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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2025
OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to _________

Commission File Number 000-10592

TRUSTCO BANK CORP NY
(Exact name of registrant as specified in its charter)

NEW YORK
14-1630287
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)

5 SARNOWSKI DRIVE, GLENVILLE, NEW YORK
12302
(Address of principal executive offices)
(Zip Code)
 
(518) 377-3311
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Trading Symbol (s)
Name of each exchange on which registered
Common Stock, $1.00 par value
TRST
 Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  ☒ Yes  ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S‑T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☒ Yes  ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.  (Check one):

Large accelerated filer ☐
Accelerated filer ☒
Non-accelerated filer ☐
Smaller reporting company ☐
Emerging growth company ☐
  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes  ☒ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock
Number of Shares Outstanding
as of April 30, 2025
$1.00 Par Value
19,019,749

TrustCo Bank Corp NY

INDEX
  
DESCRIPTION
PAGE NO.
     
3
   
Part I.
FINANCIAL INFORMATION
   
Item 1.
Consolidated Interim Financial Statements (Unaudited):
 
 
 
 6
 
 
 
 
 7
 
 
 
 
 8
 
 
 
 
 9
 
 
 
 
 10
 
 
 
 
11
 
 
 
 
 44
 
 
 
Item 2.
 45
 
 
 
Item 3.
 61
 
 
 
Item 4.
 61
 
 
 
Part II.
OTHER INFORMATION
 
 
 
 
Item 1.
 62
 
 
 
Item 1A.
62
 
 
 
Item 2.
 63
 
 
 
Item 3.
 63
 
 
 
Item 4.
 63
 
 
 
Item 5.
 63
 
 
 
Item 6.
 64

2
Cautionary Note Regarding Forward-Looking Statements
Statements included in this report and in future filings by TrustCo with the Securities and Exchange Commission, in TrustCo’s press releases, and in oral statements made with the approval of an authorized executive officer that are not historical or current facts, are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected.  Forward-looking statements can be identified by the use of such words as may, will, should, could, would, estimate, project, believe, intend, anticipate, plan, seek, expect and similar expressions.  TrustCo wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.
In addition to factors described under Part II, Item 1A, Risk Factors, and under the Risk Factor discussion in TrustCo’s Annual Report on Form 10-K for the year ended December 31, 2024, the factors listed below, among others, in some cases have affected and in the future could affect TrustCo’s actual results and could cause TrustCo’s actual financial performance to differ materially from that expressed in any forward-looking statement.  Additionally, many of these risks and uncertainties are currently elevated by and may or will continue to be heightened by volatility in financial markets and macroeconomic or geopolitical concerns related to ongoing inflation, changes in United States and foreign trade policy, continued elevated interest rates and ongoing armed conflicts (including the Russia/Ukraine conflict and the conflict in Israel and surrounding areas).
 
Risks Related to Our Lending Activities
 
 
•
changes in interest rates may significantly impact our financial condition and results of operations;
 
•
external economic factors, such as changes in monetary policy and inflation and deflation, may have an adverse effect on our business, financial condition and results of operations;
 
•
exposure to credit risk in our lending activities;
 
•
weakness in the residential real estate markets could adversely affect our performance;
 
•
our commercial loan portfolio is increasing and the inherently higher risk of loss may lead to additional provisions for credit losses or charge-offs, which would negatively impact earnings and capital;
 
•
the allowance for credit losses on loans (“ACLL”) may not be sufficient to cover expected loan losses, resulting in a decrease in earnings;
 
•
our inability to meet the cash flow requirements of our depositors or borrowers or meet our operating cash needs to fund corporate expansion and other activities;
 
•
we are subject to claims and litigation pertaining to fiduciary responsibility and lender liability;
 
•
the strict enforcement of federal laws and regulations regarding cannabis could result in our inability to continue to provide financial products and services to customers that do business in the cannabis industry, legal action taken against us, or exposure to additional liabilities and compliance costs;
 
Risks Related to our Operations

 
•
our dependency upon the services of the management team;
 
•
our disclosure controls and procedures may not prevent or detect all errors or acts of fraud;
 
•
if the business continuity and disaster recovery plans that we have in place are not adequate to continue our operations in the event of a disaster, the business disruption can adversely impact its operations;
 
•
our risk management framework may not be effective in mitigating risk and loss;
 
•
new lines of business or new products and services may subject us to additional risks;
 
•
we are exposed to climate risk;
 
•
our business may be adversely affected by the prevalence of fraud and other financial crimes;
 
•
societal responses to climate change could adversely affect our business and performance, including indirectly through impacts on our customers;
 
•
environmental, social and governance risks and diversity, equity, and inclusion risks could adversely affect our reputation and shareholder, employee, client, and third party relationships and may negatively affect our stock price;
 
3
 Risks Related to Market Conditions
 

 		•
a prolonged economic downturn, especially one affecting our geographic market area, will adversely affect our operations and financial results;

•
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 and financial condition;

•
any downgrade in the credit rating of the U.S. government or default by the U.S. government as a result of political conflicts over legislation to raise the U.S. government’s debt limit may have a material adverse effect on us;

•
the soundness of other financial institutions could adversely affect us;

•
any government shutdown could adversely affect the U.S. and global economy and our liquidity, financial condition and earnings;

•
the trust wealth management fees we receive may decrease as a result of poor investment performance, in either relative or absolute terms, which could decrease our revenues and net earnings;
 
Risks Related to Compliance and Regulation
 

 •
regulatory capital rules could slow our growth, cause us to seek to raise additional capital, or both;
  •
changes in laws and regulations and the cost of regulatory compliance with new laws and regulations may adversely affect our operations and our income;
  •
we are subject to numerous laws designed to protect consumers, including the CRA and fair lending laws, and a failure to comply with these laws could lead to a wide variety of sanctions;
  •
changes in cybersecurity or privacy regulations may increase our compliance costs, limit our ability to gain insight from data and lead to increased scrutiny;
  •
restrictions on data collection and use may limit opportunities to gain business insights useful to running our business and offering innovative products and services;
  •
non-compliance with the Bank Secrecy Act, or other laws and regulations could result in fines or sanctions;
  •
changes in tax laws may adversely affect us, and the Internal Revenue Service or a court may disagree with our tax positions, which may result in adverse effects on our business, financial condition, and results of operations or cash flows;
  •
our ability to pay dividends is subject to regulatory limitations and other limitations that may affect our ability to pay dividends to our stockholders or to repurchase our common stock;
  •
we may be subject to a higher effective tax rate if Trustco Realty Corp. (“Trustco Realty”) fails to qualify as a real estate investment trust (“REIT”);
  •
changes in accounting standards could impact reported earnings;

4
Risks Related to Competition
 

 		•
strong competition within the Bank’s market areas could hurt profits and slow growth;

•
consumers and businesses are increasingly using non-banks to complete their financial transactions, which could adversely affect our business and results of operations;
 
Risks Related to Cybersecurity, Third Parties, and Technology

 
•
our business could be adversely affected by third-party service providers, data breaches, and cyber-attacks;
 
•
the development and use of artificial intelligence presents risks and challenges that may adversely impact our business;
 
•
a failure in or breach of our operational or security systems or infrastructure, or those of third parties, could disrupt our businesses, and adversely impact our results of operations, liquidity and financial condition, as well as cause reputational harm;
 
•
unauthorized disclosure of sensitive or confidential client or customer information, whether through a breach of our computer systems or otherwise, could severely harm our business;
 
•
we could suffer a material adverse impact from interruptions in the effective operation of, or security breaches affecting, our computer systems;
 
Risks Related to Ownership of Our Securities
 

 		•
provisions in our articles of incorporation and bylaws and New York law may discourage or prevent takeover attempts, and these provisions may have the effect of reducing the market price of our stock; and

•
we cannot guarantee that the allocation of capital to various alternatives, including stock repurchase plans, will enhance long-term stockholder value.
 
You should not rely upon forward-looking statements as predictions of future events.  Although TrustCo believes that the expectations reflected in the forward‑looking statements are reasonable, it cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur.  The foregoing list should not be construed as exhaustive, and the Company disclaims any obligation to subsequently revise any forward-looking statements to reflect events or circumstances after the date of such statements, or to reflect the occurrence of anticipated or unanticipated events, except to the extent required by law.

5
Index
TRUSTCO BANK CORP NY
Consolidated Statements of Income (Unaudited)
(dollars in thousands, except per share data)

    Three months ended  
 
March 31,
  
   
2025
    
2024
  
             
Interest and dividend income:
            
Interest and fees on loans
  
$
53,450
    
$
49,804
  
Interest and dividends on securities available for sale:
                
U. S. government sponsored enterprises
    
596
      
906
  
State and political subdivisions
     -       -  
Mortgage-backed securities and collateralized mortgage obligations - residential
    
1,483
      
1,494
  
Corporate bonds
    
260
      
476
  
Small Business Administration-guaranteed participation securities
    
81
      
100
  
Other securities
    
7
      
3
  
Total interest and dividends on securities available for sale
    
2,427
      
2,979
  
                 
Interest on held to maturity securities:
                
Mortgage-backed securities and collateralized mortgage obligations-residential
    
57
      
68
  
Total interest on held to maturity securities
    
57
      
68
  
                 
Federal Home Loan Bank stock
    
151
      
152
  
Interest on federal funds sold and other short-term investments
    
6,732
      
6,750
  
Total interest income
    
62,817
      
59,753
  
                 
Interest expense:
                
Interest on deposits:
                
Interest-bearing checking
    
558
      
240
  
Savings accounts
    
734
      
712
  
Money market deposit accounts
    
1,989
      
2,342
  
Time deposits
    
18,983
      
19,677
  
Interest on short-term borrowings
    
180
      
204
  
Total interest expense
    
22,444
      
23,175
  
                 
Net interest income
    
40,373
      
36,578
  
Provision for credit losses
    
300
      
600
  
Net interest income after provision for credit losses
    
40,073
      
35,978
  
                 
Noninterest income:
                
Trustco financial services income
    
2,120
      
1,816
  
Fees for services to customers
    
2,645
      
2,745
  
Other
    
209
      
282
  
Total noninterest income
    
4,974
      
4,843
  
                 
Noninterest expenses:
                
Salaries and employee benefits
    
11,894
      
11,427
  
Net occupancy expense
    
4,554
      
4,611
  
Equipment expense
    
1,944
      
1,738
  
Professional services
    
1,726
      
1,460
  
Outsourced services
    
2,700
      
2,501
  
Advertising expense
    
361
      
408
  
FDIC and other insurance
    
1,188
      
1,094
  
Other real estate expense, net
    
28
      
74
  
Other
    
1,934
      
1,590
  
Total noninterest expenses
    
26,329
      
24,903
  
                 
Income before taxes
    
18,718
      
15,918
  
Income taxes
    
4,443
      
3,792
  
                 
Net income
  
$
14,275
    
$
12,126
  
                 
Net income per share:
                
- Basic
  
$
0.75
    
$
0.64
  
                 
- Diluted
  
$
0.75
    
$
0.64
  

See accompanying notes to unaudited consolidated interim financial statements.

6
Index
TRUSTCO BANK CORP NY
Consolidated Statements of Comprehensive Income (Unaudited)
(dollars in thousands)

   
Three months ended
  
 
March 31,
  
   
2025
    
2024
  
             
Net income
  
$
14,275
    
$
12,126
  
                 
Net unrealized holding gain (loss) on securities available for sale
    
5,326
      
(1,872
)
Tax effect
    
(1,378
)
    
494
  
                 
Net unrealized gain (loss) on securities available for sale, net of tax
    
3,948
      
(1,378
)
                 
Amortization of net actuarial gain
    
(297
)
    
(203
)
Amortization of prior service cost
    
3
   
3
  
Tax effect
    
75
      
52
  
Amortization of net actuarial gain and prior service cost on pension and postretirement plans, net of tax
    
(219
)
    
(148
)
                 
Other comprehensive income (loss), net of tax    
3,729
      
(1,526
)
Comprehensive income
  
$
18,004
    
$
10,600
  

See accompanying notes to unaudited consolidated interim financial statements.

7
Index
TRUSTCO BANK CORP NY
Consolidated Statements of Financial Condition (Unaudited)
(dollars in thousands, except share and per share data)

 
March 31, 2025
    
December 31, 2024
  
ASSETS:
            
             
Cash and due from banks
  
$
48,782
    
$
47,364
  
Federal funds sold and other short term investments
    
707,355
      
594,448
  
Total cash and cash equivalents
    
756,137
      
641,812
  
                 
Securities available for sale
    
324,453
      
358,185
  
Held to maturity securities ($5,081 and $5,306 fair value at March 31, 2025 and December 31, 2024, respectively)
     5,090       5,365  
                 
Federal Home Loan Bank stock    
6,507
      
6,507
  
Loans, net of deferred costs
     5,116,137       5,098,058  
Less:
                
Allowance for credit losses on loans
    
50,606
      
50,248
  
Net loans
    
5,065,531
      
5,047,810
  
                 
Bank premises and equipment, net
    
37,178
      
33,782
  
Operating lease right-of-use assets
    
34,968
      
36,627
  
Other assets
    
108,681
      
108,656
  
                 
Total assets
  
$
6,338,545
    
$
6,238,744
  
                 
LIABILITIES:
                
Deposits:
                
Demand
  
$
793,306
    
$
762,101
  
Interest-bearing checking
    
1,067,948
      
1,027,540
  
Savings accounts
    
1,094,968
      
1,086,534
  
Money market deposit accounts
    
478,872
      
465,049
  
Time deposits
    
2,061,576
      
2,049,759
  
Total deposits
    
5,496,670
      
5,390,983
  
                 
Short-term borrowings
    
82,275
      
84,781
  
Operating lease liabilities
    
38,324
      
40,159
  
Accrued expenses and other liabilities
    
33,468
      
46,478
  
                 
Total liabilities
    
5,650,737
      
5,562,401
  
                 
SHAREHOLDERS’ EQUITY:
                
Capital stock par value $1.00; 30,000,000 shares authorized; 20,097,152 shares issued at both March 31, 2025 and December 31, 2024, and 19,019,749 shares outstanding at March 31, 2025 and December 31, 2024
    
20,097
      
20,097
  
Surplus
    
259,182
      
258,874
  
Undivided profits
    
453,931
      
446,503
  
Accumulated other comprehensive loss, net of tax
    
(132
)
    
(3,861
)
Treasury stock at cost - 1,077,403 shares at both March 31, 2025 and December 31, 2024
    
(45,270
)
    
(45,270
)
                 
Total shareholders’ equity
    
687,808
      
676,343
  
                 
Total liabilities and shareholders’ equity
  
$
6,338,545
    
$
6,238,744
  

See accompanying notes to unaudited consolidated interim financial statements.

8
Index
TRUSTCO BANK CORP NY
Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)
(dollars in thousands, except per share data)

                     
Accumulated
              
                     
Other
              
   
Capital
          
Undivided
    
Comprehensive
    
Treasury
        
   
Stock
    
Surplus
    
Profits
    
Loss
    
Stock
    
Total
  
                                     
Beginning balance, January 1, 2024
  
$
20,058
    
$
257,181
    
$
425,069
    
$
(13,237
)
  
$
(43,786
)
  
$
645,285
  
                                                 
Net income
    
-
      
-
      
12,126
      
-
      
-
      
12,126
  
Other comprehensive loss, net of tax
    
-
      
-
      
-
      
(1,526
)
    
-
      
(1,526
)
Stock Based Compensation Expense     -       154       -       -       -       154  
Cash dividend declared, $0.36 per share
    
-
      
-
      
(6,849
)
    
-
      
-
      
(6,849
)
 
                                                
Ending balance, March 31, 2024
  
$
20,058
    
$
257,335
    
$
430,346
    
$
(14,763
)
  
$
(43,786
)
  
$
649,190
  
 
                                                
Beginning balance, January 1, 2025
  
$
20,097
    
$
258,874
    
$
446,503
    
$
(3,861
)
  
$
(45,270
)
  
$
676,343
  
                                                 
Net income
    
-
      
-
      
14,275
      
-
      
-
      
14,275
  
Other comprehensive income, net of tax
    
-
      
-
      
-
      
3,729
      
-
      
3,729
  
Stock Based Compensation Expense
     -       308       -       -       -       308  
Cash dividend declared, $0.36 per share
    
-
      
-
      
(6,847
)
    
-
      
-
      
(6,847
)
 
                                                
Ending balance, March 31, 2025
  
$
20,097
    
$
259,182
    
$
453,931
    
$
(132
)
  
$
(45,270
)
  
$
687,808
  

See accompanying notes to unaudited consolidated interim financial statements.

9
Index
TRUSTCO BANK CORP NY
Consolidated Statements of Cash Flows (Unaudited)
(dollars in thousands)

 
Three months ended March 31,
  
   
2025
    
2024
  
             
Cash flows from operating activities:
            
Net income
  
$
14,275
    
$
12,126
  
                 
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation
    
1,149
      
1,085
  
Amortization of right-of-use asset
    
1,659
      
1,654
  
Writedown of other real estate owned
     67       -  
Provision for credit losses
    
300
      
600
  
Deferred tax expense
    
2,194
      
1,447
  
Net amortization of securities
    
255
      
346
  
Stock based compensation expense
     308       154  
(Increase) Decrease in taxes receivable
    
(2,149
)
    
3,844
  
Increase in interest receivable
    
(811
)
    
(777
)
(Decrease) Increase in interest payable
    
(152
)
    
288
  
Increase in other assets
    
(3,078
)
    
(4,224
)
Decrease in operating lease liabilities
    
(1,835
)
    
(1,792
)
Decrease in accrued expenses and other liabilities
    
(10,902
)
    
(4,855
)
Total adjustments
    
(12,995
)
    
(2,230
)
Net cash provided by operating activities
    
1,280
      
9,896
  
                 
Cash flows from investing activities:
                
Proceeds from sales, paydowns and calls of securities available for sale
    
13,723
      
8,841
  
Proceeds from paydowns of held to maturity securities
    
266
      
241
  
Purchases of securities available for sale
    
(9,911
)
    
(20,000
)
Proceeds from maturities of securities available for sale
    
35,000
      
35,000
  
Purchases of Federal Home Loan Bank stock
     -       -  
Net increase in loans
    
(17,821
)
    
(4,793
)
Proceeds from dispositions of other real estate owned
    
-
      
68
  
Purchases of bank premises and equipment
    
(4,545
)
    
(501
)
Net cash provided by investing activities
    
16,712
      
18,856
  
                 
Cash flows from financing activities:
                
Net (decrease) increase in deposits
    
105,687
      
4,392
  
Net change in short-term borrowings
    
(2,506
)
    
5,384
  
Dividends paid
    
(6,848
)
    
(6,849
)
Net cash provided by financing activities
    
96,333
      
2,927
  
Net decrease in cash and cash equivalents
    
114,325
      
31,679
  
Cash and cash equivalents at beginning of period
    
641,812
      
578,004
  
Cash and cash equivalents at end of period
  
$
756,137
    
$
609,683
  
                 
Supplemental Disclosure of Cash Flow Information:
                
Cash paid during the year for:
                
Interest paid
  
$
22,596
    
$
22,887
  
Income taxes paid
    
6,598
      
494
  
Other non cash items:
                
Transfer of loans to other real estate owned
     -       2,208  
Decrease in dividends payable
     (1 )     -  
Change in unrealized (loss) gain on securities available for sale-gross of deferred taxes
    
5,326
      
(1,872
)
Change in deferred tax effect on unrealized loss (gain) on securities available for sale
     (1,378 )     494  
Amortization of net actuarial gain and prior service cost on pension and postretirement plans
    
(294
)
    
(200
)
Change in deferred tax effect of amortization of net actuarial gain postretirement benefit plans
    
75
      
52
  

See accompanying notes to unaudited consolidated interim financial statements.
10
Index
TRUSTCO BANK CORP N Y
Notes to Consolidated Interim Financial Statements
(Unaudited)
(1) Financial Statement Presentation


The unaudited Consolidated Interim Financial Statements of TrustCo Bank Corp NY (the “Company” or “TrustCo”) include the accounts of the Company’s subsidiary, Trustco Bank (also referred to as the “Bank”) and other subsidiaries after elimination of all significant intercompany accounts and transactions. Prior period amounts are reclassified when necessary to conform to the current period presentation. The net income reported for the three months ended March 31, 2025 is not necessarily indicative of the results that may be expected for the year ending December 31, 2025, or any interim periods. These financial statements consider events that occurred through the date of filing.



In the opinion of the management of the Company, the accompanying unaudited Consolidated Interim Financial Statements contain all recurring adjustments necessary to present fairly the financial position as of March 31, 2025, the results of operations and cash flows for the three months ended March 31, 2025 and 2024. The accompanying unaudited Consolidated Interim Financial Statements should be read in conjunction with the Company’s year‑end Consolidated Financial Statements, including notes thereto, which are included in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2024. The accompanying unaudited Consolidated Interim Financial Statements have been prepared in accordance with the applicable rules of the Securities and Exchange Commission (the “SEC”) and, therefore, do not include all information and notes necessary for a complete presentation of financial position, results of operations and cash flow activity required in accordance with accounting principles generally accepted in the United States. Results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.



The accounting policies of the Company, as applied in the Consolidated Interim Financial Statements presented herein, are substantially the same as those followed on an annual basis in the Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on March 14, 2025.

11
Index
(2) Earnings Per Share

The Company computes earnings per share in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 260, Earnings Per Share (“ASC 260”). A reconciliation of the component parts of earnings per share for the three months ended March 31, 2025 and 2024 is as follows:

(in thousands, except per share data)   For the three months ended  

 
March 31,
  
   
2025
    
2024
  
Net income
  
$
14,275
    
$
12,126
  
Weighted average common shares
    
19,020
      
19,024
  
Effect of Dilutive Securities:                
Stock Options and Restricted Stock Units
    
24
      
8
  
Weighted average common shares including potential dilutive shares
    
19,044
      
19,032
  
                 
Basic EPS
  
$
0.75
    
$
0.64
  
                 
Diluted EPS
  
$
0.75
    
$
0.64
  

For the three months, ended March 31, 2025 and 2024 there were approximately 8 thousand and 48 thousand, respectively, weighted average anti-dilutive stock options excluded from diluted earnings per share. The stock options are antidilutive because the strike price is greater than the average fair value of the Company’s common stock for the periods presented.

(3) Benefit Plans

The table below outlines the components of the Company’s net periodic benefit recognized during the three months ended March 31, 2025 and 2024 for its pension and other post-retirement benefit plans:

 
Three months ended March 31,
  
 
Pension Benefits
    
Other Postretirement Benefits
  
(dollars in thousands)
  
2025
    
2024
    
2025
    
2024
  

                       
Service cost
  
$
-
    
$
-
    
$
5
    
$
5
  
Interest cost
    
289
      
289
      
86
      
72
  
Expected return on plan assets
    
(763
)
    
(762
)
    
(381
)
    
(331
)
Amortization of net actuarial gain
    
(21
)
    
(19
)
    
(276
)
    
(184
)
Amortization of prior service cost
    
-
      
-
      
3
      
3
  
Net periodic benefit
  
$
(495
)
  
$
(492
)
  
$
(563
)
  
$
(435
)

The Company does not expect to contribute to its pension and postretirement benefit plans in 2025. As of March 31, 2025, no contributions have been made; however, this decision is reviewed each quarter and is subject to change based upon market conditions.

Since 2003, the Company has not subsidized retiree medical insurance premiums. However, it continues to provide medical benefits and postretirement medical benefits to a limited number of current and retired executives in accordance with the terms of their employment contracts.

12
Index
(4) Investment Securities

(a) Debt securities available for sale

The amortized cost and fair value of the debt securities available for sale are as follows:

 
March 31, 2025
  
          Gross     Gross        
    Amortized     Unrealized     Unrealized     Fair  
(dollars in thousands)
  
Cost
    
Gains
    
Losses
    
Value
  
                         
U.S. government sponsored enterprises
  
$
66,859
     $
-
     $
917
     $
65,942
  
State and political subdivisions
    
18
      
-
      
-
      
18
  
Mortgage backed securities and collateralized mortgage obligations - residential
    
241,111
      
254
      
22,032
      
219,333
  
Corporate bonds
    
25,005
      
-
      
226
      
24,779
  
Small Business Administration - guaranteed participation securities
    
14,723
      
-
      
1,040
      
13,683
  
Other
    
689
      
9
      
-
      
698
  
Total Securities Available for Sale
  
$
348,405
     $
263
     $
24,215
     $
324,453
  

 
December 31, 2024
  
          Gross     Gross        
    Amortized     Unrealized     Unrealized     Fair  
(dollars in thousands)
  
Cost
    
Gains
    
Losses
    
Value
  
                         
U.S. government sponsored enterprises
  
$
86,833
     $
4
     $
1,220
     $
85,617
  
State and political subdivisions
    
18
      
-
      
-
      
18
  
Mortgage backed securities and collateralized mortgage obligations - residential
    
239,420
      
114
      
26,406
      
213,128
  
Corporate bonds
    
45,033
      
-
      
452
      
44,581
  
Small Business Administration - guaranteed participation securities
    
15,471
      
-
      
1,330
      
14,141
  
Other
    
688
      
12
      
-
      
700
  
Total Securities Available for Sale
  
$
387,463
     $
130
     $
29,408
     $
358,185
  

13
Index
The following table categorizes the debt securities included in the available for sale portfolio as of March 31, 2025, based on the securities’ final maturity. Actual maturities may differ because of securities prepayments and the right of certain issuers to call or prepay their obligations without penalty. Securities not due at a single maturity date are presented separately:


 
Amortized
    
Fair
  
(dollars in thousands)   Cost     Value  
             
Due in one year or less
  
$
50,099
    
$
49,409
  
Due after one year through five years
    
30,472
      
30,115
  
Due after five years through ten years
    12,000       11,913
  
Mortgage backed securities and collateralized mortgage obligations - residential
    
241,111
      
219,333
  
Small Business Administration - guaranteed participation securities
    
14,723
      
13,683
  
   
$
348,405
    
$
324,453
  

Gross unrealized losses on debt securities available for sale and the related fair values aggregated by the length of time that individual securities have been in an unrealized loss position, were as follows:

 
March 31, 2025
  
   
Less than
    
12 months
      
    12 months     or more     Total  
          Gross           Gross           Gross  
    Fair     Unrealized     Fair     Unrealized     Fair    
Unrealized
  
(dollars in thousands)
  
Value
    
Loss
    
Value
    
Loss
    
Value
    
Loss
  
                                     
U.S. government sponsored enterprises
  
$
11,913
     $
87
     $
54,029
     $
830
     $
65,942
     $
917
  
Mortgage backed securities and collateralized mortgage obligations - residential
    
5,043
      
161
      
191,488
      
21,871
      
196,531
      
22,032
  
Corporate bonds
    
-
      
-
      
19,779
      
226
      
19,779
      
226
  
Small Business Administration - guaranteed participation securities
     -       -       13,683       1,040       13,683       1,040  
                                                 
Total
  
$
16,956
     $
248
     $
278,979
     $
23,967
     $
295,935
     $
24,215
  

 
December 31, 2024
  
   
Less than
    
12 months
    
 
    12 months     or more     Total  

 
   
Gross
    
   
Gross
    
   
Gross
  
    Fair     Unrealized     Fair     Unrealized     Fair     Unrealized  
(dollars in thousands)   Value     Loss     Value     Loss     Value     Loss  
                                     
U.S. government sponsored enterprises
  
$
11,961
    
38
     $
68,651
     $
1,182
     $
80,612
     $
1,220
  
Mortgage backed securities and collateralized mortgage obligations - residential
    
12,346
      
280
      
194,636
      
26,126
      
206,982
      
26,406
  
Corporate bonds
    
-
      
-
      
44,581
      
452
      
44,581
      
452
  
Small Business Administration - guaranteed participation securities
     -       -       14,141       1,330       14,141       1,330  
                                                 
Total
  
$
24,307
    
318
     $
322,009
     $
29,090
     $
346,316
     $
29,408
  

There were no allowance for credit losses recorded for debt securities available for sale during the three months ended March 31, 2025 and 2024.

14
Index
The proceeds from sales and calls and maturities of debt securities available for sale, gross realized gains and gross realized losses from sales and calls during the three months ended March 31, 2025 and 2024 are as follows:

 
Three months ended March 31,
  
(dollars in thousands)
  
2025
    
2024
  
             
Proceeds from sales
  
$
-
    
$
-
  
Proceeds from calls/paydowns
    
13,723
      
8,841
  
Proceeds from maturities
    
35,000
      
35,000
  
Gross realized gains
    
-
      
-
  
Gross realized losses
    
-
      
-
  

There were no transfers of debt securities available for sale during the three months ended March 31, 2025 and 2024.

(b) Held to maturity securities

The amortized cost and fair value of the held to maturity securities are as follows:

 
March 31, 2025
  
          Gross     Gross        
    Amortized     Unrecognized
    Unrecognized     Fair  
(dollars in thousands)
  
Cost
    
Gains
    
Losses
    
Value
  
                         
Mortgage backed securities and collateralized mortgage obligations - residential
  
$
5,090
    
$
64
    
$
73
    
$
5,081
  
Total held to maturity
  
$
5,090
    
$
64
    
$
73
    
$
5,081
  

 
December 31, 2024
  
          Gross     Gross    
 
    Amortized     Unrecognized     Unrecognized     Fair  
(dollars in thousands)
  
Cost
    
Gains
    
Losses
    
Value
  
                         
Mortgage backed securities and collateralized mortgage obligations - residential
  
$
5,365
    
$
45
    
$
104
    
$
5,306
  
Total held to maturity
  
$
5,365
    
$
45
    
$
104
    
$
5,306
  

The following table categorizes the debt securities included in the held to maturity portfolio as of March 31, 2025, based on the securities’ final maturity.  Actual maturities may differ because of securities prepayments and the right of certain issuers to call or prepay their obligations without penalty. Securities not due at a single maturity date are presented separately:

(dollars in thousands)
   Amortized     Fair  

 
Cost
    
Value
  
Mortgage backed securities and collateralized mortgage obligations - residential
  
$
5,090
     $
5,081
  
   
$
5,090
     $
5,081
  

All held to maturity securities are held at cost on the financial statements.

15
Gross unrecognized losses on held to maturity securities and the related fair values aggregated by the length of time that individual securities have been in an unrecognized loss position, were as follows:

   
March 31, 2025
  
   
Less than
    
12 months
              
(dollars in thousands)
  
12 months
    
or more
    
Total
  
 
        
Gross
          
Gross
          
Gross
  
 
  
Fair
    
Unrec.
    
Fair
    
Unrec.
    
Fair
    
Unrec.
  
 
  
Value
    
Loss
    
Value
    
Loss
    
Value
    
Loss
  
Mortgage backed securities and collateralized mortgage obligations - residential
  
$
406
     $
4
     $
1,922
     $
69
     $
2,328
     $
73
  
 
                                                
Total
  
$
406
     $
4
     $
1,922
     $
69
     $
2,328
     $
73
  

   
December 31, 2024
  
   
Less than
    
12 months
              
(dollars in thousands)
  
12 months
    
or more
    
Total
  
         
Gross
          
Gross
          
Gross
  
   
Fair
    
Unrec.
    
Fair
    
Unrec.
    
Fair
    
Unrec.
  
   
Value
    
Loss
    
Value
    
Loss
    
Value
    
Loss
  
Mortgage backed securities and collateralized mortgage obligations - residential
  
$
592
     $
7
     $
2,047
     $
97
     $
2,639
     $
104
  
                                                 
Total
  
$
592
     $
7
     $
2,047
     $
97
     $
2,639
     $
104
  

There were no sales or transfers of held to maturity securities during the three months ended March 31, 2025 and 2024.

There were no allowance for credit losses recorded for held to maturity securities during the three months ended March 31, 2025 and 2024. There were no securities on non-accrual status and all securities were performing in accordance with contractual terms.

(c) Securities in an unrealized loss position

As of March 31, 2025, the Company’s securities portfolio included certain securities, which were in an unrealized loss position, and are discussed below.

U.S. government sponsored enterprises:

In the case of unrealized losses on U.S. government sponsored enterprises, because the decline in fair value is attributable to changes in interest rates, and not credit quality, and because the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the securities are investment grade rated and there were no material underlying credit downgrades during the first quarter of 2025. As of March 31, 2025 10 out of 10 securities were in an unrealized loss position.  All securities are performing.

Mortgage backed securities and collateralized mortgage obligations – residential: 

As of March 31, 2025, all mortgage backed securities and collateralized mortgage obligations held by the Company were issued by U.S. government sponsored entities and agencies, primarily Ginnie Mae, Fannie Mae and Freddie Mac, institutions which the government has affirmed its commitment to support.  Because the decline in fair value is attributable to changes in interest rates, and not credit quality, and because the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the securities are investment grade rated and there were no material underlying credit downgrades during the first quarter of 2025. As of March 31, 2025 109 out of 118 securities were in an unrealized loss position.  All securities are performing.

16
Small Business Administration (SBA) - guaranteed participation securities: 

As of March 31, 2025, all of the SBA securities held by the Company were issued and guaranteed by the U.S. Small Business Administration.  Because the decline in fair value is attributable to changes in interest rates, and not credit quality, and because the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the securities are investment grade rated and there were no material underlying credit downgrades during the first quarter of 2025. As of March 31, 2025 8 out of 8 securities were in an unrealized loss position. All securities are performing.

Corporate Bonds: 

As of March 31, 2025, corporate bonds held by the Company are investment grade quality.  Because the decline in fair value is attributable to changes in interest rates, and not credit quality, and because the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the securities are investment grade rated and there were no material underlying credit downgrades during the first quarter of 2025. As of March 31, 2025 3 out of 4 securities were in an unrealized loss position. All securities are performing.


(5) Loan Portfolio and Allowance for Credit Losses

The following tables presents loans by portfolio segment:

 
  
March 31, 2025
  
(dollars in thousands)
    New York and              

 
other states*
    
Florida
    
Total
  
Commercial:
                  
Commercial real estate
  
$
237,008
     $
46,292
     $
283,300
  
Other
    
19,040
      
413
      
19,453
  
Real estate mortgage - 1 to 4 family:
                        
First mortgages
    
2,734,434
      
1,589,837
      
4,324,271
  
Home equity loans
    
42,648
      
13,642
      
56,290
  
Home equity lines of credit
    
242,309
      
177,497
      
419,806
  
Installment
    
9,265
      
3,752
      
13,017
  
Total loans, net
  
$
3,284,704
     $
1,831,433
      
5,116,137
  
Less: Allowance for credit losses
                    
50,606
  
Net loans
                  
$
5,065,531
  

* Includes New York, New Jersey, Vermont and Massachusetts.

17
   
December 31, 2024
  
(dollars in thousands)
  
New York and
              
   
other states*
    
Florida
    
Total
  
Commercial:
                  
Commercial real estate
  
$
227,771
    
$
39,529
    
$
267,300
  
Other
    
19,144
      
413
      
19,557
  
Real estate mortgage - 1 to 4 family:
                        
First mortgages
    
2,741,334
      
1,590,229
      
4,331,563
  
Home equity loans
    
43,096
      
13,643
      
56,739
  
Home equity lines of credit
    
235,939
      
173,322
      
409,261
  
Installment
    
9,885
      
3,753
      
13,638
  
Total loans, net
  
$
3,277,169
    
$
1,820,889
      
5,098,058
  
Less: Allowance for credit losses
                    
50,248
  
Net loans
                  
$
5,047,810
  

*Includes New York, New Jersey, Vermont and Massachusetts.

Included in commercial loans above are Paycheck Protection Program (“PPP”) loans totaling $192 thousand and $241 thousand as of March 31, 2025 and December 31, 2024 respectively.

As of March 31, 2025, the Company had approximately $33.6 million of real estate construction loans. Of the $33.6 million in real estate construction loans as of March 31, 2025, approximately $9.1 million are secured by first mortgages to residential borrowers while approximately $24.5 million were to commercial borrowers for residential construction projects. The majority of construction loans are in the Company’s New York market.

At December 31, 2024, the Company had approximately $29.7 million of real estate construction loans.  Of the $29.7 million in real estate construction loans at December 31, 2024, approximately $10.7 million are secured by first mortgages to residential borrowers while approximately $19.0 million were to commercial borrowers for residential construction projects. The majority of construction loans held in 2024 were in the Company’s New York market.

Allowance for credit losses on loans

The level of the ACLL is based on factors that influence management’s current estimate of expected credit losses, including past events and current conditions. There were no changes in the Company’s methodology for the allowance for credit losses on loans for the period ended March 31, 2025. The Company selected the baseline economic forecast for the allowance for credit losses based on current market conditions and portfolio trends. In addition, the Company’s four quarter forecast period and four quarter straight line reversion has not changed for the period ended March 31, 2025.


The Company recorded a provision for credit losses of $300 thousand for the three months ended March 31, 2025, which is the result a provision for credit losses on loans of $100 thousand, and there was $200 thousand provision for credit losses on unfunded commitments.



The Company recorded a provision for credit losses of $600 thousand for the three months ended March 31, 2024, which includes a provision for credit losses on loans of $600 thousand, and there was no provision for credit losses on unfunded commitments.

18
Activity in the allowance for credit losses on loans by portfolio segment for the three months ended March 31, 2025 and 2024 is summarized as follows:


 
For the three months ended March 31, 2025
  
(dollars in thousands)
         Real Estate              
          Mortgage-              

 
Commercial
    
1 to 4 Family
    
Installment
    
Total
  
Balance at beginning of period
  
$
3,420
    
$
46,636
    
$
192
    
$
50,248
  
Loans charged off:
                                
New York and other states*
    
4
      
80
      
25
      
109
  
Florida
    
-
      
-
      
15
      
15
  
Total loan chargeoffs
    
4
      
80
      
40
      
124
  
                                 
Recoveries of loans previously charged off:
                                
New York and other states*
    
6
      
41
      
21
      
68
  
Florida
    
314
      
-
      
-
      
314
  
Total recoveries
    
320
      
41
      
21
      
382
  
Net loans (recoveries) charged off
    
(316
)
    
39
      
19
      
(258
)
(Credit) Provision for credit losses
    
(713
)
    
710
      
103
      
100
  
Balance at end of period
  
$
3,023
    
$
47,307
    
$
276
    
$
50,606
  

* Includes New York, New Jersey, Vermont and Massachusetts.
 
   
For the three months ended March 31, 2024
  
(dollars in thousands)
        
Real Estate
              
         
Mortgage-
              
   
Commercial
    
1 to 4 Family
    
Installment
    
Total
  
Balance at beginning of period
  
$
2,735
      
45,625
       218      
48,578
  
Loans charged off:
                                
New York and other states*
    
-
      
117
       44      
161
  
Florida
    
-
      
-
       -      
-
  
Total loan chargeoffs
    
-
      
117
       44      
161
  
                                 
Recoveries of loans previously charged off:
                                
New York and other states*
    
-
      
195
       8      
203
  
Florida
    
-
      
-
       -      
-
  
Total recoveries
    
-
      
195
       8      
203
  
Net loan (recoveries) charged off
    
-
      
(78
)
     36      
(42
)
Provision for credit losses
    
7
      
592
    1      
600
Balance at end of period
  
$
2,742
      
46,295
       183      
49,220
  

* Includes New York, New Jersey, Vermont and Massachusetts.

19
The Company’s allowance for credit losses on unfunded commitments is recognized as a liability (accrued expenses and other liabilities) with adjustments to the reserve recognized in provision for credit losses in the consolidated income statement. The Company’s activity in the allowance for credit losses on unfunded commitments for the three months ended March 31, 2025 and 2024 is as follows:

    For the three
  
    months ended
  
(In thousands)
  
March 31, 2025
 
       
Balance at January 31, 2025
   $ 1,762  
Provision for credit losses
     200
Balance at March 31, 2025
  
$
1,962
  

    For the three
  
(In thousands)
  months ended
  

 
March 31, 2024
  
Balance at January 31, 2024
  
$
1,662
  
Provision for credit losses
    
-
Balance at March 31, 2024
  
$
1,662
  

Loan Credit Quality
The Company categorizes commercial loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. On at least an annual basis, the Company’s loan grading process analyzes non-homogeneous loans, such as commercial loans and commercial real estate loans, individually by grading the loans based on credit risk. The loan grades assigned to all loan types are tested by the Company’s internal loan review department in accordance with the Company’s internal loan review policy.

The Company uses the following definitions for classified loans:

Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Company’s credit position at some future date.

Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as such have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified as doubtful have all the weaknesses inherent in those loans classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above-described process are considered to be “pass” rated loans.

20
For homogeneous loan pools, such as residential mortgages, home equity lines of credit, and installment loans, the Company uses payment status to identify the credit risk in these loan portfolios. Payment status is reviewed on a daily basis by the Bank’s collection area and on a monthly basis with respect to determining the adequacy of the allowance for credit losses on loans. The payment status of these homogeneous pools as of March 31, 2025 and December 31, 2024 is also included in the aging of the past due loans table. Nonperforming loans shown in the table below were loans on nonaccrual status and loans over 90 days past due and accruing. As of March 31, 2025 and December 31, 2024, based on the most recent analysis performed, the risk category of loans by class of loans, and gross charge-offs for each loan type by origination year was as follows:

Loan Credit Quality
(in thousands)
  
As of March 31, 2025
  

 
Term Loans Amortized Cost Basis by Origination Year
  
Commercial:
 
2025
    
2024
    
2023
    
2022
    
2021
    
Prior
    
Revolving
Loans
Amortized
Cost Basis
    
Revolving
Loan
Converted to Term
    
Total
  
Risk rating
                                                      
Pass
  
$
17,533
    
$
48,481
    
$
52,782
    
$
71,625
    
$
22,085
    
$
63,390
    
$
4,893
    
$
-
    
$
280,789
  
Special Mention
  

-
    

-
    

-
    

241
    

-
    

-
    

-
    

-
    

241
  
Substandard
  

-
    

-
    

-
    

1,359
    

-
    

873
    

-
    

-
    

2,232
  
Doubtful
  
-    
-    
-    
-    
-    
38    
-    
-    
38  
Total Commercial Loans
  
$
17,533
    
$
48,481
    
$
52,782
    
$
73,225
    
$
22,085
    
$
64,301
    
$
4,893
    
$
-
    
$
283,300
  
Commercial Loans:
                                                                        
Current-period Gross writeoffs
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  
   
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  
Commercial Other:
                                                                        
Risk rating
                                                                        
Pass
  
$
877
    
$
2,531
    
$
7,128
    
$
1,716
    
$
324
    
$
2,203
    
$
4,520
    
$
-
    
$
19,299
  
Special mention
  

-
    

-
    

-
    

-
    

-
    

-
    

-
    

-
    

-
  
Substandard
  

-
    

12
    

-
    

-
    

6
    

98
    

38
    

-
    

154
  
Doubtful
 
-    
-    
-    
-    
-    
-    
-    
-    
-  
Total Commercial Real Estate Loans
  
$
877
    
$
2,543
    
$
7,128
    
$
1,716
    
$
330
    
$
2,301
    
$
4,558
    
$
-
    
$
19,453
  
                                                                         
Other Commercial Loans:
                                                                        
Current-period Gross writeoffs
  
$
-
    
$
-
    
$
-
    
$
-
    
$
4
    
$
-
    
$
-
    
$
-
    
$
4
  
   
$
-
    
$
-
    
$
-
    
$
-
    
$
4
    
$
-
    
$
-
    
$
-
    
$
4
  
                                                                         
Residential First Mortgage:
                                                                        
Risk rating
                                                                        
Performing
  
$
55,087
    
$
319,051
    
$
393,819
    
$
528,695
    
$
807,063
    
$
2,204,696
    
$
1,373
    
$
-
    
$
4,309,784
  
Nonperforming
  

-
    

-
    

553
    

182
    

963
    

12,789
    

-
    

-
    

14,487
  
Total First Mortgage:
  
$
55,087
    
$
319,051
    
$
394,372
    
$
528,877
    
$
808,026
    
$
2,217,485
    
$
1,373
    
$
-
    
$
4,324,271
  
                                                                         
Residential First Mortgage Loans:
                                                                        
Current-period Gross writeoffs
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
80
    
$
-
    
$
-
    
$
80
  
   
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
80
    
$
-
    
$
-
    
$
80
  
                                                                         
Home Equity Loans:
                                                                        
Risk rating
                                                                        
Performing
  
$
2,300
    
$
6,103
    
$
8,262
    
$
5,136
    
$
6,355
    
$
27,614
    
$
-
    
$
-
    
$
55,770
  
Nonperforming
  

-
    

-
    

-
    

154
    

-
    

366
    

-
    

-
    

520
  
Total Home Equity Loans:
  
$
2,300
    
$
6,103
    
$
8,262
    
$
5,290
    
$
6,355
    
$
27,980
    
$
-
    
$
-
    
$
56,290
  
                                                                         
Home Equity Loans:
                                                                        
Current-period Gross writeoffs
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  
   
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  
Home Equity Lines of  Credit:
                                                                        
Risk rating
                                                                        
Performing
  
$
744
    
$
4,213
    
$
1,102
    
$
1,295
    
$
1,048
    
$
15,117
    
$
393,365
    
$
-
    
$
416,884
  
Nonperforming
  

-
    

-
    

-
    

70
    

-
    

2,546
    

306
    

-
    

2,922
  
Total Home Equity Credit Lines:
  
$
744
    
$
4,213
    
$
1,102
    
$
1,365
    
$
1,048
    
$
17,663
    
$
393,671
    
$
-
    
$
419,806
  
                                                                         
Home Equity Lines of Credit:
                                                                        
Current-period Gross writeoffs
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  
   
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  
Installments:
                                                                        
Risk rating
                                                                        
Performing
  
$
771
    
$
2,831
    
$
4,856
    
$
2,471
    
$
584
    
$
422
    
$
939
    
$
-
    
$
12,874
  
Nonperforming
  

-
    

50
    

4
    

36
    

19
    

34
    

-
    

-
    

143
  
Total Installments
  
$
771
    
$
2,881
    
$
4,860
    
$
2,507
    
$
603
    
$
456
    
$
939
    
$
-
    
$
13,017
  
                                                                         
Installments Loans:
                                                                        
Current-period Gross writeoffs
  
$
-
    
$
15
    
$
7
    
$
15
    
$
0
    
$
3
    
$
-
    
$
-
    
$
40
  
   
$
-
    
$
15
    
$
7
    
$
15
    
$
0
    
$
3
    
$
-
    
$
-
    
$
40
  

21
Loan Credit Quality
(in thousands)
  
As of December 31, 2024
  
   
 Term Loans Amortized Cost Basis by Origination Year
  
Commercial :
  
2024
    
2023
    
2022
    
2021
    
2020
    
Prior
    
Revolving Loans Amortized Cost Basis
    
Revolving Loan Converted to Term
    
Total
  
Risk rating
                                                      
Pass
  
$
47,687
    
$
54,877
    
$
73,094
    
$
22,215
    
$
15,014
    
$
50,052
    
$
2,169
    
$
-
    
$
265,108
  
Special Mention
    
-
      
-
      
242
      
-
      
-
      
-
      
-
      
-
      
242
  
Substandard
    
-
      
-
      
1,003
      
-
      
22
      
887
      
-
      
-
      
1,912
  
Doubtful
     -       -       -       -       -       38       -       -       38  
Total Commercial Loans
  
$
47,687
    
$
54,877
    
$
74,339
    
$
22,215
    
$
15,036
    
$
50,977
    
$
2,169
    
$
-
    
$
267,300
  

                                                                       
Commercial Loans:                                                                        
Current-period Gross writeoffs
  
$
-
    
$
-
    
$
10
    
$
431
    
$
-
    
$
-
    
$
-
    
$
-
    
$
441
  

 
$
-
    
$
-
    
$
10
    
$
431
    
$
-
    
$
-
    
$
-
    
$
-
    
$
441
  
                                                                         
Commercial Other:
                                                                        
Risk rating
                                                                        
Pass
  
$
1,842
    
$
7,417
    
$
1,796
    
$
407
    
$
184
    
$
2,108
    
$
5,634
     $
-
    
$
19,388
  
Special mention
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
  
Substandard
    
13
      
-
      
-
      
22
      
-
      
134
      
-
      
-
      
169
  
Total Commercial Real Estate Loans
  
$
1,855
    
$
7,417
    
$
1,796
    
$
429
    
$
184
    
$
2,242
    
$
5,634
    
$
-
    
$
19,557
  
                                                                         
Other Commercial Loans:
                                                                       
Current-period Gross writeoffs
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
     $
-
  

 
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  
                                                                         
Residential First Mortgage:
                                                                        
Risk rating
                                                                        
Performing
  
$
313,944
    
$
398,722
    
$
535,702
    
$
821,804
    
$
681,840
    
$
1,563,659
    
$
938
    
$
-
    
$
4,316,609
  
Nonperforming
    
-
      
987
      
391
      
870
      
243
      
12,463
      
-
      
-
      
14,954
  
Total First Mortgage:
  
$
313,944
    
$
399,709
    
$
536,093
    
$
822,674
    
$
682,083
    
$
1,576,122
    
$
938
    
$
-
    
$
4,331,563
  

                                                                       
Residential First Mortgage Loans:                                                                        
Current-period Gross writeoffs
  
$
194
    
$
-
    
$
-
    
$
-
    
$
-
    
$
18
    
$
-
    
$
-
     $
212
  

 
$
194
    
$
-
    
$
-
    
$
-
    
$
-
    
$
18
    
$
-
    
$
-
    
$
212
  
                                                                         
Home Equity Loans:
                                                                        
Risk rating
                                                                        
Performing
  
$
6,621
    
$
8,586
    
$
5,354
    
$
6,490
    
$
5,066
    
$
24,096
    
$
-
    
$
-
    
$
56,213
  
Nonperforming
    
-
      
-
      
155
      
-
      
-
      
371
      
-
      
-
      
526
  
Total Home Equity Loans:
  
$
6,621
    
$
8,586
    
$
5,509
    
$
6,490
    
$
5,066
    
$
24,467
    
$
-
    
$
-
    
$
56,739
  

                                                                       
Home Equity Lines Loans:                                                                        
Current-period Gross writeoffs
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
     $
-
  

 
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  
                                                                         
Home Equity Credit Lines:
                                                                        
Risk rating
                                                                        
Performing
  
$
4,793
    
$
1,558
    
$
1,110
    
$
887
    
$
46
    
$
14,595
    
$
383,425
    
$
-
    
$
406,414
  
Nonperforming
    
-
      
-
      
70
      
-
      
-
      
2,532
      
245
      
-
      
2,847
  
Total Home Equity Credit Lines:
  
$
4,793
    
$
1,558
    
$
1,180
    
$
887
    
$
46
    
$
17,127
    
$
383,670
    
$
-
    
$
409,261
  

                                                                       
Home Equity Credit Lines Loans:                                                                        
Current-period Gross writeoffs
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
116
    
$
-
    
$
-
     $
116
  

 
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
116
    
$
-
    
$
-
    
$
116
  
                                                                         
Installments:
                                                                        
Risk rating
                                                                        
Performing
  
$
2,846
    
$
5,513
    
$
2,788
    
$
705
    
$
123
    
$
505
    
$
1,028
    
$
-
    
$
13,508
  
Nonperforming
    
16
      
5
      
55
      
19
      
-
      
35
      
-
      
-
      
130
  
Total Installments
  
$
2,862
    
$
5,518
    
$
2,843
    
$
724
    
$
123
    
$
540
    
$
1,028
    
$
-
    
$
13,638
  

                                                                       
Installments Loans:                                                                        
Current-period Gross writeoffs
  
$
-
    
$
53
    
$
47
    
$
35
    
$
4
    
$
31
    
$
-
    
$
-
     $
170
  

 
$
-
    
$
53
    
$
47
    
$
35
    
$
4
    
$
31
    
$
-
    
$
-
    
$
170
  

The Company transfers loans to other real estate owned, at fair value less cost to sell, in the period the Company obtains physical possession of the property (through foreclosure or through a deed in lieu).  Other real estate owned is included in other assets on the Statement of Financial Condition. Other real estate owned included $1.9 million and $2.2 million of commercial foreclosed properties, and $249 thousand and $126 thousand of residential foreclosed properties as of March 31, 2025 and 2024, respectively.  In addition, non-accrual residential mortgage loans that are in the process of foreclosure had an amortized cost of $8.0 million and $8.1 million as of March 31, 2025 and December 31,2024, respectively. 

22
The following tables present the aging of the amortized cost in past due loans by loan class and by region as of March 31, 2025 and December 31, 2024:


 
As of March 31, 2025
  

                                   
New York and other states*:    30-59      60-89      90 +      Total              
     Days      Days      Days      30+ days            Total  
(dollars in thousands)
  
Past Due
    
Past Due
    
Past Due
    
Past Due
    
Current
    
Loans
  
                                     
Commercial:
                                    
Commercial real estate
  
$
819
     $ 
-
     $ 
327
     $ 
1,146
     $ 
235,862
     $
237,008
  
Other
    
-
      
-
      
-
      
-
      
19,040
      
19,040
  
Real estate mortgage - 1 to 4 family:
                                                
First mortgages
    
4,558
      
396
      
6,107
      
11,061
      
2,723,373
      
2,734,434
  
Home equity loans
    
116
      
80
      
250
      
446
      
42,202
      
42,648
  
Home equity lines of credit
    
833
      
270
      
1,196
      
2,299
      
240,010
      
242,309
  
Installment
    
5
      
1
      
20
      
26
      
9,239
      
9,265
  
                                                 
Total
  
$
6,331
     $
747
     $
7,900
     $
14,978
     $
3,269,726
     $
3,284,704
  

Florida:
    30-59      60-89      90 +      Total          
 
     Days      Days      Days      30+ days
           Total  
(dollars in thousands)
  
Past Due
    
Past Due
    
Past Due
    
Past Due
    
Current
    
Loans
  
                                     
Commercial:
                                    
Commercial real estate
  
$
-
     $
-
     $
-
     $
-
     $
46,292
     $
46,292
  
Other
    
-
      
-
      
-
      
-
      
413
      
413
  
Real estate mortgage - 1 to 4 family:
                                                
First mortgages
    
2,178
      
566
      
1,325
      
4,069
      
1,585,768
      
1,589,837
  
Home equity loans
    
21
      
-
      
-
      
21
      
13,621
      
13,642
  
Home equity lines of credit
    
236
      
-
      
51
      
287
      
177,210
      
177,497
  
Installment
    
22
      
11
      
83
      
116
      
3,636
      
3,752
  
                                                 
Total
  
$
2,457
     $
577
     $
1,459
     $
4,493
     $
1,826,940
     $
1,831,433
  

Total:
   30-59     60-89     90 +     Total            
  
     Days      Days      Days      30+ days            Total  
(dollars in thousands)
  
Past Due
    
Past Due
    
Past Due
    
Past Due
    
Current
    
Loans
  
                                     
Commercial:
                                    
Commercial real estate
  
$
819
     $
-
     $
327
     $
1,146
     $
282,154
     $
283,300
  
Other
    
-
      
-
      
-
      
-
      
19,453
      
19,453
  
Real estate mortgage - 1 to 4 family:
                                                
First mortgages
    
6,736
      
962
      
7,432
      
15,130
      
4,309,141
      
4,324,271
  
Home equity loans
    
137
      
80
      
250
      
467
      
55,823
      
56,290
  
Home equity lines of credit
    
1,069
      
270
      
1,247
      
2,586
      
417,220
      
419,806
  
Installment
    
27
      
12
      
103
      
142
      
12,875
      
13,017
  
                                                 
Total
  
$
8,788
     $
1,324
     $
9,359
     $
19,471
     $
5,096,666
     $
5,116,137
  

* Includes New York, New Jersey, Vermont and Massachusetts.
 
23
Index
   
As of December 31, 2024
  

                                   
New York and other states*:
  
30-59
    
60-89
    
90 +
      Total              
    Days     Days     Days    
30+ days
            Total  
(dollars in thousands)
  
Past Due
    
Past Due
    
Past Due
    
Past Due
    
Current
    
Loans
  
                                     
Commercial:
                                    
Commercial real estate
  
$
1,189
     $
-
     $
329
     $
1,518
     $
226,253
     $
227,771
  
Other
    
-
      
-
      
14
      
14
      
19,130
      
19,144
  
Real estate mortgage - 1 to 4 family:
                                                
First mortgages
    
2,438
      
773
      
6,091
      
9,302
      
2,732,032
      
2,741,334
  
Home equity loans
    
15
      
22
      
318
      
355
      
42,741
      
43,096
  
Home equity lines of credit
    
401
      
-
      
1,267
      
1,668
      
234,271
      
235,939
  
Installment
    
18
      
19
      
69
      
106
      
9,779
      
9,885
  
                                                 
Total
  
$
4,061
      $
814
     $
8,088
     $
12,963
     $
3,264,206
     $
3,277,169
  

Florida:
  
30-59
    
60-89
    
90 +
      Total              
     Days      Days      Days    
30+ days
            Total  
(dollars in thousands)
  
Past Due
    
Past Due
    
Past Due
    
Past Due
    
Current
    
Loans
  
                                     
Commercial:
                                    
Commercial real estate
  
$
-
     $
-
     $
-
     $
-
     $
39,529
     $
39,529
  
Other
    
-
      
-
      
-
      
-
      
413
      
413
  
Real estate mortgage - 1 to 4 family:
                                                
First mortgages
    
2,037
      
629
      
1,773
      
4,439
      
1,585,790
      
1,590,229
  
Home equity loans
    
-
      
6
      
-
      
6
      
13,637
      
13,643
  
Home equity lines of credit
    
220
      
-
      
-
      
220
      
173,102
      
173,322
  
Installment
    
109
      
22
      
16
      
147
      
3,606
      
3,753
  
                                                 
Total
  
$
2,366
     $
657
     $
1,789
     $
4,812
     $
1,816,077
     $
1,820,889
  

Total:
  
30-59
    
60-89
    
90 +
      Total              
     Days      Days      Days    
30+ days
            Total  
(dollars in thousands)
  
Past Due
    
Past Due
    
Past Due
    
Past Due
    
Current
    
Loans
  
                                     
Commercial:
                                    
Commercial real estate
  
$
1,189
     $
-
     $
329
     $
1,518
     $
265,782
     $
267,300
  
Other
    
-
      
-
      
14
      
14
      
19,543
      
19,557
  
Real estate mortgage - 1 to 4 family:
                                                
First mortgages
    
4,475
      
1,402
      
7,864
      
13,741
      
4,317,822
      
4,331,563
  
Home equity loans
    
15
      
28
      
318
      
361
      
56,378
      
56,739
  
Home equity lines of credit
    
621
      
-
      
1,267
      
1,888
      
407,373
      
409,261
  
Installment
    
127
      
41
      
85
      
253
      
13,385
      
13,638
  
                                                 
Total
  
$
6,427
     $
1,471
     $
9,877
     $
17,775
     $
5,080,283
     $
5,098,058
  

* Includes New York, New Jersey, Vermont and Massachusetts.

As of March 31, 2025, there were no loans that were 90 days past due and still accruing interest. As a result, non-accrual loans include all loans 90 days or more past due as well as certain loans less than 90 days past due that were placed on non-accrual status for reasons other than delinquent status. There are no commitments to extend further credit on non-accrual or restructured loans.

Loans individually evaluated for impairment are non-accrual loans delinquent greater than 180 days, non-accrual commercial loans, as well as loans classified as loan modifications. As of March 31, 2025 and December 31, 2024, there was no allowance for credit losses based on the loans individually evaluated for impairment.
 
Residential and installment non-accrual loans which are not loan modifications or greater than 180 days delinquent are collectively evaluated to determine the allowance for credit loss.

24
The following tables present the amortized cost basis in non-accrual loans by portfolio segment:
 
   
As of March 31, 2025
  
(dollars in thousands)
   New York and
             

 
other states*
    
Florida
    
Total
  
Loans in non-accrual status:
                  
Commercial:
                  
Commercial real estate
  
$
688
     $
-
     $
688
  
Other
    
-
      
-
      
-
  
Real estate mortgage - 1 to 4 family:
                        
First mortgages
    
11,690
      
2,799
      
14,488
  
Home equity loans
    
427
      
93
      
520
  
Home equity lines of credit
    
2,679
      
243
      
2,922
  
Installment
    
139
      
3
      
142
  
Total non-accrual loans
    
15,623
      
3,138
      
18,760
  
Restructured real estate mortgages - 1 to 4 family
    
-
      
-
      
-
  
Total nonperforming loans
  
$
15,623
     $
3,138
     $
18,760
  

* Includes New York, New Jersey, Vermont and Massachusetts.

   
As of December 31, 2024
  
(dollars in thousands)
  
New York and
              

 
other states*
    
Florida
    
Total
  
Loans in non-accrual status:
                  
Commercial:
                  
Commercial real estate
  
$
329
     $
-
     $
329
  
Other
    
14
      
-
      
14
  
Real estate mortgage - 1 to 4 family:
                        
First mortgages
    
11,586
      
3,368
      
14,954
  
Home equity loans
    
432
      
94
      
526
  
Home equity lines of credit
    
2,653
      
194
      
2,847
  
Installment
    
108
      
22
      
130
  
Total non-accrual loans
    
15,122
      
3,678
      
18,800
  
Restructured real estate mortgages - 1 to 4 family
    
-
      
-
      
-
  
Total nonperforming loans
  
$
15,122
     $
3,678
     $
18,800
  

* Includes New York, New Jersey, Vermont and Massachusetts.

25
The following tables present the amortized cost basis of loans on non-accrual status and loans past due over 89 days still accruing as of March 31, 2025 and December 31, 2024:

   
As of March 31, 2025
 
(dollars in thousands)
  Non-accrual With     Non-accrual With
     Loans Past Due  
    No Allowance for     Allowance for
     Over 89 Days  

 
Credit Loss
    
Credit Loss
    
Still Accruing
  
Commercial:
                  
Commercial real estate
  
$
688
    
$
-
    
$
-
  
Other
    
-
      
-
      
-
  
Real estate mortgage - 1 to 4 family:
                        
First mortgages
    
12,743
      
1,744
      
-
  
Home equity loans
    
520
      
-
      
-
  
Home equity lines of credit
    
2,753
      
169
      
-
  
Installment
    
93
      
50
      
-
  
Total loans, net
  
$
16,797
    
$
1,963
    
$
-
  

 
  
As of December 31, 2024
  
(dollars in thousands)
  
Non-accrual With
    
Non-accrual With
    
Loans Past Due
  
 
  
No Allowance for
    
Allowance for
    
Over 89 Days
  
 
  
Credit Loss
    
Credit Loss
    
Still Accruing
  
Commercial:
                  
Commercial real estate
  
$
329
    
$
-
     $
-
  
Other
    
14
      
-
      
-
  
Real estate mortgage - 1 to 4 family:
                        
First mortgages
    
13,560
      
1,394
      
-
  
Home equity loans
    
526
      
-
      
-
  
Home equity lines of credit
    
2,724
      
123
      
-
  
Installment
    
112
      
18
      
-
  
Total loans, net
  
$
17,265
    
$
1,535
     $
-
  

The non-accrual balance of $2.0 million and $1.5 million was collectively evaluated and the associated allowance for credit losses on loans was determined not to be material as of March 31, 2025 and December 31, 2024, respectively.

26
The following tables present the balance in the allowance for credit losses on loans by portfolio segment and based on impairment evaluation as of March 31, 2025 and December 31, 2024:

   
As of March 31, 2025
  
(dollars in thousands)
         1-to-4 Family              
    Commercial     Residential     Installment        

 
Loans
    
Real Estate
    
Loans
    
Total
  
Allowance for credit losses on loans:
                        
Ending allowance balance attributable to loans:
                        
Individually evaluated for impairment
  
$
-
     $
-
     $
-
     $
-
  
Collectively evaluated for impairment
    
3,023
      
47,307
      
276
      
50,606
  
                                 
Total ending allowance balance
  
$
3,023
     $
47,307
     $
276
     $
50,606
  
                                 
Loans:
                                
Individually evaluated for impairment
  
$
786
     $
23,198
     $
92
     $
24,076
  
Collectively evaluated for impairment
    
301,967
      
4,777,169
      
12,925
      
5,092,061
  
                                 
Total ending loans balance
  
$
302,753
     $
4,800,367
     $
13,017
     $
5,116,137
  

   
As of December 31, 2024
  
(dollars in thousands)
        1-to-4 Family              
    Commercial     Residential     Installment        

 
Loans
    
Real Estate
    
Loans
    
Total
  
Allowance for credit losses on loans:
                        
Ending allowance balance attributable to loans:
                        
Individually evaluated for impairment
  
$
-
      
-
      
-
      
-
  
Collectively evaluated for impairment
    
3,420
      
46,636
      
192
      
50,248
  
                                 
Total ending allowance balance
  
$
3,420
      
46,636
      
192
      
50,248
  
                                 
Loans:
                                
Individually evaluated for impairment
  
$
443
      
23,835
      
112
      
24,390
  
Collectively evaluated for impairment
    
286,414
      
4,773,728
      
13,526
      
5,073,668
  
                                 
Total ending loans balance
  
$
286,857
      
4,797,563
      
13,638
      
5,098,058
 

27
A financial asset is considered collateral-dependent when the debtor is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral. Expected credit losses for the collateral dependent loans are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. The following tables present the amortized cost basis of individually analyzed collateral dependent loans by portfolio segment as of March 31, 2025 and December 31, 2024:

    As of March 31, 2025  
   
Type of Collateral
  
(dollars in thousands)        

       

 
Real Estate
    
Investment
Securities/Cash
    
Other
  
Commercial:
                  
Commercial real estate
  
$
786
      
-
      
-
  
Other
    
-
      
-
      
-
  
Real estate mortgage - 1 to 4 family:
      
        
        
  
First mortgages
    
19,276
      
-
      
-
  
Home equity loans
    
529
      
-
      
-
  
Home equity lines of credit
    
3,393
      
-
      
-
  
Installment
    
92
      
-
      
-
  
Total
  
$
24,076
      
-
      
-
  

 
  
As of December 31, 2024
  
 
  
Type of Collateral
  
(dollars in thousands)
                  
 
  
Real Estate
    
Investment Securities/Cash
    
Other
  
Commercial:
                  
Commercial real estate
  
$
429
      
-
      
-
  
Other
    
14
      
-
      
-
  
Real estate mortgage - 1 to 4 family:
    

     

     

 
First mortgages
    
19,928
      
-
      
-
  
Home equity loans
    
535
      
-
      
-
  
Home equity lines of credit
    
3,372
      
-
      
-
  
Installment
    
112
      
-
      
-
  
Total
  
$
24,390
      
-
      
-
  

The Company has not committed to lend additional amounts to customers with outstanding loans that are modified. Interest income recognized on loans that are individually evaluated was not material during the three months ended March 31, 2025 and 2024.

As of March 31, 2025 and 2024 loans individually evaluated included approximately $7.1 million and $8.1 million, respectively, of loans in accruing status that were identified as loan modifications in accordance with regulatory guidance related to Chapter 7 and 13 bankruptcy loans.

Pursuant to the adoption of ASU 2022-02 - Financial Instruments - Credit Losses (Topic 326) Troubled Debt Restructuring and Vintage Disclosures (“ASU 2022-02”), a borrower that is experiencing financial difficulty and receives a modification in the form of principal forgiveness, interest rate reduction, an other-than-insignificant payment delay or a term extension in the current period needs to be disclosed.

28
The following table presents the amortized cost basis of loans at March 31, 2025 and 2024 that were both experiencing financial difficulty and modified during the three months ended March 31, 2025, by class and by type of modification.  The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable is also presented below:

For the three months ended:
  
New York and other states*:
 March 31, 2025
  March 31, 2024
  
 
Payment
  
% of Total Class
  
Payment
   % of Total Class
 
(dollars in thousands)
Delay
  
of Loans
   Delay
  of Loans
 
 
                
Commercial:
                
Commercial real estate
  
$
-
       -     $ -       -  
Other
    
-
       -       -       -  
Real estate mortgage - 1 to 4 family:
    
-
       -       -       -  
First mortgages
    
75
      
0.00
%
     -       -  
Home equity loans
     -       -       -       -  
Home equity lines of credit
    
122
       0.05 %     -       -  
Installment
    
-
       -       -       -  
 
                                
Total
  
$
197
       0.00 %   $ -       0.00 %

Florida:
                        
 
  
Payment
    
% of Total Class
     Payment
   
% of Total Class
  
(dollars in thousands)
  
Delay
    
of Loans
     Delay
    of Loans
 
 
                        
Commercial:
                        
Commercial real estate
  
$
-
       -     $ -    
-  
Other
    
-
       -       -       -  
Real estate mortgage - 1 to 4 family:
             -
               -  
First mortgages
    
-
      
-
       85       0.01 %
Home equity loans
    
-
       -       -       -  
Home equity lines of credit
    
-
       -       -       -  
Installment
    
-
       -       -       -  
 
                                
Total
  
$
-
       -   $ 85       0.00 %

Total
                        

 
Payment
    
% of Total Class
     Payment
   
% of Total Class
  
(dollars in thousands)
  
Delay
    
of Loans
     Delay
   
of Loans
  
 
                        
Commercial:
                        
Commercial real estate
  
$
-
       -     $ -    
-  
Other
    
-
       -       -       -  
Real estate mortgage - 1 to 4 family:
                                
First mortgages
    
75
      
0.00
%
     85       0.01 %
Home equity loans
    
-
       -       -       -  
Home equity lines of credit
    
122
      
0.03
%
     -       -  
Installment
    
-
       -       -       -  
 
                                
Total
  
$
197
       0.00 %   $ 85       0.00 %

* Includes New York, New Jersey, Vermont and Massachusetts.
29

The Bank monitors the performance of loans modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table describes the performance of loans that have been modified as of March 31, 2025:

   
As of March 31, 2025
  
                                     
New York and other states*:           30-59
      60-89
      90+        
            Days
      Days
      Days
       
(dollars in thousands)    Current       Past Due
      Past Due
      Past Due
     Total  
                                     
Commercial:
                                    
Commercial real estate
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  
Other
    
-
      
-
      
-
      
-
      
-
  
Real estate mortgage - 1 to 4 family:
                                        
First mortgages
    
75
      
-
      
-
      
-
      
75
  
Home equity loans     -       -       -       -       -  
Home equity lines of credit
    
-
      
-
      
122
      
-
      
122
  
Installment
    
-
      
-
      
-
      
-
      
-
  
                                         
Total
  
$
75
    
$
-
    
$
122
    
$
-
    
$
197
  

Florida:           30-59
      60-89
      90+        
            Days
      Days
      Days
       
(dollars in thousands)    Current       Past Due
      Past Due
      Past Due
     Total  
                                     
Commercial:
                                    
Commercial real estate
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  
Other     -       -       -       -       -  
Real estate mortgage - 1 to 4 family:
                                        
First mortgages
    
-
      
-
      
-
      
-
      
-
  
Home equity loans
    
-
      
-
      
-
       -      
-
  
Home equity lines of credit
    
-
      
-
      
-
      
-
      
-
  
Installment
    
-
      
-
      
-
      
-
      
-
  
                                         
Total
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  

Total           30-59
      60-89
      90+        
            Days
      Days
      Days
       
(dollars in thousands)    Current       Past Due
      Past Due
      Past Due
     Total  
                                     
Commercial:
                                    
Commercial real estate
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  
Other
    
-
      
-
      
-
      
-
      
-
  
Real estate mortgage - 1 to 4 family:
                                        
First mortgages
    
75
      
-
      
-
      
-
      
75
  
Home equity loans
    
-
      
-
      
-
       -      
-
  
Home equity lines of credit
    
-
      
-
      
122
      
-
      
122
  
Installment
    
-
      
-
      
-
      
-
      
-
  
                                         
Total
  
$
75
    
$
-
    
$
122
    
$
-
    
$
197
  

* Includes New York, New Jersey, Vermont and Massachusetts.

30
   
As of March 31, 2024
                                     
New York and other states*:           30-59       60-89       90+        
            Days       Days       Days        
(dollars in thousands)    Current       Past Due       Past Due       Past Due      Total  
                                     
Commercial:
                                    
Commercial real estate
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  
Other
    
-
      
-
      
-
      
-
      
-
  
Real estate mortgage - 1 to 4 family:
                                        
First mortgages
    
-
      
-
      
-
      
-
      
-
  
Home equity loans     -       -       -       -       -  
Home equity lines of credit
    
-
      
-
      
-
      
-
      
-
  
Installment
    
-
      
-
      
-
      
-
      
-
  
                                         
Total
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  

Florida:           30-59       60-89       90+        
            Days       Days       Days        
(dollars in thousands)    Current       Past Due       Past Due       Past Due      Total  
                                     
Commercial:
                                    
Commercial real estate
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  
Other     -       -       -       -       -  
Real estate mortgage - 1 to 4 family:
                                        
First mortgages
    
85
      
-
      
-
      
-
      
85
  
Home equity loans
    
-
      
-
      
-
       -      
-
  
Home equity lines of credit
    
-
      
-
      
-
      
-
      
-
  
Installment
    
-
      
-
      
-
      
-
      
-
  
                                         
Total
  
$
85
    
$
-
    
$
-
    
$
-
    
$
85
  

Total           30-59       60-89       90+      
            Days       Days       Days      
(dollars in thousands)    Current       Past Due       Past Due       Past Due      Total
                                   
Commercial:
                                  
Commercial real estate
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
Other
    
-
      
-
      
-
      
-
      
-
Real estate mortgage - 1 to 4 family:
                                      
First mortgages
    
85
      
-
      
-
      
-
      
85
Home equity loans
    
-
      
-
      
-
       -      
-
Home equity lines of credit
    
-
      
-
      
-
      
-
      
-
Installment
    
-
      
-
      
-
      
-
      
-
                                       
Total
  
$
85
    
$
-
    
$
-
    
$
-
    
$
85

* Includes New York, New Jersey, Vermont and Massachusetts.

31
The following tables describes the financial effect of the modifications made to borrowers experiencing financial difficulty:

For the three months ended:
  
    March 31, 2025     March 31,2024  
   
Weighted
     Weighted  
New York and other states*:
  
Average
     Average  
   
Payment
     Payment  
(dollars in thousands)
  
Delay (Months)
    
Delay (Months)
  
             
Commercial:
            
Commercial real estate
  
$
-
     $ -  
Other
    
-
       -  
Real estate mortgage - 1 to 4 family:
    
-
       -  
First mortgages
    
24
      12  
Home equity loans
    
-
       -  
Home equity lines of credit
    
24
       -  
Installment
    
-
       -  
                 
Total
  
$
48
     $
12  

    Weighted
     Weighted
 
Florida:
   Average
     Average
 
   
Payment
     Payment
 
(dollars in thousands)
  
Delay (Months)
     Delay (Months)
 
             
Commercial:
            
Commercial real estate
  
$
-
     $ -  
Other
    
-
       -  
Real estate mortgage - 1 to 4 family:
                
First mortgages
    
-
       -  
Home equity loans
    
-
       -  
Home equity lines of credit
    
-
       -  
Installment
    
-
       -  
                 
Total
  
$
-
     $
-  

    Weighted
     Weighted
 
 
   Average
     Average
 
   
Payment
     Payment
 
(dollars in thousands)
  
Delay (Months)
     Delay (Months)
 
             
Commercial:
            
Commercial real estate
  
$
-
     $ -  
Other
    
-
       -  
Real estate mortgage - 1 to 4 family:
                
First mortgages
    
24
       12  
Home equity loans
    
-
       -  
Home equity lines of credit
    
24
       -  
Installment
    
-
       -  
                 
Total
  
$
48
     $
12  
  
* Includes New York, New Jersey, Vermont and Massachusetts.

32
The addition of these loan modifications did not have a significant impact on the allowance for credit losses on loans. The nature of the modifications that resulted in them being classified as a loan modification was the borrower filing for bankruptcy protection. There were three loan modifications totaling $261 thousand for residential mortgages and one home equity line of credit loan totaling $122 thousand that defaulted during the three months ended March 31, 2025 which had been classified as a loan modification within the prior twelve months. These loans that defaulted were all payment delay modifications. There were no loans that defaulted during the three months ended March 31, 2024 which had been classified as a loan modification within the prior twelve months.

In situations where the Bank considers a loan modification, management determines whether the borrower is experiencing financial difficulty by performing an evaluation of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification.  This evaluation is performed under the Company’s underwriting policy.

Generally, the modification of the terms of loans is the result of the borrower filing for bankruptcy protection. Chapter 13 bankruptcies generally include the deferral of all past due amounts for a period of generally 60 months in accordance with the bankruptcy court order. In the case of Chapter 7 bankruptcies even though there is no modification of terms, the borrowers’ debt to the Company is discharged and they do not reaffirm the debt.

A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. In situations involving a borrower filing for Chapter 13 bankruptcy protection, however, a loan is considered to be in payment default once it is 30 days contractually past due, consistent with the treatment by the bankruptcy court.

(6) Fair Value of Financial Instruments

FASB Topic 820, Fair Value Measurements (“ASC 820”) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair values:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity can access as of the measurement date.

Level 2 – Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 – Significant unobservable inputs that reflect a company’s own assumptions about the value that market participants would use in pricing an asset or liability.

The Company used the following methods and significant assumptions to estimate the fair value of assets and liabilities:

Securities Available for Sale: The fair value of securities available for sale is determined utilizing an independent pricing service for identical assets or significantly similar securities. The pricing service uses a variety of techniques to arrive at fair value including market maker bids, quotes and pricing models. Inputs to the pricing models include recent trades, benchmark interest rates, spreads and actual and projected cash flows. This results in a Level 2 classification of the inputs for determining fair value. Interest and dividend income is recorded on the accrual method and is included in the Consolidated Statements of Income in the respective investment class under total interest and dividend income. The Company does not have any securities that would be designated as Level 3.

33
Index
Other Real Estate Owned: Assets acquired through loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process to adjust for differences between the comparable sales and income data available. This results in a Level 3 classification of the inputs for determining fair value.

Individually evaluated loans: Periodically the Company records non-recurring adjustments to the carrying value of loans based on fair value measurements for partial charge-offs of the uncollectible portions of those loans.  Non-recurring adjustments can also include certain adjustments for collateral-dependent loans to adjust balances to fair value and generally have had a charge-off through the allowance for credit losses. For collateral dependent loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process to adjust for differences between the comparable sales and income data available. Such adjustments may be significant and typically result in a Level 3 classification of the inputs for determining fair value. When obtained, non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. Loans individually evaluated are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Indications of value for both collateral-dependent loans and other real estate owned are obtained from third party providers or the Company’s internal Appraisal Department. All indications of value are reviewed for reasonableness by a member of the Appraisal Department for the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value via comparison with independent data sources such as recent market data or industry-wide statistics.

There were no transfers between Level 1 and Level 2 during the three months ended March 31, 2025 and 2024.

34
Index
Assets and liabilities measured at fair value under ASC 820 on a recurring basis are summarized below:

Fair Value Measurements at
  
 
March 31, 2025 Using:
  
          Significant      
      Quoted Prices in   Other   Significant  
      Active Markets for   Observable   Unobservable  
  Carrying   Identical Assets   Inputs   Inputs  
(dollars in thousands)
Value
  
(Level 1)
  
(Level 2)
  
(Level 3)
  

               
U.S. government sponsored enterprises
  
$
65,942
    
$
-
    
$
65,942
    
$
-
  
State and political subdivisions
    
18
      
-
      
18
      
-
  
Mortgage backed securities and collateralized
mortgage obligations - residential
    
219,333
      
-
      
219,333
      
-
  
Corporate bonds
    
24,779
      
-
      
24,779
      
-
  
Small Business Administration- guaranteed
 participation securities
    
13,683
      
-
      
13,683
      
-
  
Other securities
    
698
      
-
      
698
      
-
  

                               
Total securities available for sale
  
$
324,453
    
$
-
    
$
324,453
    
$
-
  

Fair Value Measurements at
  
 
December 31, 2024 Using:
  
          Significant      
      Quoted Prices in   Other   Significant  
      Active Markets for   Observable   Unobservable  
  Carrying   Identical Assets   Inputs   Inputs  
(dollars in thousands)
Value
  
(Level 1)
  
(Level 2)
  
(Level 3)
  
                 
Securities available for sale:
                
U.S. government sponsored enterprises
  
$
85,617
    
$
-
    
$
85,617
    
$
-
  
State and political subdivisions
    
18
      
-
      
18
      
-
  
Mortgage backed securities and collateralized
mortgage obligations - residential
    
213,128
      
-
      
213,128
      
-
  
Corporate bonds
    
44,581
      
-
      
44,581
      
-
  
Small Business Administration- guaranteed
participation securities
    
14,141
       -      
14,141
      
-
  
Other securities
    
700
      
-
      
700
      
-
  
                                 
Total securities available for sale
  
$
358,185
    
$
-
    
$
358,185
    
$
-
  

35
Assets measured at fair value on a non-recurring basis are summarized below:

 
  
Fair Value Measurements at
  
 
  
 
    
 
  
March 31, 2025 Using:
  
 
  
 
    
                Significant                  
          Quoted Prices in     Other     Significant            
          Active Markets for     Observable     Unobservable            
     Carrying     Identical Assets     Inputs     Inputs            
(dollars in thousands)
  
Value
    
(Level 1)
    
(Level 2)
    
(Level 3)
  
Valuation technique
  
Unobservable inputs
  
Range (Weighted Average)
 
                        
 
  
 
    
Other real estate owned
  
$
 2,107
    
$
-
    
$
-
    
$
2,107
  
Sales comparison approach
  
Adjustments for differences between comparable sales
    
N/A

 
  
Fair Value Measurements at
  
 
  
 
      
 
  
December 31, 2024 Using:
  
 
  
 
      
                Significant                    
          Quoted Prices in     Other     Significant              
          Active Markets for     Observable     Unobservable              
    Carrying     Identical Assets     Inputs     Inputs              
(dollars in thousands)
  
Value
    
(Level 1)
    
(Level 2)
    
(Level 3)
  
Valuation technique
  
Unobservable inputs
  
Range (Weighted Average)
  
 
                        
 
  
 
      
Other real estate owned
  
$
2,174
    
$
-
    
$
-
    
$
2,174
  
Sales comparison approach
  
Adjustments for differences between comparable sales
    
0% - 39% (20%
)

Other real estate owned, that is carried at fair value less costs to sell was approximately $2.1 million as of March 31, 2025 and consisted of residential and commercial real estate properties. A valuation charge of $67 thousand is included in earnings for the three months ended March 31, 2025.

Of the total individually evaluated loans of $24.1 million as of March 31, 2025, there were no loans that were collateral dependent and were carried at fair value measured on a non-recurring basis.  Due to the sufficiency of charge-offs taken on these loans and the adequacy of the underlying collateral, there were no specific valuation allowances for these loans as of March 31, 2025.  There were no gross charge-offs related to residential individually evaluated loans included in the table above. 

Other real estate owned, which is carried at fair value less costs to sell, was approximately $2.2 million at December 31, 2024, and consisted of only residential real estate properties. A valuation charge of $350 thousand is included in earnings for the year ended December 31, 2024.

Of the total individually evaluated loans of $24.4 million at December 31, 2024, there are no loans that were collateral dependent and are carried at fair value measured on a non-recurring basis.  Due to the sufficiency of charge-offs taken on these loans and the adequacy of the underlying collateral, there were no specific valuation allowances for these loans at December 31, 2024. There were no gross charge-offs related to residential individually evaluated loans included in the table above.

36
Index
In accordance with FASB Topic 825, Financial Instruments (“ASC 825”), the carrying amounts and estimated fair values of financial instruments, at March 31, 2025 and December 31, 2024 are as follows:

(dollars in thousands)
        
Fair Value Measurements at
  
   
Carrying
    
March 31, 2025 Using:
  
   
Value
    
Level 1
    
Level 2
    
Level 3
    
Total
  
Financial assets:
                              
Cash and cash equivalents
  
$
756,137
      
756,137
      
-
      
-
      
756,137
  
Securities available for sale
    
324,453
       -      
324,453
      
-
      
324,453
  
Held to maturity securities
    
5,090
      
-
      
5,081
      
-
      
5,081
  
Federal Home Loan Bank stock
    
6,507
      
N/A
      
N/A
      
N/A
      
N/A
  
Net loans
    
5,065,531
      
-
      
-
      
4,607,167
      
4,607,167
  
Accrued interest receivable
    
14,005
      
830
      
1,203
      
11,972
      
14,005
  
Financial liabilities:
                                        
Demand deposits
    
793,306
      
793,306
      
-
      
-
      
793,306
  
Interest bearing deposits
    
4,703,364
      
2,641,788
      
2,050,803
      
-
      
4,692,591
  
Short-term borrowings
    
82,275
      
-
      
82,275
      
-
      
82,275
  
Accrued interest payable
    
3,665
      
223
      
3,442
      
-
      
3,665
  

(dollars in thousands)
        
Fair Value Measurements at
  
   
Carrying
    
December 31, 2024 Using:
  
   
Value
    
Level 1
    
Level 2
    
Level 3
    
Total
  
Financial assets:
                              
Cash and cash equivalents
  
$
641,812
      
641,812
      
-
      
-
      
641,812
  
Securities available for sale
    
358,185
      
-
      
358,185
      
-
      
358,185
  
Held to maturity securities
    
5,365
      
-
      
5,306
      
-
      
5,306
  
Federal Home Loan Bank stock
    
6,507
      
N/A
      
N/A
      
N/A
      
N/A
  
Net loans
    
5,047,810
      
-
      
-
      
4,589,822
      
4,589,822
  
Accrued interest receivable
    
13,194
      
271
      
1,317
      
11,606
      
13,194
  
Financial liabilities:
                                        
Demand deposits
    
762,101
      
762,101
      
-
      
-
      
762,101
  
Interest bearing deposits
    
4,628,882
      
2,579,123
      
2,038,200
      
-
      
4,617,323
  
Short-term borrowings
    
84,781
      
-
      
84,781
      
-
      
84,781
  
Accrued interest payable
    
3,817
      
216
      
3,601
      
-
      
3,817
  

37
Index
(7) Accumulated Other Comprehensive Loss

The following is a summary of the accumulated other comprehensive income loss balances, net of tax:

 
  
Three months ended March 31, 2025
  
                Amount    
       
          Other     reclassified     Other        
          Comprehensive     from Accumulated     Comprehensive income-        
    Balance at     income-Before     Other Comprehensive     Three months ended     Balance at  
(dollars in thousands)
  
12/31/2024
    
Reclassifications
    
Loss
    
3/31/2025
    
3/31/2025
  
 
                              
Net unrealized holding gain on securities available for sale, net of tax
  
$
(21,713
)
    
3,948
      
-
      
3,948
      
(17,765
)
Net change in overfunded position in pension and postretirement plans arising during the year, net of tax
    
21,266
      
-
      
-
      
-
      
21,266
  
Net change in net actuarial gain and prior service cost on pension and postretirement benefit plans, net of tax
    
(3,414
)
    
-
      
(219
)
    
(219
)
    
(3,633
)
 
                                        
Accumulated other comprehensive income (loss), net of tax
  
$
(3,861
)
    
3,948
      
(219
)
    
3,729
      
(132
)

 
Three months ended March 31, 2024
  
                Amount              
          Other     reclassified     Other        
          Comprehensive
    from Accumulated     Comprehensive loss-        
    Balance at     loss-Before     Other Comprehensive     Three months ended     Balance at  
(dollars in thousands)
  
12/31/2023
    
Reclassifications
    
Loss
    
3/31/2024
    
3/31/2024
  
                               
Net unrealized holding loss on securities available for sale, net of tax
  
$
(23,899
)
    
(1,378
)
    
-
      
(1,378
)
    
(25,277
)
Net change in overfunded position in pension and postretirement plans arising during the year, net of tax
    
13,476
      
-
      
-
      
-
      
13,476
  
Net change in net actuarial gain and prior service cost on pension and postretirement benefit plans, net of tax
    
(2,814
)
    
-
      
(148
)
    
(148
)
    
(2,962
)
                                         
Accumulated other comprehensive loss, net of tax
  
$
(13,237
)
    
(1,378
)
    
(148
)
    
(1,526
)
    
(14,763
)

The following represents the reclassifications out of accumulated other comprehensive loss for the three months ended March 31, 2025 and 2024:

(dollars in thousands)   Three months ended    
 
March 31,
    
   
2025
    
2024
  
Affected Line Item in Financial Statements
Amortization of pension and postretirement benefit items:
                        
Amortization of net actuarial gain
  
$
297
      
203
  
Salaries and employee benefits
Amortization of prior service cost
    
(3
)
    
(3
)
Salaries and employee benefits
Income tax benefit
    
(75
)
    
(52
)
Income taxes
Net of tax
    
219
      
148
  
                                      
Total reclassifications, net of tax
  
$
219
      
148
  

38
Index
(8) Revenue from Contracts with Customers

All of the Company’s revenue from contracts with customers in the scope of ASC 606 is recognized within non-Interest Income.  The following table presents the Company’s sources of non-Interest Income for the three months ended March 31, 2025 and 2024. Items outside the scope of ASC 606 are noted as such.

(dollars in thousands)
  
Three months ended
  
   
March 31,
  
   
2025
    
2024
  
Non-interest income
            
Service Charges on Deposits
            
Overdraft fees
  
$
680
    
$
663
  
Other
    
532
      
511
  
Interchange Income
    
1,490
      
1,597
  
Wealth management fees
    
2,120
      
1,816
  
Other (a)
    
152
      
256
  
                 
Total non-interest income
  
$
4,974
    
$
4,843
  

(a) Not within the scope of ASC 606.

A description of the Company’s revenue streams accounted in accordance with ASC 606 as follows:

Service charges on Deposit Accounts:    The Company earns fees from its deposit customers for transaction-based, account maintenance and overdraft services. Transaction-based fees, which include services such as stop payment charges, and wire fees, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer’s request.  Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Company satisfies the performance obligation.  Overdraft fees are recognized at the point in time that the overdraft occurs.  Service charges on deposits are withdrawn from the customer’s account balance.

Interchange Income:    Interchange revenue primarily consists of interchange fees, volume-related incentives and ATM charges. As the card-issuing bank, interchange fees represent our portion of discount fees paid by merchants for credit/debit card transactions processed through the interchange network.  The levels and structure of interchange rates are set by the card processing companies and are based on cardholder purchase volumes.  The Company earns interchange income as cardholder transactions occur and interchange fees are settled on a daily basis concurrent with the transaction processing services provided to the cardholder.

Wealth Management fees:    Trustco Wealth Management provides a comprehensive suite of trust and wealth management products and services, including financial and estate planning, trustee and custodial services, investment management, corporate retirement plan recordkeeping and administration of which a fee is charged to manage assets for investment or transact on accounts.  These fees are earned over time as the Company provides the contracted monthly or quarterly services and are generally assessed over the period in which services are performed based on a percentage of the fair value of assets under management or administration.  Other services are based on a fixed fee for certain account types, or based on transaction activity and are recognized when services are rendered.  Fees are withdrawn from the customer’s account balance.

Gains/Losses on Sales of Other real Estate Owned “OREO”: The Company records a gain or loss from the sale of OREO when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of OREO to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the OREO asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain/(loss) on sale if a significant financing component is present.

39
(9) Operating Leases

The Company has committed to rent premises used in business operations under non-cancelable operating leases and determines if an arrangement meets the definition of a lease upon inception.  Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities on the Company’s balance sheets.

Operating lease ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.  Operating lease ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.  The Company’s leases do not provide an implicit rate, therefore the Company used its incremental collateralized borrowing rates commensurate with the underlying lease terms to determine present value of operating lease liabilities.  Additionally, the Company does allocate the consideration between lease and non-lease components.  The Company’s lease terms may include options to extend when it is reasonably certain that the Company will exercise that option.  Lease expense for lease payments is recognized on a straight-line basis over the lease term.  Variable lease components, such as fair market value adjustments, are expensed as incurred and not included in ROU assets and operating lease liabilities.  Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. As of March 31, 2025, the Company did not have any leases with terms of twelve months or less.

As of March 31, 2025, the Company did not have any leases for which the construction had not yet started. As of March 31, 2025, lease expiration dates ranged from 1 month to 19.5 years and have a weighted average remaining lease term of 8.2 years. Certain leases provide for increases in future minimum annual rental payments as defined in the lease agreements. As mentioned above the leases generally also include variable lease components, which include real estate taxes, insurance, and common area maintenance (“CAM”) charges in the annual rental payments.

40
Index
Other information related to leases was as follows:

(dollars in thousands)   Three months ended  

 
March 31,
  
   
2025
    
2024
  
Operating lease cost
  
$
2,006
    
$
2,097
  
Variable lease cost
    
632
      
606
  
                 
Total Lease costs
  
$
2,638
    
$
2,703
  

(dollars in thousands)   Three months ended  

 
March 31,
  
   
2025
    
2024
  
Supplemental cash flows information:
            
Cash paid for amounts included in the measurement of lease liabilities:
            
Operating cash flows from operating leases
  
$
2,139
    
$
2,124
  
                 
Right-of-use assets obtained in exchange for lease obligations:
    
-
      
759
  
           
   
Weighted average remaining lease term
  
8.2 years
    
8.4 years
  
Weighted average discount rate
    
3.22
%
    
3.12
%

Future minimum lease payments under non-cancellable leases as of March 31, 2025 were as follows:

(dollars in thousands)
     
       
 Year ending      
December 31,
      
2025(a)
  
$
6,201
  
2026
    
7,456
  
2027
    
6,248
  
2028
    
5,060
  
2029
    
3,682
  
Thereafter
    
15,166
  
Total lease payments
  
$
43,813
  
Less: Interest
    
5,489
  
         
Present value of lease liabilities
  
$
38,324
  

(a)
Excluding the three months ended March 31, 2025.

41
Index
A member of the Board of Directors has an ownership interest in five entities that own commercial real estate leased by the Company for use as branch locations.  Total lease payments from the Company to those entities, which are included in the table above, owed as of March 31, 2025, were $2.2 million, which includes interest in the amount of $219 thousand.

(10) Regulatory Capital Requirements

Banks and bank holding companies are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy regulations and, additionally for banks, the prompt corrective action regulations, involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under regulatory accounting practices. Capital amounts and classifications are also subject to qualitative judgments by regulators. Failure to meet capital requirements can result in regulatory action. As of March 31, 2025, the Company and Bank meet all capital adequacy requirements to which they are subject.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition.  If a bank is not classified as well capitalized, regulatory approval is required to accept brokered deposits.  If a bank is undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required.  The federal banking agencies are required to take certain supervisory actions (and may take additional discretionary actions) with respect to an undercapitalized institution or its holding company.  Such actions could have a direct material effect on an institution’s or its holding company’s financial statements.  As of March 31, 2025 and December 31, 2024, the most recent regulatory guidance categorized the Bank as well capitalized under the regulatory framework for prompt corrective action.  There are no conditions or events since that notification that management believes have changed the Bank’s category.

42
Index
The Bank and the Company reported the following capital ratios as of March 31, 2025 and December 31, 2024:

(Bank Only)              
Minimum for
  
 
  

   
  Capital Adequacy plus
  As of March 31, 2025
Well
 Capital Conservation
(dollars in thousands)
  
Amount
    
Ratio
    
Capitalized(1)
    
Buffer (1)(2)
  
 
                        
Tier 1 leverage ratio
  

658,909
      
10.533
%
    
5.000
%
    
4.000
%
Common equity tier 1 capital
    
658,909
      
18.660
      
6.500
      
7.000
  
Tier 1 risk-based capital
    
658,909
      
18.660
      
8.000
      
8.500
  
Total risk-based capital
    
703,154
      
19.913
      
10.000
      
10.500
  

 
  

   
   
Minimum for
  
    Capital Adequacy plus
As of December 31, 2024
Well
 Capital Conservation
(dollars in thousands)
  
Amount
    
Ratio
    
Capitalized(1)
    
Buffer (1)(2)
  
 
                        
Tier 1 leverage ratio
  

652,668
      
10.618
%
    
5.000
%
    
4.000
%
Common equity tier 1 capital
    
652,668
      
18.542
      
6.500
      
7.000
  
Tier 1 risk-based capital
    
652,668
      
18.542
      
8.000
      
8.500
  
Total risk-based capital
    
696,767
      
19.795
      
10.000
      
10.500
  

(Consolidated)
            
     
Minimum for
  
    Capital Adequacy plus
 
As of March 31, 2025
 Capital Conservation
(dollars in thousands)
  
Amount
    
Ratio
    
Buffer (1)(2)
  
 
                  
Tier 1 leverage ratio
687,387
      
10.984
%
    
4.000
%
Common equity tier 1 capital
  
687,387
      
19.461
      
7.000
  
Tier 1 risk-based capital
  
687,387
      
19.461
      
8.500
  
Total risk-based capital
  
731,643
      
20.714
      
10.500
  

 
      
Minimum for
  
    Capital Adequacy plus
  As of December 31, 2024 Capital Conservation
(dollars in thousands)
  
Amount
    
Ratio
    
Buffer (1)(2)
  
 
                  
Tier 1 leverage ratio
  
679,651
      
11.054
%
    
4.000
%
Common equity Tier 1 capital
    
679,651
      
19.303
      
7.000
  
Tier 1 risk-based capital
    
679,651
      
19.303
      
8.500
  
Total risk-based capital
    
723,762
      
20.556
      
10.500
  

(1)
Federal regulatory minimum requirements to be considered to be Well Capitalized and Adequately Capitalized
(2)
The March 31, 2025 and December 31, 2024 common equity tier 1, tier 1 risk-based, and total risk-based capital ratios include a capital conservation buffer of 2.50 percent

(11) New Accounting Pronouncements


In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 is focused on additional income tax disclosures and requires public business entities, on an annual basis, to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income by the applicable statutory income tax rate). ASU 2023-09 is effective for the Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2024, with early adoption permitted. The Company has evaluated the impact applying this standard will have on its income tax disclosures, and the adoption of ASU 2023-09 does not have a material impact on the Company’s consolidated financial statements.


In November 2024, the FASB issued ASU No. 2024-03 “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (ASU 2024-03). ASU 2024-03 requires additional interim and annual disclosures that further disaggregate certain expense captions into specified categories in a separate note to the financial statements, as well as certain qualitative information describing amounts not separately disaggregated. ASU 2024-03 is effective for the Company in the annual period beginning on January 1, 2027 and interim periods beginning on January 1, 2028 and can be applied on either a prospective or retrospective basis, with early adoption permitted. The Company is evaluating the impact of ASU 2024-03 to its disclosures.

43
graphic
 

Crowe LLP
Independent Member Crowe Global
  

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and the Board of Directors of TrustCo Bank Corp NY
Glenville, New York

Results of Review of Interim Financial Information

We have reviewed the consolidated statement of financial condition of TrustCo Bank Corp NY (the “Company”) as of March 31, 2025, and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows for the three-month periods ended March 31, 2025 and March 31, 2024, and the related notes (collectively referred to as the “interim financial information or statements”). Based on our reviews, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated statement of financial condition of the Company as of December 31, 2024, and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated March 14, 2025, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated statement of financial condition as of December 31, 2024, is fairly stated, in all material respects, in relation to the consolidated statement of condition from which it has been derived.

Basis for Review Results

These financial statements are the responsibility of the Company’s management. We conducted our review in accordance with the standards of the PCAOB. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ Crowe LLP
 
Boston, Massachusetts
May 9, 2025

44
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction
The review that follows focuses on the factors affecting the financial condition and results of operations of TrustCo during the three month period ended March 31, 2025, with comparisons to the corresponding period in 2024, 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, 2024, which was filed with the SEC on March 14, 2025 (the “2024 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.

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 month periods ended March 31, 2025 and 2024.

Economic Overview
During the first quarter of 2025, financial markets got off to a good start and continued to rally for a time before market volatility began in February and continued through the rest of the quarter, resulting in declines in most of the financial indices.  For the first quarter of 2025, the S&P 500 Index was down 4.59%, Nasdaq was down 10.42%, and the Dow Jones Industrial Average was down 1.28% compared to the fourth quarter of 2024.  The 10‑year Treasury bond averaged 4.45% during Q1 2025 compared to 4.28% in Q4 2024, an increase of 17 basis points.  The 2‑year Treasury bond average remained flat at 4.15%, and the spread between the 10‑year and the 2-year Treasury bonds increased from 0.13% on average in Q4 2024 to 0.30% in Q1 2025.  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 quarter of 2025 Federal Funds rate remained flat at a range of 5.25% to 5.50% as of March 31, 2025.

45
 
 
 
3 Month
2 Year
5 Year
10 Year
 10 - 2 Year
 
 
 
Yield (%)
Yield (%)
Yield (%)
Yield (%)
 Spread (%)
 
 
 
 
 
 
 
 
Q1/24
 
Beg of Q1
 5.40
 4.23
 3.84
 3.88
 -0.35
 
Peak
5.49
 4.73
 4.36
 4.34
 -0.14
 
Trough
 5.42
 4.14
 3.80
 3.87
 -0.44
 
End of Q1
 5.46
 4.59
 4.21
 4.20
 -0.39
 
Average in Q1
 5.45
 4.48
 4.12
 4.16
 -0.33
 
 
 




Q2/24
 
Beg of Q2
 5.46
 4.59
 4.21
 4.20
 -0.39
 
Peak
 5.52
 5.04
 4.72
 4.70
 -0.24
 
Trough
 5.41
 4.65
 4.22
 4.20
 -0.47
 
End of Q2
 5.50
 4.71
 4.32
 4.32
 -0.39
 
Average in Q2
 5.47
 4.83
 4.47
 4.45
 -0.38
 
 
 




Q3/24
 
Beg of Q3
 5.50
 4.71
 4.32
 4.32
 -0.39
 
Peak
 5.47
 4.77
 4.44
 4.48
 0.26
 
Trough
 4.68
 3.49
 3.41
 3.63
 -0.35
 
End of Q3
 4.73
 3.66
 3.58
 3.81
 0.15
 
Average in Q3
 5.23
 4.04
 3.80
 3.95
 -0.09
 
 
 




Q4/24
 
Beg of Q4
 4.73
 3.66 3.58
 3.81
 0.15
 
Peak
 4.77
 4.37
 4.45
 4.62
 0.33
 
Trough
 4.31
 3.61
 3.51
 3.74
 0.02
 
End of Q4
 4.37
 4.25
 4.38
 4.58
 0.33
 
Average in Q4
 4.58
 4.15
 4.12
 4.28
 0.13
 
 
 




Q1/25
 
Beg of Q1
 4.37
 4.25
 4.38
 4.58
 0.33
 
Peak
 4.37
 4.40
 4.61
 4.79
 0.41
 
Trough
 4.30
 3.89
 3.96
 4.16
 0.20
 
End of Q1
 4.32
 3.89
 3.96
 4.23
 0.34
 
Average in Q1
 4.34
 4.15
 4.25
 4.45
 0.30

We are entering a period of heightened economic uncertainty as markets have been adjusting to changes in tariff policies. Tariffs have the potential to increase inflation, and it is unknown if that would have a transitory or longer lasting impact. On the national employment side, the data has held up well, although unemployment has ticked up modestly to 4.2%. Federal Reserve speakers, including Chairman Powell, have stated they can be patient at current inflation and unemployment levels to see how policy changes start to impact the data. Economic data remains mixed. Manufacturing continues to contract while the services sector expands, albeit at a slower pace than the previous two quarters. U.S. consumer spending appears to be slowing down. Focusing on backwards looking data, there are signs of a slowdown. Coupling that with forward looking expectations based on the uncertainty from tariffs, economists are evaluating the possibility of the U.S. entering a recession in the second half of 2025.

46
Management believes that TrustCo’s long-term focus on traditional banking services and practices historically has enabled the Company to avoid significant impact from asset quality problems, and that the Company’s strong liquidity and solid capital positions have allowed the Company to continue to conduct business in a manner consistent with its past practice.  While we continue to adhere to prudent underwriting standards, should general housing prices and other economic measures, such as unemployment in the Company’s market areas, deteriorate as a result of continued elevated interest rates, financial sector instability, a potential or actual default on the federal debt or other reasons, the Company may experience an increase in the level of credit risk and in the amount of its classified and nonperforming loans.

Financial Overview
TrustCo recorded net income of $14.3 million, or $0.75 of diluted earnings per share, for the three months ended March 31, 2025, compared to net income of $12.1 million, or $0.64 of diluted earnings per share, in the same period in 2024.  Return on average assets was 0.93% and 0.80%, respectively, for the three months ended March 31, 2025 and 2024.  Return on average equity was 8.49% and 7.54%, respectively, for the three months ended March 31, 2025 and 2024.

The primary factors accounting for the change in net income for the three months ended March 31, 2025 compared to the same period of the prior year were:


 •
An increase of $3.8 million, or 10.4%, in GAAP net interest income compared to the first quarter of 2024 primarily as a result of an increase in interest and fees on loans.


•
A decrease of $300 thousand in provision for credit losses for the first quarter of 2025 compared to the first quarter 2024.


•
An increase of $131 thousand in noninterest income for the first quarter of 2025 compared to the first quarter of 2024.


•
Partially offset by an increase of $1.4 million in noninterest expense for the first quarter 2025 compared to the first quarter 2024.

Asset/Liability Management
The Company strives to generate its earnings capabilities through a mix of core deposits funding a prudent mix of earning assets.  Additionally, TrustCo attempts to maintain adequate liquidity and reduce the sensitivity of net interest income to changes in interest rates to an acceptable level while enhancing profitability both on a short‑term and long‑term basis.

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 2024 Form 10-K is a description of the effect that continued elevated interest rates had on the results for the year 2024 compared to 2023.  Many of the same market factors discussed in the 2024 Form 10-K continued to have an impact on results through the first quarter of 2025.

47
TrustCo competes with other financial service providers based upon many factors including quality of service, convenience of operations and rates paid on deposits and charged on loans.  In the experience of management, the absolute level of interest rates, changes in interest rates and customers’ expectations with respect to the direction of interest rates have a significant impact on the volume of loan and deposit originations in any particular period.

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 first quarter of 2025 Federal Funds rate remained flat at a range of 5.25% to 5.50% as of March 31, 2025.

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 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 investments are most affected by the changes in longer 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 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 term market interest rates such as the 10-year Treasury.  The 10‑year Treasury yield was up 17 basis points, on average, during the first quarter of 2025 compared to the fourth quarter of 2024, and it was up 29 basis points as compared to the first quarter of 2024.

While TrustCo has been affected by changes in financial markets over time, management believes that the impacts have been mitigated by the Company’s generally conservative approach to banking.  The Company utilizes a traditional underwriting process in evaluating loan applications, and since originated loans are retained in the portfolio, there is a strong incentive to be conservative in making credit decisions.  For additional information concerning TrustCo’s loan portfolio and nonperforming loans, please refer to the discussions under “Loans” and “Nonperforming Assets,” respectively.  Further, the Company does not rely on borrowed funds to support its assets and maintains a significant level of liquidity on the asset side of the Statement of Financial Condition.  Management believes that these characteristics provide the Company with increased flexibility and stability during periods of market disruption and interest rate volatility.

48
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.  The current interest rate environment, however, has narrowed the margin on incremental balance sheet expansion.  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.

For the first quarter of 2025, the net interest margin was 2.64%, up 20 basis points versus the prior year’s first quarter.  The quarterly results reflect the following significant factors:


 •
The average balance of securities available for sale decreased by $107.4 million and the average yield increased 12 basis points to 2.62%.


•
The average balance of Federal funds sold and other short-term investments increased $116.0 million; however the average yield decreased 100 basis points to 4.45%.


•
The average loan portfolio grew by $104.7 million to $5.11 billion and the average yield increased 21 basis points to 4.19% in the first quarter of 2025 compared to the same period in 2024.


•
The average balance of interest bearing liabilities (primarily deposit accounts) increased $57.7 million and the average rate paid decreased 7 basis points to 1.92% in the first quarter of 2025 compared to the same period in 2024.

During the first quarter of 2025, 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.

The strategy on the funding side of the balance sheet was to offer competitive core deposit products coupled with short term time accounts.  We believe that this strategy has sustained TrustCo’s strong liquidity position and continues to allow us to cross sell products to new and existing relationships and take advantage of opportunities as they arise.

Earning Assets
Total average interest earning assets increased from $5.99 billion in the first quarter of 2024 to $6.11 billion in the same period of 2025 with an average yield of 4.13% in the first quarter of 2025 and 3.99% in the first quarter of 2024.  The mix of assets invested in securities available for sale decreased while Federal Funds sold and other short-term investments and loans increased over the prior year period.  Interest income on average earning assets increased $3.1 million in the first quarter of 2025 from the prior year period. This increase was primarily driven by an increase in interest income on loans due to higher interest rates on loan originations over the last year.

49
Loans
The average balance of loans was $5.11 billion in the first quarter of 2025 up from $5.01 billion in the comparable period in 2024.  The yield on loans also increased 21 basis points to 4.19%.

Compared to the first quarter of 2024, the 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 $4.39 billion in 2025 compared to $4.36 billion in 2024, an increase of 0.6%.  The average yield on residential mortgage loans increased by 18 basis points to 3.89% in the first quarter of 2025 compared to 2024, 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 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 decline 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 $20.7 million to an average balance of $297.9 million in the first quarter of 2025 compared to the same period in the prior year.  The average yield on this portfolio was up 31 basis points to 5.59% compared to the prior year period, primarily as a result of the higher interest rates on new originations compared to the existing portfolio yield and variable rate loans repricing.  The Company has sought to remain selective in underwriting commercial loans in recent periods as the apparent risk/reward balance has been less favorable in some cases compared to that of prior periods.

The average yield on home equity credit lines increased 8 basis points to 6.30% during the first quarter of 2025 compared to the prior year period.  The average balances of home equity lines increased 17.3% to $414.0 million in the first quarter of 2025 as compared to the prior year.

Securities Available for Sale
The average balance of the securities available for sale portfolio for the first quarter of 2025 was $369.9 million compared to $477.4 million for the comparable period in 2024.  The decrease in the balance reflects routine paydowns, calls and maturities, partially offset by new investment purchases.  The average yield was 2.62% for the first quarter of 2025 compared to 2.50% for the first quarter of 2024.  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.

50
The net unrealized loss in the available for sale securities portfolio was $24.0 million as of March 31, 2025 compared to a net unrealized loss of $29.3 million as of December 31, 2024.  The decrease in the net unrealized losses in the portfolio is the result of the current interest rate environment.

Held to Maturity Securities
The average balance of held to maturity securities was $5.2 million for the first quarter of 2025 compared to $6.3 million in the first quarter of 2024.  The decrease in balances reflects routine paydowns.  No new securities were added to this portfolio during the period.  The average yield was 4.34% for the first quarter of 2025 compared to 4.30% for the year earlier period.  TrustCo expects to hold the securities in this portfolio until they mature or are called.

The net unrecognized loss in the held to maturity securities portfolio was $9 thousand as of March 31, 2025 compared to a net unrecognized loss of $59 thousand as of December 31, 2024.  The decrease in the net unrecognized losses in the portfolio is the result of changes in market interest rate levels.

As of March 31, 2025, this portfolio consisted solely of residential mortgage-backed securities.  The balances for these securities are recorded at amortized cost.

Federal Funds Sold and Other Short-term Investments
The 2025 first quarter average balance of Federal Funds sold and other short-term investments was $613.6 million, a $116.0 million increase from the $497.7 million average for the same period in 2024, primarily due to an increase in deposits and funds from maturing securities which have not yet been deployed.  The yield was 4.45% for the first quarter of 2025 and 5.45% for the comparable period in 2024.  Interest income from this portfolio decreased $18 thousand from the prior year period.  While the average balances increased year over year, the decrease in the Federal Funds target rate resulted in a decrease in interest income over the same period in the prior year.

The Federal Funds sold and other short-term investments portfolio is utilized to generate additional interest income and liquidity as funds are waiting to be deployed into the loan and securities portfolios.

Funding Opportunities
TrustCo utilizes various funding sources to support its earning asset portfolio.  The vast majority of the Company’s funding comes from traditional deposit vehicles such as savings, demand deposit, interest-bearing checking, money market and time deposit accounts.

Total average interest bearing deposits (which includes interest bearing checking, money market accounts, savings and time deposits) increased $67.8 million to $4.65 billion for the first quarter of 2025 versus the first quarter in the prior year, and the average rate paid decreased from 2.02% for 2024 to 1.94% for 2025.  Total interest expense on these deposits decreased $707 thousand to $22.3 million in the first quarter of 2025 compared to the year earlier period.  From the first quarter of 2024 to the first quarter of 2025, interest bearing checking account average balances were up 4.9%, certificates of deposit average balances were up 8.7%, non‑interest demand average balances were up 4.9%, average savings balances decreased 6.0% and money market balances were down 13.9%.  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.

51
As of March 31, 2025, the maturity of total time deposits was as follows:

(dollars in thousands)
      
       
Under 1 year
  
$
1,877,201
  
1 to 2 years
    
88,706
  
2 to 3 years
    
94,188
  
3 to 4 years
    
949
  
4 to 5 years
    
479
  
Over 5 years
    
53
  
   
$
2,061,576
  

As of March 31, 2025 and December 31, 2024, approximately $1.16 billion and $1.11 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.

Average short-term borrowings for the first quarter of 2025 were $83.2 million compared to $93.3 million in the same period in 2024.  The decrease in the average balance from the prior year period is primarily a result of a shift of funds into time deposits.  The average rate remained flat at 0.88% in each of the first quarters of 2024 and 2025.  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 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 March 31, 2025 the Company also has borrowing capacity of $928 million available with the FHLBNY. The borrowings capacity is secured by the loans pledged by the Company. As of March 31, 2025 and 2024, the Company had no outstanding borrowings with the FHLBNY.

Net Interest Income
Net interest income was up $3.8 million from $36.6 million in the first quarter of 2024 to $40.4 million in the first quarter of 2025, driven by loan growth at higher interest rates and less interest expense on deposit products, partially offset by lower investment interest income and a decrease in interest on federal funds sold and other short-term investments.  The net interest spread was up 21 basis points to 2.21% in the first quarter of 2025 compared to the same period in 2024.  As previously noted, the net interest margin was up 20 basis points to 2.64% for the first quarter of 2025 compared to the same period in 2024.   Yields on earning assets increased in the first quarter of 2025 compared to the first quarter of 2024, and rates on interest-bearing liabilities decreased causing margin expansion. The Federal Reserve’s decision regarding whether to cut or hold rates in upcoming meetings will have an effect on the Company’s ability to decrease deposit costs which should help margin in future quarters.  During the first quarter of 2025, the Company has been able to lower the rates offered on our time deposits while continuing to retain and grow that product.  This is expected bring down the cost of time deposits over time.

52
Nonperforming Assets
Nonperforming assets include nonperforming loans (“NPLs”), which are those loans in a non‑accrual status and loans past due three payments or more and still accruing interest.  Also included in the total of nonperforming assets are foreclosed real estate properties, which are included in other assets and categorized as other real estate owned.

The following describes the nonperforming assets of TrustCo as of March 31, 2025:

Nonperforming loans and foreclosed real estate: Total NPLs were $18.8 million as of both March 31, 2025 and December 31, 2024.  There were no loans as of March 31, 2025 and December 31, 2024 that were past due 90 days or more and still accruing interest.

As of March 31, 2025, nonperforming loans primarily include a mix of commercial and residential loans.  Of total nonperforming loans of $18.8 million as of March 31, 2025, $17.9 million were residential real estate loans, $688 thousand were commercial loans and mortgages and $142 thousand were installment loans, compared to $18.3 million, $343 thousand and $130 thousand, respectively, at December 31, 2024.

A significant percentage of nonperforming loans are residential real estate loans, which are historically lower-risk than most other types of loans.  Net charge-offs were $41 thousand on residential real estate loans (including home equity lines of credit) for the first quarter of 2025 as compared to net recoveries of $78 thousand in the first quarter of 2024.  Management believes that these loans have been appropriately written down where required.

Ongoing portfolio management is intended to result in early identification and disengagement from deteriorating credits.  TrustCo has a diversified loan portfolio that includes a significant balance of residential mortgage loans to borrowers in the Capital Region of New York and Central Florida, and avoids concentrations to any one borrower or any single industry.  TrustCo has no advances to borrowers or projects located outside the United States.  TrustCo continues to identify delinquent loans as quickly as possible and to move promptly to resolve problem loans.  Efforts to resolve delinquencies begin immediately after the payment grace period expires, with repeated, automatically generated notices, as well as personalized phone calls and letters.  Loans are placed in nonaccrual status once they are 90 days past due, or earlier if management has determined that such classification is appropriate.  Once in nonaccrual status, loans are either brought current and maintained current, at which point they may be returned to accrual status, or they proceed through the foreclosure process.  The collateral on nonaccrual loans is evaluated periodically, and the loan value is written down if the collateral value is insufficient.

The Company originates loans throughout its branch franchise area.  As of March 31, 2025, 64.2% of its gross loan portfolio balances were in New York State and the immediately surrounding areas (including New Jersey, Vermont and Massachusetts), and 35.8% were in Florida.  Those figures compare to 64.3% and 35.7%, respectively at December 31, 2024.

53
Economic conditions vary widely by geographic location.   As a percentage of the total nonperforming loans as of March 31, 2025, 16.7% were to Florida borrowers, compared to 83.3% to borrowers in New York and surrounding areas.  For the three months ended March 31, 2025, New York and surrounding areas experienced net charge-offs of approximately $41 thousand, and Florida experienced net recoveries of $299 thousand.

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 interest.  Also as of March 31, 2025, 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 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 $786 thousand of commercial mortgages and commercial loans classified as individually evaluated as of March 31, 2025 compared to $443 thousand at December 31, 2024.  There were $23.2 million of individually evaluated residential loans as of March 31, 2025 compared to $23.8 million at December 31, 2024.

As of March 31, 2025 and December 31, 2024 the Company’s loan portfolio did not include any subprime mortgages or loans acquired with deteriorated credit quality.

As of March 31, 2025 there was $2.1 million of foreclosed real estate compared to $2.2 million at December 31, 2024.

Allowance for credit losses on loans: As of March 31, 2025, the Company utilized the Baseline scenario model of Moody’s economic scenarios and considered the uncertainty associated with the assumptions in the baseline scenario, including continued actions taken by the Federal Reserve with regard to monetary policy and interest rates and the potential impact of those actions, and the potential impact of persistent high inflation on the economy. Outcomes in any or all of these factors could differ from the baseline 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 first quarter of 2025, the Company recorded a provision for credit losses of $300 thousand, which is the result of a provision for credit losses on loans of $100 thousand, and provision for credit losses on unfunded commitments of $200 thousand.    The increase in the ACLL during the first quarter of 2025 was primarily a result of loan growth.  The increase in the provision for credit losses on unfunded commitments is a result of an increase in unfunded loan commitments.

See Note 5 of the financial statements for additional discussion related to the process for determining the provision for credit losses.

54
The allocation of the allowance for credit losses on loans as follows:

(dollars in thousands)
  
As of
March 31, 2025
    
As of
December 31, 2024
  
 
  
Amount
    
Percent of
Loans to
Total Loans
    
Amount
    
Percent of
Loans to
Total Loans
  
Commercial
  
$
 2,780
       5.44
%
  
$
 3,195
       5.25
%
Real estate - construction
     333
       0.66
%
     328
       0.58
%
Real estate mortgage - 1 to 4 family
     41,377
       85.44
%
     40,866
       85.87
%
Home equity lines of credit
     5,840
       8.21
%
     5,667
       8.03
%
Installment Loans
     276
       0.25
%
     192
       0.27
%
 
  
$
 50,606
       100.00
%
  
$
 50,248
       100.00
%

As of March 31, 2025, the allowance for credit losses on loans was $50.6 million, compared $50.2 million at December 31, 2024.  The allowance represents 0.99% of the loan portfolio as of March 31, 2025 and December 31, 2024. The coverage ratio, or the allowance for credit losses on loans to NPLs, was 269.8% and 267.3% as of March 31, 2025 and December 31, 2024, respectively.

Net recoveries for the three-month period ended March 31, 2025 were $258 thousand and $42 thousand for the prior year period.

During the first quarter of 2025, there were $4 thousand of commercial loan charge-offs, $80 thousand of residential loan charge-offs, and $40 thousand of consumer loan charge-offs compared with no commercial loan charge-offs, $117 thousand of residential loan charge-offs and $44 thousand of consumer loan charge-offs in the first quarter of 2024.  During the first quarter of 2025 there were $320 thousand of commercial loan recoveries, $41 thousand of residential mortgage loan recoveries, and $21 thousand of consumer loan recoveries, compared to no commercial loan recoveries, $195 thousand for residential mortgage loan recoveries, and $8 thousand of consumer loan recoveries in the first quarter of 2024.

The following table presents the net charge-off ratio for the three months ended March 31, 2025 and 2024:
         


For the three months ended March 31:
 

  2025
     2024
 
Commercial
   -0.11
 %
  0.00
 %
Real estate mortgage - 1 to 4 family
   0.00
 %   0.00
  %
Installment
   0.15
 %   0.22
  %
Total
   -0.01
 %   0.00
  %

55
Liquidity and Interest Rate Sensitivity
TrustCo seeks to obtain favorable sources of funding and to maintain prudent levels of liquid assets in order to satisfy varied liquidity demands. Management believes that TrustCo’s earnings performance and strong capital position enable the Company to easily secure new sources of liquidity.  The Company actively manages its liquidity through target ratios established under its liquidity policies.  Continual monitoring of both historical and prospective ratios allows TrustCo to employ strategies necessary to maintain adequate liquidity.  Management has also defined various degrees of adverse liquidity situations which could potentially occur and has prepared appropriate contingency plans should such a situation arise.  As noted, 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.  As previously stated, the Bank is a member of the FHLBNY and is an eligible borrower at the 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 contingent funding source within its Asset/Liability Management Policy.  Like other contingent funding sources, brokered certificates of deposits may be tested from time to time to ensure operational and market readiness.  Management believes that the Company has adequate sources of liquidity to cover its contractual obligations and commitments over the next twelve months and beyond.

The Company uses an industry standard external model as the primary tool to identify, quantify and project changes in interest rates and prepayment speeds taken both from industry sources and internally generated data based upon historical trends in the Bank’s balance sheet.  Assumptions based on the historical behavior of deposit rates and balances in relation to changes in market interest rates are also incorporated into the model.  This model calculates an economic or fair value amount with respect to non-time deposit categories since these deposits are part of the core deposit products of the Company.  The assumptions used are inherently uncertain and, as a result, the model cannot precisely measure the fair value of capital or precisely predict the impact of fluctuations in interest rates on the fair value of capital.

Using this model, the fair value of capital projections as of March 31, 2025 are referenced below.  The base case (current rates) scenario shows the present estimate of the fair value of capital assuming no change in the operating environment or operating strategies and no change in interest rates from those existing in the marketplace as of March 31, 2025.  The following table indicates the impact on the fair value of capital assuming interest rates were to instantaneously increase or decrease by 100 bp, 200 bp, 300 bp and 400 bp.

   
Estimated Percentage of
  
   
Fair value of Capital to
  
As of March 31, 2025
  
Fair value of Assets
+400 BP
    
20.60
%
+300 BP
    
21.00
  
+200 BP
    
21.30
  
+100 BP
    
22.90
  
Current rates
    
23.50
  
-100 BP
    
23.10
  
-200 BP
    
21.90
  
-300 BP
    
20.10
  
-400 BP
    
17.00
  

Noninterest Income
Total noninterest income for the first quarter of 2025 and 2024 was $5.0 million and $4.8 million, respectively.  The increase over the same period in the prior year was primarily related to an increase of $304 thousand in Trustco financial services income in the first quarter of 2025 as compared to the year-ago period, primarily as a result of higher market values of assets under management.  The fair value of assets under management was $1.3 billion as of March 31, 2025, $1.2 billion as of December 31, 2024 and $1.0 billion as of March 31, 2024.

56
Noninterest Expenses
Total noninterest expenses were $26.3 million for the three months ended March 31, 2025, compared to $24.9 million for the three months ended March 31, 2024, representing an increase of 5.7%.  Significant changes included increases in salaries and employee benefits, equipment expense, professional services, outsourced services, and other expenses.  Full time equivalent headcount decreased from 761 as of March 31, 2024 to 740 as of March 31, 2025 and represents a normal fluctuation of headcount.

Income Taxes
In the first quarter of 2025, TrustCo recognized income tax expense of $4.4 million compared to $3.8 million for the first quarter of 2024.  The effective tax rates were 23.7% and 23.8%, respectively, for the first quarters of 2025 and 2024.

Capital Resources
Consistent with its long-term goal of operating a sound and profitable financial organization, TrustCo strives to maintain strong capital ratios.

Banking regulators have moved towards higher required capital requirements due to the standards included in the “Basel III” banking capital reform measures and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as a general trend towards reducing risk in the banking system by providing a greater capital margin.

Total shareholders’ equity as of March 31, 2025 was $687.8 million compared to $676.3 million as of December 31, 2024.  TrustCo declared a dividend of $0.36 per share in the first quarter of 2025.  This results in a dividend payout ratio of 47.97% based on first quarter 2025 earnings of $14.3 million.

The capital rules, which are generally applicable to both the Company and the Bank, include several measures; specifically, a Tier 1 leverage ratio, a common equity tier 1 (“CET1”) capital ratio, a tier 1 risk-based capital ratio and a total risk-based capital ratio. The rules also impose a capital conservation buffer that requires the Company and the Bank to maintain additional levels of Tier 1 common equity over the minimum risk-based capital levels before they may pay dividends, repurchase shares or pay discretionary bonuses.

57
The Bank and the Company reported the following capital ratios as of March 31, 2025 and December 31, 2024:
(Bank Only)
                    
Minimum for
  
                     
Capital Adequacy plus
  
   
As of March 31, 2025
    
Well
    
Capital Conservation
  
(dollars in thousands)
  
Amount
    
Ratio
    
Capitalized(1)
    
Buffer (1)(2)
  
                         
Tier 1 leverage ratio
    
658,909
      
10.533
%
    
5.000
%
    
4.000
%
Common equity tier 1 capital
    
658,909
      
18.660
      
6.500
      
7.000
  
Tier 1 risk-based capital
    
658,909
      
18.660
      
8.000
      
8.500
  
Total risk-based capital
    
703,154
      
19.913
      
10.000
      
10.500
  

                     
Minimum for
  
                     
Capital Adequacy plus
  
   
As of December 31, 2024
    
Well
    
Capital Conservation
  
(dollars in thousands)
  
Amount
    
Ratio
    
Capitalized(1)
    
Buffer (1)(2)
  
                         
Tier 1 leverage ratio
    
652,668
      
10.618
%
    
5.000
%
    
4.000
%
Common equity tier 1 capital
    
652,668
      
18.542
      
6.500
      
7.000
  
Tier 1 risk-based capital
    
652,668
      
18.542
      
8.000
      
8.500
  
Total risk-based capital
    
696,767
      
19.795
      
10.000
      
10.500
  

(Consolidated)
                  
               
Minimum for
  
               
Capital Adequacy plus
  
   
As of March 31, 2025
    
Capital Conservation
  
(dollars in thousands)
  
Amount
    
Ratio
    
Buffer (1)(2)
  
                   
Tier 1 leverage ratio
    
687,387
      
10.984
%
    
4.000
%
Common equity tier 1 capital
    
687,387
      
19.461
      
7.000
  
Tier 1 risk-based capital
    
687,387
      
19.461
      
8.500
  
Total risk-based capital
    
731,643
      
20.714
      
10.500
  

               
Minimum for
  
               
Capital Adequacy plus
  
   
As of December 31, 2024
    
Capital Conservation
  
(dollars in thousands)
  
Amount
    
Ratio
    
Buffer (1)(2)
  
                   
Tier 1 leverage ratio
    
679,651
      
11.054
%
    
4.000
%
Common equity Tier 1 capital
    
679,651
      
19.303
      
7.000
  
Tier 1 risk-based capital
    
679,651
      
19.303
      
8.500
  
Total risk-based capital
    
723,762
      
20.556
      
10.500
  

(1)
Federal regulatory minimum requirements to be considered to be Well Capitalized and Adequately Capitalized
(2)
The March 31, 2025 and December 31, 2024 common equity tier 1, tier 1 risk-based, and total risk-based capital ratios include a capital conservation buffer of 2.50 percent

In addition, as of March 31, 2025, Trustco’s consolidated equity to total assets ratio was 10.85% compared to 10.84% at December 31, 2024.

As of March 31, 2025, the capital levels of both TrustCo and the Bank exceeded the minimum standards, including with the current capital conservation buffer taken into account.

58
Under the Office of the Comptroller of the Currency’s (“OCC”) “prompt corrective action” regulations, a bank is deemed to be “well capitalized” when its CET1, Tier 1, total risk-based and leverage capital ratios are at least 4%, 7%, 8.5%, and 10.5% respectively.  A bank is deemed to be “adequately capitalized” or better if its capital ratios meet or exceed the minimum federal regulatory capital requirements, and “undercapitalized” if it fails to meet these minimal capital requirements.  A bank is “significantly undercapitalized” if its CET1, Tier 1, total risk-based and leverage capital ratios fall below 3%, 4%, 6% and 3%, respectively and “critically undercapitalized” if the institution has a ratio of tangible equity to total assets that is equal to or less than 2%.  As of March 31, 2025 and December 31, 2024, Trustco Bank met the definition of “well capitalized.”

As noted, the Company’s dividend payout ratio was 47.97% of net income for the first quarter of 2025 and 56.48% of net income for the first quarter of 2024.  The per-share dividend paid in the first quarter of 2025, the fourth quarter of 2024, and the first quarter of 2024 was $0.36. The Company’s ability to pay dividends to its shareholders is dependent upon the ability of the Bank to pay dividends to the Company.  The payment of dividends by the Bank to the Company is subject to continued compliance with minimum regulatory capital requirements.  The OCC may disapprove a dividend if the Bank would be undercapitalized following the distribution; the proposed capital distribution raises safety and soundness concerns; or the capital distribution would violate a prohibition contained in any statute, regulation or agreement.

TrustCo maintains a dividend reinvestment plan (DRP) with approximately 6,005 participants.  The DRP allows participants to reinvest dividends in shares of the Company.  The DRP also allows for additional purchases by participants and has a discount feature (up to a 5% for safe harbor provisions) that can be activated by management as a tool to raise capital.  To date, the discount feature has not been utilized.

Share Repurchase Program
On March 18, 2025 the Company’s Board of Directors authorized, and the Company announced, another share repurchase program of up to 1,000,000 shares, or approximately 5% of its currently outstanding common stock.  There were no share repurchases during the three months ended March 31, 2025.

Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, income taxes and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.
 
During the three months ended March 31, 2025, there were no significant changes to our critical accounting policies and estimates as described in the financial statements contained in the 2024 Form 10-K other than what is set forth immediately below.
 
Management considers the accounting policy relating to the allowance for credit losses to be a critical accounting policy given the measurement uncertainty and subjective judgement necessary in evaluating the levels of the allowance required to cover the life-time losses in the loan portfolio and the material effect that such judgments can have on the results of operations.

59
TrustCo Bank Corp NY
Management’s Discussion and Analysis
STATISTICAL DISCLOSURE

I. DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY:
INTEREST RATES AND INTEREST DIFFERENTIAL

The following table summarizes the component distribution of the average balance sheet, related interest income and expense and the average annualized yields on interest earning assets and annualized rates on interest bearing liabilities of TrustCo for each of the reported periods. Nonaccrual loans are included in loans for this analysis. The average balances of securities available for sale and held to maturity are calculated using amortized costs for these securities.  Included in the average balance of shareholders’ equity is the unrealized loss, net of tax, in the available for sale portfolio of $18.8 million in 2025 and $25.6 million in 2024.  The subtotals contained in the following table are the arithmetic totals of the items contained in that category.  Increases and decreases in interest income and expense due to both rate and volume have been allocated to the categories of variances (volume and rate) based on the percentage relationship of such variances to each other.
  
   
Three months ended
    
Three months ended
                    
(dollars in thousands)
  
March 31, 2025
    
March 31, 2024
                    
                                                       
   
Average
    
Interest
    
Average
    
Average
    
Interest
    
Average
    
Change in
    
Variance
    
Variance
  
   
Balance
          
Rate
    
Balance
          
Rate
    
Interest
    
Balance
    
Rate
  
                                       
Income/
    
Change
    
Change
  
Assets
                                      
Expense
              
                                                       
Securities available for sale:
                                                      
U. S. government sponsored enterprises
  
$
74,680
    
$
596
      
3.19
%
  
$
125,973
    
$
906
      
2.88
%
  
$
(310
)
  
$
(870
)
  
$
560
  
Mortgage backed securities and collateralized mortgage obligations-residential
    
239,509
      
1,483
      
2.46
%
    
258,814
      
1,494
      
2.30
%
    
(11
)
    
(443
)
    
432
  
State and political subdivisions
    
18
      
-
      
6.77
%
    
26
      
-
      
6.90
%
    
-
      
-
      
-
  
Corporate bonds
    
40,019
      
260
      
2.60
%
    
73,625
      
476
      
2.59
%
    
(216
)
    
(236
)
    
20
  
Small Business Administration-guaranteed participation securities
    
15,003
      
81
      
2.15
%
    
18,224
      
100
      
2.20
%
    
(19
)
    
(17
)
    
(2
)
Other
    
699
      
7
      
4.01
%
    
696
      
3
      
1.72
%
    
4
      
-
      
4
  
                                                                         
Total securities available for sale
    
369,928
      
2,427
      
2.62
%
    
477,358
      
2,979
      
2.50
%
    
(552
)
    
(1,566
)
    
1,014
  
                                                                         
Federal funds sold and other short-term Investments
    
613,646
      
6,732
      
4.45
%
    
497,652
      
6,750
      
5.45
%
    
(18
)
    
5,581
      
(5,599
)
                                                                         
Held to maturity securities:
                                                                        

                                                                       
Mortgage backed securities and collateralized mortgage obligations-residential
    
5,233
      
57
      
4.34
%
    
6,329
      
68
      
4.30
%
    
(11
)
    
(15
)
    
4
  
                                                                         
Total held to maturity securities
    
5,233
      
57
      
4.34
%
    
6,329
      
68
      
4.30
%
    
(11
)
    
(15
)
    
4
  
                                                                         
Federal Reserve Bank and Federal Home Loan Bank stock
    
6,507
      
151
      
9.28
%
    
6,203
      
152
      
9.80
%
    
(1
)
    
30
      
(31
)
                                                                         
Commercial loans
    
297,926
      
4,165
      
5.59
%
    
277,183
      
3,661
      
5.28
%
    
504
      
283
      
221
  
Residential mortgage loans
    
4,385,646
      
42,614
      
3.89
%
    
4,359,476
      
40,415
      
3.71
%
    
2,199
      
244
      
1,955
  
Home equity lines of credit
    
413,981
      
6,435
      
6.30
%
    
353,004
      
5,464
      
6.22
%
    
971
      
905
      
66
  
Installment loans
    
12,967
      
236
      
7.37
%
    
16,128
      
264
      
6.58
%
    
(28
)
    
(176
)
    
148
  
                                                                         
Loans, net of unearned income
    
5,110,520
      
53,450
      
4.19
%
    
5,005,791
      
49,804
      
3.98
%
    
3,646
      
1,256
      
2,390
  
                                                                         
Total interest earning assets
    
6,105,834
      
62,817
      
4.13
%
    
5,993,333
      
59,753
      
3.99
%
    
3,064
      
5,286
      
(2,222
)
                                                                         
Allowance for credit losses on loans
    
(50,475
)
                    
(48,824
)
                                        
Cash & non-interest earning assets
    
201,154
                      
185,230
                                          
                                                                         
Total assets
  
$
6,256,513
                    
$
6,129,739
                                          
                                                                         
                                                                         
Liabilities and shareholders’ equity
                                                                        
                                                                         
Deposits:
                                                                        
Interest bearing checking accounts
    
1,038,218
      
558
      
0.22
%
  
$
990,130
    
$
240
      
0.10
%
    
318
      
12
      
306
  
Money market accounts
    
469,070
      
1,989
      
1.72
%
    
544,687
      
2,342
      
1.73
%
    
(353
)
    
(339
)
    
(14
)
Savings
    
1,089,358
      
734
      
0.27
%
    
1,158,558
      
712
      
0.25
%
    
22
      
(210
)
    
232
  
Time deposits
    
2,054,494
      
18,983
      
3.75
%
    
1,889,929
      
19,677
      
4.19
%
    
(694
)
    
7,223
      
(7,917
)
                                                                         
Total interest bearing deposits
    
4,651,140
      
22,264
      
1.94
%
    
4,583,304
      
22,971
      
2.02
%
    
(707
)
    
6,686
      
(7,393
)
Short-term borrowings
    
83,207
      
180
      
0.88
%
    
93,316
      
204
      
0.88
%
    
(24
)
    
(26
)
    
2
  
                                                                         
Total interest bearing liabilities
    
4,734,347
      
22,444
      
1.92
%
    
4,676,620
      
23,175
      
1.99
%
    
(731
)
    
6,660
      
(7,391
)
                                                                         
Demand deposits
    
761,800
                      
726,299
                                          
Other liabilities
    
78,748
                      
80,158
                                          
Shareholders’ equity
    
681,618
                    
$
646,662
                                          
                                                                         
Total liabilities and shareholders’ equity
  
$
6,256,513
                      
6,129,739
                                          
                                                                         
Net interest income
            
40,373
                      
36,578
            
$
3,795
    
$
(1,374
)
  
$
5,169
  
                                                                         
Net interest spread
                    
2.21
%
                    
2.00
%
                        
                                                                         
Net interest margin (net interest income
                                                                        
to total interest earning assets)
                    
2.64
%
                    
2.44
%
                        

60
Item 3.
Quantitative and Qualitative Disclosures about Market Risk

The information presented in the “Liquidity and Interest Rate Sensitivity” section of Part I, Item 2 of this Quarterly Report on Form 10-Q is incorporated herein by reference.

As detailed in the 2024 Form 10-K, the Company is subject to interest rate risk as its principal market risk.  As noted in the Management’s Discussion and Analysis for the three month periods ended March 31, 2025 and 2024 the Company continues to strive to respond to changes in interest rates in such a way that positions the Company to meet short term earning goals and also allows the Company to respond to changes in interest rates in the future.  Consequently, for the first quarter of 2025, the Company had an average balance of Federal Funds sold and other short-term investments of $613.6 million compared to $497.7 million in the first quarter of 2024.  As investment opportunities present themselves, management plans to invest funds from the Federal Funds sold and other short-term investment portfolio into the securities available for sale, securities held to maturity and loan portfolios.  TrustCo does not engage in activities involving interest rate swaps, forward placement contracts, or any other instruments commonly referred to as “derivatives.”  Additional disclosure of interest rate risk can be found under “Liquidity and Interest Rate Sensitivity” and “Asset/Liability Management” in the Management’s Discussion and Analysis section of this document.

Item 4.
Controls and Procedures

Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.  An evaluation was carried out under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report.  Based upon this evaluation of those disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer of the Company concluded, as of the end of the period covered by this report, that the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports the Company files and submits under the Exchange Act is recorded, processed, summarized and reported as and when required.

In designing and evaluating the Company’s disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.  Further, no evaluation of a cost-effective system of controls can provide absolute assurance that all control issues and instances of fraud, if any, will be detected.

61
Changes in Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter to which this report relates that have materially affected or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II          OTHER INFORMATION

Item 1.
Legal Proceedings

The nature of TrustCo’s business generates a certain amount of litigation against TrustCo and its subsidiaries involving matters arising in the ordinary course of business. In the opinion of management of TrustCo, there are no proceedings pending to which TrustCo or any of its subsidiaries is a party, or of which its property is the subject which, if determined adversely to TrustCo or such subsidiaries, would be material in relation to TrustCo’s consolidated shareholders’ equity and financial condition.

Item 1A.
Risk Factors

An investment in the Company involves risks, including the risks discussed in Item 1A. “Risk Factors” of the Company’s 2024 Form 10-K, which risk factors have not materially changed except as set forth below. The risk factors below supersede the similarly captioned risk factors set forth in the 2024 Form 10-K and supplement the other risk factors in the 2024 Form 10-K. The risk factors below reflect modifications to the nature of the risks that have developed since the date on which the 2024 Form 10-K was filed.

Our business may be adversely affected by the prevalence of fraud and other financial crimes.

As a bank, we are susceptible to fraudulent activity that may be committed against us or our customers which may result in financial losses or increased costs to us or our customers, disclosure or misuse of our information or our customers’ information, misappropriation of assets, privacy breaches against our customers, litigation or damage to our reputation. Such fraudulent activity may take many forms, including check fraud, electronic fraud, wire fraud, phishing, social engineering and other dishonest acts. Consistent with industry trends, we have also experienced attempted electronic fraudulent activity in recent periods. Given such electronic fraudulent activity and the growing level of use of electronic, internet-based and networked systems to conduct business directly or indirectly with our clients, certain fraud losses may not be avoidable regardless of the preventative and detection systems in place. Nationally, reported incidents of fraud and other financial crimes have increased. While we have policies and procedures designed to prevent such losses, there can be no assurance that such losses will not occur.

62
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds

Share Repurchase Program

The following table provides certain information with respect to the Company’s purchases of its common shares during the three months ended March 31, 2025:

   
Issuer Purchases of Common Shares
  
Period
  
Total
numbers
of shares
purchased
    
Average price
paid per share
    
Total number of shares
purchased as part of
publicly announced
plans or programs
    
Maximum number of
shares that may yet be
purchased under the
plans or programs (1)
  
January 1, 2025 through January 31, 2025
    
-
    
$
-
      
-
      
186,000
  
February 1, 2025 through February 28, 2025
    
-
      
-
      
-
      
186,000
  
March 1, 2025 through March 31, 2025
    
-
      
-
      
-
      
1,000,000
  
Total
    
-
    
$
-
      
-
      
1,000,000
  

  (1)
On March 18, 2025 the Company’s Board of Directors authorized, and the Company announced, another share repurchase program of up to 1,000,000 shares, or approximately 5% of its currently outstanding common stock.  The share repurchase program will expire on March 4, 2026. There were no repurchases during the three months ended March 31, 2025.

Item 3.
Defaults Upon Senior Securities

None.

Item 4.
Mine Safety Disclosures

None.

Item 5.
Other Information


(a)
None.


(b)
None.


(c)
During the period covered by this report, none of the Company’s directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (each as defined in Item 408 of Regulation S-K under the Securities Exchange Act of 1934, as amended).

63
Item 6.
Exhibits

Reg S-K (Item 601)
Exhibit No.
Description
   
Amended and Restated Certificate of Incorporation of TrustCo Bank Corp NY, as amended, incorporated by reference to Exhibit 3.1 to TrustCo Bank Corp NY’s Quarterly Report on Form 10-Q, filed August 5, 2021.
   
Amended and Restated Bylaws of TrustCo Bank Corp NY, effective October 17, 2023, incorporated by reference to Exhibit 3.1 to TrustCo Bank Corp NY’s Current Report on Form 8-K, filed October 17, 2023.
   
Crowe LLP Letter Regarding Unaudited Interim Financial Information
   
Rule 13a-15(e)/15d-15(e) Certification of Robert J. McCormick, principal executive officer.
   
Rule 13a-15(e)/15d-15(e) Certification of Michael M. Ozimek, principal financial officer.
   
Section 1350 Certifications of Robert J. McCormick, principal executive officer and Michael M. Ozimek, principal financial officer.
   
 101
Sections of the Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, formatted in Inline XBRL (eXtensible Business Reporting Language), submitted in the following files:
   
101.INS
Inline XBRL Instance Document
   
101.SCH
Inline XBRL Taxonomy Extension Schema Document
   
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
   
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
   
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
   
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
   
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

64
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
TrustCo Bank Corp NY
 
 
By: /s/ Robert J. McCormick
  
   
 
Robert J. McCormick
 
Chairman, President and Chief Executive Officer

 
By: /s/ Michael M. Ozimek
  
   
 
Michael M. Ozimek
 
Executive Vice President and Chief Financial Officer
   
Date:  May 9, 2025
  


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