TrustCo Bank Corporation

11/06/2026 | Press release | Distributed by Public on 11/06/2026 14:41

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Introduction
The review that follows focuses on the factors affecting the financial condition and results of operations of TrustCo during the three month and nine month periods ended September 30, 2026, with comparisons to the corresponding period in 2025, as applicable. The consolidated interim financial statements and related notes, as well as the Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the SEC on March 16, 2026 (the "2025 Form 10-K"), should also be read in conjunction with this review. Amounts in prior period consolidated interim financial statements are reclassified whenever necessary to conform to the current period's presentation. These reclassifications have no effect on prior period net income or shareholders' equity. See the "Cautionary Note Regarding Forward-Looking Statements" on page 5 of this report for a description of important factors that could cause actual results to differ from expected results.

Following this Management's Discussion and Analysis is the table "Distribution of Assets, Liabilities and Shareholders' Equity: Interest Rates and Interest Differential", which gives a detailed breakdown of TrustCo's average interest earning assets and interest-bearing liabilities for the three and nine month periods ended September 30, 2026 and 2025.

Economic Overview
During the third quarter of 2026, financial markets were volatile, and two of the three major indexes advanced. The S&P 500 Index was up 2.03%, Nasdaq was up 2.47%, and the Dow Jones Industrial Average was down 2.70% compared to the end of the second quarter of 2026. The 10-year Treasury bond averaged 4.76% during Q3 2026 compared to 4.42% in Q2 2026, an increase of 34 basis points. The 2-year Treasury bond average rate increased 39 basis points to 4.36% during Q3 2026, which flattened the yield curve as compared to the prior quarter. The spread between the 10-year and the 2-year Treasury bonds decreased from 0.46% on average in Q2 2026 to 0.39% in Q3 2026. Generally, steeper yield curves are favorable for portfolio mortgage lenders like TrustCo, and the table below illustrates the range of rate movements for both short term and longer-term rates. The Federal Funds rate remained flat for most of 2026 at a range of 3.50% to 3.75% until the Federal Open Market Committee ("FOMC") raised the target range to 3.75% to 4.00% in September 2026.

Index
3 Month
2 Year
5 Year
10 Year
10 - 2 Year
Yield (%)
Yield (%)
Yield (%)
Yield (%)
Spread (%)
Q3/25
Beg of Q3
4.41
3.72
3.79
4.24
0.52
Peak
4.42
3.95
4.05
4.50
0.65
Trough
4.00
3.49
3.57
4.01
0.43
End of Q3
4.02
3.60
3.74
4.16
0.56
Average in Q3
4.26
3.72
3.80
4.26
0.54
Q4/25
Beg of Q4
4.02
3.60
3.74
4.16
0.56
Peak
4.03
3.63
3.78
4.19
0.73
Trough
3.62
3.41
3.55
3.97
0.49
End of Q4
3.67
3.47
3.73
4.18
0.71
Average in Q4
3.86
3.52
3.67
4.10
0.58
Q1/26
Beg of Q1
3.67
3.47
3.73
4.18
0.71
Peak
3.74
3.96
4.08
4.44
0.74
Trough
3.62
3.38
3.51
3.97
0.46
End of Q1
3.70
3.79
3.92
4.30
0.51
Average in Q1
3.69
3.58
3.77
4.20
0.62
Q2/26
Beg of Q2
3.70
3.79
3.92
4.30
0.51
Peak
3.87
4.24
4.32
4.67
0.57
Trough
3.65
3.71
3.84
4.26
0.27
End of Q2
3.87
4.14
4.19
4.44
0.30
Average in Q2
3.73
3.97
4.09
4.42
0.46
Q3/26
Beg of Q3
3.87
4.14
4.19
4.44
0.30
Peak
4.28
4.92
5.09
5.29
0.53
Trough
3.82
4.13
4.21
4.48
0.20
End of Q3
4.20
4.88
5.09
5.29
0.41
Average in Q3
3.94
4.36
4.50
4.76
0.39

The country has been experiencing economic uncertainty as markets continue to adjust to changes in tariff policies, Middle East tensions, increased oil prices and a volatile labor market. The FOMC lowered the Federal Funds target rate range to 3.50-3.75% in December 2025 and there was no change in the first half of 2026. At its meeting in July 2026, the FOMC majority voted to leave rates unchanged although three members voted to increase the Federal Funds target rate. In September 2026, the FOMC increased the target range for the federal funds rate by 25-basis points to 3.75% - 4.00% and revised its economic outlook to reflect expectations for possible further interest rate increases during 2026. As a result, market expectations have shifted toward a continuing elevated interest rate environment, which may continue to adversely affect housing affordability and refinancing demand.

The Company expects to see continued volatility in the economic markets resulting from governmental responses to inflation, as well as uncertainty about the impacts of the conflict in Iran and tariffs. These changing conditions could have impacts on the balance sheet and income statement of the Company for the remainder of the year.

Index
Management believes that TrustCo's long-term focus on traditional banking services and practices historically has enabled the Company to avoid significant impact from asset quality problems, and that the Company's strong liquidity and solid capital positions have allowed the Company to continue to conduct business in a manner consistent with its past practice. While we continue to adhere to prudent underwriting standards, should general housing prices and other economic measures, such as unemployment in the Company's market areas, deteriorate as a result of changes in interest rates, general economic instability, a potential or actual default on the federal debt or other reasons, the Company may experience an increase in the level of credit risk and in the amount of its classified and nonperforming loans.

Financial Overview
TrustCo recorded net income of $17.3 million, or $1.02 of diluted earnings per share, for the three months ended September 30, 2026, compared to net income of $16.3 million, or $0.86 of diluted earnings per share, in the same period in 2025. Return on average assets was 1.05% and 1.02%, respectively, for the three months ended September 30, 2026 and 2025. Return on average equity was 10.57% and 9.29%, respectively, for the three months ended September 30, 2026 and 2025.

The primary factors accounting for the change in net income for the three months ended September 30, 2026 compared to the same period of the prior year were:


•
An increase of $3.9 million, or 9.1%, in net interest income compared to the third quarter of 2025, primarily as a result of an increase in interest and fees on loans and a decrease in interest expense, partially offset by a decrease in interest income on federal funds sold and other short-term investments.


•
An increase of $600 thousand in provision for credit losses compared to the third quarter of 2025.


•
An increase of $1.8 million in noninterest expense compared to the third quarter of 2025 primarily as a result of increases in equipment expense, professional services, outsourced services, advertising expense and other expenses.

TrustCo recorded net income of $50.6 million, or $2.91 of diluted earnings per share, for the nine months ended September 30, 2026, compared to net income of $45.6 million, or $2.41 of diluted earnings per share, in the same period in 2025. Return on average assets was 1.04% and 0.97%, respectively, for the nine months ended September 30, 2026 and 2025. Return on average equity was 10.15% and 8.84%, respectively, for the nine months ended September 30, 2026 and 2025.

Index
The primary factors accounting for the change in net income for the nine months ended September 30, 2026 compared to the same period of the prior year were:


•
An increase of $12.1 million, or 9.7%, in net interest income compared to the first nine months of 2025, primarily as a result of an increase in interest and fees on loans and a decrease in interest expense, partially offset by a decrease in interest income on federal funds sold and other short-term investments.


•
An increase of $1.3 million in the provision for credit losses compared to the first nine months of 2025.


•
An increase of $1.1 million in noninterest income compared to the first nine months of 2025. The increase was primarily driven by a gain of $900 thousand from the conversion and sale of the Visa Class C common stock as described below.


•
An increase of $4.5 million in noninterest expense compared to the first nine months of 2025 primarily as a result of increases in salaries and employee benefits, equipment expense, outsourced services, advertising expense, and other expense.

Visa Exchange Offer
During the second quarter of 2026, TrustCo recognized an $844 thousand unrealized gain on equity securities resulting from the conversion of Visa Class B-2 shares into a combination of Visa Class B-3 and Visa Class C shares and the fair-value recognition of the Class C shares received. The Company sold all of its Visa Class C shares all in the third quarter of 2026 and recorded an additional gain of $56 thousand, thus resulting in no remaining carrying value on the Company's Statement of Financial Condition as of September 30, 2026. The Company originally obtained the Visa Class B shares in 2008. The strategic decision to retain the Class C shares and not sell them sooner, allowed the Company to avoid commissions and other expenses thus recognizing the full market value.

Asset/Liability Management
The Company strives to generate its earnings capabilities through a mix of core deposits funding a prudent mix of earning assets. Additionally, TrustCo attempts to maintain adequate liquidity and reduce the sensitivity of net interest income to changes in interest rates to an acceptable level while enhancing profitability both on a short-term and long-term basis.

TrustCo's results are affected by a variety of factors including competitive and economic conditions in the specific markets in which the Company operates and, more generally, in the national economy, financial market conditions and the regulatory environment. Each of these factors is dynamic, and changes in any area can have an impact on TrustCo's results. Included in the 2025 Form 10-K is a description of the effect that changes in interest rates had on lending, core funding and the results for the year 2025 compared to 2024. Many of the same market factors discussed in the 2025 Form 10-K continued to have an impact on results through the third quarter of 2026.

TrustCo competes with other financial service providers based upon many factors including quality of service, convenience of operations and rates paid on deposits and charged on loans. In the experience of management, the absolute level of interest rates, changes in interest rates and customers' expectations with respect to the direction of interest rates have a significant impact on the volume of loan and deposit originations in any particular period.

Index
Interest rates have a significant impact on the operations and financial results of all financial services companies. One of the most important interest rates used to control national economic policy is the "Federal Funds" rate. This is the interest rate utilized within the banking system for overnight borrowings for institutions with the highest credit rating. The Federal Funds rate remained flat for most of 2026 at a range of 3.50% to 3.75% until the rate was increased in September 2026 to 3.75% to 4.00%.

The interest rate on the 10-year Treasury bond and other long-term interest rates have significant influence on the rates for new residential real estate loans and longer term investments. These changes in interest rates have an effect on the Company relative to the interest income on loans, securities, and Federal Funds Sold and other short-term instruments as well as the interest expense on deposits and borrowings. Residential real estate loans and longer term investments are most affected by the changes in longer term market interest rates such as the 10-year Treasury. The Federal Funds Sold portfolio and other short-term investments are affected primarily by changes in the Federal Funds target rate. Deposit interest rates are most affected by short term market interest rates. Also, changes in interest rates have an effect on the recorded balance of the securities available for sale portfolio, which is recorded at fair value. Generally, as market interest rates increase, the fair value of the securities will decrease and the reverse is also generally applicable. Interest rates on new residential real estate loan originations are also influenced by the rates established by secondary market participants such as Freddie Mac and Fannie Mae. The Company establishes rates that management determines are appropriate in light of the long-term nature of residential real estate loans while remaining competitive. Higher market interest rates also generally increase the value of retail deposits.

TrustCo's principal loan products are residential real estate loans. Most of TrustCo's residential real estate loans carry a fixed rate of interest. As noted above, residential real estate loans and longer-term investments are most affected by the changes in longer term market interest rates such as the 10-year Treasury. The 10-year Treasury yield increased 34 basis points, on average, during the third quarter of 2026 compared to the second quarter of 2026 and increased 50 basis points as compared to the third quarter of 2025.

While TrustCo has been affected by changes in financial markets over time, management believes that the impacts have been mitigated by the Company's generally conservative approach to banking. The Company utilizes a traditional underwriting process in evaluating loan applications, and since originated loans are retained in the portfolio, there is a strong incentive to be conservative in making credit decisions. For additional information concerning TrustCo's loan portfolio and nonperforming loans, please refer to the discussions under "Loans" and "Nonperforming Assets," respectively. Further, the Company does not rely on borrowed funds to support its assets and maintains a significant level of liquidity on the asset side of the balance sheet. Management believes that these characteristics provide the Company with increased flexibility and stability during periods of market disruption and interest rate volatility.

A fundamental component of TrustCo's strategy has been to grow customer relationships and the deposits and loans that are part of those relationships. Management believes that the Company has significant capacity to grow its balance sheet given its extensive branch network.

Index
The Company expects that growth to be profitable. While the Company has not changed its fundamental long term strategy in regard to utilizing its excess capacity, management continually evaluates changing conditions and may seek to limit growth or reduce the size of the balance sheet if its analysis indicates that doing so would be beneficial.

For the third quarter of 2026, the net interest margin was 2.95%, up 16 basis points versus the prior year's quarter. The quarterly results reflect the following significant factors:


•
The average balance of Federal Funds sold and other short-term investments decreased by $12.9 million and the average yield decreased 70 basis points in the third quarter of 2026 compared to the same period in 2025.


•
The average balance of securities available for sale decreased by $31.9 million and the average yield increased 24 basis points to 3.15%. The increase in the average yield was a result of higher yields on investments purchased during 2025 and the first nine months of 2026, as well as maturities of lower yielding securities over the same periods. The increase in the average yield was not enough to offset the decrease in average balance, resulting in less interest income.


•
The average loan portfolio grew by $238.1 million to $5.41 billion and the average yield increased 17 basis points to 4.49% in the third quarter of 2026 compared to the same period in 2025.


•
The average balance of interest-bearing liabilities increased $212.0 million and the average rate paid decreased 11 basis points to 1.79% in the third quarter of 2026 compared to the same period in 2025.

During the third quarter of 2026, the Company continued to focus on its strategy to expand its loan portfolio by offering competitive interest rates. Management believes the TrustCo residential real estate loan product is very competitive compared to local and national competitors. Competition remains strong in the Company's market areas.

For the nine months ended September 30, 2026, the net interest margin was 2.89%, up 18 basis points versus the prior year. The nine-month results reflect the following significant factors:


•
The average balance of Federal Funds sold and other short-term investments increased by $27.1 million and the average yield decreased 73 basis points in the third quarter of 2026 compared to the same period in 2025. The increase in the average balance was not enough to offset the decrease in average yield, resulting in less interest income.


•
The average balance of securities available for sale decreased by $39.1 million and the average yield increased 27 basis points to 3.05% for the first nine months of 2026 compared to the same period in 2025. The increase in the average yield was a result of higher yields on investments purchased during 2025 and the first nine months of 2026, as well as maturities of lower yielding securities over the same periods. The increase in the average yield was not enough to offset the decrease in average balance, resulting in less interest income.

Index

•
The average loan portfolio grew by $198.5 million to $5.34 billion and the average yield increased 18 basis points to 4.43% for the first nine months of 2026 compared to the same period in 2025.


•
The average balance of interest-bearing liabilities increased $187.3 million and the average rate paid decreased 12 basis points to 1.79% for the first nine months of 2026 compared to the same period in 2025.

The strategy on the funding side of the balance sheet was to offer competitive core deposit products coupled with short term time accounts. We believe that this strategy has sustained TrustCo's strong liquidity position and continues to allow us to cross sell products to new and existing customer relationships and take advantage of opportunities as they arise.

Earning Assets
Total average interest earning assets increased from $6.20 billion in the third quarter of 2025 to $6.39 billion in the same period of 2026 with an average yield of 4.35% in the third quarter of 2026 and 4.25% in the third quarter of 2025. The mix of assets invested in loans increased, while Federal Funds sold and other short-term investments and securities available for sale decreased over the prior year period. Interest income on average earning assets increased from $66.0 million in the third quarter of 2025 to $69.6 million in the third quarter of 2026. This increase was primarily driven by the increase in interest income on loans due to higher loan balances and higher interest rates on loan originations over the last year and variable rate loans repricing upwards.

Loans
The average balance of loans was $5.41 billion in the third quarter of 2026 and $5.18 billion in the comparable period in 2025, and the yield on loans was up 17 basis points to 4.49%. Interest income on loans was $60.9 million in the third quarter of 2026 up $4.9 million from the same period in 2025, primarily as a result of increased balances and higher interest rates on new originations compared to the existing portfolio yield.

Compared to the third quarter of 2025, the average balance of residential mortgage loans, home equity credit lines, and commercial loans increased, while the average balance of installment loans decreased.

The average balance of residential mortgage loans was $4.59 billion in the third quarter of 2026 compared to $4.41 billion in 2025, an increase of 4.0%. The average yield on residential mortgage loans increased by 21 basis points to 4.21% in the third quarter of 2026 compared to 2025, primarily as a result of the higher interest rates on new originations compared to the existing portfolio yield.

Index
TrustCo actively markets the residential loan products within its market territories. Mortgage loan rates are affected by a number of factors including rates on Treasury securities, the Federal Funds target rate and rates set by competitors and secondary market participants. TrustCo aggressively markets the unique aspects of its loan products thereby attempting to create differentiation from other lenders. These unique aspects include low closing costs, fast turn-around time on loan approvals, and no escrow or mortgage insurance requirements for qualified borrowers. Assuming a change in long-term interest rates, the Company would anticipate that the unique features of its loan products will continue to attract customers in the residential mortgage loan area.

Commercial loans, which consist primarily of loans secured by commercial real estate, increased $13.5 million to an average balance of $327.3 million in the third quarter of 2026 compared to the same period in the prior year. The average yield on this portfolio was up 5 basis points to 5.69% compared to the prior year period, primarily as a result of higher interest rates on new originations compared to the existing portfolio yield and certain variable rate loans that repriced upwards. The Company has remained selective in underwriting commercial loans in 2026 as the apparent risk/reward balance has been less favorable in some cases.

The average yield on home equity credit lines decreased 19 basis points to 6.31% during the third quarter of 2026 compared to the year earlier period. The average balances of home equity credit lines increased 11.4% to $490.3 million in the third quarter of 2026 as compared to the prior year.

Securities Available for Sale
The average balance of the securities available for sale portfolio for the third quarter of 2026 was $315.1 million compared to $347.0 million for the comparable period in 2025. The decrease in the balance reflects routine paydowns, calls and maturities, partially offset by new investment purchases. The average yield was 3.15% for the third quarter of 2026 compared to 2.91% for the third quarter of 2025. The increase in average yield is a result of higher yields on bonds purchased as well as lower rate bonds maturing since the prior year quarter. This portfolio is primarily comprised of agency issued residential mortgage-backed securities, bonds issued by government sponsored enterprises (such as Fannie Mae, the Federal Home Loan Bank, and Freddie Mac), Small Business Administration participation certificates, corporate bonds and municipal bonds. These securities are recorded at fair value with any adjustment in fair value included in other comprehensive income (loss), net of tax.

The net unrealized loss in the available for sale securities portfolio was $27.5 million as of September 30, 2026 compared to a net unrealized loss of $16.3 million as of December 31, 2025. The increase in net unrealized losses in the portfolio is the result of changes in the current interest rate environment.

Held to Maturity Securities
The average balance of held to maturity securities was $3.7 million for the third quarter of 2026 compared to $4.7 million in the third quarter of 2025. The decrease in balances reflects routine paydowns. No new securities were added to this portfolio during the period. The average yield was 4.53% for the third quarter of 2026 up from 4.40% for the year earlier period. TrustCo expects to hold the securities in this portfolio until they mature or are called.

The net unrecognized loss in the held to maturity securities portfolio was $78 thousand as of September 30, 2026 compared to a net unrecognized gain of $50 thousand as of December 31, 2025. The change from a net unrecognized gain to a net unrecognized loss in the portfolio is the result of changes in market interest rate levels.

Index
As of September 30, 2026, this portfolio consisted solely of agency issued residential mortgage-backed securities. The balances for these securities are recorded at amortized cost.

Federal Funds Sold and Other Short-Term Investments
The average balance of Federal Funds sold and other short-term investments was $649.8 million for the third quarter of 2026 compared to $662.7 million in the third quarter of 2025. The yield was 3.72% for the third quarter of 2026 and 4.42% for the comparable period in 2025. Interest income from this portfolio decreased $1.3 million from $7.4 million in 2025 to $6.1 million in 2026.

The Federal Funds sold and other short-term investments portfolio is utilized to generate additional interest income and liquidity as funds are waiting to be deployed into the loan and securities portfolios.

Funding Opportunities
TrustCo utilizes various funding sources to support its earning asset portfolio. The vast majority of the Company's funding comes from traditional deposit vehicles such as savings, demand deposit, interest-bearing checking, money market and time deposit accounts.

Total average interest-bearing deposit accounts (which includes interest-bearing checking, money market accounts, savings and time deposits) increased $197.0 million to $4.90 billion for the third quarter of 2026 versus the third quarter in the prior year, and the average rate paid decreased from 1.92% for 2025 to 1.80% for 2026. Total interest expense on these deposits decreased from $22.7 million to $22.2 million in the third quarter of 2026 compared to the year earlier period. From the third quarter of 2025 to the third quarter of 2026, interest-bearing checking account average balances were up 5.5%, certificates of deposit average balances were up 7.6%, non-interest demand average balances were up 4.1%, average savings balances were flat and money market balances were down 4.7%. Overall, average balances are up from a year ago as we continue to encourage customers to retain their funds in the expanded product offerings of the Bank through aggressive marketing and product differentiation.

At September 30, 2026, the maturity of total time deposits was as follows:

(dollars in thousands)
Under 1 year
$
2,101,501
1 to 2 years
196,843
2 to 3 years
3 to 4 years
4 to 5 years
Over 5 years
$
2,299,326

Index
As of September 30, 2026 and December 31, 2025, approximately $1.28 billion and $1.22 billion, respectively, of our deposit portfolio was uninsured. The uninsured amounts are estimates based on the methodologies and assumptions used for the Bank's regulatory reporting requirements.

Average short-term borrowings for the third quarter were $102.4 million in 2026 compared to $87.3 million in 2025. The weighted average interest rate for short-term borrowings increased 47 basis points to 1.37% during this time period. The short-term borrowings of the Company are cash management accounts, which represent retail accounts with customers for which the Bank has pledged certain assets as collateral.

The Company has a number of contingent funding alternatives available in addition to the large cash and cash equivalents position and the investment securities positions it maintains on its balance sheet. The Bank is a member of the Federal Home Loan Bank of New York ("FHLBNY") and is an eligible borrower at the Federal Reserve Bank of New York ("FRBNY") and has the ability to borrow utilizing securities and/or loans as collateral at either institution. The Bank does not utilize brokered deposits as a part of its funding strategy, but does incorporate them as a potential contingent funding source within its Asset/Liability Management Policy. Like other contingent funding sources, brokered CDs may be tested from time to time to ensure operational and market readiness. As of September 30, 2026 the Company also has borrowing capacity of $1.03 billion available with the FHLBNY and $525 thousand available with the FRBNY. The borrowing capacity is secured by the loans pledged by the Company. As of September 30, 2026 and December 31, 2025, the Company had no outstanding borrowings with the FHLBNY or the FRBNY.

Net Interest Income
Net interest income increased by $3.9 million to $47.0 million in the third quarter of 2026 compared to the same period in 2025. The net interest spread was up 21 basis points to 2.56% in the third quarter of 2026 compared to the same period in 2025. As previously noted, the net interest margin was also up 16 basis points to 2.95% for the third quarter of 2026 compared to the same period in 2025. Yields on earning assets increased in the third quarter of 2026 compared to the third quarter of 2025, and rates on interest-bearing liabilities decreased causing margin expansion. The loan and investment portfolios continue to reprice upward as lower yielding assets mature and are replaced with higher rate loan originations and investment purchases, driving steady improvement in overall asset yields. The Federal Reserve's decision regarding whether to raise, cut, or hold rates in upcoming meetings will have an effect on the Company's timing and ability to raise or lower deposit costs which may impact margin in future quarters.

Net interest income increased by $12.1 million to $137.3 million in the first nine months of 2026 compared to the same period in 2025. The net interest spread was up 21 basis points to 2.49% in the first nine months of 2026 compared to the same period in 2025. Net interest margin was up 18 basis points to 2.89% for the first nine months of 2026 compared to the same period in 2025. The increases in net interest income for the first nine months of 2026 primarily resulted from the same factors discussed above for the third quarter of 2026.

Index
Nonperforming Assets
Nonperforming assets include nonperforming loans ("NPLs"), which are those loans in a non-accrual status and loans past due three payments or more and still accruing interest. Also included in the total of nonperforming assets are foreclosed real estate properties, which are included in other assets and categorized as other real estate owned.

The following describes the nonperforming assets of TrustCo as of September 30, 2026:

Nonperforming loans and foreclosed real estate: Total NPLs were $21.1 million at September 30, 2026 compared to $20.7 million at December 31, 2025. There were no loans at September 30, 2026 and December 31, 2025 that were past due 90 days or more and still accruing interest. The coverage ratio, or allowance for credit losses on loans to NPLs, was 261.8% at September 30, 2026 compared to 252.5% at December 31, 2025.

At September 30, 2026, NPLs primarily include a mix of commercial and residential loans. Of total NPLs of $21.1 million at September 30, 2026, $19.0 million were residential real estate loans, $2.0 million were commercial loans and mortgages and $38 thousand were installment loans, compared to $18.6 million, $2.0 million and $51 thousand, respectively, at December 31, 2025.

A significant percentage of NPLs are residential real estate loans, which are historically lower-risk than most other types of loans. Net recoveries were $44 thousand on residential real estate loans (including home equity lines of credit) for the third quarter of 2026 compared to net recoveries of $194 thousand for the third quarter of 2025. Management believes that these loans have been appropriately written down where required.

Ongoing portfolio management is intended to result in early identification and disengagement from deteriorating credits. TrustCo has a diversified loan portfolio that includes a significant balance of residential mortgage loans to borrowers in the Capital Region of New York and Central Florida, and avoids concentrations to any one borrower or any single industry. TrustCo has no advances to borrowers or projects located outside the U.S. TrustCo continues to identify delinquent loans as quickly as possible and to move promptly to resolve problem loans. Efforts to resolve delinquencies begin immediately after the payment grace period expires, with repeated, automatically generated notices, as well as personalized phone calls and letters. Loans are placed in non-accrual status once they are 90 days past due, or earlier if management has determined that such classification is appropriate. Once in non-accrual status, loans are either brought current and maintained current, at which point they may be returned to accrual status, or they proceed through the foreclosure process. The collateral on non-accrual loans is evaluated periodically, and the loan value is written down if the collateral value is insufficient.

The Company originates loans throughout its branch franchise area. At September 30, 2026, 64.9% of its gross loan portfolio balances were in New York State and the immediately surrounding areas (including New Jersey, Vermont and Massachusetts), and 35.1% were in Florida. Those figures compare to 64.3% and 35.7%, respectively, at December 31, 2025.

Economic conditions vary widely by geographic location. As a percentage of the total NPLs as of September 30, 2026, 23.7% were to Florida borrowers, compared to 76.3% to borrowers in New York and surrounding areas. For the three months ended September 30, 2026, New York and surrounding areas experienced net recoveries of approximately $45 thousand and Florida experienced net charge-offs of $15 thousand for the third quarter of 2026.

Index
Other than loans currently identified as nonperforming, management is aware of no other loans in the Bank's portfolio that pose material risk of the eventual non-collection of principal and interest. Also as of September 30, 2026, there were no other loans classified for regulatory purposes that management reasonably expects will materially impact future operating results, liquidity, or capital resources.

Loans individually evaluated for impairment are non-accrual residential loans delinquent greater than 180 days, non-accrual commercial loans, as well as loans classified as loan modifications to borrowers experiencing financial difficulty. There were $2.1 million of commercial mortgages and commercial loans classified as individually evaluated as of both September 30, 2026 and December 31, 2025. There were $23.7 million of individually evaluated residential loans also at both September 30, 2026 and December 31, 2025.

As of September 30, 2026 and December 31, 2025, the Company's loan portfolio did not include any subprime mortgages or loans acquired with deteriorated credit quality.

At September 30, 2026 there was $1.2 million of foreclosed real estate compared to $1.4 million at December 31, 2025.

Allowance for credit losses on loans:

As of September 30, 2026, the Company utilized the Baseline scenario model of Moody's economic scenarios and considered the uncertainty associated with the assumptions in the Baseline scenario, including continued actions taken by the Federal Reserve with regard to monetary policy and interest rates and the potential impact of those actions and the potential impact of persistent high inflation on the economy. Outcomes in any or all of these factors could differ from the Baseline scenario utilized, and the Company incorporated qualitative considerations reflecting the risk of uncertain economic conditions, and for additional dimensions of risk that may not be captured in the quantitative model.

The Company also continues to apply a reasonable and supportable forecast based on Moody's Baseline Scenario for a four-quarter period. Following the forecast period, the model uses a four-quarter straight-line reversion to historical averages.

Qualitative adjustments continue to be evaluated using a weighted scorecard framework based on regulatory interagency guidance. The framework considers internal and external factors that may not be fully captured in the quantitative model, including changes in portfolio risk characteristics, economic conditions, lending practices, and other factors affecting the credit quality of each portfolio segment.

Index
In the third quarter of 2026, the Company recorded a provision for credit losses of $850 thousand, which is the result of a provision for credit losses on loans of $1.05 million, and benefit for credit losses on unfunded commitments of $200 thousand. The increase in the Allowance for Credit Losses on Loans ("ACLL") during the third quarter of 2026 was primarily a result of loan growth and changes in economic forecasts. In the third quarter of 2025, the Company recorded a provision for credit losses of $250 thousand, which is the result of a provision for credit losses on loans of $450 thousand, and benefit for credit losses on unfunded commitments of $200 thousand. The Company recorded a provision for credit losses of $2.5 million for the nine-months ended September 30, 2026 which is the result of a provision for credit losses on loans of $2.8 million and a benefit for credit losses on unfunded commitments of $350 thousand. The increase in the ACLL during the nine months ended September 30, 2026 was primarily a result of loan growth and changes in economic forecasts. For the nine-months ended September 30, 2025 the Company recorded a provision for credit losses of $1.2 million which is all the result of a provision for credit losses on loans and there was no provision for unfunded commitments.

See Note 5 of the consolidated interim financial statements for additional discussion related the process for determining the provision for credit losses.

The allocation of the ACLL as of September 30, 2026 and December 31, 2025 was as follows:
As of
As of
(dollars in thousands)
September 30, 2026
December 31, 2025
Percent of
Percent of
Loans to
Loans to
Amount
Total Loans
Amount
Total Loans
Commercial
$
3,124
5.48
%
$
2,786
5.40
%
Real estate - construction
0.89
%
0.80
%
Real estate mortgage - 1 to 4 family
47,855
84.33
%
42,143
84.75
%
Home equity lines of credit
3,546
9.13
%
6,636
8.84
%
Installment Loans
0.17
%
0.21
%
55,162
100.00
%
$
52,205
100.00
%

At September 30, 2026, the allowance for loan losses was $55.2 million, compared to $52.2 million at December 31, 2025. The allowance represents 1.01% of the loan portfolio as of September 30, 2026, and 0.99% at December 31, 2025. The coverage ratio, or the allowance for credit losses on loans to NPLs, was 261.8% and 252.5% as of September 30, 2026 and December 31, 2025, respectively. The ratio of non-performing loans to total loans was 0.39% as of both September 30, 2026 and December 31, 2025, respectively.

Net recoveries for the three-month period ended September 30, 2026 were $30 thousand and net recoveries were $176 thousand for the prior year period.

During the third quarter of 2026, there were no commercial loan charge-offs, no residential loan charge-offs, and $19 thousand of consumer loan charge-offs, compared to no commercial loan charge-offs, no residential loan charge-offs, and $22 thousand of consumer loan charge-offs in the third quarter of 2025. During the third quarter of 2026 there were no commercial loan recoveries, $44 thousand of residential mortgage recoveries, and $5 thousand for consumer loan recoveries, compared to no commercial loan recoveries, $194 thousand of residential mortgage recoveries, and $4 thousand for consumer loan recoveries in the third quarter of 2025.

The following table presents the net charge-off ratio for the three and nine months ended September 30, 2026 and 2025:

Index
For the three months ended September 30:
2026
2025
Commercial
0.00
%
0.00
%
Real estate mortgage - 1 to 4 family
0.00
%
0.00
%
Installment
0.15
%
0.15
%
Total
0.00
%
0.00
%

For the nine months ended September 30:
2026
2025
Commercial
-0.01
%
-0.10
%
Real estate mortgage - 1 to 4 family
0.00
%
-0.01
%
Installment
0.23
%
1.20
%
Total
0.00
%
-0.01
%

Liquidity and Interest Rate Sensitivity
TrustCo seeks to obtain favorable sources of funding and to maintain prudent levels of liquid assets in order to satisfy varied liquidity demands. Management believes that TrustCo's earnings performance and strong capital position enable the Company to easily secure new sources of liquidity. The Company actively manages its liquidity through target ratios established under its liquidity policies. Continual monitoring of both historical and prospective ratios allows TrustCo to employ strategies necessary to maintain adequate liquidity. Management has also defined various degrees of adverse liquidity situations which could potentially occur and has prepared appropriate contingency plans should such a situation arise. As noted, the Company has a number of contingent funding alternatives available in addition to the large cash and cash equivalents position and the investment securities positions it maintains on its balance sheet. As previously stated, the Bank is a member of the FHLBNY and is an eligible borrower at the FRBNY and has the ability to borrow utilizing securities and/or loans as collateral at either institution. As previously stated, the Bank does not utilize brokered deposits as a part of its funding strategy, but does incorporate them as a contingent funding source within its Asset/Liability Management Policy. Like other contingent funding sources, brokered deposits may be tested from time to time to ensure operational and market readiness. Management believes that the Company has adequate sources of liquidity to cover its contractual obligations and commitments over the next twelve months and beyond.

The Company uses an industry standard external model as the primary tool to identify, quantify and project changes in interest rates and their effect on loan prepayment speeds taken both from industry sources and internally generated data based upon historical trends in the Bank's balance sheet. Assumptions based on the historical behavior of deposit rates and balances in relation to changes in market interest rates are also incorporated into the model. This model calculates an economic or fair value amount with respect to non-time deposit categories since these deposits are part of the core deposit products of the Company. The assumptions used are inherently uncertain and, as a result, the model cannot precisely measure the fair value of capital or precisely predict the impact of fluctuations in interest rates on the fair value of capital.

Using this model, the fair value of capital projections as of September 30, 2026 are referenced below. The base case (current rates) scenario shows the present estimate of the fair value of capital assuming no change in the operating environment or operating strategies and no change in interest rates from those existing in the marketplace as of September 30, 2026.

Index
The following table indicates the impact on the fair value of capital assuming interest rates were to have instantaneously increased by 100 bp, 200 bp, 300 bp and 400 bp or decreased by 100 bp, 200 bp, and 300 bp as of September 30, 2026.
Estimated Percentage of
Fair value of Capital to
As of Setpember 30, 2026
Fair value of Assets
+400 BP
21.10
%
+300 BP
21.80
+200 BP
22.60
+100 BP
24.60
Current rates
25.50
-100 BP
25.50
-200 BP
24.90
-300 BP
23.40

Noninterest Income
Total noninterest income for the third quarter of 2026 was $4.8 million compared to $4.7 million in the third quarter of 2025. Financial Services income was up $92 thousand to $2.1 million in the third quarter of 2026 as compared to the year-ago period. The fair value of assets under management was $1.4 billion at September 30, 2026, $1.2 billion as of December 31, 2025, and $1.3 billion at September 30, 2025.

For the nine months ended September 30, 2026 total noninterest income was $15.6 million, up $1.1 million compared to the prior year period. The increase is primarily the result of the gain of $900 thousand recorded on the Visa Class C Common stock exchange during the nine months ended September 30, 2026.

Noninterest Expenses
Total noninterest expenses were $28.0 million for the three months ended September 30, 2026 compared to $26.2 million for the same period in 2025. Significant changes included a $368 thousand increase in equipment expense, a $173 thousand increase in professional fees, a $308 thousand increase in outsourced services, a $178 thousand increase in advertising expense and a $613 increase in other expenses. Full time equivalent headcount was 738 as of September 30, 2025, 743 as of December 31, 2025, and 740 as of September 30, 2026. Changes in headcount represent normal fluctuations.

Total noninterest expenses were $83.3 million for the nine months ended September 30, 2026, compared to $78.8 million for the nine months ended September 30, 2025. Significant changes included an increase of $1.5 million in salaries and employee benefits, an increase of $610 thousand in equipment expense, an increase of $552 thousand in outsourced services, an increase of $493 thousand in advertising expense and an increase of $1.8 million in other expense, partially offset by a decrease of $408 thousand in other real estate expense, net.

Index
Income Taxes
In the third quarter of 2026, TrustCo recognized income tax expense of $5.7 million compared to $5.1 million for the third quarter of 2025. The effective tax rates were 24.7% and 23.7% for the third quarters of 2026 and 2025, respectively. For the first nine months, income taxes were $16.6 million and $14.2 million in 2026 and 2025, respectively. The effective tax rate was 24.7% and 23.7% for 2026 and 2025, respectively.

Capital Resources
Consistent with its long-term goal of operating a sound and profitable financial organization, TrustCo strives to maintain strong capital ratios.

Banking regulators have moved towards higher required capital requirements due to the standards included in the "Basel III" banking capital reform measures and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as a general trend towards reducing risk in the banking system by providing a greater capital margin.

Total shareholders' equity at September 30, 2026 was $631.3 million compared to $692.0 million at September 30, 2025. TrustCo declared a dividend of $0.40 per share in the third-quarter of 2026 and $0.38 per share in the third quarter of 2025. This results in a dividend payout ratio of 38.58% for the third quarter of 2026 based on earnings for the quarter of $17.3 million, compared to a dividend payout ratio of 43.68% for the third quarter of 2025 based on earnings for the quarter of $16.3 million.

The capital rules, which are generally applicable to both the Company and the Bank, include several measures; specifically, a Tier 1 leverage ratio, a common equity tier 1 ("CET1") capital ratio, a tier 1 risk-based capital ratio and a total risk-based capital ratio. The rules also impose a capital conservation buffer that requires the Company and the Bank to maintain additional levels of Tier 1 common equity over the minimum risk-based capital levels before they may pay dividends, repurchase shares or pay discretionary bonuses.

Index
The Bank and the Company reported the following capital ratios as of September 30, 2026 and December 31, 2025:

(Bank Only)
Minimum for
Capital Adequacy plus
As of September 30, 2026
Well
Capital Conservation
(dollars in thousands)
Amount
Ratio
Capitalized(1)
Buffer (1)(2)
Tier 1 leverage ratio
$
566,137
8.648
%
5.000
%
4.000
%
Common equity tier 1 capital
566,137
14.763
6.500
7.000
Tier 1 risk-based capital
566,137
14.763
8.000
8.500
Total risk-based capital
614,182
16.016
10.000
10.500

Minimum for
Capital Adequacy plus
As of December 31, 2025
Well
Capital Conservation
(dollars in thousands)
Amount
Ratio
Capitalized(1)
Buffer (1)(2)
Tier 1 leverage ratio
$
513,719
8.058
%
5.000
%
4.000
%
Common equity tier 1 capital
513,719
13.981
6.500
7.000
Tier 1 risk-based capital
513,719
13.981
8.000
8.500
Total risk-based capital
559,750
15.234
10.000
10.500

(Consolidated)
Minimum for
Capital Adequacy plus
As of September 30, 2026
Capital Conservation
(dollars in thousands)
Amount
Ratio
Buffer (1)(2)
Tier 1 leverage ratio
$
630,695
9.633
%
4.000
%
Common equity tier 1 capital
630,695
16.442
7.000
Tier 1 risk-based capital
630,695
16.442
8.500
Total risk-based capital
678,752
17.695
10.500

Minimum for
Capital Adequacy plus
As of December 31, 2025
Capital Conservation
(dollars in thousands)
Amount
Ratio
Buffer (1)(2)
Tier 1 leverage ratio
$
676,012
10.601
%
4.000
%
Common equity Tier 1 capital
676,012
18.393
7.000
Tier 1 risk-based capital
676,012
18.393
8.500
Total risk-based capital
722,055
19.646
10.500

(1)
Federal regulatory minimum requirements to be considered to be Well Capitalized and Adequately Capitalized
(2)
The September 30, 2026 and December 31, 2025 common equity tier 1, tier 1 risk-based, and total risk-based capital ratios include a capital conservation buffer of 2.50 percent

In addition, at September 30, 2026, the consolidated equity to total assets ratio was 9.72%, compared to 10.66% at December 31, 2025.

As of September 30, 2026, the capital levels of both TrustCo and the Bank exceeded the minimum standards, including with the fully phased-in capital conservation buffer taken into account.

Index
Under the Office of the Comptroller of the Currency's ("OCC") "prompt corrective action" regulations, a bank is deemed to be "well capitalized" when its CET1, Tier 1, total risk-based and leverage capital ratios are at least 6.5%, 8.0%, 10.0%, and 5.0%, respectively. A bank is deemed to be "adequately capitalized" or better if its capital ratios meet or exceed the minimum federal regulatory capital requirements, and "undercapitalized" if it fails to meet these minimal capital requirements. A bank is "significantly undercapitalized" if its CET1, Tier 1, total risk-based and leverage capital ratios fall below 3%, 4%, 6% and 3%, respectively and "critically undercapitalized" if the institution has a ratio of tangible equity to total assets that is equal to or less than 2%. At September 30, 2026 and December 31, 2025, Trustco Bank met the definition of "well capitalized."

As noted, the Company's dividend payout ratio was 38.58% of net income for the third quarter of 2026 and 43.68% of net income for the third quarter of 2025. The per-share dividend paid in the third quarter of 2026 was $0.40 per share compared to $0.38 in the third quarter of 2025. The Company's ability to pay dividends to its shareholders is dependent upon the ability of the Bank to pay dividends to the Company. The payment of dividends by the Bank to the Company is subject to continued compliance with minimum regulatory capital requirements. The OCC may disapprove a dividend if the Bank would be undercapitalized following the distribution; the proposed capital distribution raises safety and soundness concerns; or the capital distribution would violate a prohibition contained in any statute, regulation or agreement.

TrustCo maintains a dividend reinvestment and stock purchase plan (DRSPP) with approximately 5,433 participants. The DRSPP allows participants to reinvest dividends in shares of the Company. The DRP also allows for additional purchases by participants and has a discount feature (up to a 5% for safe harbor provisions) that can be activated by management as a tool to raise capital. To date, the discount feature has not been utilized.

Share Repurchase Program
On December 19, 2025, the Company's Board authorized, and the Company announced, a share repurchase program of up to 2,000,000 shares, or approximately 11% of its then currently outstanding common stock. The program expires on December 31, 2026. During the three-months ended September 30, 2026, the Company repurchased a total of 500,000 shares at an average price per share of $57.34 for a total of $28.7 million under its Board authorized share repurchase program. As of September 30, 2026, the Company was authorized to repurchase up to an additional 498,633 shares of common stock under the share repurchase program.

Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, income taxes and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.

During the nine months ended September 30, 2026, there were no significant changes to our critical accounting policies and estimates as described in the consolidated financial statements contained in the 2025 Form 10-K other than what is set forth immediately below.

Management considers the accounting policy relating to the allowance for credit losses to be a critical accounting policy given the measurement uncertainty and subjective judgement necessary in evaluating the levels of the allowance required to cover the life-time losses in the loan portfolio and the material effect that such judgments can have on the results of operations.

Index
TrustCo Bank Corp NY
Management's Discussion and Analysis
STATISTICAL DISCLOSURE

I. DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY:
INTEREST RATES AND INTEREST DIFFERENTIAL

The following table summarizes the component distribution of the average balance sheet, related interest income and expense and the average annualized yields on interest earning assets and annualized rates on interest bearing liabilities of TrustCo for each of the reported periods.
Nonaccrual loans are included in loans for this analysis. The average balances of securities available for sale and held to maturity are calculated using amortized costs for these securities. Included in the average balance of shareholders' equity is the unrealized loss, net of tax, in the available for sale portfolio of $16.9 million in 2026 and $14.8 million in 2025. The subtotals contained in the following table are the arithmetic totals of the items contained in that category. Increases and decreases in interest income and expense due to both rate and volume have been allocated to the categories of variances (volume and rate) based on the percentage relationship of such variances to each other.

Three months ended
Three months ended
(dollars in thousands)
September 30, 2026
September 30, 2025
Average
Interest
Average
Average
Interest
Average
Change in
Variance
Variance
Balance
Rate
Balance
Rate
Interest
Balance
Rate
Income/
Change
Change
Assets
Expense
Securities available for sale:
U. S. government sponsored enterprises
$
10,977
$
3.13
%
$
69,294
$
3.46
%
$
(513
)
$
(460
)
$
(53
)
Mortgage backed securities and collateralized mortgage obligations-residential
217,254
1,509
2.75
237,092
1,583
2.65
(74
)
(379
)
State and political subdivisions
-
6.77
6.77
(1
)
(1
)
-
Corporate bonds
75,681
4.33
26,512
4.00
Small Business Administration-guaranteed participation securities
10,440
2.14
13,385
2.15
(16
)
(16
)
-
Other
4.46
4.00
-
Total securities available for sale
315,078
2,479
3.15
347,001
2,527
2.91
(48
)
(325
)

Federal funds sold and other short-term Investments
649,823
6,098
3.72
662,737
7,376
4.42
(1,278
)
(141
)
(1,137
)
Held to maturity securities:
Mortgage backed securities and collateralized mortgage obligations-residential
3,740
4.53
4,709
4.40
(9
)
(19
)
Total held to maturity securities
3,740
4.53
4,709
4.40
(9
)
(19
)
Federal Reserve Bank and Federal Home Loan Bank stock
6,756
6.63
6,601
7.57
(13
)
(31
)
Commercial loans
327,267
4,654
5.69
313,800
4,426
5.64
Residential mortgage loans
4,586,955
48,286
4.21
4,409,645
44,089
4.00
4,197
1,814
2,383
Home equity lines of credit
490,310
7,739
6.31
440,288
7,215
6.50
1,735
(1,211
)
Installment loans
9,182
8.54
11,842
7.48
(27
)
(171
)
Loans, net of unearned income
5,413,714
60,875
4.49
5,175,575
55,953
4.32
4,922
3,569
1,353
Total interest earning assets
6,389,111
69,607
4.35
6,196,623
66,033
4.25
3,574
3,102
Allowance for credit losses on loans
(54,467
)
(51,706
)
Cash & non-interest earning assets
219,106
208,701
Total assets
$
6,553,750
$
6,353,618
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts
$
1,092,564
$
0.23
%
$
1,035,366
$
0.18
%
Money market accounts
442,480
1,597
1.43
464,334
2,065
1.76
(468
)
(94
)
(374
)
Savings
1,076,926
0.27
1,077,441
0.27
(11
)
-
(11
)
Time deposits
2,288,063
19,245
3.34
2,125,920
19,427
3.63
(182
)
5,915
(6,097
)
Total interest bearing deposits
4,900,033
22,214
1.80
4,703,061
22,716
1.92
(502
)
5,849
(6,351
)
Short-term borrowings
102,386
1.37
87,348
0.90
Total interest bearing liabilities
5,002,419
$
22,568
1.79
4,790,409
$
22,914
1.90
(346
)
5,887
(6,233
)
Demand deposits
825,203
792,621
Other liabilities
75,989
76,502
Shareholders' equity
650,139
694,086
Total liabilities and shareholders' equity
$
6,553,750
$
6,353,618
Net interest income
$
47,039
$
43,119
$
3,920
$
(2,785
)
$
6,705
Net interest spread
2.56
%
2.35
%
Net interest margin (net interest income to total interest earning assets)
2.95
%
2.79
%

Index
TrustCo Bank Corp NY
Management's Discussion and Analysis
STATISTICAL DISCLOSURE

I. DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY:
INTEREST RATES AND INTEREST DIFFERENTIAL
The following table summarizes the component distribution of the average balance sheet, related interest income and expense and the average annualized yields on interest earning assets and annualized rates on interest bearing liabilities of TrustCo (adjusted for tax equivalency) for each of the reported periods.
Nonaccrual loans are included in loans for this analysis. The average balances of securities available for sale and held to maturity are calculated using amortized costs for these securities. Included in the average balance of shareholders' equity is the unrealized loss, net of tax, in the available for sale portfolio of $14.3 million in 2026 and $16.7 million in 2025. The subtotals contained in the following table are the arithmetic totals of the items contained in that category. Increases and decreases in interest income and expense due to both rate and volume have been allocated to the categories of variances (volume and rate) based on the percentage relationship of such variances to each other.

Nine months ended
Nine months ended
(dollars in thousands)
September 30, 2026
September 30, 2025
Average
Interest
Average
Average
Interest
Average
Change in
Variance
Variance
Balance
Rate
Balance
Rate
Interest
Balance
Rate
Income/
Change
Change
Assets
Expense
Securities available for sale:
U. S. government sponsored enterprises
$
17,681
$
2.61
%
$
72,461
$
1,809
3.33
%
$
(1,463
)
$
(1,138
)
$
(325
)
Mortgage backed securities and collateralized mortgage obligations-residential
219,451
4,464
2.71
240,401
4,679
2.59
(215
)
(513
)
State and political subdivisions
-
6.77
6.77
(1
)
(1
)
-
Corporate bonds
70,395
2,290
4.34
30,696
3.19
1,555
1,217
Small Business Administration-guaranteed
participation securities
11,098
2.14
14,151
2.15
(50
)
(49
)
(1
)
Other
4.31
4.20
-
Total securities available for sale
319,346
7,301
3.05
358,425
7,474
2.78
(173
)
(484
)

Federal funds sold and other short-term Investments
668,926
18,547
3.71
641,793
21,320
4.44
(2,773
)
1,355
(4,128
)
Mortgage backed securities and collateralized mortgage obligations-residential
3,972
4.50
4,969
4.37
(29
)
(87
)
Total held to maturity securities
3,972
4.50
4,969
4.37
(29
)
(87
)
Federal Reserve Bank and Federal Home Loan Bank stock
6,704
7.18
6,567
8.22
(44
)
(53
)
Commercial loans
320,738
13,565
5.64
306,091
12,851
5.60
Residential mortgage loans
4,532,068
140,718
4.14
4,394,245
129,940
3.94
10,778
4,156
6,622
Home equity lines of credit
476,358
22,297
6.26
427,830
20,480
6.40
1,817
2,536
(719
)
Installment loans
9,923
8.32
12,440
7.40
(72
)
(186
)
Loans, net of unearned income
5,339,087
177,197
4.43
5,140,606
163,960
4.25
13,237
7,126
6,111
Total interest earning assets
6,338,035
203,540
4.28
6,152,360
193,322
4.19
10,218
7,919
2,299
Allowance for credit losses on loans
(53,483
)
(50,991
)
Cash & non-interest earning assets
220,871
204,651
Total assets
$
6,505,423
$
$ 6,306,020
Liabilities and shareholders' equity
Deposits:
Interest bearing checking accounts
$
1,079,452
$
1,726
0.21
%
$
$ 1,037,598
$
1,577
0.20
%
Money market accounts
445,015
4,780
1.44
468,059
6,140
1.75
(1,360
)
(291
)
(1,069
)
Savings
1,072,414
2,108
0.26
1,084,712
2,208
0.27
(100
)
(25
)
(75
)
Time deposits
2,244,343
56,465
3.36
2,088,844
57,605
3.69
(1,140
)
5,679
(6,819
)
Total interest bearing deposits
4,841,224
65,079
1.80
4,679,213
67,530
1.93
(2,451
)
5,428
(7,879
)
Short-term borrowings
109,206
1,124
1.38
83,885
0.88
Total interest bearing liabilities
4,950,430
66,203
1.79
4,763,098
$
68,084
1.91
(1,881
)
5,628
(7,509
)
Demand deposits
814,465
777,573
Other liabilities
74,106
76,372
Shareholders' equity
666,422
688,977
Total liabilities and shareholders' equity
$
6,505,423
$
$ 6,306,020
Net interest income , tax equivalent
137,337
$
125,238
$
12,099
$
2,291
$
9,808
Net interest spread
2.49
%
2.28
%
Net interest margin (net interest income to total interest earning assets)
2.89
%
2.71
%

Index
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