TRUSTCO BANK CORP N Y (TRST)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 delivered strong operating momentum: net income rose 26.3% YoY to $16.3M ($0.86 diluted EPS) on 11.5% YoY growth in net interest income (NII) and an 18 bps expansion in net interest margin (NIM) to 2.79% .
• Asset yields rose (4.25%) while the cost of interest-bearing liabilities fell to 1.90%, driving spread/NIM gains; credit quality remained robust with NPLs/loans at 0.36% and coverage at 281% .
• Management reiterated a constructive outlook: “meaningful net interest income upside for quarters to come,” citing loan/investment repricing and $1B of CDs maturing at ~3.75% vs current top offer ~4% (3-month), creating deposit cost repricing opportunities depending on the Fed path .
• Capital return continues: 467k shares repurchased YTD (2.5% of outstanding) with 533k shares authorized remaining; book value/share increased to $37.30 (+6% YoY) .

What Went Well and What Went Wrong

• What Went Well

  • NIM and spread expanded: NIM 2.79% (+18 bps YoY), spread 2.35% (+18 bps YoY) on higher asset yields (4.25%) and lower cost of interest-bearing liabilities (1.90%) .
  • Broad-based loan and deposit growth: average loans +$125.9M (+2.5% YoY) led by HELOC (+15.7%), and average deposits +$251.1M (+4.8% YoY) .
  • Management tone confident on forward NII: “expect…meaningful net interest income upside for quarters to come,” with specific CD repricing tailwinds highlighted .

• What Went Wrong

  • Fee income softness vs prior quarter: noninterest income of $4.689M was down from $4.852M in Q2 (though in-line YoY trend) .
  • ORE/Ops noise persists albeit small: ORE expense net was $8k (vs $522k in Q2), with management guiding to ≤$250k/quarter cap—a reminder of some quarterly volatility even if controlled .
  • Commercial concentration remains deliberately small (~6% of loans), limiting growth leverage if commercial demand accelerates, though this is by design for credit quality .

Financial Results

• Year-over-year, Q3 total revenue +9.7% ($47.81M vs $43.58M) and EPS +26.5% ($0.86 vs $0.68), driven by NII growth and margin expansion .
• Sequentially, revenue +2.6% and EPS +8.9% vs Q2, supported by continued NIM expansion .

Asset Quality and Capital KPIs

Loan and Deposit Detail (Period-End)

Notes on fee and wealth management:

• Wealth management AUM: ~$1.25B at 9/30/25; wealth/financial services fees ~41.9% of noninterest income in Q3 .
• AUM in Q2: ~$1.19B; wealth fees +13% YoY in Q2 .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• CEO tone on strategy and execution: “Solid strategic vision accompanied by effective tactical decisions… are combining to create exceptional results… We have held the line on cost of funds, grown loans and deposits… ROAA and ROAE up 18% and 15% YTD… executing our share repurchase program contributed to EPS growth of 22% YTD” .
• Forward outlook on NII: “As the year progresses we expect to continue to see meaningful net interest income upside for quarters to come… portfolios continue to reprice upward” .
• CFO on margin drivers and fee/AUM: “NIM… 2.79%… yield on interest-earning assets 4.25%; cost of interest-bearing liabilities 1.9%… Wealth management AUM ~$1.25B; ~41.9% of noninterest income” .
• Chief Banking Officer on loan demand/pricing: “30-year fixed-rate mortgage at 6.125%… HELOC rates starting below 6.75%… encouraged by loan growth” .

Q&A Highlights

• Deposit cost trajectory: ~$1B CDs mature over next 4–6 months at ~3.75% average; current highest offer 4% (3-month), implying potential repricing benefit depending on Fed and competition .
• Recoveries context: Strong upstate NY housing demand with limited inventory; many resolutions before taking property back; ~$194k NY recoveries tied to ~5 properties (4 residential, 1 commercial) .
• Footprint strategy: Evaluating growth in Florida’s Pasco County and selective downstate NY infill; disciplined on transaction terms .

Estimates Context

• S&P Global consensus for EPS and revenue was not available for TRST this quarter (no consensus means/estimate counts returned). As a result, we present actuals only and do not characterize beats/misses. Values retrieved from S&P Global.*

Key Takeaways for Investors

• Sustained margin expansion and loan growth are driving double-digit revenue and EPS growth; operating leverage continues to improve as efficiency ratio falls to 54.9% .
• Near-term NII tailwinds from asset repricing and ~$1B of maturing CDs (~3.75% avg rate) create an attractive setup if funding costs ease with the Fed .
• Credit remains a differentiator (NPLs/loans 0.36%, coverage ~281%) with three straight quarters of net recoveries—supporting lower provision needs and stable capital .
• Capital return is active (2.5% of shares repurchased YTD) with intent to complete the 1M-share authorization; book value/share continues to climb (+6% YoY) .
• Wealth management is a growing, recurring fee stream (~42% of noninterest income) with AUM at ~$1.25B, adding diversification to spread income .
• Selective market expansion (Florida, downstate NY) could underpin loan growth without compromising credit standards .
• Trading lens: momentum in NIM/NII and pristine credit are positive catalysts; watch Fed path and CD repricing execution for funding cost trajectory and forward EPS power .

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Additional Supporting Detail

Non-GAAP disclosures: Adjusted efficiency ratio excludes ORE expense and equity gains; Q3 adjusted efficiency ratio 54.87% vs GAAP 54.89%, indicating minimal non-GAAP impact .

Cross-references and consistency checks: All revenue/NII/EPS and KPI figures reconcile between the 8‑K exhibit and the press release; management commentary on NIM drivers and credit aligns with reported yield/cost tables and NPA/NPL disclosures .