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    TRST
    Earnings call· Jun 2026(Q2 FY26)

    TRUSTCO BANK CORP N Y TRST

    Jul 22, 2026 Source

    Executive summary

    TrustCo Bank Q2 FY26 — Stellar Financial Results Driven by Favorable Repricing and Deposit Growth

    TrustCo Bank delivered strong Q2 FY26 results, characterized by favorable loan and investment repricing, growth in lower-cost deposits, and robust loan origination. The company continued its disciplined capital deployment strategy through share buybacks, while maintaining solid credit quality. Management highlighted the Florida regional headquarters as a foundation for future growth and expressed confidence in its ability to manage potential rate changes.

    Highlights

    5

    • Net income increased by 12.8% to $17 million in Q2 FY26 compared to the prior year quarter.

    • Net interest income grew by 9.2% to $45.6 million in Q2 FY26.

    • Net interest margin expanded by 16 basis points to 2.87% in Q2 FY26.

    • Average loans reached an all-time high of $5.3 billion, growing 3.8% year-over-year.

    • Repurchased over 2.3 million shares since 2020, including 10.5% of outstanding shares under 2025/2026 programs.

    Concerns

    3

    • Nonperforming loans modestly increased to $21.8 million in Q2 FY26 from $17.9 million in Q2 FY25.

    • Nonperforming assets increased to $23 million in Q2 FY26 from $19 million in Q2 FY25.

    • Total noninterest expense net of ORE expense increased to $28.2 million, up $1.3 million from the prior quarter, partly due to higher employee benefit costs and professional fees.

    Guidance & targets

    2
    CategoryTargetConfidence
    Total recurring noninterest expense (net of ORE expense)
    $27.3 million to $27.8 million per quarter
    medium materiality
    High
    ORE expense (net)
    not exceed $250,000 per quarter
    low materiality
    High

    Operational metrics

    15
    Return on average assets
    1.04%
    Q2 FY26
    Return on average equity
    10.22%
    Q2 FY26
    Consolidated equity assets ratio
    10.5%vs 10.91% in Q2 FY25
    Q2 FY26
    Book value per share growth
    48%vs 36.5% a year earlier
    YoY Q2 FY26

    Growth rate of book value per share. The 36.5% refers to the prior year's growth rate.

    Nonperforming assets
    $23 millionvs $22.8 million last quarter and $19 million a year ago
    Q2 FY26
    Net recovery (charge-offs)
    $88,000vs $39,000 in Q1 FY26
    Q2 FY26

    Sixth straight quarter of net recoveries.

    Yield on interest-earning assets
    4.27%up 8 bps from prior year quarter
    Q2 FY26
    Cost of interest-bearing liabilities
    1.79%decreased from 1.91% in Q2 FY25
    Q2 FY26
    Assets under management (Wealth Management)
    $1.39 billion
    June 30, 2026

    Majority of fee income is recurring, supported by long-term advisory relationships.

    Visa Class C common stock gain
    $844,000
    Q2 FY26

    Marked to fair value based on conversion privilege.

    Average loans growth (YoY)
    3.8%vs $158.9 million (absolute) last quarter
    Q2 FY26

    Reached an all-time high of $5.3 billion. Improvement over last quarter's reported growth.

    Purchase mortgage loans growth (QoQ)
    $62.8 millionQoQ
    Q2 FY26

    Includes refinances. Part of overall loan increase of $87.1 million compared to Q1.

    Home equity loans growth (QoQ)
    $19.3 millionQoQ
    Q2 FY26

    Part of overall loan increase of $87.1 million compared to Q1.

    Commercial loans growth (QoQ)
    $5.7 millionQoQ
    Q2 FY26

    Part of overall loan increase of $87.1 million compared to Q1.

    Mortgage rates
    6.25% to 6.5%
    Q2 FY26

    Leveled off over the past weeks after increasing slightly earlier in the quarter.

    Industry KPIs

    12
    MetricValueDetails
    Loans$5.3 billionUSD
    Deposits$5.7 billionUSD
    Rotce ROE—
    Capital returnsmore than 2.3 million sharesshares
    Fee income lines—
    Allowance reserves$54.1 millionUSD
    Net interest income$45.6 millionUSD
    Net interest margin2.87%%
    Net charge offs npls0.4%%
    Total operating expenses$28.2 millionUSD
    Provision for credit losses$650,000USD
    Efficiency ratio operating leverage—

    Risks & headwinds

    2
    Modest increase in nonperforming loans and assetsYear-over-year

    NPLs increased to $21.8 million (Q2 FY26) from $17.9 million (Q2 FY25); NPAs increased to $23 million (Q2 FY26) from $19 million (Q2 FY25).

    Mitigation: Continued full and solid underwriting, conservative lending standards.

    Potential for short-term rate increases impacting profitabilityMonths ahead

    Not quantified, but discussed as a macro factor.

    Mitigation: Offering longer CD products, aggressive mortgage and home equity lending (floating rate products), maintaining short duration on investment maturities.

    What to watch in Q3 FY26

    4

    Recurring noninterest expense

    Q3 FY26
    Current$28.2 million (Q2 FY26)
    TargetWithin $27.3 million to $27.8 million per quarter

    Why it matters

    Expense management is key to operating leverage and profitability. The updated guidance reflects a slight increase, and verifying adherence will be important.

    We would expect '26 total recurring noninterest expense, net of ORE expense, to be in the range of $27.3 million to $27.8 million per quarter.

    Q&A highlights

    2

    Clarification on the increase in noninterest expense from the previous guidance of $26.7M-$27.3M to the reported $28.2M, and the new guidance of $27.3M-$27.8M.

    The increase was partly due to recurring salary increases and partly to non-recurring incentive compensation revaluation and professional fees. The new guidance reflects the recurring salary increases.

    “So I mean, 2 big lines, salary employee benefits. About half of that was some salary increases that we pushed through and that will be recurring about half of that increase in salary and benefits are related to incentive comp programs that as the large piece of that, as our stock price continues to go up, we revalue those plans.”

    asked by John Lapey · answered by Robert McCormick

    2 min read6 chapters

    Detailed Narrative

    01

    Business Model & Strategy

    TrustCo Bank emphasizes a time-tested business model focused on favorable repricing of loan and investment portfolios, fueled by lower-cost deposit growth, without compromising credit quality. This strategy aims to generate meaningful and sustainable shareholder value. The company remains convinced that repurchasing its own stock is the best acquisition it can make.

    02

    Florida Expansion

    The company recently moved into a new regional headquarters in Longwood, Florida, enhancing its visibility and providing a foundation for further growth in the state. Florida is highlighted as a key part of TrustCo's success, and the new building is expected to support future expansion.

    03

    Capital Allocation

    TrustCo maintains a disciplined long-term capital allocation strategy, primarily through share buybacks. Since 2020, the company has reacquired more than 2.3 million shares, including 10.5% of outstanding common stock under the 2025 and 2026 programs, reinforcing confidence in its long-term strength and focus on capital optimization.

    04

    Loan Portfolio Dynamics

    Loan growth was primarily driven by the residential loan portfolio, with significant increases in first mortgage and home equity loans. Mortgage rates fluctuated during the quarter, impacting refinance activity, but overall origination showed solid momentum. The bank continues to offer competitive mortgage and home equity products.

    05

    Deposit Strategy

    Retaining and growing deposits remains a key focus, with total deposits ending the quarter at $5.7 billion, up $191 million year-over-year. The bank leverages competitive product offerings and digital capabilities to maintain a stable deposit base that supports ongoing loan growth and expansion, indicating strong customer confidence.

    06

    Wealth Management & Noninterest Income

    The Wealth Management division is a significant and recurring source of noninterest income, with approximately $1.39 billion in assets under management as of June 30, 2026. This is supported by long-term advisory relationships. Additionally, the company recorded a gain of $844,000 from marking its Visa Class C common stock to fair value.

    AI-generated summary of the company’s earnings call. Not investment advice.