TrustBank NY(TRST) - 2025 Q3 - Quarterly Report

Financial Performance - TrustCo recorded net income of $16.3 million, or $0.86 of diluted earnings per share, for Q3 2025, compared to $12.9 million, or $0.68 per share, in Q3 2024, representing a 26.3% increase in net income [145]. - For the nine months ended September 30, 2025, net income was $45.6 million, or $2.41 per diluted share, compared to $37.6 million, or $1.97 per share, in the same period in 2024, reflecting a 21.3% increase [146]. - The effective tax rate for Q3 2025 was 23.7%, slightly down from 23.8% in Q3 2024, with income tax expense recognized at $5.1 million compared to $4.0 million [209]. - Total shareholders' equity increased to $692.0 million as of September 30, 2025, from $669.0 million a year earlier [211]. - Shareholders' equity increased to $688,977, up from $653,026, indicating a strengthening of the company's capital base [228]. Interest Income and Margin - Net interest income increased by $12.2 million, or 10.8%, for the first nine months of 2025 compared to the same period in 2024, driven by higher interest income on loans and short-term investments [147]. - For Q3 2025, the net interest margin was 2.79%, an increase of 18 basis points compared to Q3 2024 [159]. - Net interest income rose by $4.4 million to $43.1 million in Q3 2025, with a net interest spread increase of 18 basis points to 2.35% [181]. - The net interest spread increased to 2.28%, up from 2.08%, suggesting improved profitability on interest-earning assets [228]. - Total interest-bearing deposits increased to $4,679,213, with a net interest income of $125,238, reflecting a year-over-year increase of $12,201 [228]. Asset Quality and Credit Losses - TrustCo experienced a decrease of $250 thousand in provision for credit losses in Q3 2025 compared to Q3 2024, indicating improved asset quality [148]. - The Company recorded a provision for credit losses of $250 thousand in Q3 2025, down from $500 thousand in Q3 2024, primarily due to loan growth [194]. - Nonperforming loans totaled $18.5 million as of September 30, 2025, a slight decrease from $18.8 million at December 31, 2024 [183]. - The net charge-off ratio for commercial loans was 0.00% for Q3 2025, compared to 0.02% in Q3 2024 [199]. - The Company has no subprime mortgages or loans acquired with deteriorated credit quality as of September 30, 2025 [191]. Loan and Deposit Growth - The average loan portfolio grew by $125.9 million to $5.18 billion in Q3 2025, with an average yield increase of 20 basis points to 4.32% [160]. - The average balance of home equity credit lines increased by 15.7% to $440.3 million in Q3 2025 compared to the prior year [169]. - The average balance of interest-bearing deposit accounts increased by $200.6 million to $4.70 billion in Q3 2025 [177]. - The average balance of Federal Funds sold and other short-term investments was $662.7 million for Q3 2025, up from $465.9 million in Q3 2024 [174]. - Commercial loans increased to $306,091 with an interest income of $12,851, indicating a strong demand for lending products [227]. Capital Ratios and Dividends - As of September 30, 2025, the Tier 1 leverage ratio for the Bank was 10.576%, exceeding the minimum requirement of 5.000% [213]. - The Common Equity Tier 1 (CET1) capital ratio was 18.669%, significantly above the minimum requirement of 6.500% [213]. - The Company’s dividend payout ratio was 43.68% of net income for Q3 2025, compared to 53.16% for Q3 2024, with a per-share dividend of $0.38 in Q3 2025 versus $0.36 in Q3 2024 [215]. - During the three months ended September 30, 2025, the Company repurchased 298,177 shares at an average price of $38.69, totaling $11.5 million [217]. - The consolidated equity to total assets ratio was 10.90% as of September 30, 2025, compared to 10.84% at December 31, 2024 [213]. Noninterest Income and Expenses - Noninterest income decreased by $242 thousand in Q3 2025 compared to Q3 2024, primarily due to a lack of significant gains from securities transactions [148]. - Total noninterest income for Q3 2025 was $4.7 million, a decrease from $4.9 million in Q3 2024, with financial services income down $77 thousand to $2.0 million [205]. - Total noninterest expenses for Q3 2025 were $26.2 million, unchanged from Q3 2024, with significant increases in salaries and employee benefits by $593 thousand [207]. Market Conditions and Strategy - The Federal Funds rate was lowered to a range of 4.00% to 4.25% in September 2025 and further to 3.75% to 4.00% in October 2025, impacting TrustCo's interest income dynamics [141]. - The average yield on the 10-year Treasury bond decreased by 10 basis points to 4.26% in Q3 2025 compared to Q2 2025, which is favorable for mortgage lenders like TrustCo [141]. - The company maintains a conservative approach to banking, focusing on traditional underwriting processes to mitigate credit risk [157]. - TrustCo's strategy includes growing customer relationships and expanding deposits and loans, with management evaluating conditions to optimize balance sheet growth [158]. - The company does not engage in derivatives, focusing instead on traditional banking activities to manage interest rate risk [230].