Earnings call transcript: TrustCo Bank Q2 2025 beats forecasts, stock rises

TrustCo Bank Corp NY (TRST) reported strong financial results for the second quarter of 2025, surpassing analyst expectations with an earnings per share (EPS) of $0.79 compared to the forecasted $0.69, representing a 14.49% surprise. Revenue also exceeded expectations at $46.6 million, slightly above the forecast of $46.16 million. Following the announcement, TrustCo’s stock increased by 2.34% to $35.40 in premarket trading. With a market capitalization of $680 million and a P/E ratio of 13.2, the bank continues to demonstrate solid fundamentals. InvestingPro analysis reveals the company has maintained dividend payments for 44 consecutive years, showcasing its commitment to shareholder returns.

Key Takeaways

• TrustCo Bank’s EPS of $0.79 surpassed the forecast by 14.49%.
• Revenue for Q2 2025 reached $46.6 million, slightly above expectations.
• Stock price rose by 2.34% in premarket trading following the earnings announcement.
• The bank’s net income increased by 19.8% year-over-year to $15 million.
• TrustCo continues to focus on digital banking and loan growth.

Company Performance

TrustCo Bank Corp NY demonstrated robust performance in Q2 2025, with net income climbing to $15 million, marking a 19.8% increase from the same period last year. The bank’s focus on digital banking and relationship banking has contributed to its strong growth, particularly in the Northeast and Florida markets where it holds a leading position.

Financial Highlights

• Revenue: $46.6 million, slightly above the forecast of $46.16 million.
• Earnings per share: $0.79, exceeding the forecast of $0.69.
• Net income: $15 million, a 19.8% increase year-over-year.
• Return on average assets: 0.968%.
• Return on average equity: 0.73%.
• Book value per share: $36.75, up 6.6%.

Earnings vs. Forecast

TrustCo’s EPS of $0.79 beat the forecast of $0.69, resulting in a 14.49% surprise. This performance is consistent with the company’s historical trend of exceeding earnings expectations, bolstered by strong net interest income and a diversified loan portfolio.

Market Reaction

Following the earnings announcement, TrustCo’s stock price rose by 2.34% to $35.40 in premarket trading. This positive market reaction reflects investor confidence in the bank’s financial health and growth prospects. The stock remains within its 52-week range, with a high of $38.89 and a low of $27.18. According to InvestingPro’s Fair Value analysis, TRST appears slightly undervalued at current levels. The stock’s beta of 0.67 indicates lower volatility compared to the broader market, while offering an attractive dividend yield of 4.08%. For deeper insights into TRST’s valuation and 12+ additional exclusive ProTips, consider exploring InvestingPro’s comprehensive research report.

Outlook & Guidance

TrustCo Bank projects continued positive momentum into 2026, with expectations of loan growth and capital optimization. The bank is prepared for potential Federal Reserve interest rate easing and plans to maintain a disciplined approach to share buybacks. InvestingPro data shows the company maintains a healthy financial position with a debt-to-equity ratio of 0.18, positioning it well for future growth. Analysts tracked by InvestingPro forecast the company will remain profitable this year, with projected earnings per share of $2.88 for fiscal year 2025.

Executive Commentary

CEO Robert J. McCormick stated, "Performance has been stellar," highlighting the bank’s strong financial results. Kevin Curley, Chief Banking Officer, emphasized TrustCo’s strategic positioning to manage pricing and increase lending volume. CFO Mike Ozemich noted, "The bank is well positioned to continue delivering strong net interest income performance."

Risks and Challenges

• Interest rate fluctuations could impact net interest margins.
• Competitive deposit market may pressure customer retention strategies.
• Economic downturns in key markets like the Northeast and Florida could affect loan demand.
• Regulatory changes may pose compliance challenges.

Q&A

During the earnings call, analysts inquired about the strong demand in Florida and the Northeast, as well as the composition of the bank’s commercial loan portfolio, which is over 90% secured by real estate. Executives also discussed CD maturity rates and new rate offerings.

Full transcript - TrustCo Bank Corp NY (TRST) Q2 2025:

Conference Moderator: Good day, and welcome to the TrustCo Bank Corp earnings call and webcast. All participants will be in listen only mode. After today’s presentation, there will be an opportunity to ask questions. Before proceeding, we would like to mention that this presentation may contain forward looking information about TrustCoBank Corp. New York that’s 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 these and other risk factors can be found in our press release that preceded this call and in the Risk Factors and Forward Looking Statements section of our annual report on Form 10 ks and as uploaded 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 and reflects any 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 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 trustcobank.com. Please also note that today’s event is being recorded. A replay of the call will be available for thirty 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 conference over to Mr.

Robert J. McCormick, Chairman, President and CEO to begin. Please go ahead, Robert.

Robert J. McCormick, Chairman, President and CEO, TrustCo Bank Corp: Thanks, Sami. Good morning, everyone, and thank you for joining the call. I’m Rob McCormick, the President of the Bank. I’m joined today as usual by Mike Ozemich, our CFO, will go through the numbers and Kevin Curley, our Chief Banking Officer, will talk about lending. We are very pleased to announce the outstanding year to date and year over year performance results.

Mike will provide the details, but the net income of $15,000,000 for the quarter and nearly $30,000,000 year to date is nothing short of stellar. This is and the numbers supported are time to shine. The strategy we developed and deployed over the past several years has been to amass capital for the purpose at least in part of having low cost funds available to lend out exactly at this moment. When the interest rate environment is favorable, loan demand is up, and our competition is scraping to borrow funds to lend out, it is a fundamental principle of TrustCo Bank that we take in deposits and lend those funds right back out into the communities where we are where they were gathered. Average deposits are up over the year and meaningful margin expansion is contributing to our success.

Compared to this time last year, margin increased by a solid 7%. Our increased income is of course affected by increased loan volume over the period. On the residential side, home equity products led the way because of the flexibility offered customers looking to preserve favorable first lien rates and increased by 18% year over year. In fact, our team got so good at originating equity loans that we were able to offer a product that promises and delivers a closing within seven days of application. We also successfully executed strategy of growth in our commercial loan portfolio.

That program grew by 11% over the past year. And in trademark Trusco fashion, all of this was accomplished while preserving credit quality. We saw net recoveries for the second quarter second consecutive quarter in 2025. These successes have served our own as well. All return metrics are up significantly, return on assets, return on equity, earnings per share and efficiency ratio, also a double digit improvement from this time last year.

The beauty of our deployed capital strategy is that we can support the lending in the way we have while preserving our ability to execute on authorized share buyback program, which we have done and likely will continue. I will conclude where I started. Performance has been stellar. The results in the 2025 establish positive momentum that we believe may extend into 2026. Now Mike will go into the details.

Mike? Thank you, Rob, and good morning, everyone. I will now review TrustCo’s financial results for the second quarter of twenty twenty five.

Mike Ozemich, CFO, TrustCo Bank Corp: As we noted in the press release, the company saw standout results for the 2025 marked by increases in both net income and net interest income of TrustCo Bank during the 2025 compared to the second quarter of twenty twenty four. This performance is underscored by rising net interest income, continued margin expansion and operated loan growth across key portfolios. This results in the second quarter net income of $15,000,000 an increase of 19.8% over the prior year quarter which yielded a return on average assets and average equity of 0.968.73% respectively. Capital remains strong. Consolidated equity to assets ratio was 10.91% for the 2025 compared to 10.73% in the second quarter of twenty twenty four.

Book value per share at 06/30/2025 was $36.75 up 6.6% compared to $34.46 a year earlier. During the second quarter of twenty twenty five, TrustCo repurchased 169,000 shares of common stock under the previously announced stock repurchase program. And as always, we remain committed to returning value to shareholders through a disciplined share repurchase program, which reflects our confidence in the long term strength of the franchise and our focus on capital optimization. Average loans for the 2025 grew 2.3% or $115,600,000 to $5,100,000,000 from the second quarter of twenty twenty four, an all time high. Consequently, overall loan growth has continued to increase and leading the charge was home equity lines of credit portfolio, which increased by $64,700,000 or 17.8% in the 2025 over the same period in 2024.

The residential real estate portfolio increased 27,900,000 or 0.6%. The average commercial loans increased $25,800,000 or 9.2% and installment loans decreased $2,900,000 over the same period in 2024. This uptick continues to reflect a strong local economy and increased demand for credit. For the second quarter of twenty twenty five, the provision for credit losses was 6,100 and dollars Retaining deposits has been a key focus as we navigate through 2025. Total deposits ended the quarter at $5,500,000,000 and was up $213,000,000 compared to the prior year quarter.

We believe the increase in these deposits compared to the same period in 2024 continues to indicate strong customer confidence in the bank’s competitive deposit offerings. The bank’s continued emphasis on relationship banking combined with competitive product offerings and digital capabilities has continued to be a stable deposit base that continues to support ongoing loan growth and expansion. Net interest income was $41,700,000 for the second quarter of twenty twenty five, an increase of $4,000,000 or 10.5 percent compared to the prior year quarter. The net interest margin for the 2025 was 2.71%, up 18 basis points from the prior year quarter. Yield on interest earning assets increased to 4.19%, up 13 basis points from the prior year quarter.

The cost of interest bearing liabilities decreased to 1.91% in the 2025 from 1.97% in the second quarter of twenty twenty four. The bank is well positioned to continue delivering strong net interest income performance even as the Federal Reserve signals a potential easing cycle in the months ahead. The bank remains committed to maintaining a competitive deposit offerings while ensuring financial stability and continued support for our communities’ banking needs. Our wealth management division continues to be a significant recurring source of non interest income. They had approximately $1,200,000,000 of assets under management as of June 3025.

Non interest income attributable to wealth management and financial services fees increased 13% to $1,800,000 driven by strong client demand and higher assets under management. These revenues now represent 37.5% of non interest income. The majority of this fee income is recurring supported by long term advisory relationships and a growing base of managed assets. Now on to non interest expense. Total non interest expense net of ORE expense came in at $25,700,000 down $600,000 from the prior year quarter.

ORE expense net came in at an expense of $522,000 for the quarter as compared to $16,000 in the prior year quarter. We’re going to continue to hold the anticipated level of expense not to exceed $250,000

Kevin Curley, Chief Banking Officer, TrustCo Bank Corp: per quarter for ORE expense. All the other categories of non interest expense were in line with expectations for the second quarter. Now Kevin will review the loan portfolio and non performing loans. Thanks Mike and good morning to everyone. Our loans grew by $115,600,000 or 2.3% year over year.

The growth was centered on our home equity loans, which increased by $64,700,000 or 17.8 percent over last year, and residential mortgages, increased by $27,900,000 In addition, our commercial loans grew by $25,800,000 or 9.2% over last year. For the second quarter, actual loans increased by $40,600,000 as total residential loans grew by 29,400,000.0 and commercial loans were also higher increasing by $11,500,000 for the quarter. Overall residential activity trends remain similar to those discussed in recent quarters. Our home equity credit lines continue to see consistent demand as customers continue to use their equity in their home for home improvements, education purposes or paying off higher cost loans such as credit cards. For purchase and refinance activity, we are well situated in the market and are ready to capture more growth as these segments pick up.

Also, as a portfolio lender, we are uniquely positioned to manage pricing and implement promotions to increase lending volume. In all our markets, rates continue to be moving in approximately 50 basis point range and our current rate is 6.5% for our base thirty year fixed rate loan. In addition, our home equity products remain very attractive option for customers with rates starting below 7%. Commercial loan activity remained strong this quarter and continued to contribute to our portfolio growth. Overall, are encouraged about our loan growth this quarter and are committed to driving stronger results moving forward.

Now moving to asset quality. Asset quality at the bank remains very strong. Our early stage delinquencies for our portfolio continue to be steady. Charge offs for the quarter amounted to a net recovery of $9,000 which follows a net recovery $258,000 in the first quarter. Non performing loans were $17,900,000 at this quarter end, dollars 18,800,000.0 last quarter and $19,200,000 a year ago.

Non performing loans to total loans decreased to 0.35% at this quarter end compared to 0.37% last quarter and 0.38% a year ago. And non performing assets also decreased to $19,000,000 at quarter end versus $20,900,000 last quarter and $21,500,000 a year ago. At quarter end, our allowance for credit losses remained very solid at $51,300,000 with a coverage ratio of 286% compared to $50,600,000 with a coverage ratio of 270% in the first quarter and $49,800,000 and a coverage ratio of 259% a year ago. Rob?

Robert J. McCormick, Chairman, President and CEO, TrustCo Bank Corp: That’s our story. We’re happy to answer any questions anyone might have.

Conference Moderator: We will now begin the question and answer session. Our first question comes from Ian Lapie from Gabelli Funds. Your line is open. Please go ahead.

Ian Lapie, Analyst, Gabelli Funds: Good morning, Congratulations. Great quarter. Just a couple of

Robert J. McCormick, Chairman, President and CEO, TrustCo Bank Corp: Thank you, Ian, and good morning, Neil.

Ian Lapie, Analyst, Gabelli Funds: Thanks. Rob, you talked about strong local demand. Is that in Florida as well? I

Robert J. McCormick, Chairman, President and CEO, TrustCo Bank Corp: missed the first part of the question, Ian. I’m sorry. There’s something you must have came faded in and out.

Ian Lapie, Analyst, Gabelli Funds: The strong local demand that you referred to, is that in Florida as well as in the Northeast?

Robert J. McCormick, Chairman, President and CEO, TrustCo Bank Corp: Across the markets. Yeah. The the best demand the the better of the two categories has been Florida, Ian, but we’ve had very strong demand locally as well.

Ian Lapie, Analyst, Gabelli Funds: Okay, great. And then what is the in terms of the CDs that will be maturing in the next quarter, what is the rate for maturing CDs as opposed to ones you’re currently issuing?

Robert J. McCormick, Chairman, President and CEO, TrustCo Bank Corp: We’re still gaining ground, but not as much ground as we were gaining, Ian. Do you have the the number? Yeah. Sure. We have what’s coming due is about the average rate is $3.91.

Ian Lapie, Analyst, Gabelli Funds: Okay. And what what are you paying now?

Robert J. McCormick, Chairman, President and CEO, TrustCo Bank Corp: The highest is 4, but that’s for three months.

Kevin Curley, Chief Banking Officer, TrustCo Bank Corp: And then last one Ian, one thing is

Mike Ozemich, CFO, TrustCo Bank Corp: as we go Ian, I’ll just add to that. I mean, that’s over the next quarter. But as you look out, we gained some ground in future quarters and what’s coming due in Q4 and Q1 of next year are lower. They’re in the $3.60 range. So we’re going to make some more ground up as we go forward.

Ian Lapie, Analyst, Gabelli Funds: Okay. Great. And last one, in terms of the strong commercial loan growth, what what types of borrowers are you lending? And what’s the rough mix between secured and unsecured?

Robert J. McCormick, Chairman, President and CEO, TrustCo Bank Corp: The the vast majority, Ian, probably in the 90 over 90% range is real estate related in commercial loans. And, we’re doing smaller multifamily projects and, very small office offerings, some owner occupied and some investment. But the vast majority of the commercial loan portfolio is secured by real estate.

Ian Lapie, Analyst, Gabelli Funds: Okay. Great. Thank you very much.

Robert J. McCormick, Chairman, President and CEO, TrustCo Bank Corp: Thank you.

Kevin Curley, Chief Banking Officer, TrustCo Bank Corp: We

Conference Moderator: currently have no further questions. So I’d like to turn the conference call back to Robert J. McCormack for any closing remarks.

Robert J. McCormick, Chairman, President and CEO, TrustCo Bank Corp: Thank you for your interest in our company, and we appreciate you spending a couple of minutes with us this morning. Have a great day.

Conference Moderator: The conference call has now concluded. Thank you for attending today’s presentation. You may now disconnect your lines.

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