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TRUSTCO BANK CORP N Y (TRST)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered strong profitability and margin expansion: net income $15.0M (+19.8% y/y), diluted EPS $0.79, and net interest margin 2.71% (+18 bps y/y), driven by higher loan yields and disciplined deposit pricing .
  • Average loans rose $115.6M (+2.3% y/y), led by home equity lines of credit (+17.8% y/y) and commercial (+9.2% y/y); credit quality improved with NPLs down to 0.35% of loans and a coverage ratio of 286% .
  • Noninterest income grew y/y on wealth management fees (+13% to $1.8M) and AUM at ~$1.2B, though customer service fees softened sequentially vs. Q1 .
  • Management reiterated confidence and continued buybacks (169k shares in Q2), highlighting tailwinds from lower CD resets later in 2025/early 2026 and potential margin resilience if the Fed eases, which we view as catalysts for sentiment .

What Went Well and What Went Wrong

What Went Well

  • Margin expansion and NII growth: NIM rose to 2.71% (+18 bps y/y), NII to $41.7M (+10.5% y/y), reflecting improved asset yields and prudent deposit pricing . CEO: “Performance has been stellar… our time to shine.”
  • Loan growth with strong asset quality: Average loans +$115.6M; HELOCs +17.8% y/y and commercial +9.2% y/y, with net recoveries for a second consecutive quarter and NPLs down to 0.35% .
  • Wealth management momentum: Fees +13% to $1.8M; AUM at ~$1.2B, providing recurring noninterest income and diversification .

What Went Wrong

  • ORE-related expense uptick: Other real estate expense (net) rose to $522k in Q2 vs. $16k in Q2 2024; management aims to cap at ≤$250k per quarter going forward .
  • Sequential softening in certain fees: Fees for services to customers declined to $2.27M vs. $2.65M in Q1 despite y/y stability, moderating total noninterest income sequentially .
  • Deposit costs remain elevated in near term: Q&A indicated maturing CDs averaging ~3.91% next quarter and current highest issuance ~4% for 3 months; tailwinds improve later as Q4/Q1 maturities trend to ~3.60% range .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Total Revenue (NII + Noninterest Income) ($USD Millions)$42.08 $45.35 $46.60
Net Interest Income ($USD Millions)$37.79 $40.37 $41.75
Noninterest Income ($USD Millions)$5.65 $4.97 $4.85
Diluted EPS ($)$0.66 $0.75 $0.79
Net Interest Margin (%)2.53% 2.64% 2.71%

Segment/Portfolio Breakdown (period-end balances):

Loans ($USD Millions)Q2 2024Q1 2025Q2 2025
Residential Mortgage Loans$4,370.64 $4,380.56 $4,394.32
Home Equity Lines of Credit (HELOC)$370.06 $419.81 $435.43
Commercial Loans$282.44 $302.75 $314.27
Installment Loans$15.17 $13.02 $12.68

Key KPIs:

KPIQ2 2024Q1 2025Q2 2025
Total Deposits ($USD Millions)$5,276.97 $5,496.67 $5,490.31
Book Value per Share ($)$34.46 $36.16 $36.75
ROAA (%)0.82 0.93 0.96
ROAE (%)7.76 8.49 8.73
NPLs / Total Loans (%)0.38 0.37 0.35
Coverage Ratio (x)2.6x 2.7x 2.9x
Efficiency Ratio (GAAP, %)60.91 58.06 56.27
Adjusted Efficiency Ratio (%)62.84 58.00 55.15

Estimates vs. Actuals (S&P Global):

MetricQ2 2025 ActualQ2 2025 Consensus
Revenue (S&P “Revenue”) ($USD Millions)$45.95*N/A*
Primary EPS ($)N/A*N/A*

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Other Real Estate Expense (net)Ongoing (per quarter)N/A≤$250k per quarterNew cap articulated
Share Repurchase2025Authorized up to 1.0M shares (announced Q1) 169k shares repurchased in Q2; program ongoing Maintained/Executing
DividendQ2 2025$0.36 per share (ongoing) $0.36 per share Maintained
Margin Outlook2H 2025N/A“Well positioned” with potential Fed easing tailwind Qualitative positive
Deposit Cost Outlook (CDs)Q3 2025 → Q4 2025/Q1 2026N/AMaturing CDs ~3.91% next quarter; ~3.60% later (Q4/Q1) Improving tailwind later

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Deposit Pricing/CostsQ4: Cost of interest-bearing liabilities 1.97% (+y/y) ; Q1: decreased to 1.92% Decreased further to 1.91% Improving
Net Interest MarginQ4: 2.60% ; Q1: 2.64% 2.71% Improving
HELOC GrowthQ4: +17.9% y/y ; Q1: +17.3% y/y +17.8% y/y Sustained strength
Asset QualityQ4: NPLs 0.37% ; Q1: NPLs 0.37% NPLs 0.35%, coverage 286% Improving
Geographic DemandLimited prior commentaryFlorida demand stronger than Northeast in Q2 Florida leading

Management Commentary

  • CEO strategic stance: “The strategy… to amass capital for… low-cost funds… at this moment… When the interest rate environment is favorable, loan demand is up… Performance has been stellar.”
  • CEO on returns and efficiency: “We saw double digit growth in our return metrics year over year… margin improved 7% y/y… 12% y/y improvement in adjusted efficiency ratio.”
  • CFO on margin and costs: “NIM… 2.71%… Yield on interest-earning assets 4.19%… Cost of interest-bearing liabilities decreased to 1.91%.”
  • Strategy on buybacks: “We… executed the share repurchase program, which we have done and likely will continue.”

Q&A Highlights

  • Geographic demand: Florida showing stronger demand than Northeast, supporting loan growth momentum .
  • CD rate dynamics: Maturing CDs ~3.91% over next quarter; current highest issuance ~4% for 3 months; maturities in Q4/Q1 ~3.60%, implying deposit cost tailwinds later .
  • Commercial loan mix/security: Vast majority (>90%) secured by real estate (small multifamily, small office, owner-occupied/investment) .

Estimates Context

  • Wall Street consensus EPS and revenue for Q2 2025 were not available via S&P Global; S&P provided actual “Revenue” of ~$45.95M for Q2, with no consensus series to benchmark a beat/miss. Values retrieved from S&P Global.*
  • Given margin expansion and y/y revenue/NII growth, estimates likely need to reflect sustained NIM improvement and lower deposit costs into Q4/Q1, but we cannot quantify revisions without published consensus .

Key Takeaways for Investors

  • Margin trend is positive (2.53% → 2.64% → 2.71%), supported by higher asset yields and stabilizing funding costs; expect incremental tailwinds as later-quarter CD maturities reset lower .
  • Loan growth is balanced and high quality (HELOC strength, commercial mostly real estate-secured), with improving asset quality (NPLs 0.35%, coverage 286%) reducing credit risk concerns .
  • Noninterest income diversification via wealth management (fees +13%, AUM ~$1.2B) is building recurring revenue streams that complement NII .
  • Capital remains robust (equity/assets 10.91%; BVPS $36.75) and ongoing buybacks (169k shares in Q2) add support to EPS and per-share metrics in the near term .
  • Watch ORE expense normalization (management targeting ≤$250k/quarter) and sequential fee trends; execution on expense control sustains efficiency gains (adjusted efficiency 55.15%) .
  • Macro sensitivity: Management asserts resilience even in easing scenarios; deposit pricing discipline and asset-liability strategy position NIM for durability .
  • Near-term trading: Positive narrative catalysts include continued margin expansion updates and confirmation of lower CD resets in Q4/Q1; medium-term thesis hinges on disciplined growth, pristine credit, and capital returns .

References: Q2 2025 earnings press release and 8-K (Item 2.02, Exhibit 99(a)) , Q2 2025 earnings call transcript , Q1 2025 press release , Q4 2024 press release .