover the loan portfolio, leaving time for questions at the end. Our industry as a whole and specifically the regional banking sector has faced many challenges so far this year. The numbers we are reporting today, however, are very strong, building on the results from the first quarter and reinforcing our long-term profitability. Net income was roughly $16.4 million for the quarter. This is slightly down, but still a very solid number. It's also worth mentioning that it follows several record quarters. Our loan growth was 7.5% during the quarter compared to the same time last year. with our residential, commercial, and home equity credit lines all steadily increasing to set a new record high in the loan portfolio of 4.9 billion. We continue to demonstrate stability with our deposit portfolio, which is up 66 million, or about 1.25% from the beginning of the year, and up 46 million since the first quarter of 23. Reflected the current interest rate environment, our time deposits are up 162.7 million, almost 13% for the quarter. We recognize this current shift toward time deposits and are proud of our team for strengthening relationships across our customer base. Instead of fleeing to non-bank investment products, we've seen our customers remain loyal and continue to enhance their relationships with us. Our strategy of maintaining a very healthy and liquid balance sheet during the historically aggressive rising interest rate environment is bearing fruit. The ability to maintain flexibility on pricing deposits to provide the maximum benefit to our shareholders. coupled with consistent loan growth and cultivating our customer base to grow deposits has helped keep our net interest income steady, which was 44.1 million for the second quarter, a 2.3% increase over the second quarter in 22. Our net interest margin was 2.98%, which is up from the same quarter last year. Asset quality remains strong and our loan loss reserves are consistent over last year. Our allowance for credit loss on loans to total loans was 0.96%, essentially flat from 1% this time last year. We saw another quarter in net recoveries, marking the sixth consecutive quarter for this. Our ROE and ROE were 1.09 and 10.61% respectively for the second quarter of 23. We are pleased to report our book value has increased to $32.66 a share, up a solid 5.2% from the second quarter of 22. Capital levels continue to remain strong, standing at 10.23% in the second quarter, up over 7% from the 9.54% this time last year. Now, Mike will give us a lot of detail on the numbers. Scott will give color on the loan portfolio. Then we can take your questions. Mike.

Thank you, Rob, and good morning, everyone. I will now review Trusco's financial results for the second quarter of 2023. As we noted in the press release, the company saw a second quarter net income of $16.4 million. which yielded a return on average assets and average equity of 1.09% and 10.61% respectively. Capital remained strong. Consolidated equity to assets ratio is 10.23% for the second quarter of 23 compared to 9.55% in the second quarter of 22. Book value per share in June 30, 2023 was $32.66, up 5.2% compared to 31.06 a year earlier. Average loans for the quarter grew to 7.5% or $336 million to 4.8 billion from the second quarter of 2022. Loan growth was exceptional and occurred in all of our loan categories and leading the charge was the residential real estate portfolio, which increased 220 million or 5.4% in the second quarter of 23 over the same period in 22. Average commercial loans increased 50.1 million or 25.2% Home equity lines of credit increased 59.5 million or 24.4%, and installment loans increased 6.4 million or 6.8% over the same period in 2022. For the second quarter of 2023, the provision for credit losses was a benefit of $500,000. We have now been actively retaining deposits now for two quarters in a row. Total deposits as of June 30, 2023 increased $46 million $5.26 billion from March 31, 2023. As we move forward, our objective is to continue to offer competitive product offerings of the bank through aggressive marketing and product differentiation. We understood the big inflows of deposits during the pandemic are temporary, and that's why we did not invest that liquidity into our securities or loans, but retained that liquidity on the balance sheet for when our depositors would start to absorb the funds. core customers. Net interest income was $44.1 million for the second quarter of 23, an increase of $992 million, or 2.3% compared to the same period in 22, driven by solid liquidity, loan growth, and the recent increases in the Fed funds target rate. The net interest margin for the second quarter of 23 was 2.98%, up 15 basis points from the second quarter of 22. The yield on interest-earning assets increased to 3.8%, up 90 basis points from 2.9 in the second quarter of 22. The cost of interest-bearing liabilities increased to 1.06% in the second quarter of 23 from 10 basis points in the second quarter of 22. Our financial services division continues to be a significant recurring source of non-interest income. They have approximately 940 million of assets under management as of June 30, 23. Now on to non-interest expense. Total non-interest expense, net of ORE expense, came in at $27.2 million, which is consistent with the prior quarter. Horary expense came in at an expense of $148,000 for the quarter as compared to an expense of $225,000 in the prior quarter. Given the continued low level of horary expenses, we're going to continue to hold the anticipated level of expense not to exceed $250,000. We would expect the 2023's total recurring non-interest expense net of ORE expense to remain in the range of $26.9 to $27.4 million per quarter. Now Scott will review the loan portfolio and non-performing loans.