TRST 10-K & 10-Q changes, risk factors and insider trading

TheIn addition to the other information set forth in this 2025 Form 10-K, you should carefully consider the following factors, which could materially affect our business, financial condition or results of operations. The risks described below are general risk factors affectingnot the Company.only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business operations. Any of these risks could materially and adverselynegatively affect our business, financial condition or results of operations. In such cases, you may lose all or part of your investment.

Over any specific period of time, our interest-earning assets may be more sensitive to changes in market interest rates than our interest-bearing liabilities, or vice-versa. In addition, the individual market interest rates underlying our loan and deposit products may not change to the same degree over a given time period. In any event, if market interest rates should move contrary to our position, earnings may be negatively affected. After the benchmark federal funds interest rate reached a peak range between 5.25 percent and 5.50 percent in 2023 into 2024, the FOMC reduced the federal funds rate by 50a total of 100 basis points in Septemberthree rate cuts in 2024 and by a total of an additional 2575 basis points in Novemberthree 2024,rate cuts in 2025, to a range of 4.50 3.50 percent to 4.753.75 percent.percent Whileat the FOMCend hasof initiated2025. a rate easing cycle, theThe range of potential rate paths over the coming year is wide and will ultimately be driven by the path of inflation, labor market performance and economic growth.

There can be no assurances as to any future FOMC conduct. If the FOMC increases the targeted federal funds rates, overall interest rates likely will rise, which will positively impact our interest income but may further negatively impact the entire national economy, including the housing industry in the markets we serve, by reducing refinancing activity and new home purchases. In addition, deflationary pressures, while possibly lowering our operational costs, could have a significant negative effect on our borrowers and the values of collateral securing loans, which could negatively affect our financial performance. A significant portion of our loans have fixed interest rates (or, if adjustable, are initially fixed for periods of five to 10 years) and longer terms than our deposits and borrowings. Our net interest income could be adversely affected if the rates we pay on deposits and borrowings increase more rapidly rapidly than the rates we earn on loans. In addition, deflationary pressures, while possibly lowering our operational costs, could have a significant negative effect on our borrowers and the values of collateral securing loans, which could negatively affect our financial performance.

Inflation rose sharply at the end of 2021 and remained elevated throughout 2022 at levels not seen for over 40 years. Inflationary pressures dissipated over the course offrom 2023 andthrough 2024,2025, with the annual inflation rate in the United States decreasing to 2.9%2.7% during December 20242025 from its high of 9.1% in June 2022, as reported by the U.S. Bureau of Labor Statistics. Virtually all our assets and liabilities are monetary in nature. As a result, interest rates tend to have a more significant impact on our performance than general levels of inflation or deflation. Interest rates do not necessarily move in the same direction or by the same magnitude as the prices of goods and services. Nevertheless, Nevertheless, small to medium-sized businesses may be impacted more during periods of high inflation as they are not able to leverage economics of scale to mitigate cost pressures compared to larger businesses. Consequently, the ability of our business customers to repay their loans has deteriorated and may continue to deteriorate, and in some cases this deterioration has occurred and may in the future occur quickly, which can adversely impact our results of operations and financial financial condition. Furthermore, a prolonged period of inflation has caused and may continue to cause wages and other costs to the Company to increase, which could adversely affect our results of operations and financial condition.

WeaknessOur emphasis on residential mortgage loans exposes us to lending risks, and any weakness in the residential real estate markets could adversely affect our performance.

As of December 31, 2024,2025, consumer residential real estate loans represented approximately 94.1%93.8% of our total loan portfolio. Residential mortgage lending is generally sensitive to regional and local economic conditions that significantly impact the ability of borrowers to meet their loan payment obligations, making loss levels difficult to predict. A general decline in home values would adversely affect the value of collateral securing the residential real estate that we hold, as well as the volume of loan originations and the amount we realize on the sale of real estate loans. Additionally, if insurance obtained by our borrowers is insufficient to cover any losses sustained to the collateral, the decreases in the value of collateral securing our loans as a result of natural disasters or other related events could adversely impact our financial condition and results of operations. If insurance coverage is unavailable to our borrowers due to the reluctance of insurance companies to renew policies covering the collateral or due to other factors, the resulting increase in cost of home ownership could affect the ability of borrowers to repay loans. These factors could result in higher delinquencies and greater charge-offs in future periods, which could materially adversely affect our business, financial condition or results of operations.

Our borrowers may not repay their loans according to the terms of the loans, and, as a result of potential declines in home prices, the collateral securing the payment of these loans may be insufficient to pay any remaining loan balance. We may experience significant loan losses, which could have a material adverse effect on our operating results. TrustCo adopted ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“CECL”) effective January 1, 2022. This standard requires financial institutions to determine periodic estimates of lifetime expected credit losses on financial instruments and other commitments to extend credit. When determining the amount of the ACLL, we make various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of our loans, as well as about the current and expected future economic environment. In deciding on the adequacy of the allowance for credit losses, management reviews past due information, historical charge-off and recovery data, nonperforming loan activity and reasonable and supportable forecasts. Also, there are a number of other factors that are taken into consideration, including: the magnitude, nature and trends of recent loan charge-offs and recoveries, the growth in the loan portfolio and the implication that it has in relation to the economic climate in the Bank’s market territories, and the economic environment in the Upstate New York territory (the Company’s largest geographical area) primarily over the last several years, as well as in the Company’s Company’s other market areas. A significant portion of the ACLL is determined using qualitative factors. The determination of qualitative factors involves subjective judgement and subjective measurement. We cannot predict loan losses with certainty that charge-offs in future periods will not exceed our estimate of expected losses as determined through our ACLL. If our assumptions and analysis prove to be incorrect, including with respect to the economic environment, our ACLL may not be sufficient to cover expected losses in our loan portfolio, resulting in additions to our ACLL which is maintained through provisions for credit losses. In addition, regulatory agencies, as an integral part of their examination process, may require additions to the allowance based on their judgment about information available to them at the time of their examination. Material additions to our ACLL would materially decrease our net income.

We have implemented a program to provide financial products and services to customers that do business in the cannabis industry and theThe strict enforcement of federal laws and regulations regarding cannabis could result in our inability to continue to provide financial products and services to theseour customers.customers that do business in the cannabis industry. We could have legal action taken against us by the federal government and exposure to additional liabilities and regulatory compliance costs.

Offering financial products and services to the cannabis industry presents a unique set of regulatory risks due to the conflict between state and federal laws. While the possession and sale of recreational marijuana is legal for adults aged 21 and older in New York State, cannabis currently remains classified as a Schedule I controlled substance under the federal Controlled Substances Act. Enforcement policies and practices may be highly variable between political administrations. InFor instance, in December 2025, President Trump signed Executive Order 14370, instructing the Attorney General to take all necessary steps to expedite the rescheduling of marijuana from Schedule I addition,to Schedule III under the Controlled Substances Act. Moreover, federal prosecutors have significant discretion and there can be no assurance that the federal prosecutor for any district in which we or our customers operate will not choose to strictly enforce the federal laws governing cannabis.

Environmental, social and governance (“ESG”) and diversity, equity and inclusion (“DEI”) risks could adversely affect our reputation and shareholder, employee, client and third party relationships and may negatively affect our stock price.

Our business faces increasing public investor, activist, legislative and regulatory scrutiny related to ESG, anti-ESG, DEIESG and anti-DEI activities and developments.anti-ESG. We risk damage to our brand and reputation if we fail to act responsibly in a number of areas, such as diversity, equity, inclusion, environmental stewardship, human capital management, support for our local communities, corporate governance and transparency, or fail to consider ESG factors in our business operations.

In response to ESG developments (including, in particular DEI initiatives), there are increasing instances of anti-ESG legislation and anti-DEI executive orders,legislation, adverse media coverage, regulation, and litigation that could have unintended impacts on ordinary banking operations and increase litigation or reputational risk related to actions we choose to take and impact the results of our operations. If legislatures in the states in which we operate adopt legislation intended to protect certain industries by limiting or prohibiting consideration of business and industry factors in lending activities, certain portions of our lending operations may be impacted.

Instability in global economic conditions and geopolitical matters, as well as volatility in financial markets, could have a material adverse effect on our results of operations operations and financial condition. The macroeconomic environment in the United States is susceptible to global events and volatility in financial markets. Unfavorable or uncertain economic and market conditions could lead to credit quality concerns related to borrower repayment ability and collateral protection as well as reduced demand for the products and services we offer. In addition, economic conditions in foreign countries, including global political hostilities hostilities (including China-Taiwan and U.S.-China relations), global military conflicts (including the conflicts in the UkraineUkraine, Iran, and the Middle East), and U.S. and foreign tariff policies, could affect the stability of global financial markets, which could hinder domestic economic growth. If the national, regional and local economies experience worsening economic conditions, including high levels of unemployment, our growth and profitability could be constrained. Weak economic conditions are characterized by, among other indicators, deflation, elevated levels of unemployment, fluctuations in debt and equity capital markets, increased delinquencies on commercial, mortgage and consumer loans, residential and commercial real estate, price declines and lower home sales and commercial activity. Furthermore, trade negotiations between the U.S. and other nations remain uncertain and could adversely impact economic and market conditions for the Company, our customers, and counterparties.

Recent federal budget deficit concerns and political conflict over legislation to raise the U.S. government’s debt limit have increased the possibility of a default by the U.S. government on its debt obligations, related credit-rating downgrades, or an economic recession in the United States. On January 21, 2025, the U.S. Treasury began taking extraordinary measures to prevent a default on U.S. government debt, which measures are expected to continue until such time as the U.S. Congress increases the debt ceiling. However, it is unclear how long such extraordinary measures will forestall a default in the event of extended Congressional negotiations or inaction. Many of our investment securities are issued by the U.S. government, including certain government agencies and sponsored entities. As a result of uncertain domestic political conditions, including the possibility of the federal government defaulting on its obligations for a period of time due to debt ceiling limitations or other unresolved political issues, investments in financial instruments issued or guaranteed by the federal government may pose liquidity risks. In 2011, Standard & Poor’s lowered its long-term sovereign credit rating on the U.S. from AAA to AA+. On August 1, 2023, Fitch Ratings also downgraded its U.S. long-term sovereign credit rating from AAA to AA+. AOn downgrade,May or16, a2025, similarMoody’s actionRatings bydowngraded otherthe ratingU.S. agencies,long-term inissuer responseand senior unsecured ratings to current politicalAa1 dynamics,from asAaa welland aschanged sovereignits debtoutlook issuesto facingstable thefrom governmentsnegative. ofFurther other countries,downgrades could generally have a material adverse impact on financial markets and economic conditions in the U.S. and worldwide and, therefore, materially adversely affect our business, financial condition and results of operations.

DisagreementRecent overU.S. government shutdowns have negatively impacted U.S. economic growth, and the federalsuspension budget has previously caused the U.S. federalof government todata shut down for periods of time. On December 21, 2024, President Biden signed a bipartisan continuing resolution to extend federal spendingcollection and avertpublication a governmentleft shutdown through March 14, 2025. Accordingly,policymakers without a final agreement regarding the federal budget in place prioraccess to the expirationlatest ofdata on employment, inflation, and economic growth, increasing the continuing resolution, or another continuing resolution, it is still possiblerisk that a partial shutdownwrong ofdecision thewill U.S.be governmentmade. mayMoreover, occur. Anan extended period of shutdown of portions of the U.S. federal government could negatively impact the financial performance of certain customers and could negatively impact customers’ future access to certain loan and guaranty programs. Continued adverse political and economic conditions could have a material adverse effect on our business, financial condition and results of operations. During any protracted federal government shutdown, we may not be able to close certain loans and we may not be able to recognize non-interest income on the sale of loans. Some of the loans we originate are sold directly to government agencies, and some of these sales may be unable to be consummated during a shutdown. In addition, we believe that some borrowers may decide not to proceed with their home purchase and not close on their loans, which would result in a permanent loss of the related non-interest income. A federal government shutdown could also result in reduced income for government employees or employees of companies that engage in business with the federal government, which could result in greater loan delinquencies, increased in our non-performing, criticized, and classified assets, and a decline in demand for our products and services.

We are subject to extensive regulation, supervision, and examination by the OCC, Federal Reserve Board, and FDIC. These regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the ability to impose restrictions on a bank’s operations, reclassify assets, determine the adequacy of a bank’s loss allowances, and determine the level of deposit insurance premiums assessed. The Dodd-Frank Act significantly affected the lending, deposit, investment, trading, and operating activities of financial institutions and their holding companies and will continue to do so. Changes in banking regulations and oversight, and the regulation of other agencies, agencies, such as the CFPB and the U.S. Department of Housing and Urban Development, whether in the form of regulatory policy, new regulations or legislation, or additional deposit insurance premiums, have impacted our operations and may continue to have a material impact on our operations in the future. New or revised rules have increased and may in the future increase our regulatory compliance burden and costs and restrict the financial products and services we offer to our customers.

The CRA, the Equal Credit Opportunity Act, the Fair Housing Act, and other fair lending laws and regulations (collectively, fair lending laws) impose community investment and nondiscriminatory lending requirements on financial institutions. The CFPB, the Department of Justice and other federal and state agencies are responsible for enforcing these federal laws and regulations and comparable state provisions. Various federal banking agencies have recently completed significant changes to their respective CRA regulations. Federal, state or local consumer lending laws may restrict our ability to originate certain mortgage loans or increase our risk of liability with respect to such loans. A successful regulatory challenge to an institution'sinstitution’s performance under the fair lending laws could result in a wide variety of sanctions, including damages and civil money penalties, injunctive relief, restrictions on mergers and acquisitions, restrictions on expansion and restrictions on entering new business lines. Private parties may also have the ability to challenge an institution'sinstitution’s performance under fair lending laws in private class action litigation. Such actions could have a material adverse effect on our business, financial condition and results of operations.

We are subject to numerous federal, state, and international regulations regarding the privacy and security of personal information. These laws vary widely by jurisdiction and are constantly evolving. Privacy regulations with a significant impact on our operations include the NYDFS 23 NYCRR Part 500 Cybersecurity Requirements for Financial Services Companies, Gramm-Leach-Bliley Title V Subtitle A- Safeguards Rule, and FDIC Part 364 Appendix B- Interagency Guidelines Establishing Information Security Standards. Similar legislation is being enacted around the world with requirements and protections specific to data security requirements, notification requirements for data breaches, the right to access personal data and the right to be forgotten. These and other changes in cybersecurity and privacy regulations or the enactment of new regulations may increase our compliance costs and failure to comply with these regulations may lead to reputational damage, fines or civil damages and increased regulatory scrutiny. with these regulations may lead to reputational damage, fines or civil damages and increased regulatory scrutiny. Moreover, the failure to meet reasonable cybersecurity control requirements could risk our ability to obtain cyber liability insurance or influence significantly higher rates.

The changesChanges in the federal tax laws may have an adverse effect on the market for, and the valuation of, residential properties, and on the demand for such loans in the future, and could make it harder for borrowers to make their loan payments. In addition, these changes may also have a disproportionate effect on taxpayers in states with high residential home prices and high state and local taxes, likesuch as New York. If home ownership becomes less attractive, demand for mortgage loans could decrease. The value of the properties securing loans in our loan portfolio may be adversely impactedaffected as a result of the changing economics of home ownership, which could require an increase in our provision for loan losses, which would reduce our profitability and could materially adversely affect our business, financial conditioncondition, and results of operations.

OurWe ability to pay dividends isare subject to regulatory limitations and other limitations that may affect our ability to pay dividends to our stockholders or to repurchase our common stock.

Furthermore, our assets that are at risk for cyber-attacks include financial assets and non-public information belonging to customers. We use several third-party service providers who have access to our assets via electronic media. Certain cyber security risks arise due to this access, including cyber espionage, blackmail, ransom, and theft. We employ preventive and detective controls to protect our assets and provide recurring information security training to all employees. Although to date we have not experienced any material losses or other material consequences to date relating to technology failure, cyberattacks or other information or security breaches, whether directed at us or at third parties, there can be no assurance that our controls and procedures in place to monitor and mitigate the risks of cyber threats, including the remediation of critical information security and software vulnerabilities, will be sufficient and/or timely as to prevent material losses or consequences in the future, particularly in light of the increased sophistication and evolving nature of cyber criminals’ activity. Our risk and exposure to these cybersecurity incidents remains heightened because of, among other things, our implementation of Internet and mobile banking to meet customer demand, our expanded internal usage of web-based products and applications, the current economic and political environment, and our regulatory obligations and the regulatory scrutiny within our industry. As cyber and other data security threats continue to evolve, we may be required to expend significant additional resources to continue to modify and enhance our protective measures or to investigate and remediate any security vulnerabilities.

Our business plan calls for us to execute a variety of strategies to allocate and deploy any excess capital including, but not limited to, continued organic balance sheet growth and diversification, diversification, implementation of stock repurchase plans and payment of regular cash dividends. Additionally, we will carefully consider acquisition opportunities to further deploy capital when we expect such opportunities to significantly enhance long-term shareholder value. If we are unable to effectively and timely deploy capital through these strategies, it may constrain growth in earnings and return on equity and thereby diminish potential growth in stockholder value.

On MarchDecember 29,19, 2024,2025, we announced that our Board authorized a new stock repurchase plan to acquire up to 200,0002,000,000 shares of the Company’s outstanding common stock. Repurchases are made at management’s management’s discretion at prices management considers to be attractive and in the best interests of both the Company and its stockholders, subject to the availability of stock, general market conditions, the trading price of the stock, alternative uses for capital, and the Company’s financial performance.

The information requiredset byforth thisunder thisthe Itemcaption 7“Management’s isDiscussion containedand inAnalysis of Financial Condition and Results of Operations” (located on pages 6 through 33 of TrustCo’s 2025 Annual Report to Shareholders for the year ended December 31, 2024,Shareholders, which is filed as Exhibit 13 heretoto andthis 2025 Form 10-K) is incorporated herein by reference.

The review that follows focuses on the factors affecting the financial condition and results of operations of TrustCo during the threethree-month monthand periodsix-month periods ended MarchJune 31,30, 2026, with comparisons to the corresponding period in 2025, as applicable. The consolidated interim financial statements and related notes, as well as the Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the SEC on March 16, 2026 (the “2025 Form 10-K”), should also be read in conjunction with this review. Amounts in the prior period consolidated interim financial statements are reclassified whenever necessary to conform to the current period’speriod's presentation. These reclassifications have no effect on prior period net income or shareholders’ equity. See “Cautionary Note Regarding Forward-Looking Statements” on page 5 of this report for a description of important factors that could cause actual results to differ from expected results.

Following this Management’s Discussion and Analysis is the table “"Distribution of Assets, Liabilities and Shareholders’Shareholders' Equity: Interest Rates and Interest Differential,”Differential" which gives a detailed breakdown of TrustCo's TrustCo’s average interest earning assets and interest bearinginterest-bearing liabilities for the three and six month periods ended MarchJune 31,30, 2026 and 2025.

During the firstsecond quarter of 2026, financial markets startedenjoyed outsolid stronggrowth toin beginall 2026,major butfinancial declinedmarket byindexes. The S&P 500 Index was up 14.87%, Nasdaq was up 21.41%, and the endDow Jones ofIndustrial theAverage quarterwas drivenup by12.90% tensionscompared in the Middle East, higher oil prices and labor market deterioration. As ofto the end of the first quarter of 2026, the S&P 500 Index was down 4.63%, Nasdaq was down 7.11%, and the Dow Jones Industrial Average was down 3.58% compared to December 31, 2025.2026. The 10‑year Treasury bond averaged 4.20%4.42% during Q1Q2 2026 compared to 4.10%4.20% in Q4Q1 2025,2026, an increase of 1022 basis points. The 2‑year Treasury bond average averagedrate 3.58%increased 39 basis points to 3.97% during Q1Q2 20262026, which flattened the yield curve as compared to 3.52%the inprior Q4quarter. 2025, and theThe spread between the 10‑year and the 2-year Treasury bonds increased decreased from 0.58%0.62% on average in Q4Q1 20252026 to 0.62% 0.46% in Q1Q2 2026. Generally, steeper yield curves are favorable for portfolio mortgage lenders like TrustCo, and the table below illustrates the range of rate movements for both short term and longer termlonger-term rates. During the first quarterhalf of 2026, 2026the Federal Funds rate remained flat at a range of 3.50% to 3.75%.

The country has been experiencing economic uncertainty as markets continue to adjust to changes in tariff policies, Middle East tensions, increased oil prices and a volatile labor market. The Federal Open Market Committee (“FOMC”) lowered the Federal Funds target rate range to 3.50-3.75% in December 2025 and there was no change in the first quarterhalf of 2026. At its meeting in July 2026, the FOMC majority voted to leave rates unchanged although three members voted to increase the Federal Funds target rate.

TrustCo recorded net income of $16.3$17.0 million, or $0.91$0.98 of diluted earnings per share, for the three monthsthree-months ended MarchJune 31,30, 2026, compared to net income of $14.3$15.0 million, or $0.75$0.79 of diluted earnings per share, in the same period in 2025. Return on average assets was 1.02%1.04% and 0.93%,0.96%, respectively, for the three months ended MarchJune 31,30, 2026 and 2025. Return on average equity was 9.66%10.22% and 8.49%,8.73%, respectively, for the three monthsthree-months ended MarchJune 31, 30, 2026 and 2025.

The primary factors accounting for the change in net income for the three monthsthree-months ended MarchJune 31,30, 2026 compared to the same period of the prior year were:

TrustCo’s results are affected by a variety of factors including competitive and economic conditions in the specific markets in which the Company Company operates and, more generally, in the national economy, financial market conditions and the regulatory environment. Each of these factors is dynamic, and changes in any area can have an impact on TrustCo’s results. Included in the 2025 Form 10-K is a description of the effect that changes in interest rates had on the results for the year 2025 compared to 2024. Many of the same market factors discussed in the 2025 Form 10-K continued to have an impact on results through the firstsecond quarter of 2026.

Interest rates have a significant impact on the operations and financial results of all financial services companies. One of the most important interest rates used to control national economic policy is the “Federal Funds” rate. This is the interest rate utilized within the banking system for overnight borrowings for institutions with the highest credit rating. During the firstsecond quarter of 2026 Federal Funds target rate remained flat at a range of 3.50% to 3.75%. 3.75% through June 30, 2026.

The interest rate on the 10-year Treasury bond and other long-term interest rates have significant influence on the rates for new residential real estate loans and longer term investments. These changes in interest interest rates have an effect on the Company relative to the interest income on loans, securities, and Federal Funds Sold and other short-term instruments as well as the interest expense on deposits and borrowings. Residential real estate loans and longer-term longer‑term investments are most affected by the changes in longer-termlonger term market interest rates such as the 10‑year Treasury. The Federal Funds Sold portfolio and other short‑term investments are affected primarily by changes in the Federal Funds target rate. Deposit interest rates are most affected by short-term market interest rates. Also, changes in interest rates have an effect on the recorded balance of the securities available-for-saleavailable for sale portfolio, which is recorded at fair value. Generally, as market interest rates increase, the fair value of the securities will decrease and the reverse is also generally applicable. Interest rates on new residential real estate loan originations are also influenced by the rates established by secondary market participants such as Freddie Mac and Fannie Mae. The Company establishes rates that management determines are appropriate in light of the long-term nature of residential real estate loans while remaining competitive. Higher market interest rates also generally increase the value of retail deposits.

TrustCo’s principal loan products are residential real estate loans. Most of TrustCo’s residential real estate loans carry a fixed rate of interest. As noted above, residential real estate loans and longer‑term investments are most affected by the changes in longer-termlonger term market interest rates such as the 10-year Treasury. The 10‑year Treasury yield wasincreased up 1022 basis points, on average, during the firstsecond quarter of 2026 compared to the fourth first quarter of 2025, 2026 and italso wasincreased down 256 basis points as compared to the firstsecond quarter of 2025.

For the firstsecond quarter of 2026, the net interest margin was 2.84%,2.87%, up 2016 basis points versus the prior year’s firstsecond quarter. The quarterly results reflect the following significant factors:

During the firstsecond quarter of 2026, the Company continued to focus on its strategy to expand its loan portfolio by offering competitive interest rates. Management believes that the TrustCo residential real estate loan product is very competitive compared to local and national competitors. Competition remains strong in the Company’s market areas.

Total average interest earning assets increased from $6.11$6.15 billion in the firstsecond quarter of 2025 to $6.27$6.35 billion in the same period of 2026 with an average yield of 4.23%4.27% in the firstsecond quarter of 2026 and 4.13% 4.19% in the first second quarter of 2025. The mix of assets invested in securities available for sale decreased while Federal Funds sold and other short-term investments and loans increased while securities available for sale and held to maturity securities decreased over the prior year period. Interest income on average earning assets increased $3.4from $64.5 million in the firstsecond quarter of 20262025 fromto $67.7 million in the priorsecond yearquarter period.of 2026. This increase was primarily driven by anthe increase in interest income on loans due to higher interest rates on loan originations over the last year.year and variable rate loans repricing upwards.

The average balance of loans was $5.27$5.33 billion in the firstsecond quarter of 2026 upand from $5.11$5.14 billion in the comparable period in 2025. The yield on loans increasedwas 19up 16 basis points to 4.38%.4.41%. Interest income on loans was $58.8 million in the second quarter of 2026 up $4.2 million from the same period in 2025.

Compared to the first quarter of 2025, theThe average balance of residential mortgage loans, commercial loans, and home equity loans all increased, while installment loans decreased. The average balance of residential mortgage loans was $4.48$4.53 billion in the second quarter of 2026 compared to $4.39 billion in 2025, an increase of 2.1%.3.2%. The average yield on residential mortgage loans increased by 2018 basis points to 4.09%4.12% in the firstsecond quarter of 2026 compared to 2025, primarily as a result of the higher interest rates on new originations compared to the existing portfolio yield.

TrustCo actively markets the residential loan products within its market territories. Mortgage loan rates are affected by a number of factors including rates on Treasury securities, the Federal Funds target rate, rate, and rates set by competitors and secondary market participants. TrustCo aggressively markets the unique aspects of its loan products thereby attempting to create differentiation from other lenders. These unique aspects include low closing costs, fast turn-around time on loan approvals, and no escrow or mortgage insurance requirements for qualified borrowers. Assuming a continued declinechange in long-term interest rates, the Company would anticipate that the unique features of its loan products will continue to attract customers in the residential mortgage loan area.

Commercial loans, which consist primarily of loans secured by commercial real estate, increased $17.1$13.4 million to an average balance of $315.1$319.7 million in the firstsecond quarter of 2026 compared to the same period in the prior year. The average yield on this portfolio was flatup at8 5.59%basis points to 5.64% compared to the prior year period.period, primarily as a result of higher interest rates on new originations compared to the existing portfolio yield and variable rate loans repricing upwards. The Company has remained selective in underwriting commercial loans in 2026 as the apparent risk/reward balance has been less favorable in some cases.

The average yield on home equity credit lines decreased 414 basis points to 6.26%6.25% during the firstsecond quarter of 2026 compared to the prioryear yearearlier period. The average balances of home equity credit lines increased 12.3%10.4% to $464.8 $473.7 million in the firstsecond quarter of 2026 as compared to the prior year.

The average balance of the securities available for sale portfolio for the firstsecond quarter of 2026 was $323.9$319.2 million compared to $369.9$358.6 million for the comparable period in 2025. The decrease in the balance reflects reflects routine paydowns, calls and maturities, partially offset by new investment purchases. The average yield was 2.94%3.06% for the firstsecond quarter of 2026 compared to 2.62%2.81% for the firstsecond quarter of 2025. The increase in average yield is a result of higher yields on bonds purchased as well as lower rate bonds maturing since the prior year quarter. This portfolio is primarily comprised of agency issued residential mortgage-backedmortgage backed securities, bonds issued by government sponsored enterprises (such as Fannie Mae, the Federal Home Loan Bank, and Freddie Mac), Small Business Administration participation certificates, corporate bonds and municipal bonds. These securities are recorded at fair value with any adjustment in fair value included in other comprehensive income,income (loss), net of tax.

The net unrealized loss in the available for sale securities portfolio was $17.9$18.9 million as of MarchJune 31,30, 2026 compared to a net unrealized loss of $16.2 million as of December 31, 2025. The increase in the net unrealized losses in the portfolio is the result of the current interest rate environment.

The average balance of held to maturity securities was $4.2$4.0 million for the firstsecond quarter of 2026 compared to $5.2$5.0 million in the firstsecond quarter of 2025. The decrease in balances reflects routine paydowns. No new securities were added to this portfolio during the period. The average yield was 4.47% for the firstsecond quarter of 2026 compared to 4.34%4.37% for the year earlier period. TrustCo expects to hold the securities in this portfolio until they mature or are called.

The net unrealizedunrecognized gain in the held to maturity securities portfolio was $37$25 thousand as of MarchJune 31,30, 2026 compared to a net unrealizedunrecognized gain of $50 thousand as of December 31, 2025. The decrease in the net net unrealizedunrecognized gains in the portfolio is the result of changes in market interest rate levels.

As of MarchJune 31,30, 2026, this portfolio consisted solely of residential mortgage-backed securities. The balances for these securities are recorded at amortized cost.

The 2026 firstsecond quarter average balance of Federal Funds sold and other short-term investments was $670.0$687.2 million, a $56.3$38.8 million increase from the $613.6$648.5 million average for the same period in 2025, primarily due to an increase in deposits and funds from maturing and called securities which have not yet been deployed. The yield was 3.70% for the firstsecond quarter of 2026 and 4.45%4.46% for the comparable period in 2025. Interest income from this portfolio decreased $627 $868 thousand from the$7.2 priormillion yearin period.2025 Whileto $6.3 million in 2026. The increase in the average balancesbalance increasedwas yearnot overenough year,to offset the decreases in the Federal Funds target rate in 2025 resulted in a decrease in interest incomeyield over the same period in the prior year.period.

Total average interest bearinginterest-bearing deposits (which includes interest bearing checking, money market accounts, savings and time deposits) increased $118.3$169.9 million to $4.77$4.85 billion for the firstsecond quarter of 2026 versus the first second quarter in the prior year, and the average rate paid decreased from 1.94%1.93% for 2025 to 1.80% for 2026. Total interest expense on these deposits decreased $1.1$802 millionthousand to $21.1$21.7 million in the firstsecond quarter of 2026 compared to the year earlier period. From the firstsecond quarter of 2025 to the firstsecond quarter of 2026, interest bearinginterest-bearing checking account average balances were up 2.1%,4.4%, certificates of deposit average balances were up 6.7%,8.0%, non‑interest non-interest demand average balances were up 5.2%,5.0%, average savings balances decreased 2.1%1.3% and money market balances were down 3.9%.6.1%. Overall, average balances are up from a year ago as we continue to encourage customers to retain their funds in the expanded product offerings of the Bank through aggressive marketing and product differentiation.

As of MarchJune 31,30, 2026, the maturity of total time deposits was as follows:

As of MarchJune 31,30, 2026 and December 31, 2025, approximately $1.23$1.25 billion and $1.22 billion, respectively, of our deposit portfolio waswere uninsured. The uninsured amounts are estimates based on the methodologies and and assumptions used for the Bank’sBank's regulatory reporting requirements.

Average short-term borrowings for the firstsecond quarter ofwere $108.9 million in 2026 were $116.5 million compared to $83.2$81.1 million in the same period in 2025. The increase in the average balance from the prior year period is primarily a result of increases in customer balances. The weighted average interest rate for short-term borrowings during the second quarter increased during this time period from 0.87% in 2025 to 1.40%1.36% in the first quarter of 2026 compared to 0.88% in the prior year quarter.2026. The short-term borrowings of the Company are cash management accounts, which represent retail accounts with customers for which the Bank has pledged certain assets as collateral. The customer account balances changed based on the needs of the underlying retail customers.

The Company has a number of contingent funding alternatives available in addition to the large cash and cash equivalents position and the investment securities positions it maintains on its balance sheet. The Bank is a member of the Federal Federal Home Loan Bank of New York (“FHLBNY”) and is an eligible borrower at the Federal Reserve Bank of New York (“FRBNY”) and has the ability to borrow utilizing securities and/or loans as collateral at either institution. The Bank does not utilize brokered deposits as a part of its funding strategy, but does incorporate them as a potential contingent funding source within its Asset/Liability Management Policy. Like other contingent funding sources, brokered depositsCDs may be tested from time to time to ensure operational and market readiness. As of MarchJune 31,30, 2026 the Company also has borrowing capacity of $967$1.02 millionbillion available with the FHLBNY and $539$530 thousand available with the FRBNY. The borrowings borrowing capacity is secured by the loans pledged by the Company. As of MarchJune 31,30, 2026 and December 31, 2025, the Company had no outstanding borrowings with the FHLBNY or the FRBNY.

Net interest income wasincreased upby $4.3$3.8 million fromto $40.4$45.6 million in the firstsecond quarter of 20252026 compared to $44.7the millionsame period in the first quarter of 2026,2025 driven by loan growth at higher interest rates and less lower interest expense on deposit products,expense, partially offset by lower investment interest income and a decrease in interest income on Federal Funds sold and other short-term investments. The net interest spread was up 2320 basis points to 2.44%2.48% in the first second quarter of 2026 compared to the same period in 2025. As previously noted, the net interest margin was up 2016 basis points to 2.84%2.87% for the firstsecond quarter of 2026 compared to the same period in 2025. Yields on earning assets increased in the firstsecond quarter of 2026 compared to the first second quarter of 2025, and rates on interest-bearing liabilities decreased causing margin expansion. The Federal Reserve’s decision regarding whether to cut, raiseraise, or hold rates in upcoming meetings will have an effect on the Company’s ability to continue to decrease deposit costs which shouldwill helpimpact margin in future quarters. During the firstsecond quarter of 2026, the Company was able to lower the rates offered on our time deposits while continuing to retain and grow that product.

The following describes the nonperforming assets of TrustCo as of MarchJune 31,30, 2026:

Nonperforming loans and foreclosed real estate: Total NPLs were $21.5$21.8 million andat June 30, 2026, compared to $20.7 million as of March 31, 2026 andat December 31, 2025, respectively.2025. There were no loans as of MarchJune 31,30, 2026 and December 31, 2025 that were past due 90 days or more and still accruing interest.

AsAt ofJune March 31,30, 2026, nonperforming loans primarily include a mix of commercial and residential loans. Of total nonperforming loans of $21.5$21.8 million asat ofJune March 31,30, 2026, $19.4$19.7 million were residential real estate loans, $2.0 million were commercial loans and mortgages and $63$53 thousand were installment loans, compared to $18.6 million, $2.0 million and $51 thousand, respectively, at December 31, 2025.

A significant percentage of nonperforming loans are residential real estate loans, which are historically lower-risk than most other types of loans. Net recoveries were $43$72 thousand on residential real estate loans (including home equity lines of credit) for the firstsecond quarter of 2026 as compared to net charge-offsrecoveries of $41$121 thousand infor the firstsecond quarter of 2025. Management believes that these loans have been appropriately written written down where required.

The Company originates loans throughout its branch franchise area. AsAt ofJune March 31,30, 2026, 64.5% of its gross loan portfolio balances were in New York State and the immediately surrounding areas areas (including New Jersey, Vermont and Massachusetts), and 35.5% were in Florida. Those figures compare to 64.3% and 35.7%, respectively at December 31, 2025.

Economic conditions vary widely by geographic location. As a percentage of the total nonperforming loans as of MarchJune 31,30, 2026, 19.8%20.3% were to Florida borrowers, compared to 80.2%79.7% to borrowers in New York and surrounding areas. For the three monthsthree-months ended MarchJune 31,30, 2026, New York and surrounding areas experienced net recoveries of approximately $13$93 thousand,thousand and Floridathere experiencedwere net recoveriescharge-offs of $26$5 thousand.thousand in Florida for the second quarter of 2026.

Other than loans currently identified as nonperforming, management is aware of no other loans in the Bank’s portfolio that pose material risk of the eventual non-collection of principal and and interest. Also as of MarchJune 31,30, 2026, there were no other loans classified for regulatory purposes that management reasonably expects will materially impact future operating results, liquidity, or capital resources.

Loans individually evaluated for impairment are non-accrual residential loans delinquent greater than 180 days, non-accrual commercial loans, as well as loans classified as loan modifications to borrowers experiencing financial difficulty. There were $2.0 million and $2.1 million of commercial mortgages and commercial loans classified as individually evaluated as of June both March 31, 2026 and December 31, 2025. There were $24.3 million and 23.7 million of individually evaluated residential loans as of March 31,30, 2026 and December 31, 2025, respectively. There were $24.9 million of individually evaluated residential loans at June 30, 2026 compared to $23.7 million classified as individually evaluated at December 31, 2025.

As of MarchJune 31,30, 2026 and December 31, 20252025, the Company’s loan portfolio did not include any subprime mortgages or loans acquired with deteriorated credit quality.

Allowance for credit losses on loans: As of MarchJune 31,30, 2026, the Company utilized the Baseline scenario model of Moody’s economic scenarios and considered the uncertainty associated with the assumptions in the Baselinebaseline scenario, including continued actions taken by the Federal Reserve with regard to monetary policy and interest rates and the potential impact of those actions, actions and the potential impact of persistent high inflation on the economy. Outcomes in any or all of these factors could differ from the Baselinebaseline scenario utilized, and the Company incorporated qualitative considerations reflecting the risk of uncertain economic conditions, and for additional dimensions of risk that may not be captured in the quantitative model.

In the firstsecond quarter of 2026, the Company recorded a provision for credit losses of $950$650 thousand, which is the result of a provision for credit losses on loans of $750$1.0 thousand,million, and provisionbenefit for credit losses on unfunded commitments of $200 $350 thousand. The increase in the Allowance for Credit Losses on Loans (“ACLL”) during the firstsecond quarter of 2026 was primarily a result of loan growthgrowth. andIn economicthe conditions.second Thequarter increaseof in2025, the Company recorded a provision for credit losses of $650 thousand, which is all related to the provision for credit losses on loans, as there was no provision for credit losses on unfunded commitments. The Company recorded a provision for credit losses of $1.6 million for the six-months ended June 30, 2026 which is the result of a provision for credit losses on loans of $1.8 million and a benefit for credit losses on unfunded commitments isof $150 thousand. For the six-months ended June 30, 2025 the Company recorded a result provision for credit losses of an$950 increasethousand inwhich is the result of a provision for credit losses on loans of $750 thousand and a provision for unfunded loancommitments commitments.of $200 thousand.

The allocation of the allowance for credit losses on loans as of MarchJune 31,30, 2026 and December 31, 2025 was as follows:

AsAt ofJune March 31,30, 2026, the allowance for credit losses on loans was $53.0$54.1 million, compared to $52.2 million at December 31, 2025. The allowance represents 1.00%1.01% of the loan portfolio asat ofJune March 31,30, 2026 and 0.99%0.99 as of% at December 31, 2025. The coverage ratio, or the allowance for credit losses on loans to NPLs, was 246.9%248.6% and 252.5% as of MarchJune 31,30, 2026 and December 31, 2025, respectively. The ratio of non-performing loans to total loans was 0.41%0.40% and 0.39% as of MarchJune 31,30, 2026 and December 31, 2025, respectively.

Net recoveries for the three-month period ended MarchJune 31,30, 2026 were $39$88 thousand and $258$9 thousand for the prior year period.