TrustCo Bank Corp NY

then 1. To withdraw your question, you may press star and 2. Before proceeding, we'd like to mention this presentation may contain forward-looking information about Trust Code Bancorp New York that 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 or implied by such statements due to various risks, uncertainties, and other factors. More detailed information about these risks and other factors can be found in our press release that precedes this call and in the Risks and Factors and Forward Looking Statements section of our annual report form 10-K and are as updated by our quarterly reports form 10-Q. The forward looking statements made in this call are only valid as of the date hereof and the company disclaims any obligation to update the 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 US GAAP. Reconciliations of such non-GAAP financial measures to the most comparable GAAP figures are included in our earnings press release, which is available under the Investor Relations tab on our website at truscobank.com. Please also note that today's event is being recorded. A replay of today's 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'd like to hand the call over to Robert J. McCormick, Chairman, President, CEO. Please go ahead.

Robert McCormick Morning, everyone, and thank you for joining the call. I'm Robert McCormick, President of Trustco Bank. I'm joined today, as usual, by Kevin Curley, who will talk about lending, and Mike Ozemek, our CFO, who will go into detail on the numbers. The results that we report today reflect our organization's efforts during 2024, which were characterized by achievement of efficiency, the preservation of strength, and the creation of shareholder value. These elements came together to produce an efficiency ratio of 61.5%, capital of 10.84%, and return on average equity of almost 7.5%, all contributing to an net income of $48.8 million. In 2024, home equity lending, both lines and loans, presented the greatest opportunity. Our team dug deep and leveraged our extensive branch network and sizable customer base to create loan volume where there otherwise was very little. By tailoring offerings to new and existing customers who elected to improve their existing homes, brought them by a new one. This strengthened our customer bonds and enhanced our communities within our footprint. Home equity volume exceeded purchase mortgage volume for the year. In the third quarter of 2024, we were more efficient both overall and in the cost of funds. that they're capitalized and generated better earnings than our peers. Like our performance, our loan products are best in class and adaptable. Thus, we enter 2025 liquid, well capitalized, and ready to lend. And we come to this position without the resort to borrowings or broker deposits. Also looking ahead, we continue to invest in technology intended to further enhance efficiency and improve the customer experience across all business lines. Additionally, we have undertaken an exciting new venture by offering our products and services to the business in the cannabis industry. Trusco is particularly well-suited to this industry because our extensive branch network dovetails with the needs of cash-intensive retail outlets. We would be remiss if we failed to highlight the extraordinary credit quality that supports our success. Non-performing loans and total loans remain essentially flat year over year, Likewise, net charge-offs to average loans are 0.01% this year compared to 0.02% last year. This is a testament to our underwriting and the commitment we make to our customers as a portfolio lender. Now, Mike will dive into the numbers, Kevin will provide an update on the loan portfolio, and then we can take your questions. Mike? Thank you, Rob, and good morning, everyone.

I will now review TrustCo's financial results for the fourth quarter of 2024. As we noted in the press release, the company saw a fourth quarter net income of $11.3 million, an increase of 14.6% over the prior year quarter, which yielded a return on average assets and average equity of 0.73% and 6.70% respectively. Capital remained strong. Consolidated equity to assets ratio was 10.84% for the fourth quarter of 2024, compared to 10.46 in the fourth quarter of 2023. Book value per share at December 31, 2024 was $35.56, up 4.8% compared to $33.92 a year earlier. Average loans for the fourth quarter of 2024 grew 2.1%, or $104.9 million to $5.1 billion for the fourth quarter of 2023, another all-time high. Loan growth has continued to increase, and leading the charge was home equity lines of credit portfolio, which increased $61 million, or 17.9% in the fourth quarter of 2004, over the same period in 2023. The residential real estate portfolio increased $34.9 million. Average commercial loans increased $11.7 million, or 4.3%, and installment loans decreased $2.6 million over the same period in 2023. For the fourth quarter of 2024, the provision for credit losses was $400,000. The provision recorded for the fourth quarter matched loan growth with no indications of decreasing loan credit quality. Our focus continues to be on traditional residential lending and conservative balance sheet management, which has continued to enable us to produce consistent high quality recurring earnings. Our investment portfolio is and always has been a source of liquidity to fund loan growth and provide flexibility for balance sheet management. As a result, we held an average of 504 million of overnight investments during the fourth quarter of 2024, an increase of 43 million compared to the same period in 2023. Given the current levels of cash and the current interest rate environment, the bank will continue to evaluate investing excess liquidity into the market. Retaining and growing deposits has been a key focus throughout 2024. Total deposits ended the quarter at $5.4 billion. It was up $127 million compared to the prior quarter. As we move forward, our objective is to continue to offer competitive product offerings of the bank through aggressive marketing and product differentiation. Net interest income was $38.9 million for the fourth quarter of 2024, an increase of $231,000 compared to the prior quarter. The net interest margin for the fourth quarter of 2024 was 2.60%, down one basis point from the prior quarter. The yield on interest-earning assets increased to 4.12%, up one basis point from the prior quarter. The cost of interest-bearing liabilities increased to 1.97% in the fourth quarter of 2024, from 1.94% in the third quarter of 2024. Throughout 2024, we have been able to lower the rates offered on time deposits while retaining and growing a significant portion of that product quarter over quarter. which continue to bring down the cost of time deposits. The bank has seen the erosion of margin to begin to flatten in the latter half of 2024. On the funding side of the balance sheet, total average deposits increased 31.7 million, or 0.6% for the fourth quarter of 2024 over the same period a year earlier. Our wealth management division continues to be a significant recurring source of non-interest income. They have approximately $1.2 billion of assets under management as of December 31, 2024. Now on to non-interest expense. Total non-interest expense net of ORE expense came in at $27.7 million, up $1.7 million from the prior quarter. The increase is a result of higher cost in net occupancy expense, equipment expense, outsource services, and advertising expense. ORE expense net came in at an expense of $476,000 for the quarter as compared to $204,000 in the prior quarter. Given the one-time charge-offs experienced this quarter, we are going to continue to hold the anticipated level expenses to not exceed $250,000 per quarter. All the other categories of non-interest expense were in line with our expectations for the fourth quarter. We would expect 2024's total recurring non-interest expense net of already expense to be in the range of 27.5 million and $28 million per quarter. This represents less than a 3% increase over the levels in 2024. Now, Kevin will review the loan portfolio and non-reporting loans.