TRUSTCO BANK CORP N Y

Previous wording

The review that follows focuses on the factors affecting the financial condition and results of operations of TrustCo during the three-month and six-month periods ended June 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'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.

Current wording

The review that follows focuses on the factors affecting the financial condition and results of operations of TrustCo during the three month and nine month periods ended September 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 prior period consolidated interim financial statements are reclassified whenever necessary to conform to the current period’s presentation. These reclassifications have no effect on prior period net income or shareholders’ equity. See the “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.

Previous wording

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

Current wording

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

Previous wording

During the second quarter of 2026, financial markets enjoyed solid growth in all major financial market indexes. The S&P 500 Index was up 14.87%, Nasdaq was up 21.41%, and the Dow Jones Industrial Average was up 12.90% compared to the end of the first quarter of 2026. The 10‑year Treasury bond averaged 4.42% during Q2 2026 compared to 4.20% in Q1 2026, an increase of 22 basis points. The 2‑year Treasury bond average rate increased 39 basis points to 3.97% during Q2 2026, which flattened the yield curve as compared to the prior quarter. The spread between the 10‑year and the 2-year Treasury bonds decreased from 0.62% on average in Q1 2026 to 0.46% in Q2 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-term rates. During the first half of 2026, the Federal Funds rate remained flat at a range of 3.50% to 3.75%.

Current wording

During the third quarter of 2026, financial markets were volatile, and two of the three major indexes advanced. The S&P 500 Index was up 2.03%, Nasdaq was up 2.47%, and the Dow Jones Industrial Average was down 2.70% compared to the end of the second quarter of 2026. The 10‑year Treasury bond averaged 4.76% during Q3 2026 compared to 4.42% in Q2 2026, an increase of 34 basis points. The 2‑year Treasury bond average rate increased 39 basis points to 4.36% during Q3 2026, which flattened the yield curve as compared to the prior quarter. The spread between the 10‑year and the 2-year Treasury bonds decreased from 0.46% on average in Q2 2026 to 0.39% in Q3 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-term rates. The Federal Funds rate remained flat for most of 2026 at a range of 3.50% to 3.75% until the Federal Open Market Committee (“FOMC”) raised the target range to 3.75% to 4.00% in September 2026.

Previous wording

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 half 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.

Current wording

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 FOMC lowered the Federal Funds target rate range to 3.50-3.75% in December 2025 and there was no change in the first half 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. In September 2026, the FOMC increased the target range for the federal funds rate by 25-basis points to 3.75% - 4.00% and revised its economic outlook to reflect expectations for possible further interest rate increases during 2026. As a result, market expectations have shifted toward a continuing elevated interest rate environment, which may continue to adversely affect housing affordability and refinancing demand.

Previous wording

The Company expects to see continued volatility in the economic markets resulting from governmental responses to inflation and recessionary signs in the economy, as well as uncertainty about the impacts of the conflict in Iran and tariffs. These changing conditions could have impacts on the balance sheet and income statement of the Company for the remainder of the year.

Current wording

The Company expects to see continued volatility in the economic markets resulting from governmental responses to inflation, as well as uncertainty about the impacts of the conflict in Iran and tariffs. These changing conditions could have impacts on the balance sheet and income statement of the Company for the remainder of the year.

Previous wording

TrustCo recorded net income of $17.0 million, or $0.98 of diluted earnings per share, for the three-months ended June 30, 2026, compared to net income of $15.0 million, or $0.79 of diluted earnings per share, in the same period in 2025. Return on average assets was 1.04% and 0.96%, respectively, for the three months ended June 30, 2026 and 2025. Return on average equity was 10.22% and 8.73%, respectively, for the three-months ended June 30, 2026 and 2025.

Current wording

TrustCo recorded net income of $17.3 million, or $1.02 of diluted earnings per share, for the three months ended September 30, 2026, compared to net income of $16.3 million, or $0.86 of diluted earnings per share, in the same period in 2025. Return on average assets was 1.05% and 1.02%, respectively, for the three months ended September 30, 2026 and 2025. Return on average equity was 10.57% and 9.29%, respectively, for the three months ended September 30, 2026 and 2025.

Previous wording

TrustCo recorded net income of $33.3 million, or $1.89 of diluted earnings per share, for the six-months ended June 30, 2026, compared to net income of $29.3 million, or $1.54 of diluted earnings per share, in the same period in 2025. Return on average assets was 1.03% and 0.94%, for the six-months ended June 30, 2026 and 2025, respectively. Return on average equity was 9.94% and 8.61% for the six-months ended June 30, 2026 and 2025, respectively.

Current wording

TrustCo recorded net income of $50.6 million, or $2.91 of diluted earnings per share, for the nine months ended September 30, 2026, compared to net income of $45.6 million, or $2.41 of diluted earnings per share, in the same period in 2025. Return on average assets was 1.04% and 0.97%, respectively, for the nine months ended September 30, 2026 and 2025. Return on average equity was 10.15% and 8.84%, respectively, for the nine months ended September 30, 2026 and 2025.

Previous wording

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

Current wording

The primary factors accounting for the change in net income for the nine months ended September 30, 2026 compared to the same period of the prior year were:

Previous wording

During the second quarter of 2026, TrustCo recognized an $844 thousand unrealized gain on equity securities resulting from the conversion of Visa Class B-2 shares into a combination of Visa Class B‑3 and Visa Class C shares and the fair-value recognition of the Class C shares received. The Company had not sold the resulting Class C shares as of June 30, 2026. The Company originally obtained the Visa Class B shares in 2008. The strategic decision to retain the Class C shares and not sell them sooner, allowed the Company to avoid commissions and other expenses thus recognizing the full market value.

Current wording

During the second quarter of 2026, TrustCo recognized an $844 thousand unrealized gain on equity securities resulting from the conversion of Visa Class B-2 shares into a combination of Visa Class B‑3 and Visa Class C shares and the fair-value recognition of the Class C shares received. The Company sold all of its Visa Class C shares all in the third quarter of 2026 and recorded an additional gain of $56 thousand, thus resulting in no remaining carrying value on the Company’s Statement of Financial Condition as of September 30, 2026. The Company originally obtained the Visa Class B shares in 2008. The strategic decision to retain the Class C shares and not sell them sooner, allowed the Company to avoid commissions and other expenses thus recognizing the full market value.

Previous wording

TrustCo’s results are affected by a variety of factors including competitive and economic conditions in the specific markets in which the 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 second quarter of 2026.

Current wording

TrustCo’s results are affected by a variety of factors including competitive and economic conditions in the specific markets in which the 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 lending, core funding and 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 third quarter of 2026.

Previous wording

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 second quarter of 2026 Federal Funds target rate remained flat at a range of 3.50% to 3.75% through June 30, 2026.

Current wording

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. The Federal Funds rate remained flat for most of 2026 at a range of 3.50% to 3.75% until the rate was increased in September 2026 to 3.75% to 4.00%.

Previous wording

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 term market interest rates such as the 10-year Treasury. The 10‑year Treasury yield increased 22 basis points, on average, during the second quarter of 2026 compared to the first quarter of 2026 and also increased 6 basis points as compared to the second quarter of 2025.

Current wording

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 term market interest rates such as the 10-year Treasury. The 10‑year Treasury yield increased 34 basis points, on average, during the third quarter of 2026 compared to the second quarter of 2026 and increased 50 basis points as compared to the third quarter of 2025.

Previous wording

A fundamental component of TrustCo’s strategy has been to grow customer relationships and the deposits and loans that are part of those relationships. Management believes that the Company has significant capacity to grow its balance sheet given its extensive branch network. The Company expects that growth to be profitable. While the Company has not changed its fundamental long-term strategy in regard to utilizing its excess capacity, management continually evaluates changing conditions and may seek to limit growth or reduce the size of the balance sheet if its analysis indicates that doing so would be beneficial.

Current wording

The Company expects that growth to be profitable. While the Company has not changed its fundamental long term strategy in regard to utilizing its excess capacity, management continually evaluates changing conditions and may seek to limit growth or reduce the size of the balance sheet if its analysis indicates that doing so would be beneficial.

Previous wording

For the second quarter of 2026, the net interest margin was 2.87%, up 16 basis points versus the prior year’s second quarter. The quarterly results reflect the following significant factors:

Current wording

For the third quarter of 2026, the net interest margin was 2.95%, up 16 basis points versus the prior year’s quarter. The quarterly results reflect the following significant factors:

Previous wording

During the second quarter of 2026, the Company continued to focus on its strategy to expand its loan portfolio by offering competitive interest rates. Management believes 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.

Current wording

During the third quarter of 2026, the Company continued to focus on its strategy to expand its loan portfolio by offering competitive interest rates. Management believes 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.

Previous wording

For the six-months ended June 30, 2026, the net interest margin was 2.86%, up 18 basis points versus the prior year. The six-month results reflect the following significant factors:

Current wording

For the nine months ended September 30, 2026, the net interest margin was 2.89%, up 18 basis points versus the prior year. The nine-month results reflect the following significant factors:

Previous wording

Total average interest earning assets increased from $6.15 billion in the second quarter of 2025 to $6.35 billion in the same period of 2026 with an average yield of 4.27% in the second quarter of 2026 and 4.19% in the second quarter of 2025. The mix of assets invested in 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 from $64.5 million in the second quarter of 2025 to $67.7 million in the second quarter of 2026. This increase was primarily driven by the increase in interest income on loans due to higher interest rates on loan originations over the last year and variable rate loans repricing upwards.

Current wording

Total average interest earning assets increased from $6.20 billion in the third quarter of 2025 to $6.39 billion in the same period of 2026 with an average yield of 4.35% in the third quarter of 2026 and 4.25% in the third quarter of 2025. The mix of assets invested in loans increased, while Federal Funds sold and other short-term investments and securities available for sale decreased over the prior year period. Interest income on average earning assets increased from $66.0 million in the third quarter of 2025 to $69.6 million in the third quarter of 2026. This increase was primarily driven by the increase in interest income on loans due to higher loan balances and higher interest rates on loan originations over the last year and variable rate loans repricing upwards.

Previous wording

The average balance of loans was $5.33 billion in the second quarter of 2026 and $5.14 billion in the comparable period in 2025. The yield on loans was up 16 basis points to 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.

Current wording

The average balance of loans was $5.41 billion in the third quarter of 2026 and $5.18 billion in the comparable period in 2025, and the yield on loans was up 17 basis points to 4.49%. Interest income on loans was $60.9 million in the third quarter of 2026 up $4.9 million from the same period in 2025, primarily as a result of increased balances and higher interest rates on new originations compared to the existing portfolio yield.

Previous wording

Compared to the second quarter of 2025, the average balance of residential mortgage loans, home equity credit lines, and commercial loans, all increased, while the average balance of installment loans decreased.

Current wording

Compared to the third quarter of 2025, the average balance of residential mortgage loans, home equity credit lines, and commercial loans increased, while the average balance of installment loans decreased.

Previous wording

The average balance of residential mortgage loans was $4.53 billion in the second quarter of 2026 compared to $4.39 billion in 2025, an increase of 3.2%. The average yield on residential mortgage loans increased by 18 basis points to 4.12% in the second quarter of 2026 compared to 2025, primarily as a result of the higher interest rates on new originations compared to the existing portfolio yield.

Current wording

The average balance of residential mortgage loans was $4.59 billion in the third quarter of 2026 compared to $4.41 billion in 2025, an increase of 4.0%. The average yield on residential mortgage loans increased by 21 basis points to 4.21% in the third quarter of 2026 compared to 2025, primarily as a result of the higher interest rates on new originations compared to the existing portfolio yield.

Previous wording

Commercial loans, which consist primarily of loans secured by commercial real estate, increased $13.4 million to an average balance of $319.7 million in the second quarter of 2026 compared to the same period in the prior year. The average yield on this portfolio was up 8 basis points to 5.64% compared to the prior year 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.

Current wording

Commercial loans, which consist primarily of loans secured by commercial real estate, increased $13.5 million to an average balance of $327.3 million in the third quarter of 2026 compared to the same period in the prior year. The average yield on this portfolio was up 5 basis points to 5.69% compared to the prior year period, primarily as a result of higher interest rates on new originations compared to the existing portfolio yield and certain variable rate loans that repriced 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.

Previous wording

The average yield on home equity credit lines decreased 14 basis points to 6.25% during the second quarter of 2026 compared to the year earlier period. The average balances of home equity credit lines increased 10.4% to $473.7 million in the second quarter of 2026 as compared to the prior year.

Current wording

The average yield on home equity credit lines decreased 19 basis points to 6.31% during the third quarter of 2026 compared to the year earlier period. The average balances of home equity credit lines increased 11.4% to $490.3 million in the third quarter of 2026 as compared to the prior year.

Previous wording

The average balance of the securities available for sale portfolio for the second quarter of 2026 was $319.2 million compared to $358.6 million for the comparable period in 2025. The decrease in the balance reflects routine paydowns, calls and maturities, partially offset by new investment purchases. The average yield was 3.06% for the second quarter of 2026 compared to 2.81% for the second 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 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 (loss), net of tax.

Current wording

The average balance of the securities available for sale portfolio for the third quarter of 2026 was $315.1 million compared to $347.0 million for the comparable period in 2025. The decrease in the balance reflects routine paydowns, calls and maturities, partially offset by new investment purchases. The average yield was 3.15% for the third quarter of 2026 compared to 2.91% for the third 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-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 (loss), net of tax.

Previous wording

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

Current wording

The net unrealized loss in the available for sale securities portfolio was $27.5 million as of September 30, 2026 compared to a net unrealized loss of $16.3 million as of December 31, 2025. The increase in net unrealized losses in the portfolio is the result of changes in the current interest rate environment.

Previous wording

The average balance of held to maturity securities was $4.0 million for the second quarter of 2026 compared to $5.0 million in the second 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 second quarter of 2026 compared to 4.37% for the year earlier period. TrustCo expects to hold the securities in this portfolio until they mature or are called.

Current wording

The average balance of held to maturity securities was $3.7 million for the third quarter of 2026 compared to $4.7 million in the third 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 4.53% for the third quarter of 2026 up from 4.40% for the year earlier period. TrustCo expects to hold the securities in this portfolio until they mature or are called.

Previous wording

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

Current wording

The net unrecognized loss in the held to maturity securities portfolio was $78 thousand as of September 30, 2026 compared to a net unrecognized gain of $50 thousand as of December 31, 2025. The change from a net unrecognized gain to a net unrecognized loss in the portfolio is the result of changes in market interest rate levels.

Previous wording

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

Current wording

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

Previous wording

The 2026 second quarter average balance of Federal Funds sold and other short-term investments was $687.2 million, a $38.8 million increase from the $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 second quarter of 2026 and 4.46% for the comparable period in 2025. Interest income from this portfolio decreased $868 thousand from $7.2 million in 2025 to $6.3 million in 2026. The increase in the average balance was not enough to offset the decrease in yield over the same period.

Current wording

The average balance of Federal Funds sold and other short‑term investments was $649.8 million for the third quarter of 2026 compared to $662.7 million in the third quarter of 2025. The yield was 3.72% for the third quarter of 2026 and 4.42% for the comparable period in 2025. Interest income from this portfolio decreased $1.3 million from $7.4 million in 2025 to $6.1 million in 2026.

Previous wording

Total average interest-bearing deposits (which includes interest bearing checking, money market accounts, savings and time deposits) increased $169.9 million to $4.85 billion for the second quarter of 2026 versus the second quarter in the prior year, and the average rate paid decreased from 1.93% for 2025 to 1.80% for 2026. Total interest expense on these deposits decreased $802 thousand to $21.7 million in the second quarter of 2026 compared to the year earlier period. From the second quarter of 2025 to the second quarter of 2026, interest-bearing checking account average balances were up 4.4%, certificates of deposit average balances were up 8.0%, non-interest demand average balances were up 5.0%, average savings balances decreased 1.3% and money market balances were down 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.

Current wording

Total average interest-bearing deposit accounts (which includes interest-bearing checking, money market accounts, savings and time deposits) increased $197.0 million to $4.90 billion for the third quarter of 2026 versus the third quarter in the prior year, and the average rate paid decreased from 1.92% for 2025 to 1.80% for 2026. Total interest expense on these deposits decreased from $22.7 million to $22.2 million in the third quarter of 2026 compared to the year earlier period. From the third quarter of 2025 to the third quarter of 2026, interest-bearing checking account average balances were up 5.5%, certificates of deposit average balances were up 7.6%, non-interest demand average balances were up 4.1%, average savings balances were flat and money market balances were down 4.7%. 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.

Previous wording

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

Current wording

At September 30, 2026, the maturity of total time deposits was as follows:

Previous wording

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

Current wording

As of September 30, 2026 and December 31, 2025, approximately $1.28 billion and $1.22 billion, respectively, of our deposit portfolio was uninsured. The uninsured amounts are estimates based on the methodologies and assumptions used for the Bank’s regulatory reporting requirements.

Previous wording

Average short-term borrowings for the second quarter were $108.9 million in 2026 compared to $81.1 million 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 1.36% in 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.

Current wording

Average short-term borrowings for the third quarter were $102.4 million in 2026 compared to $87.3 million in 2025. The weighted average interest rate for short-term borrowings increased 47 basis points to 1.37% during this time period. 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.

Previous wording

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 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 CDs may be tested from time to time to ensure operational and market readiness. As of June 30, 2026 the Company also has borrowing capacity of $1.02 billion available with the FHLBNY and $530 thousand available with the FRBNY. The borrowing capacity is secured by the loans pledged by the Company. As of June 30, 2026 and December 31, 2025, the Company had no outstanding borrowings with the FHLBNY or the FRBNY.

Current wording

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 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 CDs may be tested from time to time to ensure operational and market readiness. As of September 30, 2026 the Company also has borrowing capacity of $1.03 billion available with the FHLBNY and $525 thousand available with the FRBNY. The borrowing capacity is secured by the loans pledged by the Company. As of September 30, 2026 and December 31, 2025, the Company had no outstanding borrowings with the FHLBNY or the FRBNY.

Previous wording

Net interest income increased by $3.8 million to $45.6 million in the second quarter of 2026 compared to the same period in 2025 driven by loan growth at higher interest rates and lower interest 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 20 basis points to 2.48% in the second quarter of 2026 compared to the same period in 2025. As previously noted, the net interest margin was up 16 basis points to 2.87% for the second quarter of 2026 compared to the same period in 2025. Yields on earning assets increased in the second quarter of 2026 compared to the second quarter of 2025, and rates on interest-bearing liabilities decreased causing margin expansion. The Federal Reserve’s decision regarding whether to cut, raise, or hold rates in upcoming meetings will have an effect on the Company’s ability to continue to decrease deposit costs which will impact margin in future quarters. During the second quarter of 2026, the Company was able to lower the rates offered on our time deposits while continuing to retain and grow that product.

Current wording

Net interest income increased by $3.9 million to $47.0 million in the third quarter of 2026 compared to the same period in 2025. The net interest spread was up 21 basis points to 2.56% in the third quarter of 2026 compared to the same period in 2025. As previously noted, the net interest margin was also up 16 basis points to 2.95% for the third quarter of 2026 compared to the same period in 2025. Yields on earning assets increased in the third quarter of 2026 compared to the third quarter of 2025, and rates on interest-bearing liabilities decreased causing margin expansion. The loan and investment portfolios continue to reprice upward as lower yielding assets mature and are replaced with higher rate loan originations and investment purchases, driving steady improvement in overall asset yields. The Federal Reserve’s decision regarding whether to raise, cut, or hold rates in upcoming meetings will have an effect on the Company’s timing and ability to raise or lower deposit costs which may impact margin in future quarters.

Previous wording

Net interest income increased by $8.2 million to $90.3 million in the first six-months of 2026 compared to the same period in 2025. The net interest spread was up 23 basis points to 2.47% in the first six-months of 2026 compared to the same period in 2025. Net interest margin increased 18 basis points to 2.86% for the first six-months of 2026 compared to the same period in 2025. The increases in net interest income for the first six months of 2026 primarily resulted from the same factors discussed above for the second quarter of 2026.

Current wording

Net interest income increased by $12.1 million to $137.3 million in the first nine months of 2026 compared to the same period in 2025. The net interest spread was up 21 basis points to 2.49% in the first nine months of 2026 compared to the same period in 2025. Net interest margin was up 18 basis points to 2.89% for the first nine months of 2026 compared to the same period in 2025. The increases in net interest income for the first nine months of 2026 primarily resulted from the same factors discussed above for the third quarter of 2026.

Previous wording

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

Current wording

Nonperforming loans and foreclosed real estate: Total NPLs were $21.1 million at September 30, 2026 compared to $20.7 million at December 31, 2025. There were no loans at September 30, 2026 and December 31, 2025 that were past due 90 days or more and still accruing interest. The coverage ratio, or allowance for credit losses on loans to NPLs, was 261.8% at September 30, 2026 compared to 252.5% at December 31,2025.

Previous wording

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

Current wording

At September 30, 2026, NPLs primarily include a mix of commercial and residential loans. Of total NPLs of $21.1 million at September 30, 2026, $19.0 million were residential real estate loans, $2.0 million were commercial loans and mortgages and $38 thousand were installment loans, compared to $18.6 million, $2.0 million and $51 thousand, respectively, at December 31, 2025.

Previous wording

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 $72 thousand on residential real estate loans (including home equity lines of credit) for the second quarter of 2026 compared to net recoveries of $121 thousand for the second quarter of 2025. Management believes that these loans have been appropriately written down where required.

Current wording

A significant percentage of NPLs are residential real estate loans, which are historically lower-risk than most other types of loans. Net recoveries were $44 thousand on residential real estate loans (including home equity lines of credit) for the third quarter of 2026 compared to net recoveries of $194 thousand for the third quarter of 2025. Management believes that these loans have been appropriately written down where required.

Previous wording

The Company originates loans throughout its branch franchise area. At June 30, 2026, 64.5% of its gross loan portfolio balances were in New York State and the immediately surrounding 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.

Current wording

The Company originates loans throughout its branch franchise area. At September 30, 2026, 64.9% of its gross loan portfolio balances were in New York State and the immediately surrounding areas (including New Jersey, Vermont and Massachusetts), and 35.1% were in Florida. Those figures compare to 64.3% and 35.7%, respectively, at December 31, 2025.

Previous wording

Economic conditions vary widely by geographic location. As a percentage of the total nonperforming loans as of June 30, 2026, 20.3% were to Florida borrowers, compared to 79.7% to borrowers in New York and surrounding areas. For the three-months ended June 30, 2026, New York and surrounding areas experienced net recoveries of approximately $93 thousand and there were net charge-offs of $5 thousand in Florida for the second quarter of 2026.

Current wording

Economic conditions vary widely by geographic location. As a percentage of the total NPLs as of September 30, 2026, 23.7% were to Florida borrowers, compared to 76.3% to borrowers in New York and surrounding areas. For the three months ended September 30, 2026, New York and surrounding areas experienced net recoveries of approximately $45 thousand and Florida experienced net charge-offs of $15 thousand for the third quarter of 2026.