Microvast Holdings announces departure of chief financial officer
TrustCo Bank Corp NY (NASDAQ:TRST) reported its fourth-quarter earnings for 2024, revealing mixed financial results that led to a decline in its stock price. The company posted earnings per share (EPS) of $0.59, missing the analysts' forecast of $0.64. Revenue also fell short, coming in at $43.31 million compared to the expected $43.88 million. Following the earnings release, TrustCo's stock fell by 2.12% in after-hours trading.
Key Takeaways
- TrustCo's Q4 2024 EPS of $0.59 missed expectations by $0.05.
- Revenue was slightly below forecasts, contributing to a stock price drop.
- The company saw a 14.6% increase in net income year-over-year.
- New cannabis banking services launched in multiple states.
- Stock price decreased by 2.12% in after-hours trading.
Company Performance
TrustCo Bank reported a 14.6% increase in net income for Q4 2024, reaching $11.3 million. The company's return on average assets was 0.73%, and the return on average equity stood at 6.70%. TrustCo's book value per share increased by 4.8% to $35.56, reflecting a solid financial position despite the earnings miss. The bank continues to focus on portfolio lending with flexible pricing and conservative balance sheet management.
Financial Highlights
- Revenue: $43.31 million, slightly below the $43.88 million forecast.
- Earnings per share: $0.59, compared to a forecast of $0.64.
- Net income: $11.3 million, up 14.6% year-over-year.
- Book value per share: $35.56, up 4.8%.
- Efficiency ratio: 61.5%.
Earnings vs. Forecast
TrustCo's EPS of $0.59 fell short of the expected $0.64, marking a miss of approximately 7.8%. Revenue also missed the forecast by $570,000. This performance contrasts with the previous quarters where the company had either met or exceeded expectations, highlighting a potential area of concern for investors.
Market Reaction
Following the earnings announcement, TrustCo's stock price dropped by 2.12% in after-hours trading, closing at $31.82. This decline places the stock closer to its 52-week low of $25.83, reflecting investor disappointment in the earnings miss and revenue shortfall. The broader market's reaction to TrustCo's performance was muted, with the financial sector showing mixed results.
Outlook & Guidance
Looking ahead, TrustCo Bank aims to expand its commercial loan portfolio and explore opportunities in cannabis banking, particularly in New York and Massachusetts. The company remains optimistic about the real estate market's recovery and plans to maintain conservative lending standards. TrustCo has projected EPS growth for the coming quarters, with expectations of $0.65 in Q1 2025 and $0.69 in Q2 2025.
Executive Commentary
CEO Robert McCormick (NYSE:MKC) expressed optimism about the real estate market, stating, "Optimism is coming back into the Real Estate business." He also emphasized the company's cautious approach, saying, "We like slow and steady." McCormick reassured investors about credit quality, noting, "We're not concerned about credit quality at all."
Q&A
During the earnings call, analysts inquired about TrustCo's plans for commercial lending and the potential impact of rising interest rates on its mortgage products. The company reiterated its focus on purchase money mortgages and highlighted its competitive CD rates, with a 9-month rate at 4.15% and a 12-month rate at 4%.
Risks and Challenges
- Potential impact of rising interest rates on mortgage demand.
- Competition in the cannabis banking sector.
- Economic uncertainties affecting commercial lending growth.
- Regulatory changes in banking and financial services.
- Dependence on real estate market recovery for growth.
Full transcript - TrustCo Bank Corp NY (TRST) Q4 2024:
Moderator/Operator: Good day, and welcome to Trusco Bancorp Earnings Call and Webcast. All participants will be on listen only mode. Before proceeding, we'd like to mention that this presentation may contain forward looking information about TrustCo 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 ks 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 U. S. 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 trustcobank.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 1 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 and CEO. Please go ahead.
Robert J. McCormick, Chairman, President and CEO, TrustCo Bank: Morning, everyone, and thank you for joining the call. I'm Rob McCormick, President of TrustCo Bank. I'm joined today as usual by Kevin Curley, who will talk about lending and Mike Ozimek, 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 percent, capital of 10.84 percent and return on average equity of almost 7.5%, all contributing to a net income of 48,800,000 dollars 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 is very little. By tailoring our 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. Through the Q3 of 2024, we were more efficient both overall and in the cost of funds.
Better 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 brokered 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 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 fail to highlight the extraordinary credit quality that supports our success. Non performing loans to total loans remained essentially flat year over year. Likewise, net charge offs to average loans were 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
Mike Ozimek, CFO, TrustCo Bank: good morning, everyone. I will now review TrustCo's financial results for the Q4 of 2024. As we noted in the press release, the company saw 4th quarter net income of $11,300,000 an increase of 14.6 percent over the prior year quarter, which yielded a return on average assets and average equity of 0.73% and 6.70 percent, respectively. Capital remains strong. Consolidated equity to assets ratio was 10.84 percent for the Q4 of 2024 compared to 10.46% in the Q4 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 Q4 of 2024 grew 2.1 percent or $104,900,000 to $5,100,000 for the Q4 of 2023, another all time high. Loan growth has continued to increase and leaving the charge was home equity lines of credit portfolio, which increased $61,000,000 or 17.9 percent in the Q4 of 0.4 percent over the same period in 2023. The residential real estate portfolio increased $34,900,000 Average commercial loans increased $11,700,000 or 4.3 percent and installment loans decreased $2,600,000 over the same period in 2023. For the Q4 of 2024, the provision for credit losses was $400,000 The provision recorded for the Q4 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 $504,000,000 of overnight investments during the Q4 of 2024, an increase of $43,000,000 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 (EPA:TTEF) deposits ended the quarter at $5,400,000,000 and was up $127,000,000 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 $38,900,000 for the Q4 of 2024, an increase of $231,000 compared to the prior quarter. Net interest margin for the Q4 of 2024 was 2.60 percent, down 1 basis point from the prior quarter. Yield on interest earning assets increased to 4.12%, up 1 basis point from the prior quarter.
The cost of interest bearing liabilities increased to 1.97% in the Q4 of 2024 from 1.94% in the Q3 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 twenty twenty four. On the funding side of the balance sheet, total average deposits increased $31,700,000 or 0.6 percent for the Q4 of 2024 over the same period a year earlier. Our Wealth Management division continues to be a significant recurring source of noninterest income.
They have approximately $1,200,000,000 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 $27,700,000 up $1,700,000 from the prior quarter. The increase is a result of higher costs in net occupancy expense, equipment expense, outdoor 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 not we are going to continue to hold the anticipated level of expenses to not exceed $250,000 per quarter. All the other categories of non interest expense were in line with our expectations for the Q4. We would expect 20 24's total recurring non interest expense, net of ORE expense, to be in the range of $27,500,000 $28,000,000 per quarter. This represents less than a 3% increase over the levels in 2024. Now Kevin will review the loan portfolio and nonperforming loans.
Kevin Curley, Lending Executive, TrustCo Bank: Thanks, Mike, and good morning to everyone. Our 4th quarter average loans grew by $105,000,000 or 2.1 percent year over year. The growth centered on our residential mortgages, which increased by $35,000,000 over last year, and our home equity loans also increased by $61,000,000 or 17.9 percent. In addition, our commercial loans grew by $11,700,000 over last year. For the Q4, as compared to the Q3, actual loans increased by $27,200,000 residential loans decreased by over $21,000,000 with both first mortgages and home equity credit lines posting increases.
Commercial loans were also higher in the quarter by increasing 6,600,000 dollars Overall, residential activity trends remain similar to those discussed in recent quarters. We remain well positioned in the market and seek to capitalize as market activity develops. As a portfolio lender, we have the flexibility to utilize our control on pricing and the ability to offer various promotions to increase application volume. Rates in the market have increased in recent weeks and our current rate is 6.875 percent for a base 30 year fixed rate loan. In addition, we have very competitive adjustable rate mortgages with rates in the 6.25% to 6.75% range.
Our home equity products continue to see steady demand as they remain attractive to many borrowers that may have low rate mortgages, but they want to use their home's equity for various projects or large purchases. Overall, we are positive about our loan growth in the quarter and remain focused on driving stronger results in 2025. Moving to asset quality. Asset quality at the bank remains consistently strong. Non performing loans were $18,800,000 at quarter end, dollars 19,400,000 last quarter and just under $18,000,000 a year ago.
Non performing loans now stand at 0.37 percent of total loans compared to 0.38 percent last quarter and 0.35 percent a year ago. Non performing assets totaled $21,000,000 as of December 31 versus $21,900,000 last quarter $17,900,000 a year ago. Early stage delinquencies also continue to be steady. Net charge offs for the quarter amounted to $102,000 down from the Q3's $222,000 Our year to date total net charge offs are only $230,000 as we posted net recoveries in the 1st and second quarters of 2024. At quarter end, our allowance for credit losses remained solid at $50,200,000 with a coverage ratio of 2 67% compared to $50,000,000 with a coverage ratio of 2 57% at the end of September and $48,600,000 at a coverage ratio of 275 percent at year end 2023.
Rob?
Robert J. McCormick, Chairman, President and CEO, TrustCo Bank: That's our story. We're happy to answer any questions you may have.
Moderator/Operator: Thank you very much. We'd now like to open the lines for Q and A. Our first question comes from Ian Lappe of Gambele Funds. Ian, your line is now open.
Ian Lappe, Analyst, Gambele Funds: Hi, Rob. Good morning. Congratulations on Good
Robert J. McCormick, Chairman, President and CEO, TrustCo Bank: morning, Ian. How are you?
Ian Lappe, Analyst, Gambele Funds: I'm doing well. Thanks.
Kevin Curley, Lending Executive, TrustCo Bank: Thank you.
Ian Lappe, Analyst, Gambele Funds: Yes, so maybe just start. So in 2024, you said the home equity provided the best opportunity in 2024 for growth and the numbers show that. How are you thinking about 2025 with the fixed rate mortgage at 6.875% that you mentioned? Is that tipping back to being more attractive? Or just talk about sort of the trade off there?
Robert J. McCormick, Chairman, President and CEO, TrustCo Bank: I got to tell you, I think optimism is coming back into the Real Estate business. Ian, I don't know what you're seeing, but I think we're doing more pre approvals this
Mike Ozimek, CFO, TrustCo Bank: time
Robert J. McCormick, Chairman, President and CEO, TrustCo Bank: this year than we have in the past probably 18 months. So we're very encouraged about I'm 61 years old, I think you know that, but we used to call it the spring market and that kind of faded up when during a crazy real estate market that we've been in for a period of time. But I think we may end up with a quote spring market again. So we're actively participating in a lot of home shows and calling on a lot of real estate brokers and things like that in an effort maybe to capture some purchase money mortgages. So I guess we're optimistic about purchase money mortgages.
We're also optimistic, Ian, about some of the non trust co refinances that are out there. We have a pretty good program for that and eventually people need and want some additional funds.
Ian Lappe, Analyst, Gambele Funds: Yes. Okay.
Mike Ozimek, CFO, TrustCo Bank: I hope that gets played.
Ian Lappe, Analyst, Gambele Funds: Yes, yes. Thank you. On the NIM, so we had 100 basis points of cuts since September, but your NIM actually fell a little bit. What would sort of I mean, not a lot, but what would the spot NIM be now as we're in January?
Mike Ozimek, CFO, TrustCo Bank: I mean we're holding and we're able to we are re pricing some of our CDs down, right? So that's helping us out. And obviously, on the other side, I mean, if the Fed keeps cutting, that will bring the asset side down. But we're I think we're flattening out.
Ian Lappe, Analyst, Gambele Funds: So what are your current rates on CDs?
Kevin Curley, Lending Executive, TrustCo Bank: We have 6 and this is Kevin Carley. We have 6 9 months at 4 point 15% and 12 months at 4%.
Moderator/Operator: Okay.
Ian Lappe, Analyst, Gambele Funds: And then on the expenses, the equipment expense and outsourced services jumped fairly significantly both sequentially and year over year. Was there anything unusual in those lines that drove those increases?
Mike Ozimek, CFO, TrustCo Bank: Yes. Throughout the 3rd Q4, we had a couple of occasions that we kind of we just we cleaned up we closed out for the year branches that we left. We've also installed some new ATMs. We put those into service. Some existing fit ups that we are amortizing we wrote off.
So those are they are pushing the equipment expense line item up. Outdoor services are just some expenses that hit the 4th quarter. So we don't expect those to continue at that level.
Ian Lappe, Analyst, Gambele Funds: Okay. And then maybe last one. Credit quality looks good. I think you said early delinquencies are steady. What are you worried about as you look forward to 2025 and 2026?
What are you watching on the credit quality side?
Robert J. McCormick, Chairman, President and CEO, TrustCo Bank: We're not concerned about credit quality at all, Ian. We're pretty comfortable with where we're at. We keep a relatively modest commercial portfolio for a company of our size. We've always been pretty reasonable with regard to our lending standards and we're not nervous about credit quality at all.
Ian Lappe, Analyst, Gambele Funds: Okay. Good to hear. Thanks, guys, and I'll talk to you next quarter.
Kevin Curley, Lending Executive, TrustCo Bank: Thank you.
Ian Lappe, Analyst, Gambele Funds: Okay.
Kevin Curley, Lending Executive, TrustCo Bank: Thank you. Thank
Moderator/Operator: you very much. Our next question comes from Greg Roder of Adriennecht Funds. Your line is now open, Greg.
Greg Roder, Analyst, Adriennecht Funds: Hi, guys. Congrats on the line on a very challenging funding quarter. You mentioned you had dry powder, you're not nervous about credit quality. You're very underweight commercial loans in your book. And I'm curious as to as other lenders are kind of pulling back from commercial real estate, whether it be non owner occupied or small unique multifamily deals or things like that, do you see the opportunity to kind of increase your exposure there?
Kevin Curley, Lending Executive, TrustCo Bank: Absolutely.
Robert J. McCormick, Chairman, President and CEO, TrustCo Bank: I don't think you'll ever see us with $1,000,000,000 commercial loan portfolio, Greg, but I certainly wouldn't mind pushing that up a significant number, dollars 300,000,000 or $325,000,000 something like that long term. But again, we're a little bit contrarian, we like slow and steady. I think you know that about us and we won't get crazy over, but if there are opportunities, we think and we think there will be, just so you know, especially in 2026 and 2027 and we'd like to seize that opportunity to grab more of that if we could.
Greg Roder, Analyst, Adriennecht Funds: Good to hear. And my next question my last question is on the cannabis opportunity. I'm very curious about that. Is it confined to certain states? I know New York State and Massachusetts and I don't really know much about New Jersey or Florida in terms of their laws and rules and so forth.
And I'm curious as how that works?
Robert J. McCormick, Chairman, President and CEO, TrustCo Bank: We have it open to all states right now in our entire market. But Florida is still medical only and the most activity we've had is New York and Massachusetts so far, Greg.
Greg Roder, Analyst, Adriennecht Funds: So you're essentially going to bank on the deposit side, the small retail operators?
Kevin Curley, Lending Executive, TrustCo Bank: Yes, sir. Yes, sir. Okay.
Robert J. McCormick, Chairman, President and CEO, TrustCo Bank: No, none yet. Yes, right.
Greg Roder, Analyst, Adriennecht Funds: Okay. That's it. Thanks a lot. Good luck in 2025.
Moderator/Operator: Thank you very much.
Mike Ozimek, CFO, TrustCo Bank: Thank you, Greg. We currently
Moderator/Operator: have no further questions. So I'd like to hand back to Robert McCormick for any closing remarks.
Kevin Curley, Lending Executive, TrustCo Bank: Thank you very much for
Robert J. McCormick, Chairman, President and CEO, TrustCo Bank: joining our company. We hope you have a great day. See you next quarter.
Moderator/Operator: As we conclude today's call, we'd like to thank everyone for joining. You may now disconnect your lines.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.