TrustCo Bank Corp NY Reports Strong Start to 2025

TrustCo Bank Corp NY ((TRST)) has held its Q1 earnings call. Read on for the main highlights of the call.

TrustCo Bank Corp NY’s recent earnings call paints a picture of a robust start to 2025, with the bank showcasing strong growth in deposits and loans, a notable increase in commercial lending, and a significant improvement in net income and interest margin. Despite some concerns over increased non-interest expenses and limited residential loan growth, the overall sentiment remains positive, highlighting the bank’s solid capital position and effective management of non-performing loans.

Strong Deposit Growth

TrustCo Bank Corp NY reported impressive growth in deposits, with every category, including low-cost core and business accounts, showing an increase. The total deposits reached $5.5 billion, marking a $142 million rise compared to the previous year’s quarter, underscoring the bank’s successful strategies in attracting and retaining deposits.

Increase in Commercial Lending

The bank’s commercial lending segment saw an 8% increase, with the total now exceeding $300 million. This growth reflects TrustCo’s strategic focus on expanding its commercial lending portfolio, contributing significantly to its overall financial performance.

Loan Portfolio Growth

TrustCo’s loan portfolio reached an all-time high of $5.1 billion, with average loans growing by 2.1% or $104.7 million in the first quarter of 2025. Notably, home equity lines increased by $61 million or 17.3%, highlighting the bank’s efforts to diversify its loan offerings.

Record Net Income and Margin Improvement

The first quarter net income saw a substantial increase of 17.7% over the prior year quarter, reaching $14.3 million. Additionally, the net interest margin improved by more than 8% year-over-year to 2.64%, demonstrating TrustCo’s effective interest rate management and profitability enhancement.

Strong Capital Position

TrustCo’s consolidated equity to assets ratio rose to 10.85%, a 3% increase year-over-year, with shareholders’ equity up by 6%. This strong capital position supports the bank’s strategic initiatives, including a share repurchase program.

Non-Performing Loans Remain Low

The bank maintained a low level of non-performing loans, with the ratio remaining flat at a negligible 0.37%. This stability reflects TrustCo’s robust credit risk management practices.

Share Repurchase Program

As part of its capital management strategy, TrustCo announced a stock repurchase program of up to 1 million shares, approximately 5% of the current outstanding shares, indicating confidence in its financial health and future prospects.

Increase in Non-Interest Expenses

The earnings call highlighted an increase in non-interest expenses, which rose by $1.4 million from the prior year quarter. This was attributed to higher costs in salaries, equipment, and professional services, posing a challenge to the bank’s cost management efforts.

Limited Residential Loan Growth

Residential mortgages showed limited growth, increasing by only $26.2 million over the last year. This slower growth in residential loans contrasts with the bank’s otherwise strong performance in other segments.

Forward-Looking Guidance

TrustCo Bank Corp NY’s forward-looking guidance emphasizes a strong start to 2025, with significant growth in loans and deposits. The bank anticipates opportunities from potential interest rate reductions and remains focused on relationship banking and maintaining financial stability. The share repurchase program and low non-performing loan levels further underscore TrustCo’s strategic direction and financial resilience.

In summary, TrustCo Bank Corp NY’s earnings call reflects a positive outlook for 2025, with strong growth in key financial metrics and a solid capital position. While challenges such as increased non-interest expenses and limited residential loan growth exist, the bank’s overall performance and strategic initiatives position it well for continued success.