John Lapey

John Lapey of an unknown firm asked for clarification on the "strong local economy" mentioned in the press release, inquiring about specific market performance, residential home price trends, and the rationale behind the new 5% share repurchase plan after a previous 1% plan was not executed.

Answer

President Robert McCormick clarified that TrustCo's core markets, including New York's Capital District and Central Florida, are stable and not experiencing the volatility seen elsewhere. He noted that home prices are stable but no longer seeing significant annual increases. Regarding the buyback, McCormick stated the 5% authorization reflects a more favorable environment for repurchases compared to the prior year and that the company intends to fully execute the plan.

John Lapey inquired about the 2025 lending outlook, contrasting home equity with fixed-rate mortgages, and asked about the current Net Interest Margin (NIM), CD rates, and the drivers behind increased equipment and outsourced services expenses.

Answer

President Robert McCormick expressed optimism for a 'spring market' in real estate, anticipating growth in purchase mortgages. CFO Michael Ozimek noted that the NIM is stabilizing as the bank reprices CDs downward, providing current rates of 4.15% for 6-9 month terms and 4% for 12-month terms. Ozimek also clarified that higher Q4 expenses were due to non-recurring costs from branch closures and new ATM installations.

John Lapey from Alliance Global Partners inquired about several key areas: potential credit issues in Florida following Hurricane Milton, the pricing dynamics of maturing versus new CDs, the drivers of strong financial services revenue, and the bank's capital allocation priorities, including branch expansion, dividends, and share repurchases.

Answer

Robert McCormick, President, addressed the questions, stating that the bank does not anticipate significant credit issues from the hurricane based on past experiences. He noted that most CD customers are opting for 3-month terms at around 4.5%. McCormick attributed the strength in financial services to both higher assets under management and proactive fee management. Regarding capital, he prioritized a potential share buyback program and targeted new branch expansion as the financial outlook continues to improve.