Good day, and welcome to the TrustCo Bank Corp Fourth Quarter 2014 Earnings Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] Before proceeding, we would like to mention that this presentation may contain forward-looking information about TrustCo Bank Corp NY that is intended to be covered by the Safe Harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Actual results and trends could differ materially from those set forth in such statements due to various risks, uncertainties and other factors. Please review risk factors in our most recent annual report on Form 10-K and our other securities filings for detailed information. The statements are valid only as of the date hereof and the company disclaims any obligation to update this information except as maybe required by applicable law. Please also note today's call is being recorded. I would now like to turn the conference over to Mr. Robert J. McCormick, President and CEO. Please, sir, go ahead.

Thanks Hilda. Good morning everyone. I'm Rob McCormick, President and CEO of the TrustCo Bank. Joining me on the call today are Mike Ozimek, our new CFO; and Scot Salvador, our Chief Banking Officer. As always in the room is Kevin Timmons, who most of you deal with on a regular basis, and Bob Cushing ready to pounce if Mike messes up. As most of your know Bob Cushing our long term CFO has announced his retirement effective 5/30/2015. Bob has been great for our company for about 20 years. We will certainly miss him and wish him well on his retirement. We are lucky to have Mike Ozimek to fill his shoes. Mike has been with us for about 12 years. He is a CPA, a graduate of Siena College, and with KPMG prior to joining our company. We have every confidence that Mike will be successful and we look forward to him taking a bigger role in our company. In the meantime Bob and Mike are working closely together until the end of May. Mike has been trained by Bob for the last 12 years. Bob will be around through the end of the year on a consulting basis to help with the transition. If you follow our company we try to cover things with contingency plans and its nice when they work out. Let's get to 2014. 2014 was certainly a solid year at TrustCo Bank. Our net income was up over 11% in comparison to 2013, almost $44.2 million. We are very pleased with our results. Our net interest income was up over 4% to about $141.4 million. Our total assets were $4.644 billion at year end up about $123 million. Our loans were up about $250 million to $3.159 billion as a growth occurred almost…

Thanks Rob. I will now review the financial results for TrustCo for the fourth quarter and the full year 2014. The strength of momentum that we built during the year continued into the fourth quarter. We saw sustained loan growth during what is normally a quite banking season due to the holidays and weather. The loan portfolio increased by $78 million average during the quarter and $254 million from the fourth quarter of 2013. This is a positive shift in the balance sheet from the lower yielding investments to higher yielding core loan relationships. Net income was approximately $10.7 million for the fourth quarter of 2014 compared to $10.6 million for the same quarter in 2013. As Rob said, the full year 2014 results were $44.2 million compared to $39.8 million for 2013, an increase of 11%. This resulted in a return on assets of 97 basis points of our full year of 2014, 90 basis points for 2013. Return on equity increased in 2014 to 11.54%, and 11.15% for the full year of 2013. There were no unusual or one-time items, income items recognized in the fourth quarter that would affect the comparability of the prior years. As we noted in prior conference calls, there were some one-time income items that occurred in both the first and second quarters of 2014 that would need to be considered when comparing the trailing fourth quarter results. For the quarter our net interest margin increased to 3.17% up from 3.16% in the third quarter, resulting in a taxable equivalent net interest income of $35.7 million this quarter compared to $34.5 million in the fourth quarter of 2013. The increase in net interest margin comes from the asset side of the balance sheet as a result of the two basis point increase in…

Thanks Mike. For the fourth quarter our loan portfolio continued to steadily increase. Our total loans grew by $75 million with our year-over-year growth tallying an approximately $250 million. Loans grew by 2.45% in the quarter and 8.59% on the year. These are very solid growth numbers and we are pleased with both the quarter and the year-end results. As has been the norm, the vast majority of the quarter’s loan growth was in the residential portfolio, accounting for over $70 million of the increase. Commercial loans increased by $3.6 million in the quarter with our small installment portfolio also shown $1.2 million in growth as our new credit card product was rolled out. We experienced residential loan growth throughout our markets with Florida this quarter accounting for approximately 42% of our net increase. Our loan backlog at year end was solid, though down from the third quarter. A decrease in loan activity is normal at this point in the year, and the first quarters net loan growth is typically the slowest of the year. Most of our recent originations had been in the 4% range for a 30-year mortgage. Non-performing loan and asset quality measurements continue to improve on the quarter with significant improvements posting on a year-over-year basis. Non-performing assets fell $3.1 million during the quarter to $40.5 million and declined $11.7 million for the full year. Non-performing loans decreased to 1.08% of loans at year end versus 1.49% a year earlier. Early stage delinquencies remained low and the quarter's net charge-off totaled with the lowest since the fourth quarter of 2008. Finally the coverage ratio or allowance for loan losses to non-performing loans was 136% in year end versus 110% at year earlier. Rob?

That's our story and we'd happy to answer any questions you might have.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Alex Twerdahl with Sandler O'Neill. Please go ahead.

Scot, you mentioned that new mortgages are going on around 4% today. Can you remind us, back in the middle of 2012, when the 10-year really was in the 1.50% range, where mortgage rates bottomed for you guys?

Yes, they bottomed right around this range, Alex, to be honest with you. We have come down at low for slightly under four when I say slightly under four, I'm talking high threes. I mean, we will occasionally really just to stir up the market and kind of draw some attention, we have occasionally drop down a little lower on a couple days special are one week special type thing. But really, where we bought them in the past and most recently is right around the 4% range maybe high threes.

Okay. Thank you. And then, can you talk about, as you prepare for potentially the short end of the curve to go higher towards the end of the year, early next year, can you talk about going out a little bit longer on CDs, which I think is something you've been doing over the past couple of months, versus maybe putting on some borrowings with some interest rate swaps or something a little bit more sophisticated like that?

We've been looking at the CDs from an opportunistic point of view. We view it as a chance not just on the rate side but on the relationship side too. As Rob said earlier, you know we don't have any brokerage deposits. We don’t buy any CDs. So we’re not going to put a higher rate out there just to bring in a flood of money. But as you said, we have recently been putting little bit higher rate out there. We’ve done an 18 months term. We've even going out as far as a three year term. I'm not crazy high, one plus range on a couple of occasions and again the goal is too full we always think, Number one, we do want to lock-in some of the money for longer terms and we’ve been successful at that. If you look back over the last year 18 months, our CD portfolio duration has really transitioned. We have moved a lot of that money out longer in terms of maturity which is definitely a good thing. But we do it strategically. We really want to get a customer out of it hopefully that we’re going to have the long term. So that’s kind of our basic philosophy on that.

Okay. Then just a final question: A couple years ago, when we were looking at credit, the time frame to foreclose on a property in upstate New York, I think, was over 1,000 days. Has that come down meaningfully recently?

Not significantly Alex. Our bubble has gotten significant smaller, but it's still - probably just shy of three years now. But it has not come down significantly. It's actually probably a little better in Florida, but we have nothing in Florida.

Okay, great. Thank you, guys, for taking my questions.

[Operator Instructions] The next question comes from Travis Lan with KBW. Please go ahead.

Mike, just to clarify your expense guidance, you said the $21 million to $21.7 million quarterly - that's excluding OREO, right?

That's correct. That's $21 million to $21.7 million and then 500,000 to 1 million on the OREO side.

Got it. Thanks. Okay. Then, if you could talk a little bit about your own NIM outlook, obviously there's been some interest rate volatility, and you guys have been able to offset a lot of that with your balance sheet flexibility. At what point do you see, if ever -- what will it take in the environment to see this NIM get put under pressure?

We don't typically forecast our - give guidance on our margin going out. But we are positioned I think pretty decent on our balance sheet right now. Rates are only going one way, let's face it, Travis. The longer we can delay that or put that back, to invest that funds I think the better off will be. And we are not seeing the pressures that you’re describing at this point in time. So the longer we can take that pause and hold that cash and wait for the rates to rise, I think we’re in a better position.

Got it. Okay. Then –

Flexibility to move we have to.

Right. Yes, and that's worked so well to this point.

That’s right.

Just a little bit on the loan growth outlook: Mike, you mentioned that obviously the fourth quarter was strong, for what's typically a seasonally weak quarter. What are you guys looking at for 2015, in terms of activity?

We see the growth, we had a good 2014, we see really same thing from 2015. We are over $200 million – in that $225 million range year-over-year and we expect really the same thing going forward into 2015. That's where we see opportunity. Right now, on the investment side, where the rates are right now, we are not going to hog wild and start really investing tons of money in the investment side, but we see opportunity on the loan side.

It certainly didn’t come up in the call Travis. We usually throw the stat out, at least at the annual meeting and usually on the call, is the average deposits per branch. That continues to rise which is 144 locations, small increases in every branches is really what we’re banking on and we’ll provide the prosperity for the future.

To this point, you haven't seen deposit competition really pick up from a rate perspective?

The deposit world is competitive but we do pretty well on that market and the number of locations we have and some of the other services we offer certainly put us in a better competitive position and most of the banks we are dealing with.

All right. Thank you guys very much.

[Operator Instructions] This concludes our question-and-answer session. I'd like now to turn the conference back over to Mr. Robert McCormick, for any closing remarks.

Thanks for taking some time this morning and thanks for your interest in the Bank. Hope you all have a great day.