Skillful Application of Fundamental Principles Yields Standout Results: TrustCo Announces Net Income Up 19.8%; Net Interest Income up 10.5%

Overview

Chairman, President, and CEO, Robert J. McCormick said "Part of our long-term strategy is having the right mix of products available so that we can sell the right thing, to the right customer, at the right time. It is our ability to do this with agility and skill that has produced the standout results announced today. We saw double digit growth in our return metrics year over year, as return on average assets improved 17%, and return on average equity grew 12.5%. Our margin improved 7% year over year, in tandem with a 12% year over year improvement in adjusted efficiency ratio. Our ability to sell home equity products at a time of high market demand for the flexibility they offer has been key to this success. Home equity credit lines are up 18% year over year. Likewise, we strategically grew commercial loans 11% year over year – which we have done without exposure to risky multi-family loans or other industry-specific concentrations. We lowered non-performing loans to total loans by 7% year over year, and booked a second consecutive quarter of net recoveries. These exceptional results in the first half of 2025 provide a foundation for positive momentum moving into 2026."

Details

As the year continues to progress, we are seeing increased opportunities to deploy our resources effectively. Some efforts include loan originations, targeted investments in technology and digital banking infrastructure, and strategic growth in key markets. Average loans were up $115.6 million, or 2.3%, in the second quarter 2025 over the same period in 2024. Average residential loans and HECLs, our primary lending focus, were up $27.9 million, or 0.6%, and $64.7 million, or 17.8%, respectively, in the second quarter 2025 over the same period in 2024. Average commercial loans also increased $25.8 million, or 9.2%, in the second quarter 2025 over the same period in 2024. We believe that this upward trend reflects improving economic confidence among borrowers, strong credit quality, and the Bank's focus on relationship lending. The sustained growth in the loan portfolio will likely enhance net interest income in the quarters ahead. Average deposits were up $173.4 million, or 3.3%, for the second quarter 2025 over the same period in 2024, primarily as a result of an increase in time deposits, interest bearing checking accounts, and demand deposits. The Bank's continued emphasis on relationship banking, combined with competitive product offerings and digital capabilities, has contributed to a stable deposit base that supports ongoing loan growth and expansion.

During the second quarter of 2025, we remained committed to returning value to shareholders through a disciplined share repurchase program, which reflects our confidence in the long-term strength of the franchise and our focus on capital optimization. TrustCo purchased 169 thousand, or 0.9%, of total shares outstanding of TrustCo common stock under the previously announced stock repurchase program during the second quarter of 2025. Our approach ensures every dollar of capital is working to generate solid returns, strengthen customer relationships, and enhance shareholder value. As of June 30, 2025, our equity to asset ratio was 10.91%, compared to 10.73% as of June 30, 2024. Book value per share as of June 30, 2025 was $36.75, up 6.6% compared to $34.46 a year earlier.

Net interest income was $41.7 million for the second quarter 2025, an increase of $4.0 million, or 10.5%, compared to the second quarter of 2024, driven by loan growth at higher interest rates, increase in interest on federal funds sold and other short-term investments, and less interest expense on deposit products, partially offset by lower investment interest income. The net interest margin for the second quarter 2025 was 2.71%, up 18 basis points from 2.53% in the second quarter of 2024. The yield on interest earnings assets increased to 4.19% in the second quarter of 2025, up 13 basis points from 4.06% in the second quarter of 2024. The cost of interest bearing liabilities decreased to 1.91% in the second quarter 2025, down from 1.97% in the second quarter 2024. The Bank is well positioned to continue delivering strong net interest income performance even as the Federal Reserve signals a potential easing cycle in the months ahead. Our balance sheet is built for resilience and flexibility, with a favorable asset mix and a stable deposit base that we believe positions us to thrive across interest rate environments. In addition to new loan originations, we are seeing ongoing opportunities to reprice portions of our existing loan book as higher-rate loans replace paydowns and early payoffs, helping us maintain attractive yields. With loan demand accelerating and funding costs stabilizing, we believe there is meaningful upside to net interest income in the coming quarters. Our proactive asset-liability management strategy gives us confidence in sustaining margin strength and driving consistent profitable growth.

Non-interest income, net of net gains on equity securities, increased to $4.9 million as compared to $4.3 million for the second quarter of 2024. This increase was primarily attributable to wealth management and financial services fees, which increased by 13.0% to $1.8 million, driven by strong client demand and higher assets under management. These revenues represent 37.5% of non-interest income for the second quarter of 2025. The majority of this fee income is recurring, supported by long-term advisory relationships and a growing base of managed assets. Non-interest expense increased $236 thousand over the second quarter of 2024.

Asset quality remains strong and has been consistent over the past twelve months. The Company recorded a provision for credit losses on loans of $650 thousand in the second quarter of 2025. The ratio of allowance for credit losses on loans to total loans was 0.99% as of both June 30, 2025 and 2024. The allowance for credit losses on loans was $51.3 million as of June 30, 2025, compared to $49.8 million as of June 30, 2024. Nonperforming loans (NPLs) were $17.9 million as of June 30, 2025, compared to $19.2 million as of June 30, 2024. NPLs were 0.35% and 0.38% of total loans as of June 30, 2025 and 2024, respectively. The coverage ratio, or allowance for credit losses on loans to NPLs, was 286.2% as of June 30, 2025, compared to 259.4% as of June 30, 2024. Nonperforming assets (NPAs) were $19.0 million as of June 30, 2025, compared to $21.5 million as of June 30, 2024.  

A conference call to discuss second quarter 2025 results will be held at 9:00 a.m. Eastern Time on July 22, 2025. Those wishing to participate in the call may dial toll-free for the United States at 1-833-470-1428, and for Canada at 1-833-950-0062, Access code 258501. A replay of the call will be available for thirty days by dialing toll-free for the United States at 1-866-813-9403, Access code 410483.   The call will also be audio webcast at  https://events.q4inc.com/attendee/979003710, and will be available for one year.

About TrustCo Bank Corp NY

TrustCo Bank Corp NY is a $6.3 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 136 offices in New York, New Jersey, Vermont, Massachusetts, and Florida as of June 30, 2025.

In addition, the Bank's Wealth Management Department offers a full range of investment services, retirement planning and trust and estate administration services. The common shares of TrustCo are traded on the NASDAQ Global Select Market under the symbol TRST.

Forward-Looking Statements

All statements in this news release and the related earnings call that are not historical are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future development, results or periods. Examples of forward-looking statements include, among others, statements we make regarding our expectations for our future performance, including our expectations regarding the impact of our loan portfolio's growth, loan demand and funding cost on net interest income, and the anticipated effects of our capital management strategy, including our stock repurchase program. Forward-looking statements are based on management's current expectations as well as certain assumptions and estimates made by, and information available to, management at the time the statements are made. Such forward-looking statements are subject to factors and uncertainties that could cause actual results to differ materially for TrustCo from the views, beliefs and projections expressed in such statements, and many of the risks and uncertainties are heightened by or may, in the future, be heightened by volatility in financial markets and macroeconomic or geopolitical concerns related to inflation, changes in United States and foreign trade policy, continued elevated interest rates and ongoing armed conflicts (including the Russia/Ukraine conflict and the conflict in Israel and surrounding areas). TrustCo wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The following important factors, among others, in some cases have affected and in the future could affect TrustCo's actual results and could cause TrustCo's actual financial performance to differ materially from that expressed in any forward-looking statement: future changes in interest rates; external economic factors, such as changes in monetary policy, ongoing inflationary pressures and continued elevated prices; exposure to credit risk in our lending activities; the risk of weakness in residential real estate markets; our increasing commercial loan portfolio; the sufficiency of our allowance for credit losses on loans to cover actual loan losses; our ability to meet the cash flow requirements of our depositors or borrowers or meet our operating cash needs to fund corporate expansion and other activities; claims and litigation pertaining to fiduciary responsibility and lender liability; the enforcement of federal cannabis laws and regulations and its impact on our ability to provide services in the cannabis industry; our dependency upon the services of the management team; our disclosure controls and procedures' ability to prevent or detect errors or acts of fraud; the adequacy of our business continuity and disaster recovery plans; the effectiveness of our risk management framework; the impact of any expansion by us into new lines of business or new products and services; an increase in the prevalence of fraud and other financial crimes; the impact of severe weather events and climate change on us and the communities we serve, including societal responses to climate change; environmental, social and governance risks, as well as diversity, equity, and inclusion-related risks, and their impact on our reputation and relationships; the chance of a prolonged economic downturn, especially one affecting our geographic market area; instability in global economic conditions and geopolitical matters, as well as volatility in financial markets; the soundness of other financial institutions; U.S. government shutdowns, credit rating downgrades, or failure to increase the debt ceiling; fluctuations in the trust wealth management fees we receive as a result of investment performance; the impact of regulatory capital rules on our growth; changes in laws and regulations, including changes in cybersecurity or privacy regulations; restrictions on data collection and use; our compliance with the USA PATRIOT Act, Bank Secrecy Act, and other laws and regulations that could result in material fines or sanctions; changes in tax laws; limitations on our ability to pay dividends; TrustCo Realty Corp.'s ability to qualify as a real estate investment trust; changes in accounting standards; competition within our market areas; consumers and businesses' use of non-banks to complete financial transactions; our reliance on third-party service providers; the impact of data breaches and cyber-attacks; the development and use of artificial intelligence; the impact of a failure in or breach of our operational or security systems or infrastructure, or those of third parties; the impact of an unauthorized disclosure of sensitive or confidential client or customer information; the impact of interruptions in the effective operation of our computer systems; the impact of anti-takeover provisions in our organizational documents; the impact of the manner in which we allocate capital; and other risks and uncertainties set forth in our public filings made with the Securities and Exchange Commission (the "SEC"), including our most recent Annual Report on Form 10-K for the year ended December 31, 2024, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, and our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2025 to be filed with the SEC. The forward-looking statements contained in this news release represent TrustCo management's judgment as of the date of this news release. TrustCo disclaims, however, any intent or obligation to update forward-looking statements, either as a result of future developments, new information or otherwise, except as may be required by law.

Non-GAAP Financial Measures Reconciliation

Tangible book value per share is a non-GAAP financial measure derived from GAAP-based amounts. We calculate tangible book value by excluding the balance of intangible assets from total shareholders' equity divided by shares outstanding. We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios. Additionally, we believe that this measure is important to many investors in the marketplace who are interested in relative changes from period to period in equity exclusive of changes in intangible assets.

Tangible equity as a percentage of tangible assets at period end is a non-GAAP financial measure derived from GAAP-based amounts. We calculate tangible equity and tangible assets by excluding the balance of intangible assets from total shareholders' equity and total assets, respectively. We calculate tangible equity as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end. We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios. Additionally, we believe that this measure is important to many investors in the marketplace who are interested in relative changes from period to period in equity and total assets, each exclusive of changes in intangible assets.

Adjusted efficiency ratio is a non-GAAP measures of expense control relative to revenue from net interest income and non-interest fee income. We calculate the efficiency ratio by dividing total non-interest expense by the sum of net interest income and total non-interest income. We calculate the adjusted efficiency ratio by dividing total noninterest expenses as determined under GAAP, excluding other real estate expense, net, by net interest income and total noninterest income as determined under GAAP, excluding net gains on equity securities. We believe that this provides a reasonable measure of primary banking expenses relative to primary banking revenue. Additionally, we believe this measure is important to investors looking for a measure of efficiency in our productivity measured by the amount of revenue generated for each dollar spent.

We believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our financial results. Our management internally assesses our performance based, in part, on these measures. However, these non-GAAP financial measures are supplemental and not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these measures, this presentation may not be comparable to other similarly titled measures reported by other companies. A reconciliation of the non-GAAP measures of tangible book value to shares outstanding, tangible equity as a percentage of tangible assets, and efficiency ratio to the most directly comparable GAAP measures is set forth below.