TrustCo Bank Corp NY's Q1 2025: Key Contradictions in Share Repurchase Plans and Credit Quality

Share repurchase plan, credit quality concerns, residential home price trends, changes in capital allocation strategy are the key contradictions discussed in TrustCo Bank Corp NY's latest 2025Q1 earnings call.



Deposit and Loan Growth:
- TrustCo Bank reported that deposits were up with low-cost core and business accounts, including cannabis accounts, contributing significantly.
- Commercial lending increased by 8%, with total commercial loans surpassing $300 million.
- The growth was driven by a renewed focus on digital channels for account openings and effective management of the cost of funds.

Margin Improvement and Shareholder Returns:
- The bank achieved a meaningful margin improvement of more than 8% year-over-year, with a net interest margin now at 2.64%.
- Earnings per share, return on average assets, and return on average equity all increased by 27%.
- This improvement was due to increases in deposits and strong performance in residential and commercial lending.

Capital Strength and Share Repurchase:
- Consolidated equity to assets remained at an exemplary 10.85%, up 3% year-over-year.
- The company announced a million share repurchase program, accounting for approximately 5% of outstanding shares.
- The strong capital position supports the repurchase program, enhancing shareholder value while maintaining operational flexibility.

Loan Portfolio Expansion:
- Average loans grew by 2.1% or $104.7 million, reaching an all-time high of $5.1 billion.
- Home equity lines of credit portfolio increased by 17.3%, contributing to the overall growth.
- The growth in the loan portfolio is attributed to a strong local economy and increased demand for credit.