Banking Cautiously Despite Notable Enhancements at TrustCo
Geared-Up Guide to TrustCo Bank's Financial Journey
Hey there! Let's dive into the story of TrustCo Bank and see if it's worth investing in. This traditional bank, with a $600 million market cap, operates in New York, Florida, and New Jersey. It's been up and down lately, having a 25% rise since September 2023, followed by a 1.3% drop since then.
The balance sheet keeps growing, but revenue and profits are on the decline. The shares might be cheap considering their book value, but they're still quite pricey on a price-to-earnings basis. Asset quality could use some improvement too.
Since the last update, the deposits have grown, reaching almost $5.5 billion in the first quarter of the 2025 fiscal year. Loans also increased slightly, with most originating from New York and Florida. About 84.5% of the loans are first mortgages, but the bank does have some exposure to home equity lines of credit and commercial real estate.
The good news? The company's net interest income climbed to $40.1 million in the latest quarter. Management has been repricing loans and deposits, which has helped boost the net interest margin and benefit the company. Non-interest income also saw a small improvement thanks to higher financial services income.
However, profitability still needs to increase substantially before considering an upgrade. Shares are trading at 12.3 times earnings, which is above our preferred range. Asset quality must improve, too, as it's currently under the minimum threshold we look for.
TrustCo Bank has a strong asset quality history, with conservative lending practices, impressive performance during crises, and recognition from industry leaders. While direct peer-to-peer asset quality ratios aren't detailed in the given sources, TrustCo's history indicates it ranked favorably within its peer group.
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Stay tuned for more insights!
Fun Fact:Did you know that TrustCo Bank has paid dividends for over 100 consecutive years? That's a testament to the bank's commitment to shareholder returns and financial strength! (Sources: 1, 2)
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- TrustCo Bank, previously known for its operations in oil and gas, has expanded its portfolio to include banking, real estate, and mortgages, as indicated by its increasing loans, particularly first mortgages and home equity lines of credit.
- Despite the bank's conservative lending practices, active management of loan and deposit rates, and a strong asset quality history, the declining revenue and profits, underperforming profitability, and a pricey price-to-earnings ratio suggest a need for further improvement in the finance sector.
- Even though Crude Value Insights primarily focuses on oil and natural gas investing, the long-standing tradition of dividend payments by TrustCo Bank for over 100 consecutive years shows its commitment to shareholder returns and financial strength in both the banking and energy sectors.
