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TRUSTCO BANK CORP N Y (TRST)·Q1 2025 Earnings Summary
Executive Summary
- Q1 2025 delivered solid profitability and margin expansion: net income $14.3M, diluted EPS $0.75, ROAA 0.93%, ROAE 8.49%, and NIM 2.64% (+20 bps YoY; +4 bps QoQ) as loan repricing and disciplined deposit costs drove net interest income higher .
- Credit metrics remained strong and stable: NPLs 0.37% of loans, coverage ratio 269.8%, NPAs 0.33% of assets; net recoveries of $258K in the quarter .
- Capital and shareholder returns: equity-to-assets 10.85%; Board authorized repurchase of up to 1,000,000 shares (~5% OS), and continued the $0.36 quarterly dividend (declared May 21, payable July 1) .
- Deposits and loans both up YoY (average loans +$104.7M, +2.1%; average deposits +$103.3M, +1.9%) with home equity lines leading growth (+17.3% YoY); management emphasized digital engagement and pricing discipline as deposit cost tailwinds in a potential lower-rate environment .
- Wall Street consensus (S&P Global) was not available for EPS or revenue, so a beat/miss assessment cannot be determined this quarter; monitoring estimate updates is warranted given margin and fee-income momentum [Values retrieved from S&P Global]*.
What Went Well and What Went Wrong
What Went Well
- Margin and spread improved: NIM rose to 2.64% (+20 bps YoY; +4 bps QoQ), spread to 2.21% (+21 bps YoY), as loan yields rose and cost of interest-bearing liabilities fell to 1.92%; management highlighted repricing loans at market rates and disciplined deposit costs as drivers .
- Fee income momentum: Trustco Financial Services fees increased 16.7% to $2.1M; assets under management reached ~$1.1–1.2B, with fees now ~42.6% of noninterest income; management emphasized recurring nature of these revenues .
- Strong capital and shareholder returns: equity-to-assets 10.85%; authorized up to 1M share buyback with intent to fully execute; dividend of $0.36 continued, supporting total return profile .
Quote: “We added loans at current market rates, which repriced our current loan portfolio higher… funded entirely by our own deposits… favorably repriced our time deposits… yielded net income of $14.3 million and boosted all return metrics significantly year-over-year.” — Robert J. McCormick .
What Went Wrong
- Noninterest expense increased YoY: total noninterest expense rose to $26.3M (+$1.4M YoY), driven by salaries/benefits, equipment, professional services, and outsourced services; though management expects recurring ORE expense not to exceed $250K per quarter .
- Investment income softer: lower interest/dividend income from securities and short-term investments partially offset the benefit of higher loan yields (company commentary) .
- Limited external estimate context: S&P Global consensus EPS and revenue were unavailable, constraining beat/miss analysis and potentially delaying sell-side narrative alignment [Values retrieved from S&P Global]*.
Financial Results
Segment/Line-of-Business (selected noninterest income components):
KPIs and Balance Sheet
Guidance Changes
Earnings Call Themes & Trends
Management Commentary
- Strategy: “We added loans at current market rates… funded entirely by our own deposits… favorably repriced our time deposits… boosted all return metrics” — Robert J. McCormick .
- Capital return: “Tone and tenor towards share repurchases is more favorable… intent would be to fully execute on the 5% this year” — Robert J. McCormick .
- Cost outlook: “Anticipated level of [ORE] expense not to exceed $250,000 per quarter… expect 2025's total recurring noninterest expense net of ORE to be consistent with prior year's guidance” — Michael Ozimek .
- Macro/rates: “Lower interest rate environment will provide opportunities to manage deposit costs more effectively, thereby supporting net interest margin” — Company commentary .
Q&A Highlights
- Market strength: Management characterized the Capital District and Central Florida markets as “pretty strong,” emphasizing stability versus more volatile regions .
- Home prices: “Stable and not increasing… expectation of 10–15% annual returns on real estate are not happening” — CEO .
- Buyback execution/targets: Intent to fully execute the 5% buyback; capital ratio targets not disclosed but management sees room for additional repurchases while maintaining “very strong capital position” .
Estimates Context
- S&P Global consensus for Q1 2025 EPS and revenue was not available at the time of retrieval; therefore, we cannot assess beats/misses relative to Street expectations [Values retrieved from S&P Global]*.
- Reported Q1 2025 results: diluted EPS $0.75; net interest income $40.4M; noninterest income $5.0M; efficiency ratio 58.06%; NIM 2.64% . With margin tailwinds and fee momentum, estimates may need upward adjustments if deposit cost trends continue and HELOC demand persists .
Key Takeaways for Investors
- Margin trajectory improving: loan repricing and deposit cost discipline expanded NIM and spread; if Fed eases, deposit costs could decline further, supporting additional margin gains .
- Credit remains a differentiator: sub-40 bps NPL ratio with robust coverage and net recoveries underscores low loss content and balance sheet resilience .
- Capital deployment: new 5% buyback authorization and maintained dividend sharpen TSR profile; management intent to execute is a near-term catalyst .
- Fee income durability: wealth/financial services revenue growth and rising AUM provide recurring noninterest income to complement NII, reducing rate sensitivity .
- Expense watch: while noninterest costs rose YoY, ORE expense guardrail and commentary to keep recurring costs aligned with prior guidance temper margin pressure risk .
- Geographic exposure: stable NY Capital District and Central Florida footprint provides steady demand; home prices are flat, limiting collateral volatility .
- Near-term trading lens: focus on execution of the buyback, sequential NIM progression, and deposit cost behavior; absence of Street consensus this quarter may delay sell-side narrative, but improving fundamentals and shareholder-return signals can support the stock pending broader estimate updates .