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, 2024
For the quarterly period ended September 30, 2017Commission File Number 0-10592
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
14‑163028714-1630287
(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:
(518) 377‑3311
code)

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

Title of each classTrading Symbol (s)Name of each exchange on which registered
Common Stock, $1.00 par valueTRSTNasdaq 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    ☒ Yes  ☐ No


Indicate by check mark whether the registrant has submitted electronically and posted  on  its  corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-TS‑T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post 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”,filer,” “smaller reporting company”,company,” and “emerging growth company” in Rule 12b-212b‑2 of the Exchange Act.  (Check one):


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

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


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 October 31, 2017April 30, 2024
$1 Par Value
96,107,59619,024,433

TrustCo Bank Corp NY


INDEX


DESCRIPTIONPAGE NO.
Forward-Looking Statements
3

Part I.FINANCIAL INFORMATIONPAGE NO.
 
Item 1.Consolidated Interim Financial Statements (Unaudited):
  
 
Consolidated Statements of Income for the three month and nine month periods ended September 30, 2017March 31, 2024 and 20162023
36
   
 
Consolidated Statements of Comprehensive Income for the three month and nine month periods ended September 30, 2017March 31, 2024 and 20162023
47
   
 
Consolidated Statements of Financial Condition as of September 30, 2017March 31, 2024 and December 31, 20162023
58
   
 
Consolidated Statements of Changes in Shareholders’ Equity for the ninethree month periods ended September 30, 2017March 31, 2024 and 20162023
69
   
 
Consolidated Statements of Cash Flows for the ninethree month periods ended September 30, 2017March 31, 2024 and 20162023
710
   
 
Notes to Consolidated Interim Financial Statements
8–3711-44
   
 
Report of Independent Registered Public Accounting Firm
3845
   
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
39-6046-62
   
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
6163
   
Item 4.
Controls and Procedures
6163
   
Part II.OTHER INFORMATION 
   
Item 1.
Legal Proceedings
6264
   
Item 1A.
Risk Factors
6264
   
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
6264
   
Item 3.
Defaults Upon Senior Securities
6265
   
Item 4.
Mine SafetyDisclosures
6265
   
Item 5.
Other Information
6265
   
Item 6.
Exhibits
6265

2
Index
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, 2023, 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, 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 Operations

•changes in interest rates may significantly impact our financial condition and results of operations;

•ongoing inflationary pressures and continued elevated prices may affect our results of operations and financial condition;

•exposure to credit risk in our lending activities;

•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”) is not 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;

•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;

•societal responses to climate change could adversely affect our business and performance, including indirectly through impacts on our customers;

•increasing scrutiny and evolving expectations from customers, regulators, investors, and other stakeholders with respect to our environmental, social and governance practices may impose additional costs on us or expose us to new or additional risks
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Index
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;

•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 USA PATRIOT Act, 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;
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Index
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;

•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.

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


  Three months ended 
 March 31, 
  2024  2023 
       
Interest and dividend income:      
Interest and fees on loans $49,804  $44,272 
Interest and dividends on securities available for sale:        
U. S. government sponsored enterprises  906   692 
Mortgage-backed securities and collateralized mortgage obligations - residential  1,494   1,585 
Corporate bonds  476   521 
Small Business Administration-guaranteed participation securities  100   117 
Other securities  3   2 
Total interest and dividends on securities available for sale  2,979   2,917 
         
Interest on held to maturity securities:        
Mortgage-backed securities and collateralized mortgage obligations-residential  68   78 
Total interest on held to maturity securities  68   78 
         
Federal Home Loan Bank stock  152   110 
Interest on federal funds sold and other short-term investments  6,750   6,555 
Total interest income  59,753   53,932 
         
Interest expense:        
Interest on deposits:        
Interest-bearing checking  240   66 
Savings accounts  712   530 
Money market deposit accounts  2,342   814 
Time deposits  19,677   5,272 
Interest on short-term borrowings  204   285 
Total interest expense  23,175   6,967 
         
Net interest income  36,578   46,965 
Provision for credit losses  600   300 
Net interest income after provision for credit losses
  35,978   46,665 
         
Noninterest income:        
Trustco financial services income  1,816   1,774 
Fees for services to customers  2,745   2,648 
Other  282   247 
Total noninterest income  4,843   4,669 
         
Noninterest expenses:        
Salaries and employee benefits  11,427   13,283 
Net occupancy expense  4,611   4,598 
Equipment expense  1,738   1,962 
Professional services  1,460   1,607 
Outsourced services  2,501   2,296 
Advertising expense  408   390 
FDIC and other insurance  1,094   1,052 
Other real estate expense, net  74   225 
Other  1,590   2,266 
Total noninterest expenses  24,903   27,679 
         
Income before taxes  15,918   23,655 
Income taxes  3,792   5,909 
         
Net income $12,126  $17,746 
         
Net income per share:
        
- Basic $0.64  $0.93 
         
- Diluted $0.64  $0.93 
  
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 
  2017  2016  2017  2016 
             
Interest and dividend income:            
Interest and fees on loans $37,513   36,171   110,219   107,428 
Interest and dividends on securities available for sale:                
U. S. government sponsored enterprises  465   408   1,667   1,067 
State and political subdivisions  6   13   29   40 
Mortgage-backed securities and collateralized mortgage obligations-residential  1,815   1,829   5,717   6,114 
Corporate bonds  153   97   458   97 
Small Business Administration-guaranteed participation securities  380   445   1,189   1,371 
Mortgage-backed securities and collateralized mortgage obligations-commercial  22   36   66   110 
Other securities  4   4   12   12 
Total interest and dividends on securities available for sale  2,845   2,832   9,138   8,811 
                 
Interest on held to maturity securities:                
Mortgage-backed securities and collateralized mortgage obligations-residential  276   347   888   1,123 
Corporate bonds  102   156   410   464 
Total interest on held to maturity securities  378   503   1,298   1,587 
                 
Federal Reserve Bank and Federal Home Loan Bank stock  125   131   393   369 
Interest on federal funds sold and other short-term investments  1,927   866   4,900   2,542 
Total interest income  42,788   40,503   125,948   120,737 
                 
Interest expense:                
Interest on deposits:                
Interest-bearing checking  113   120   371   350 
Savings  435   504   1,300   1,712 
Money market deposit accounts  469   463   1,403   1,426 
Time deposits  2,247   2,468   6,711   7,301 
Interest on short-term borrowings  345   281   1,043   800 
Total interest expense  3,609   3,836   10,828   11,589 
                
Net interest income  39,179   36,667   115,120   109,148 
Provision for loan losses  550   750   1,700   2,350 
Net interest income after provision for loan losses  38,629   35,917   113,420   106,798 
                
Noninterest income:               
Trustco financial services income  1,844   1,347   5,127   4,464 
Fees for services to customers  2,767   2,664   8,201   8,062 
Net gain on securities transactions  -   -   -   668 
Other  243   718   757   1,306 
Total noninterest income  4,854   4,729   14,085   14,500 
                
Noninterest expenses:               
Salaries and employee benefits  10,360   8,995   30,129   26,932 
Net occupancy expense  4,027   3,887   12,403   11,893 
Equipment expense  1,669   1,596   4,653   4,950 
Professional services  1,679   1,959   5,570   6,203 
Outsourced services  1,650   1,465   4,650   4,441 
Advertising expense  699   489   2,019   1,788 
FDIC and other insurance  1,018   1,127   3,077   5,066 
Other real estate expense (income), net  275   895   770   1,837 
Other  2,149   2,636   7,187   7,352 
Total noninterest expenses  23,526   23,049   70,458   70,462 
                
Income before taxes  19,957   17,597   57,047   50,836 
Income taxes  7,361   6,667   21,264   19,033 
                
Net income $12,596   10,930   35,783   31,803 
                
Net income per share:               
- Basic $0.131   0.114   0.373   0.333 
                
- Diluted $0.131   0.114   0.372   0.333 


See accompanying notes to unaudited consolidated interim financial statements.

3
6
Index
TRUSTCO BANK CORP NY
Consolidated Statements of Comprehensive Income (Unaudited)
(dollars in thousands)


  Three months ended 
 
March 31,
 
  2024  2023 
       
Net income $12,126  $17,746 
         
Net unrealized holding (loss) gain on securities available for sale  (1,872)  5,251 
Tax effect  494   (1,350)
         
Net unrealized (loss) gain on securities available for sale, net of tax  (1,378)  3,901 
         
Amortization of net actuarial gain  (203)  (114)
Amortization of prior service cost
  3   3 
Tax effect  52   29 
Amortization of net actuarial gain and prior service cost on pension and postretirement plans, net of tax
  (148)  (82)
         
Other comprehensive (loss) income, net of tax  (1,526)  3,819 
Comprehensive income $10,600  $21,565 
  
Three Months Ended
September 30
  
Nine Months Ended
September 30
 
  2017  2016  2017  2016 
             
Net income $12,596   10,930   35,783   31,803 
                 
Net unrealized holding gain on securities available for sale  938   (125)  5,460   12,475 
Reclassification adjustments for net gain recognized in income  -   -   -   (668)
Tax effect  (376)  50   (2,185)  (4,723)
                 
Net unrealized gain on securities available for sale, net of tax  562   (75)  3,275   7,084 
                 
Amortization of net actuarial gain  (72)  (8)  (208)  (25)
Amortization of prior service cost  23   22   68   67 
Tax effect  20   (6)  56   (17)
Amortization of net actuarial gain and prior service cost on pension and postretirement plans, net of tax  (29)  8   (84)  25 
                 
Other comprehensive income, net of tax  533   (67)  3,191   7,109 
Comprehensive income $13,129   10,863   38,974   38,912 


See accompanying notes to unaudited consolidated interim financial statements.

4
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Index
TRUSTCO BANK CORP NY
Consolidated Statements of Financial Condition (Unaudited)
(dollars in thousands, except share and per share data)

 March 31, 2024  December 31, 2023 
ASSETS:      
       
Cash and due from banks $44,868  $49,274 
Federal funds sold and other short term investments  564,815   528,730 
Total cash and cash equivalents  609,683   578,004 
         
Securities available for sale  426,241   452,289 
Held to maturity securities ($6,108 and $6,396 fair value at March 31, 2024 and December 31, 2023, respectively)
  6,206   6,458 
         
Federal Home Loan Bank stock  6,203   6,203 
Loans, net of deferred net costs  5,005,506   5,002,879 
Less:        
Allowance for credit losses on loans
  49,220   48,578 
Net loans  4,956,286   4,954,301 
         
Bank premises and equipment, net  33,423   34,007 
Operating lease right-of-use assets  39,647   40,542 
Other assets  101,881   96,387 
         
Total assets $6,179,570  $6,168,191 
         
LIABILITIES:        
Deposits:        
Demand $742,997  $754,532 
Interest-bearing checking  1,020,136   1,015,213 
Savings accounts  1,155,517   1,179,241 
Money market deposit accounts  532,611   565,767 
Time deposits  1,903,908   1,836,024 
Total deposits  5,355,169   5,350,777 
         
Short-term borrowings  94,374   88,990 
Operating lease liabilities  43,438   44,471 
Accrued expenses and other liabilities  37,399   38,668 
         
Total liabilities  5,530,380   5,522,906 
         
SHAREHOLDERS’ EQUITY:        
Capital stock par value $1.00; 30,000,000 shares authorized; 20,058,142 shares issued at March 31, 2024 and December 31, 2023, and 19,024,433 shares outstanding at March 31, 2024 and December 31, 2023, respectively
  20,058   20,058 
Surplus
  257,335   257,181 
Undivided profits  430,346   425,069 
Accumulated other comprehensive loss, net of tax  (14,763)  (13,237)
Treasury stock at cost - 1,033,709 shares at March 31, 2024 and December 31, 2023, respectively
  (43,786)  (43,786)
         
Total shareholders’ equity  649,190   645,285 
         
Total liabilities and shareholders’ equity $6,179,570  $6,168,191 
  September 30, 2017  December 31, 2016 
ASSETS: (Unaudited)  (Audited) 
       
Cash and due from banks $41,598   48,719 
         
Federal funds sold and other short term investments  582,599   658,555 
Total cash and cash equivalents  624,197   707,274 
        
Securities available for sale  580,430   620,360 
         
Held to maturity securities (fair value 2017 $30,731; 2016 $47,526)  29,268   45,490 
         
Federal Reserve Bank and Federal Home Loan Bank stock  8,779   9,579 
        
Loans, net of deferred net costs  3,578,282   3,430,586 
Less:       
Allowance for loan losses  44,082   43,890 
Net loans  3,534,200   3,386,696 
         
Bank premises and equipment, net  35,028   35,466 
Other assets  58,373   63,941 
        
Total assets $4,870,275   4,868,806 
        
LIABILITIES:       
Deposits:       
Demand $397,623   377,755 
Interest-bearing checking  862,067   815,534 
Savings accounts  1,265,229   1,271,449 
Money market deposit accounts  564,557   571,962 
Time deposits  1,075,886   1,159,463 
Total deposits  4,165,362   4,196,163 
        
Short-term borrowings  216,508   209,406 
Accrued expenses and other liabilities  33,477   30,551 
        
Total liabilities $4,415,347   4,436,120 
        
SHAREHOLDERS’ EQUITY:       
Capital stock par value $1; 150,000,000 shares authorized; 99,561,882 and 99,214,382 shares issued at September 30, 2017 and December 31, 2016, respectively  99,562   99,214 
Surplus  172,712   171,425 
Undivided profits  218,401   201,517 
Accumulated other comprehensive loss, net of tax  (3,060)  (6,251)
Treasury stock at cost - 3,454,286 and 3,434,205 shares at        
September 30, 2017 and December 31, 2016, respectively  (32,687)  (33,219)
        
Total shareholders’ equity  454,928   432,686 
         
Total liabilities and shareholders’ equity $4,870,275   4,868,806 


See accompanying notes to unaudited consolidated interim financial statements.

5
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, 2023
 $20,058  $257,078  $393,831  $(27,194) $(43,786) $599,987 
Net income  -   -   17,746   -   -   17,746 
Other comprehensive income, net of tax  -   -   -   3,819   -   3,819 
Cash dividend declared, $0.36 per share
  -   -   (6,849)  -   -   (6,849)
                         
Ending balance, March 31, 2023
 $20,058  $257,078  $404,728  $(23,375) $(43,786) $614,703 
                         
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 
  
Capital
Stock
  Surplus  
Undivided
Profits
  
Accumulated
Other
Comprehensive
(Loss) Income
  
Treasury
Stock
  Total 
                   
Beginning balance, January 1, 2016 $98,973   171,443   184,009   (4,781)  (36,334)  413,310 
Net income  -   -   31,803   -   -   31,803 
Other comprehensive income, net of tax  -   -   -   7,109   -   7,109 
Cash dividend declared, $.1969 per share  -   -   (18,799)  -   -   (18,799)
Stock options exercised (147,630 shares)  148   612   -   -   -   760 
Purchase of treasury stock (111,906 shares)  -   -   -   -   (701)  (701)
Sale of treasury stock (316,337 shares)  -   (1,130)  -   -   3,088   1,958 
Stock based compensation expense  -   168   -   -   -   168 
                         
Ending balance, September 30, 2016 $99,121   171,093   197,013   2,328   (33,947)  435,608 
                         
Beginning balance, January 1, 2017 $99,214   171,425   201,517   (6,251)  (33,219)  432,686 
Net income  -   -   35,783   -   -   35,783 
Other comprehensive income, net of tax  -   -   -   3,191   -   3,191 
Cash dividend declared, $.1969 per share  -   -   (18,899)  -   -   (18,899)
Stock options exercised (347,500 shares)  348   1,510   -   -   -   1,858 
Purchase of treasury stock (251,646 shares)  -   -   -   -   (1,683)  (1,683)
Sale of treasury stock (231,750 shares)  -   (337)  -   -   2,215   1,878 
Stock based compensation expense  -   114   -   -   -   114 
                         
Ending balance, September 30, 2017 $99,562   172,712   218,401   (3,060)  (32,687)  454,928 


See accompanying notes to unaudited consolidated interim financial statements.

6
9
Index
TRUSTCO BANK CORP NY
Consolidated Statements of Cash Flows (Unaudited)
(dollars in thousands)

  Nine months ended September 30, 
  2017  2016 
       
Cash flows from operating activities:      
Net income $35,783   31,803 
        
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation and amortization  2,857   3,071 
Net gain on sale of other real estate owned  (897)  (281)
Writedown of other real estate owned  823   911 
Provision for loan losses  1,700   2,350 
Deferred tax expense  1,122   3,899 
Net amortization of securities  2,244   3,702 
Stock based compensation expense  114   168 
Net loss on sale/retirement of bank premises and equipment  43   (480)
Net gain on sales of securities  -   (668)
Decrease in taxes receivable  2,748   2,320 
Decrease in interest receivable  257   (610)
Decrease in interest payable  (56)  (5)
Increase in other assets  (2,214)  (4,844)
Increase (decrease) in accrued expenses and other liabilities  2,957   (297)
Total adjustments  11,698   9,236 
Net cash provided by operating activities  47,481   41,039 
         
Cash flows from investing activities:        
         
Proceeds from sales and calls of securities available for sale  109,123   205,312 
Proceeds from calls and maturities of held to maturity securities  16,222   8,435 
Purchases of securities available for sale  (65,977)  (250,554)
Proceeds from maturities of securities available for sale  -   550 
Purchases of Federal Reserve Bank and Federal Home Loan Bank stock  (144)  (99)
Proceeds from redemption of Federal Reserve Bank and Federal Home Loan Bank stock  944   - 
Net increase in loans  (152,334)  (101,292)
Proceeds from dispositions of other real estate owned  4,593   4,860 
Proceeds from dispositions of bank premises and equipment  -   674 
Purchases of bank premises and equipment  (2,462)  (1,732)
Net cash (used in) provided by investing activities  (90,035)  (133,846)
         
Cash flows from financing activities:        
         
Net change in deposits  (30,801)  67,860 
Net change in short-term borrowings  7,102   (12,022)
Proceeds from exercise of stock options  1,858   760 
Proceeds from sale of treasury stock  1,878   1,958 
Purchases of treasury stock  (1,683)  (701)
Dividends paid  (18,877)  (18,776)
Net cash provided by financing activities  (40,523)  39,079 
Net decrease in cash and cash equivalents  (83,077)  (53,728)
Cash and cash equivalents at beginning of period  707,274   718,156 
Cash and cash equivalents at end of period $624,197   664,428 
         
Supplemental Disclosure of Cash Flow Information:        
Cash paid during the year for:        
Interest paid $10,884   11,594 
Income taxes paid  18,508   16,944 
Other non cash items:        
Transfer of loans to other real estate owned  3,130   3,803 
Increase in dividends payable  22   23 
Change in unrealized gain on securities available for sale-gross of deferred taxes  5,460   11,807 
Change in deferred tax effect on unrealized gain on securities available for sale  (2,185)  (4,723)
Amortization of net actuarial (gain) loss and prior service cost on pension and postretirement plans  (140)  42 
Change in deferred tax effect of amortization of net actuarial (gain) loss and prior service cost on pension and postretirement plans  56   (17)



 Three months ended March 31, 
  2024  2023 
       
Cash flows from operating activities:      
Net income $12,126  $17,746 
         
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation  1,085   1,008 
Amortization of right-of-use asset  1,654   1,634 
Net gain on sale of other real estate owned  -   (148)
   Provision for credit losses  600   300 
Deferred tax expense
  1,447   1,816 
Net amortization of securities  346   460 
   Stock based compensation expense
  154   - 
Decrease in taxes receivable  3,844   5,456 
Increase in interest receivable  (777)  (198)
Increase in interest payable
  288   842 
Increase in other assets  (4,224)  (3,583)
Decrease in operating lease liabilities  (1,792)  (1,722)
Decrease in accrued expenses and other liabilities  (4,855)  (4,831)
Total adjustments  (2,230)  1,034 
Net cash provided by operating activities  9,896   18,780 
         
Cash flows from investing activities:        
Proceeds from sales, paydowns and calls of securities available for sale  8,841   14,659 
Proceeds from paydowns of held to maturity securities  241   311 
Purchases of securities available for sale  (20,000)  (5,000)
Proceeds from maturities of securities available for sale  35,000   - 
Net increase in loans  (4,793)  (66,328)
Proceeds from dispositions of other real estate owned  68   340 
Purchases of bank premises and equipment  (501)  (757)
Net cash provided by (used in) investing activities  18,856   (56,775)
         
Cash flows from financing activities:        
Net increase in deposits  4,392   19,648 
Net change in short-term borrowings  5,384   11,593 
Dividends paid  (6,849)  (6,861)
Net cash provided by financing activities
  2,927   24,380 
Net increase (decrease) in cash and cash equivalents  31,679   (13,615)
Cash and cash equivalents at beginning of period  578,004   650,599 
Cash and cash equivalents at end of period $609,683  $636,984 
         
Supplemental Disclosure of Cash Flow Information:        
Cash paid during the year for:        
Interest paid $22,887  $6,125 
Income taxes paid  494   471 
Other non cash items:        
Transfer of loans to other real estate owned
  2,208   - 
Increase (decrease) in dividends payable  -   (12)
Change in unrealized (loss) gain on securities available for sale-gross of deferred taxes  (1,872)  5,251 
Change in deferred tax effect on unrealized loss (gain) on securities available for sale  494   (1,350)
Amortization of net actuarial gain and prior service cost on pension and postretirement plans  (200)  (111)
Change in deferred tax effect of amortization of net actuarial gain postretirement benefit plans  52   29 

See accompanying notes to unaudited consolidated interim financial statements.

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10
Index
TRUSTCO BANK CORP NY
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 and nine months ended September 30, 2017March 31, 2024 is not necessarily indicative of the results that may be expected for the year ending December 31, 2017,2024, 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, 2024, the results of operations and cash flows for fair presentation.the three months ended March 31, 2024 and 2023. The accompanying unaudited Consolidated Interim Financial Statements should be read in conjunction with the Company’s year-endyear‑end Consolidated Financial Statements, including notes thereto, which are included in the Company’s Annual Report on Form 10-K10‑K for the year ended December 31, 2016.2023. The accompanying consolidated financial statementsunaudited Consolidated Interim Financial Statements have been prepared in accordance with the instructions to Form 10-Qapplicable 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, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.


Effective January 1, 2017,

The accounting policies of the Company, adopted FASB issued ASU No. 2016-09, “Improvement to Employee Share-Based Payment Accounting” which amended existing guidance to simplify aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The adoption of these amendments did not have a material impact onapplied 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, 2023 filed with the SEC on March 11, 2024.




Risks and Uncertainties:Industry events have led to a greater focus by financial institutions, investors and regulators on liquidity positions of and funding sources for financial institutions, the composition of their deposits, including the amount of uninsured deposits, the amount of accumulated other comprehensive loss, capital levels and interest rate risk management. Present economic conditions have caused disruption to the banking system and any additional implications are uncertain. The Company believes that it has sufficient liquid assets and borrowing sources should there be a liquidity need.

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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 and nine months ended September 30, 2017March 31, 2024 and 20162023 is as follows:


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

 
March 31,
 
  2024  2023 
Net income $12,126  $
17,746 
Weighted average common shares
  19,024   19,024 
Stock Options and Restricted Stock Units  8   3 
Weighted average common shares including potential dilutive shares
  19,032   19,027 
         
Basic EPS
 $0.64  $
0.93 
         
Diluted EPS
 $0.64  $
0.93 
(in thousands, except per share data) 
For the three months ended
September 30:
  
For the nine months ended
September 30:
 
  2017  2016  2017  2016 
Net income $12,596   10,930  $35,783   31,803 
Weighted average common shares  96,102   95,603   95,997   95,486 
Stock Options  103   119   94   86 
Weighted average common shares including potential dilutive shares  96,205   95,722   96,091   95,572 
                 
Basic EPS $0.131   0.114  $0.373   0.333 
                 
Diluted EPS $0.131   0.114  $0.372   0.333 
8

For the three and nine months, ended September 30, 2017, theMarch 31, 2024 and 2023 there were approximately 48 thousand and 2 thousand weighted average number of antidilutiveanti-dilutive stock options excluded from diluted earnings per share was approximately 995 thousand and 1.4 million.  For the three and nine months ended September 30, 2016 the weighted average number of antidilutive stock options excluded from diluted earnings per share was approximately 1.6 million.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 and nine months ended September 30, 2017March 31,2024 and 20162023 for its pension and other postretirement benefit plans:


Three months ended March 31,
 
Pension Benefits Other Postretirement Benefits 
(dollars in thousands)2024 2023 2024 2023 
         
Service cost $-  $-  $5  $2 
Interest cost  289   302   72   66 
Expected return on plan assets  (762)  (680)  (331)  (289)
Amortization of net gain  (19)  -   (184)  (114)
Amortization of prior service cost
  -   -   3   3 
Net periodic benefit $(492) $(378) $(435) $(332)
  For the three months ended September 30, 
  Pension Benefits  Other Postretirement Benefits 
(dollars in thousands) 2017  2016  2017  2016 
             
Service cost $11   15   26   32 
Interest cost  326   343   54   61 
Expected return on plan assets  (686)  (669)  (190)  (180)
Amortization of net loss (gain)  17   46   (89)  (54)
Amortization of prior service cost  -   -   23   22 
Net periodic benefit $(332)  (265)  (176)  (119)
  For the nine months ended September 30, 
  Pension Benefits  Other Postretirement Benefits 
(dollars in thousands)  2017   2016   2017   2016 
                 
Service cost $33   46   77   96 
Interest cost  977   1,029   164   184 
Expected return on plan assets  (2,058)  (1,994)  (571)  (540)
Amortization of net loss (gain)  50   138   (258)  (163)
Amortization of prior service cost  -   -   68   67 
Net periodic benefit $(998)  (781)  (520)  (356)

The Company does not expect to make contributionscontribute to its pension and postretirement benefit plans in 2017.2024. As of September 30, 2017,March 31, 2024, no contributions have been made,made; however, this decision is reviewed each quarter and is subject to change based upon market conditions.


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Index
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.

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Index
(4) Investment Securities


(a) Securities available for sale

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


 
March 31, 2024
 
     Gross  Gross    
  Amortized  Unrealized  Unrealized  Fair 
(dollars in thousands) Cost  Gains  Losses  Value 
             
U.S. government sponsored enterprises $131,755  $
4  $
2,905  $
128,854 
State and political subdivisions  26   -   -   26 
Mortgage backed securities and collateralized mortgage obligations - residential  254,806   158   27,886   227,078 
Corporate bonds  55,078   -   1,737   53,341 
Small Business Administration - guaranteed participation securities  17,984   -   1,724   16,260 
Other  688   7   13   682 
Total Securities Available for Sale $460,337  $
169  $
34,265  $
426,241 
(dollars in thousands) September 30, 2017 
  
Amortized
Cost
  
Gross
Unrealized
Gains
  
Gross
Unrealized
Losses
  
Fair
Value
 
             
U.S. government sponsored enterprises $125,024   93   1,459   123,658 
State and political subdivisions  521   12   -   533 
Corporate bonds  40,442   -   61   40,381 
Mortgage backed securities and collateralized mortgage obligations - residential  338,519   164   3,152   335,531 
Small Business Administration- guaranteed participation securities  71,169   -   1,351   69,818 
Mortgage backed securities and collateralized mortgage obligations - commercial  9,875   -   51   9,824 
Other  650   -   -   650 
Total debt securities  586,200   269   6,074   580,395 
Equity securities  35   -   -   35 
Total securities available for sale $586,235   269   6,074   580,430 

 
December 31, 2023
 
     Gross  Gross    
  Amortized  Unrealized  Unrealized  Fair 
(dollars in thousands) Cost  Gains  Losses  Value 
             
U.S. government sponsored enterprises $121,728  $
5  $
3,065  $
118,668 
State and political subdivisions  26   -   -   26 
Mortgage backed securities and collateralized mortgage obligations - residential  263,182   270   25,775   237,677 
Corporate bonds  80,150   -   2,098   78,052 
Small Business Administration - guaranteed participation securities  18,740   -   1,554   17,186 
Other  687   11   18   680 
Total Securities Available for Sale $484,513  $
286  $
32,510  $
452,289 

(dollars in thousands) December 31, 2016 
  
Amortized
Cost
  
Gross
Unrealized
Gains
  
Gross
Unrealized
Losses
  
Fair
Value
 
            
U.S. government sponsored enterprises $119,887   -   2,621   117,266 
State and political subdivisions  873   13   -   886 
Mortgage backed securities and collateralized mortgage obligations - residential  378,068   123   5,883   372,308 
Corporate bonds  40,956   -   251   40,705 
Small Business Administration- guaranteed participation securities  81,026   -   2,527   78,499 
Mortgage backed securities and collateralized mortgage obligations - commercial  10,130   -   119   10,011 
Other  650   -   -   650 
Total debt securities  631,590   136   11,401   620,325 
Equity securities  35   -   -   35 
Total securities available for sale $631,625   136   11,401   620,360 
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Index

The following table distributescategorizes the debt securities included in the available for sale portfolio as of September 30, 2017,March 31, 2024, 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 $70,613  $
69,407 
Due after one year through five years  116,934   113,496 
Mortgage backed securities and collateralized mortgage obligations - residential  254,806   227,078 
Small Business Administration - guaranteed participation securities  17,984   16,260 
  $460,337  $
426,241 

(dollars in thousands) 
Amortized
Cost
  
Fair
Value
 
Due in one year or less $50,331   50,283 
Due in one year through five years  106,105   104,749 
Due after five years through ten years  10,201   10,190 
Due after ten years  -   - 
Mortgage backed securities and collateralized mortgage obligations - residential  338,519   335,531 
Small Business Administration- guaranteed participation securities  71,169   69,818 
Mortgage backed securities and collateralized mortgage obligations - commercial  9,875   9,824 
  $586,200   580,395 

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Index
Gross unrealized losses on 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, 2024
 
  Less than  12 months   
  12 months  or more  Total 
     Gross     Gross     Gross 
  Fair  Unrealized  Fair  Unrealized  Fair  Unreal. 
(dollars in thousands) Value  Loss  Value  Loss  Value  Loss 
                   
U.S. government sponsored enterprises $14,993  
7  
106,358  
2,898  
121,351  
2,905 
Mortgage backed securities and collateralized mortgage obligations - residential  2,907   10   217,331   27,876   220,238   27,886 
Corporate bonds  -   -   53,341   1,737   53,341   1,737 
Small Business Administration - guaranteed participation securities
  -   -   16,260   1,724   16,260   1,724 
Other
  -   -   637   13   637   13 
                         
Total $17,900  
17  
393,927   
34,248  
411,827  
34,265 

 
December 31, 2023
 
  Less than  12 months  
 
  12 months  or more  Total 

 
  Gross  
  Gross  
  Gross 
  Fair  Unreal.  Fair  Unreal.  Fair  Unreal. 
(dollars in thousands) Value  Loss  Value  Loss  Value  Loss 
                   
U.S. government sponsored enterprises $-  
-   
116,163  
3,065  
116,163   
3,065 
Mortgage backed securities and collateralized mortgage obligations - residential  -   -   227,891   25,775   227,891   25,775 
Corporate bonds  -   -   78,052   2,098   78,052   2,098 
Small Business Administration - guaranteed participation securities  -   -   17,186   1,554   17,186   1,554 
Other
  -    -
   631
    18
   631
   18
 
                         
Total $-  
-  
439,923  
32,510   
439,923   
32,510 

(dollars in thousands) September 30, 2017 
  
Less than
12 months
  
12 months
or more
  
Total
 
  
Fair
Value
  
Gross
Unreal.
Loss
  
Fair
Value
  
Gross
Unreal.
Loss
  
Fair
Value
  
Gross
Unreal.
Loss
 
U.S. government sponsored enterprises $24,887   113   88,544   1,346   113,431   1,459 
Corporate bonds  -   -   40,381   61   40,381   61 
Mortgage backed securities and collateralized mortgage obligations - residential  228,925   1,972   82,423   1,180   311,348   3,152 
Small Business Administration- guaranteed participation securities  20,070   270   49,748   1,081   69,818   1,351 
Mortgage backed securities and collateralized mortgage obligations - commercial  -   -   9,824   51   9,824   51 
                         
Total $273,882   2,355   270,920   3,719   544,802   6,074 
There were no allowance for credit losses recorded for securities available for sale during the three months ended March 31,2024 and 2023.
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Index
(dollars in thousands) December 31, 2016 
  
Less than
12 months
  
12 months
or more
  
Total
 
  
Fair
Value
  
Gross
Unreal.
Loss
  
Fair
Value
  
Gross
Unreal.
Loss
  
Fair
Value
  
Gross
Unreal.
Loss
 
                  
U.S. government sponsored enterprises $102,266   2,621   -   -   102,266   2,621 
Corporate bonds  40,705   251   -   -   40,705   251 
Mortgage backed securities and collateralized mortgage obligations - residential  359,622   5,766   4,713   117   364,335   5,883 
Small Business Administration- guaranteed participation securities  64,560   1,960   13,940   567   78,500   2,527 
Mortgage backed securities and collateralized mortgage obligations - commercial  10,011   119   -   -   10,011   119 
                         
Total $577,164   10,717   18,653   684   595,817   11,401 


The proceeds from sales and calls and maturities of securities available for sale, gross realized gains and gross realized losses from sales and calls during the three and nine months ended September 30, 2017March 31, 2024 and 20162023 are as follows:


 Three months ended March 31, 
(dollars in thousands) 2024  2023 
       
Proceeds from sales $-  
- 
Proceeds from calls/paydowns  8,841   14,659 
Proceeds from maturities  35,000   - 
Gross realized gains  -   - 
Gross realized losses  -   - 
(dollars in thousands) Three months ended September 30, 
  2017  2016 
       
Proceeds from sales $-   - 
Proceeds from calls  35,554   70,762 
Gross realized gains  -   - 
Gross realized losses  -   - 

(dollars in thousands) Nine months ended September 30, 
  2017  2016 
       
Proceeds from sales $-   44,829 
Proceeds from calls  109,123   160,483 
Gross realized gains  -   668 
Gross realized losses  -   - 

There were no sales of securities available for sale during the three and nine months ended September 30, 2017. For the three and nine months ended September 30, 2016, income tax expense recognized on net gains on sales of securities available for sale was approximately $267 thousand.

12
14
Index
(b) Held to maturity securities


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


 
March 31, 2024
 
     Gross  Gross    
  Amortized  Unrecognized
  Unrecognized  Fair 
(dollars in thousands) Cost  Gains  Losses  Value 
             
Mortgage backed securities and collateralized mortgage obligations - residential $6,206  
49  
147  
6,108 
Total held to maturity $6,206  
49  
147  
6,108 

 
December 31, 2023
 
     Gross  Gross  
 
  Amortized  Unrecognized  Unrecognized  Fair 
(dollars in thousands) Cost  Gains  Losses  Value 
             
Mortgage backed securities and collateralized mortgage obligations - residential $6,458  
74  
136  
6,396 
Total held to maturity $6,458  
74  
136  
6,396 

(dollars in thousands) September 30, 2017 
  
Amortized
Cost
  
Gross
Unrecognized
Gains
  
Gross
Unrecognized
Losses
  
Fair
Value
 
             
Mortgage backed securities and collateralized mortgage obligations - residential $29,268   1,463   -   30,731 
Total held to maturity $29,268   1,463   -   30,731 
(dollars in thousands) December 31, 2016 
  
Amortized
Cost
  
Gross
Unrecognized
Gains
  
Gross
Unrecognized
Losses
  
Fair
Value
 
                 
Mortgage backed securities and collateralized mortgage obligations - residential $35,500   1,736   -   37,236 
Corporate bonds  9,990   300   -   10,290 
Total held to maturity $45,490   2,036   -   47,526 

The following table distributescategorizes the debt securities included in the held to maturity portfolio as of September 30, 2017,March 31, 2024, 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
Cost
  
Fair
Value
 
Mortgage backed securities and collateralized mortgage obligations - residential  29,268   30,731 
  $29,268   30,731 

(dollars in thousands) Amortized  Fair 

 Cost  Value 
Mortgage backed securities and collateralized mortgage obligations - residential $6,206   6,108 
  $6,206   6,108 


There were noAll held to maturity securities are held at cost on the financial statements.

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 of September 30, 2017 or December 31, 2016.follows:


  March 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 $136   3   2,523   144   2,659   147 
                         
Total $136   3   2,523   144   2,659   147 

15
Index
  December 31, 2023 
  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 
$
283
   
3
   
2,703
   
133
   
2,986
   
136
 
                         
Total 
$
283
   
3
   
2,703
   
133
   
2,986
   
136
 

There were no sales or transfers of held to maturity securities during the three and nine months ended September 30, 2017March 31, 2024 and 2016.2023.


There were no allowance for credit losses recorded for held to maturity securities during the three months ended March 31, 2024 and 2023. There were no securities on non-accrual status and all securities were performing in accordance with contractual terms.

(c) Other-Than-Temporary Impairment


Debt Securities
Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation.  The investment securities portfolio is evaluated for OTTI by segregating the portfolio by type and applying the appropriate OTTI model. Investment securities classified as available for sale or held to maturity are evaluated for OTTI under FASB ASC Topic 320,Investments – Debt and Equity Securities (“ASC 320”).
13
Index

In determining OTTI under the ASC 320 model,for debt securities, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Company has the intent to sell the debt security or it is more likely than not that it will be required to sell the debt security before its anticipated recovery.  The assessment of whether any other-than-temporaryother‑than‑temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.


When OTTI occurs, the amount of the OTTI recognized in earnings depends on whether management intends to sell the security or it is more likely than not it will be required to sell the security before recovery of its amortized cost basis.  If management intends to sell or it is more likely than not it will be required to sell the security before recovery of its amortized cost basis, the OTTI shall be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date.  If management does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis, the OTTI on debt securities shall be separated into the amount representing the credit loss and the amount related to all other factors.  The amount of the total OTTI related to the credit loss is determined based on the present value of cash flows expected to be collected and is recognized in earnings.earnings through the provision for credit losses.  The amount of the total OTTI related to other factors is recognized in other comprehensive income, net of applicable taxes.

The previous amortized cost basis lessCompany does not intend to sell nor does it anticipate that it will be required to sell any of its securities in an unrealized loss position as of March 31, 2024. The Company’s ability and intent to hold these securities until recovery is supported by the OTTI recognizedCompany’s strong capital and liquidity positions as well as its historically low turnover in earnings becomes the new amortized cost basis of the investment.portfolio.


16
Index
As of September 30, 2017,March 31, 2024, the Company’s security portfoliossecurities portfolio included certain securities, which were in an unrealized loss position.  The declinesposition, 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 areis 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 Company does not consider these securities to be other-than-temporarily impaired at September 30, 2017.as of March 31, 2024.

Mortgage backed securities and collateralized mortgage obligations – residential:  As of March 31, 2024, 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 Company does not consider these securities to be other‑than‑temporarily impaired as of March 31, 2024.

14Corporate Bonds & Other:As of March 31, 2024, corporate and other bonds held by the Company were 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 Company does not consider these securities to be other-than-temporarily impaired as of March 31, 2024.

Small Business Administration (SBA) - guaranteed participation securities:As of March 31, 2024, all of the SBA securities held by the Company were issued and guaranteed by 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 Company does not consider these securities to be other-than-temporarily impaired as of March 31, 2024.

17
Index
(5) LoansLoan Portfolio and Allowance for LoanCredit Losses


The following tabletables presents the recorded investment in loans by loan class:portfolio segment:


 September 30, 2017  March 31, 2024 
(dollars in thousands) 
New York and
other states*
  Florida  Total   New York and       

 other states*  Florida  Total 
Commercial:                  
Commercial real estate $152,228   12,980   165,208  $214,158  $
40,757  $
254,915 
Other  21,754   319   22,073   23,536   641   24,177 
Real estate mortgage - 1 to 4 family:                        
First mortgages  2,251,152   742,697   2,993,849   2,744,294   1,552,257   4,296,551 
Home equity loans  64,556   12,565   77,121   44,207   13,611   57,818 
Home equity lines of credit  267,143   44,610   311,753   213,754   142,125   355,879 
Installment  6,796   1,482   8,278   11,581   4,585   16,166 
Total loans, net $2,763,629   814,653   3,578,282  $3,251,530  $
1,753,976   5,005,506 
Less: Allowance for loan losses          44,082 
Less: Allowance for credit losses
          49,220 
Net loans         $3,534,200          $4,956,286 
            

* Includes New York, New Jersey, Vermont and Massachussetts.
  December 31, 2016 
(dollars in thousands)
 
 
New York and
other states*
  Florida  
Total
 
Commercial:       
 
Commercial real estate $151,366   
12,243
   
163,609
 
Other  27,539   46   27,585 
Real estate mortgage - 1 to 4 family:            
First mortgages  2,158,904   665,183   2,824,087 
Home equity loans  60,892   10,754   71,646 
Home equity lines of credit  286,586   48,255   334,841 
Installment  7,048   1,770   8,818 
Total loans, net $2,692,335   738,251   3,430,586 
Less: Allowance for loan losses          43,890 
Net loans         $3,386,696 

  December 31, 2023 
(dollars in thousands)
 New York and       
  other states*  Florida  Total 
Commercial:
         
Commercial real estate 
$
212,754
  
$
39,501
  
$
252,255
 
Other  
20,863
   
397
   
21,260
 
Real estate mortgage - 1 to 4 family:
            
First mortgages  
2,756,914
   
1,550,191
   
4,307,105
 
Home equity loans  
44,152
   
13,806
   
57,958
 
Home equity lines of credit  
212,298
   
135,117
   
347,415
 
Installment
  
12,057
   
4,829
   
16,886
 
Total loans, net
 
$
3,259,038
  
$
1,743,841
   
5,002,879
 
Less: Allowance for credit losses
          
48,578
 
Net loans
         
$
4,954,301
 

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

At September 30, 2017
Included in commercial loans above are Paycheck Protection Program (“PPP”) loans totaling $556 thousand and $620 thousand as of March 31, 2024 and December 31, 2016,2023, respectively.

As of March 31, 2024, the Company had approximately $27.6 million and $24.8$25.8 million of real estate construction loans, respectively.loans. Of the $27.6$25.8 million in real estate construction loans at September 30, 2017,as of March 31, 2024, approximately $17.2$7.6 million are secured by first mortgages to residential borrowers while approximately $10.4$18.2 million were to commercial borrowers for residential construction projects. The majority of construction loans are in the Company’s New York market.

18
Index
At December 31, 2023, the Company had approximately $29.1 million of real estate construction loans.  Of the $24.8$29.1 million in real estate construction loans at December 31, 2016,2023, approximately $16.3$8.0 million are secured by first mortgages to residential borrowers while approximately $8.5$21.1 million were to commercial borrowers for residential construction projects. The vast majority of construction loans areheld in 2023 were in the Company’s New York market.

TrustCo lends

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. Consistent with previous periods, the Company has determined the stagflation forecast scenario to be appropriate for the March 31, 2024 ACLL calculation.  The Company selected the stagflation economic forecast for credit losses as management expects that markets will experience a slight decline in economic conditions and a slight increase in the geographic territory of its branch locations in New York, Florida, Massachusetts, New Jersey and Vermont. Althoughunemployment rate over the loan portfolio is diversified, a portion of its debtors’ ability to repay depends significantly on the economic conditions prevailing in the respective geographic territory.next two years.

15
The following tables present the recorded investment in non-accrual loans by loan class:
  September 30, 2017 
(dollars in thousands) 
New York and
other states
  Florida  Total 
Loans in non-accrual status:         
Commercial:         
Commercial real estate $1,596   -   1,596 
Other  100   -   100 
Real estate mortgage - 1 to 4 family:            
First mortgages  17,048   1,764   18,812 
Home equity loans  35   -   35 
Home equity lines of credit  3,843   131   3,974 
Installment  30   -   30 
Total non-accrual loans  22,652   1,895   24,547 
Restructured real estate mortgages - 1 to 4 family  40   -   40 
Total nonperforming loans $22,692   1,895   24,587 
  December 31, 2016 
 (dollars in thousands) 
New York and
other states
  Florida  Total 
Loans in non-accrual status:            
Commercial:            
Commercial real estate $1,843   -   1,843 
Other  -   -   - 
Real estate mortgage - 1 to 4 family:            
First mortgages  17,727   1,659   19,386 
Home equity loans  95   -   95 
Home equity lines of credit  3,376   270   3,646 
Installment  48   -   48 
Total non-accrual loans  23,089   1,929   25,018 
Restructured real estate mortgages - 1 to 4 family  42   -   42 
Total nonperforming loans $23,131   1,929   25,060 


The Company transfersrecorded a provision for credit losses of $600 thousand for the three months ended March 31, 2024, which is the result a provision for credit losses on loans to other real estate owned, at fair value less cost to sell, inof $600 thousand, and there was no provision for credit losses on unfunded commitments.



The Company recorded a provision for credit losses of $300 thousand for the period the Company obtains physical possessionthree months ended March 31, 2023, which includes a provision for credit losses on loans of the property (through legal title or through$600 thousand, and a deed in lieu). Asbenefit for credit losses on unfunded commitments of September 30, 2017 and December 31, 2016, other estate owned included $2.5 million and $3.5 million of residential foreclosed properties, respectively. Non-accrual residential mortgage loans that are in the process of foreclosure had a recorded investment of $13.3 million and $12.5 million as of September 30, 2017 and December 31, 2016, respectively.$300 thousand.
The following tables present the aging of the recorded investment in past due loans by loan class and by region as of September 30, 2017 and December 31, 2016:

New York and other states:                  
 September 30, 2017 
(dollars in thousands) 
30-59
Days
Past Due
  
60-89
Days
Past Due
  
90+
Days
Past Due
  
Total
30+ days
Past Due
  Current  
Total
Loans
 
                      
Commercial:                     
Commercial real estate $-   -   1,481   1,481   150,747   152,228 
Other  -   -   100   100   21,654   21,754 
Real estate mortgage - 1 to 4 family:                        
First mortgages  4,972   1,973   9,560   16,505   2,234,647   2,251,152 
Home equity loans  70   -   3   73   64,483   64,556 
Home equity lines of credit  337   167   2,235   2,739   264,404   267,143 
Installment  39   29   10   78   6,718   6,796 
                         
Total $5,418   2,169   13,389   20,976   2,742,653   2,763,629 
Florida:                       
                        
(dollars in thousands)  
30-59
Days
Past Due
  
60-89
Days
Past Due
  
90+
Days
Past Due
  
Total
30+ days
Past Due
  Current  
 
Total
Loans
 
                         
Commercial:                        
Commercial real estate $-   -   -   -   12,980   12,980 
Other  -   -   -   -   319   319 
Real estate mortgage - 1 to 4 family:                        
First mortgages  845   291   1,323   2,459   740,238   742,697 
Home equity loans  -   -   -   -   12,565   12,565 
Home equity lines of credit  -   -   -   -   44,610   44,610 
Installment  -   -   -   -   1,482   1,482 
                         
Total $845   291   1,323   2,459   812,194   814,653 
Total:                       
                       
(dollars in thousands)  
30-59
Days
Past Due
  
60-89
Days
Past Due
  
90+
Days
Past Due
  
Total
30+ days
Past Due
  Current  
Total
Loans
 
                         
Commercial:                        
Commercial real estate $-   -   1,481   1,481   163,727   165,208 
Other  -   -   100   100   21,973   22,073 
Real estate mortgage - 1 to 4 family:                        
First mortgages  5,817   2,264   10,883   18,964   2,974,885   2,993,849 
Home equity loans  70   -   3   73   77,048   77,121 
Home equity lines of credit  337   167   2,235   2,739   309,014   311,753 
Installment  39   29   10   78   8,200   8,278 
                         
Total $6,263   2,460   14,712   23,435   3,554,847   3,578,282 
17
New York and other states:                  
  December 31, 2016 
(dollars in thousands) 
30-59
Days
Past Due
  
60-89
Days
Past Due
  
90+
Days
Past Due
  
Total
30+ days
Past Due
  Current  
Total
Loans
 
                      
Commercial:                     
Commercial real estate $50   43   1,706   1,799   149,567   151,366 
Other  -   -   -   -   27,539   27,539 
Real estate mortgage - 1 to 4 family:                        
First mortgages  6,379   2,924   9,643   18,946   2,139,958   2,158,904 
Home equity loans  50   3   74   127   60,765   60,892 
Home equity lines of credit  685   111   1,839   2,635   283,951   286,586 
Installment  34   32   15   81   6,967   7,048 
                         
Total $7,198   3,113   13,277   23,588   2,668,747   2,692,335 
Florida:                        
                         
                   
(dollars in thousands)  
30-59
Days
Past Due
  
60-89
Days
Past Due
  
90+
Days
Past Due
  
Total
30+ days
Past Due
  Current  
Total
Loans
 
                         
Commercial:                        
Commercial real estate $-   -   -   -   12,243   12,243 
Other  -   -   -   -   46   46 
Real estate mortgage - 1 to 4 family:                        
First mortgages  1,942   69   1,255   3,266   661,917   665,183 
Home equity loans  19   -   -   19   10,735   10,754 
Home equity lines of credit  -   -   156   156   48,099   48,255 
Installment  30   6   -   36   1,734   1,770 
                         
Total $1,991   75   1,411   3,477   734,774   738,251 
Total:                        
    
                   
(dollars in thousands)  
30-59
Days
Past Due
  
60-89
Days
Past Due
  
90+
Days
Past Due
  
Total
30+ days
Past Due
  Current  
Total
Loans
 
                         
Commercial:                        
Commercial real estate $50   43   1,706   1,799   161,810   163,609 
Other  -   -   -   -   27,585   27,585 
Real estate mortgage - 1 to 4 family:                        
First mortgages  8,321   2,993   10,898   22,212   2,801,875   2,824,087 
Home equity loans  69   3   74   146   71,500   71,646 
Home equity lines of credit  685   111   1,995   2,791   332,050   334,841 
Installment  64   38   15   117   8,701   8,818 
                         
Total $9,189   3,188   14,688   27,065   3,403,521   3,430,586 
At September 30, 2017 and December 31, 2016, 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.

Activity in the allowance for loancredit losses on loans by portfolio segment for the three months ended March 31, 2024 and 2023 is summarized as follows:



 For the three months ended March 31, 2024 
(dollars in thousands) For the three months ended September 30, 2017     Real Estate       
    Mortgage-       
 Commercial  
Real Estate
Mortgage-
1 to 4 Family
  Installment  Total  Commercial  1 to 4 Family  Installment  Total 
Balance at beginning of period $4,596   38,871   695   44,162  $2,735  $
45,625  $
218  $
48,578 
Loans charged off:                                
New York and other states*  -   747   65   812   -   117   44   161 
Florida  -   31   4   35   -   -   -   - 
Total loan chargeoffs  -   778   69   847   -   117   44   161 
                                
Recoveries of loans previously charged off:                                
New York and other states*  -   137   8   145   -   195   8   203 
Florida  -   72   -   72   -   -   -   - 
Total recoveries  -   209   8   217   -   195   8   203 
Net loans charged off  -   569   61   630 
Provision for loan losses  24   434   92   550 
Net loans (recoveries) charged off  -   (78)  36   (42)
Provision for credit losses  7   592   1   600 
Balance at end of period $4,620   38,736   726   44,082  $2,742  $
46,295  $
183  $
49,220 


(dollars in thousands) For the three months ended September 30, 2016 
  Commercial  
Real Estate
Mortgage-
1 to 4 Family
  Installment  Total 
Balance at beginning of period $5,046   38,589   429   44,064 
Loans charged off:                
New York and other states*  356   549   57   962 
Florida  -   2   3   5 
Total loan chargeoffs  356   551   60   967 
                 
Recoveries of loans previously charged off:                
New York and other states*  3   78   20   101 
Florida  -   2   -   2 
Total recoveries  3   80   20   103 
Net loans charged off  353   471   40   864 
Provision (credit) for loan losses  505   (51)  296   750 
Balance at end of period $5,198   38,067   685   43,950 
* Includes New York, New Jersey, Vermont and Massachusetts.

19
Index
 For the three months ended March 31, 2023 
(dollars in thousands) For the nine months ended September 30, 2017     Real Estate       
    Mortgage-       
 Commercial  
Real Estate
Mortgage-
1 to 4 Family
  Installment  Total  Commercial  1 to 4 Family  Installment  Total 
Balance at beginning of period $4,929   38,231   730   43,890  
$
2,596
   
43,271
   165   
46,032
 
Loans charged off:                                
New York and other states*  72   1,699   146   1,917   
-
   
-
   17   
17
 
Florida  -   167   19   186   
-
   
-
   31   
31
 
Total loan chargeoffs  72   1,866   165   2,103   
-
   
-
   48   
48
 
                                
Recoveries of loans previously charged off:                                
New York and other states*  8   494   21   523   
-
   
53
   23   
76
 
Florida  -   72   -   72   
-
   
25
   -   
25
 
Total recoveries  8   566   21   595   
-
   
78
   23   
101
 
Net loans charged off  64   1,300   144   1,508 
Provision for loan losses  (245)  1,805   140   1,700 
Net loan (recoveries) charged off
  
-
   
(78
)
  25   
(53
)
Provision for credit losses
  
112
   
417
  71   
600
Balance at end of period $4,620   38,736   726   44,082  
$
2,708
   
43,766
   211   
46,685
 


(dollars in thousands) For the nine months ended September 30, 2016 
  Commercial  
Real Estate
Mortgage-
1 to 4 Family
  Installment  Total 
Balance at beginning of period $4,491   39,753   518   44,762 
Loans charged off:                
New York and other states*  688   2,528   230   3,446 
Florida  -   103   20   123 
Total loan chargeoffs  688   2,631   250   3,569 
                 
Recoveries of loans previously charged off:                
New York and other states*  44   313   46   403 
Florida  -   4   -   4 
Total recoveries  44   317   46   407 
Net loans charged off  644   2,314   204   3,162 
Provision for loan losses  1,351   628   371   2,350 
Balance at end of period $5,198   38,067   685   43,950 
* Includes New York, New Jersey, Vermont and Massachusetts.

The Company has identified non-accrual commercialCompany’s allowance for credit losses on unfunded commitments is recognized as a liability (accrued expenses and commercial real estate loans, as well as all loans restructured under a troubled debt restructuring (“TDR”), as impaired loans. A loan is considered impaired when it is probable that the borrower will be unable to repay the loan accordingother liabilities) with adjustments to the original contractual terms ofreserve recognized in  provision for credit losses in the loan agreement or the loan is restructured as a TDR.

consolidated income statement. The following tables present the balanceCompany’s activity in the allowance for loancredit losses and the recorded investment in loans by portfolio segment and based on impairment method as of September 30, 2017 and December 31, 2016:
  September 30, 2017 
(dollars in thousands) Commercial Loans  
1-to-4 Family
Residential Real Estate
  Installment Loans  Total 
Allowance for loan losses:            
Ending allowance balance attributable to loans:            
Individually evaluated for impairment $-   -   -   - 
Collectively evaluated for impairment  4,620   38,736   726   44,082 
                 
Total ending allowance balance $4,620   38,736   726   44,082 
                 
Loans:                
Individually evaluated for impairment $2,969   21,585   -   24,554 
Collectively evaluated for impairment  184,312   3,361,138   8,278   3,553,728 
                 
Total ending loans balance $187,281   3,382,723   8,278   3,578,282 
 December 31, 2016 
(dollars in thousands) Commercial Loans  
1-to-4 Family
Residential Real Estate
  Installment Loans  Total 
Allowance for loan losses:            
Ending allowance balance attributable to loans:            
Individually evaluated for impairment $-   -   -   - 
Collectively evaluated for impairment  4,929   38,231   730   43,890 
                 
Total ending allowance balance $4,929   38,231   730   43,890 
                 
Loans:                
Individually evaluated for impairment $2,418   21,607   -   24,025 
Collectively evaluated for impairment  188,776   3,208,967   8,818   3,406,561 
                 
Total ending loans balance $191,194   3,230,574   8,818   3,430,586 

A loanunfunded commitments for which the terms have been modified, and for which the borrower is experiencing financial difficulties, is considered a TDR and is classified as impaired. TDR’s at September 30, 2017 and December 31, 2016 are measured at the present value of estimated future cash flows using the loan’s effective rate at inception or the fair value of the underlying collateral if the loan is considered collateral dependent.
The following tables present impaired loans by loan class as of September 30, 2017 and December 31, 2016:
The following table presents impaired loans by loan class:

New York and other states:

  September 30, 2017 
(dollars in thousands) 
Recorded
 Investment
  
Unpaid
Principal
Balance
  
Related
Allowance
  
Average
 Recorded
 Investment
 
             
Commercial:            
Commercial real estate $2,869   3,916   -   2,879 
Other  100   100   -   100 
Real estate mortgage - 1 to 4 family:                
First mortgages  16,043   16,351   -   16,715 
Home equity loans  252   272   -   265 
Home equity lines of credit  2,330   2,524   -   2,128 
                 
Total $21,594   23,163   -   22,087 

Florida:

(dollars in thousands) 
Recorded
 Investment
  
Unpaid
Principal
Balance
  
Related
Allowance
  
Average
 Recorded
Investment
 
             
Commercial:            
Commercial real estate $-   -   -   - 
Other  -   -   -   - 
Real estate mortgage - 1 to 4 family:                
First mortgages  2,335   2,441   -   2,217 
Home equity loans  90   90   -   92 
Home equity lines of credit  535   535   -   568 
                 
Total $2,960   3,066   -   2,877 

Total:
(dollars in thousands) 
Recorded
Investment
  
Unpaid
Principal
Balance
  
Related
Allowance
  
Average
Recorded
Investment
 
             
Commercial:            
Commercial real estate $2,869   3,916   -   2,879 
Other  100   100   -   100 
Real estate mortgage - 1 to 4 family:                
First mortgages  18,378   18,792   -   18,932 
Home equity loans  342   362   -   358 
Home equity lines of credit  2,865   3,059   -   2,696 
                 
Total $24,554   26,229   -   24,964 
New York and other states:

  December 31, 2016 
(dollars in thousands) 
Recorded
Investment
  
Unpaid
Principal
Balance
  
Related
Allowance
  
Average
Recorded
Investment
 
             
Commercial:            
Commercial real estate $2,418   3,470   -   2,214 
Other  -   -   -   - 
Real estate mortgage - 1 to 4 family:                
First mortgages  16,675   17,439   -   15,665 
Home equity loans  269   305   -   251 
Home equity lines of credit  1,999   2,160   -   1,806 
                 
Total $21,361   23,374   -   19,936 

Florida:
(dollars in thousands) 
Recorded
Investment
  
Unpaid
Principal
Balance
  
Related
Allowance
  
Average
Recorded
Investment
 
             
Commercial:            
Commercial real estate $-   -   -   - 
Other  -   -   -   - 
Real estate mortgage - 1 to 4 family:                
First mortgages  2,009   2,100   -   1,800 
Home equity loans  94   94   -   81 
Home equity lines of credit  561   633   -   591 
                 
Total $2,664   2,827   -   2,472 

Total:

(dollars in thousands) 
Recorded
Investment
  
Unpaid
Principal
Balance
  
Related
Allowance
  
Average
Recorded
Investment
 
             
Commercial:            
Commercial real estate $2,418   3,470   -   2,214 
Other  -   -   -   - 
Real estate mortgage - 1 to 4 family:                
First mortgages  18,684   19,539   -   17,465 
Home equity loans  363   399   -   332 
Home equity lines of credit  2,560   2,793   -   2,397 
                 
Total $24,025   26,201   -   22,408 
The Company has not committed to lend additional amounts to customers with outstanding loans that are classified as impaired. Interest income recognized on impaired loans was not material during the three and nine months ended  September 30, 2017March 31, 2024 and 2016.2023 is as follows:


As of September 30, 2017 and December 31, 2016 impaired loans included approximately $11.0 million and $11.5 million of loans in accruing status that were identified as TDR’s in accordance with regulatory guidance related to Chapter 7 bankruptcy loans, respectively.

Management evaluates impairment on impaired loans on a quarterly basis. If, during this evaluation, impairment of the loan is identified, a charge off is taken at that time. As a result, as of September 30, 2017 and December 31, 2016, based upon management’s evaluation and due to the sufficiency of chargeoffs taken, none of the allowance for loan losses has been allocated to a specific impaired loan(s).

The following table presents, by class, loans that were modified as TDR’s:

  Three months ended 9/30/2017  Three months ended 9/30/2016 
New York and other states*:    Pre-Modification  Post-Modification     Pre-Modification  Post-Modification 
(dollars in thousands) 
Number of
Contracts
  
Outstanding
Recorded
Investment
  
Outstanding
Recorded
Investment
  
Number of
Contracts
  
Outstanding
Recorded
Investment
  
Outstanding
Recorded
Investment
 
                   
Commercial:                  
Commercial real estate  -  $-   -   -  $-   - 
Real estate mortgage - 1 to 4 family:                        
First mortgages  7  $941  $941   7  $655  $655 
Home equity loans  -   -   -   1   44   44 
Home equity lines of credit  3   296   296   2   183   183 
                         
Total  10  $1,237  $1,237   10  $882  $882 
Florida:
 
 
(dollars in thousands)
 
Number of
Contracts
  
Pre-Modification
Outstanding
Recorded
Investment
  
Post-Modification
Outstanding
Recorded
Investment
  
Number of
Contracts
  
Pre-Modification
Outstanding
Recorded
Investment
  
Post-Modification
Outstanding
Recorded
Investment
 
                   
Commercial:                  
Commercial real estate  -  $-   -   -  $-   - 
Real estate mortgage - 1 to 4 family:                        
First mortgages  2  $251  $251   -  $-  $- 
Home equity loans  -   -   -   -   -   - 
Home equity lines of credit  -   -   -   -   -   - 
                         
Total  2  $251  $251   -  $-  $- 
  For the three
 
  months ended
 
(In thousands) 
March 31, 2024
 
    
Balance at January 31, 2024 $1,662 
Provision  for credit losses  -
Balance at March 31, 2024 $1,662 
24
Index
  For the three
 
(In thousands)
 months ended
 

 March 31, 2023 
Balance at January 1, 2023 $2,912 
(Credit) provision for credit losses  (300)
Balance at March 31, 2023 $2,612 
  Nine months ended 9/30/2017  Nine months ended 9/30/2016 
New York and other states*:    Pre-Modification  Post-Modification     Pre-Modification  Post-Modification 
  (dollars in thousands) 
Number of
Contracts
  
Outstanding
Recorded
Investment
  
Outstanding
Recorded
Investment
  
Number of
Contracts
  
Outstanding
Recorded
Investment
  
Outstanding
Recorded
Investment
 
                   
Commercial:                  
Commercial real estate  3  $747  $747   -  $-  $- 
Real estate mortgage - 1 to 4 family:                        
First mortgages  25  $3,986   3,986   27  $2,383   2,383 
Home equity loans  1   13   13   1   44   44 
Home equity lines of credit  8   457   457   10   316   316 
                         
Total  37  $5,203  $5,203   38  $2,743  $2,743 
Florida:
 
 
(dollars in thousands)
 
Number of
Contracts
  
Pre-Modification
Outstanding
Recorded
Investment
  
Post-Modification
Outstanding
Recorded
Investment
  
Number of
Contracts
  
Pre-Modification
Outstanding
Recorded
Investment
  
Post-Modification
Outstanding
Recorded
Investment
 
                   
Commercial:                  
Commercial real estate  -  $-   -   -  $-   - 
Real estate mortgage - 1 to 4 family:                        
First mortgages  7  $718  $718   2  $408  $408 
Home equity loans  -   -   -   1   45   45 
Home equity lines of credit  1   70   70   1   6   6 
                         
Total  8  $788  $788   4  $459  $459 
The addition of these TDR’s did not have a significant impact on the allowance for loan losses.

Loan Credit Quality
In situations where the Company 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 was 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, as previously noted, even though there is no modification of terms, the borrowers’ debt to the Company was discharged and they did 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.
The following table presents, by class, TDR’s that defaulted during the three and nine months ended September 30, 2017 and 2016 which had been modified within the last twelve months:

  Three months ended 9/30/2017  Three months ended 9/30/2016 
New York and other states*:
(dollars in thousands)
 
Number of
Contracts
  
Recorded
Investment
  
Number of
Contracts
  
Recorded
Investment
 
             
Real estate mortgage - 1 to 4 family:            
First mortgages  2  $236   -  $- 
Home equity lines of credit  -   -   -   - 
                 
Total  2  $236   -  $- 
Florida:
(dollars in thousands)
Number of
Contracts
Recorded
Investment
Number of
Contracts
Recorded
Investment
Real estate mortgage - 1 to 4 family:
First mortgages-$--$-
Total-$--$-
  Nine months ended 9/30/2017  Nine months ended 9/30/2016 
New York and other states*:
(dollars in thousands)
 
Number of
Contracts
  
Recorded
Investment
  
Number of
Contracts
  
Recorded
Investment
 
             
Real estate mortgage - 1 to 4 family:            
First mortgages  2  $236   1  $107 
Home equity loans  -   -   -   - 
Home equity lines of credit  1   3   -   - 
                 
Total  3  $239   1  $107 
Florida:
(dollars in thousands) 
Number of
Contracts
  
Recorded
Investment
  
Number of
Contracts
  
Recorded
Investment
 
             
Real estate mortgage - 1 to 4 family:            
First mortgages  1  $77   -  $- 
Home equity lines of credit  1  $70   1  $46 
                 
Total  2  $147   1  $46 
The TDR’s that subsequently defaulted described above did not have a material impact on the allowance for loan losses.

The Company categorizes non-homogenouscommercial loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as: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.


20
Index
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.

26
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. All doubtful loans are considered impaired.


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

As of September 30, 2017 and December 31, 2016, and based on the most recent analysis performed, the risk category of loans by class of loans is as follows:

  September 30, 2017 
New York and other states:         
          
(dollars in thousands)         
  Pass  Classified  Total 
Commercial:         
Commercial real estate $142,390   9,838   152,228 
Other  20,154   1,600   21,754 
             
  $162,544   11,438   173,982 
Florida:
(dollars in thousands)         
  Pass  Classified  Total 
Commercial:         
Commercial real estate $12,980   -   12,980 
Other  319   -   319 
             
  $13,299   -   13,299 
Total:
(dollars in thousands)         
  Pass  Classified  Total 
Commercial:         
Commercial real estate $155,370   9,838   165,208 
Other  20,473   1,600   22,073 
             
  $175,843   11,438   187,281 
27
  December 31, 2016 
New York and other states:         
          
(dollars in thousands)         
  Pass  Classified  Total 
Commercial:         
Commercial real estate $136,676   14,690   151,366 
Other  25,442   2,097   27,539 
             
  $162,118   16,787   178,905 
Florida:         
          
(dollars in thousands)         
  Pass  Classified  Total 
Commercial:         
Commercial real estate $12,243   -   12,243 
Other  46   -   46 
             
  $12,289   -   12,289 
Total:
(dollars in thousands)         
  Pass  Classified  Total 
Commercial:         
Commercial real estate $148,919   14,690   163,609 
Other  25,488   2,097   27,585 
             
  $174,407   16,787   191,194 
Included in classified loans in the above tables are non-accrual loans of $1.2 million and $1.8 million at September 30, 2017 and December 31, 2016, respectively.

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 Company’sBank’s collection area and on a monthly basis with respect to determining the adequacy of the allowance for loan losses.credit losses on loans. The payment status of these homogeneous pools as of September 30, 2017 and DecemberMarch 31, 20162024 is also included in the aging of the recorded investment of the past due loans table. In addition,Nonperforming loans shown in the total nonperforming portiontable below were loans on nonaccrual status and loans over 90 days past due and accruing.

21
Index
As of these homogeneous loan pools as of September 30, 2017March 31, 2024 and December 31, 2016 is presented2023, 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:

(in thousands) As of March 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 $10,568  $57,315  $80,610  $23,628  $16,206  $59,591  $5,360  $-  $253,278 
Special Mention $
-  $
-  $
247  $
-  $
37  $
537  $
-  $
-  $
821 
Substandard $
-  $
-  $
-  $-  $
-  $
816  $
-  $
-  $
816 
Total Commercial Loans $10,568  $57,315  $80,857  $23,628  $16,243  $60,944  $5,360  $-  $254,915 
Commercial Loans:                                    
Current-period Gross writeoffs $-  $-  $-  $-  $-  $-  $-  $-  $- 
  $-  $-  $-  $-  $-  $-  $-  $-  $- 
Commercial Other:                                    
Risk rating                                    
Pass $1,542  $9,170  $2,079  $1,798  $1,329  $3,132  $4,614  $-  $23,664 
Special mention $ 
-  $ 
-  $ 
-  $ 
-  $-  $ 
-  $ 
38  $ 
-  $ 
38 
Substandard $
-  $
-  $
-  $
-  $
-  $
-  $
285  $
-  $
285 
Doubtful
 $
 -
  $
 -
  $
 -
  $
 190
  $
 -
  $
 -
  $
 -
  $
 -
  $
 190
 
Total Commercial Real Estate Loans $1,542  $9,170  $2,079  $1,988  $1,329  $3,132  $4,937  $-  $24,177 
                                     
Other Commercial Loans:                                    
Current-period Gross writeoffs $-  $-  $-  $-  $-  $-  $-  $-  $
- 
  $-  $-  $-  $-  $-  $-  $-  $-  $- 
                                     
Residential First Mortgage:                                    
Risk rating                                    
Performing $49,915  $420,073  $560,709  $865,629  $721,417  $1,664,927  $-  $-  $4,282,670 
Nonperforming $
-  $
64  $
209  $
539  $
78  $
12,991  $
-  $
-  $
13,881 
Total First Mortgage: $49,915  $420,137  $560,918  $866,168  $721,495  $1,677,918  $-  $-  $4,296,551 
                                     
Residential First Mortgage Loans:                                    
Current-period Gross writeoffs $-  $-  $-  $-  $-  $18  $-  $-  $
18 
  $-  $
-  $
-  $
-  $
-  $
18  $
-  $
-  $18 
                                     
Home Equity Loans:                                    
Risk rating                                    
Performing $1,417  $9,565  $5,884  $7,601  $5,512  $27,515  $-  $-  $57,494 
Nonperforming $
-  $
-  $
-  $
-  $
-  $
324  $
-  $
-  $
324 
Total Home Equity Loans: $1,417  $9,565  $5,884  $7,601  $5,512  $27,839  $-  $-  $57,818 
                                     
Home Equity Loans:                                    
Current-period Gross writeoffs $-  $-  $-  $-  $-  $-  $-  $-  $
- 
  $-  $-  $-  $-  $-  $-  $-  $-  $- 
Home Equity Lines of  Credit:                                    
Risk rating                                    
Performing $812  $1,348  $712  $543  $169  $15,686  $333,534  $-  $352,804 
Nonperforming $ 
-  $-  $-  $
-  $56  $
2,804  $ 
215  $-  $ 
3,075 
Total Home Equity Credit Lines: $812  $1,348  $712  $543  $225  $18,490  $333,749  $-  $355,879 
                                     
Home Equity Lines of Credit:                                    
Current-period Gross writeoffs $-  $-  $-  $-  $-  $99  $-  $-  $
99 
  $-  $-  $-  $-  $-  $99  $-  $-  $99 
Installments:                                    
Risk rating                                    
Performing $984  $7,823  $4,148  $1,273  $289  $544  $956  $-  $16,017 
Nonperforming $ 
-  $ 
-  $ 
46  $ 
36  $ 
-  $66  $
1  $-  $149 
Total Installments $984  $7,823  $4,194  $1,309  $289  $610  $957  $-  $16,166 
                                     
Installments Loans:                                    
Current-period Gross writeoffs $-  $18  $19  $-  $-  $7  $-  $-  $
44 
  $-  $18  $19  $-  $-  $7  $-  $-  $44 

22
Index
(in thousands) As of December 31, 2023 
   Term Loans Amortized Cost Basis by Origination Year 
Commercial : 2023  2022  2021  2020  2019  Prior  Revolving Loans Amortized Cost Basis  Revolving Loan Converted to Term  Total 
Risk rating                           
Pass $61,148  $82,339  $23,940  $16,653  $19,835  $41,153  $5,664  $-  $250,732 
Special Mention  -   -   -   42   -   225   -   -   267 
Substandard  -   -   -   -   -   1,256   -   -   1,256 
Total Commercial Loans $61,148  $82,339  $23,940  $16,695  $19,835  $42,634  $5,664  $-  $252,255 

                                    
Commercial Loans:                                    
Current-period Gross writeoffs $-  $-  $-  $-  $-  $-  $-  $-  $- 

 $-  $-  $-  $-  $-  $-  $-  $-  $- 
                                     
Commercial Other:                                    
Risk rating                                    
Pass $7,873  $2,164  $1,933  $1,386  $321  $2,641  $4,482  $
-  $20,800 
Special mention  -   -   -   -   -   -   34   -   34 
Substandard  -   -   328   -   -   98   -   -   426 
Total Commercial Real Estate Loans $7,873  $2,164  $2,261  $1,386  $321  $2,739  $4,516  $-  $21,260 
                                     
Other Commercial Loans:                                    
Current-period Gross writeoffs $-  $-  $-  $-  $-  $-  $-  $-   - 

 $-  $-  $-  $-  $-  $-  $-  $-  $- 
                                     
Residential First Mortgage:                                    
Risk rating                                    
Performing $418,891  $566,617  $878,015  $732,851  $342,559  $1,354,867  $-  $-  $4,293,800 
Nonperforming  64   210   383   229   1,119   11,300   -   -   13,305 
Total First Mortgage: $418,955  $566,827  $878,398  $733,080  $343,678  $1,366,167  $-  $-  $4,307,105 

                                    
Residential First Mortgage Loans:                                    
Current-period Gross writeoffs $-  $-  $-  $-  $27  $336  $-  $-   363 

 $-  $-  $-  $-  $27  $336  $-  $-  $363 
                                     
Home Equity Loans:                                    
Risk rating                                    
Performing $9,660  $5,963  $7,770  $5,668  $6,542  $22,076  $-  $-  $57,679 
Nonperforming  -   -   -   -   -   279   -   -   279 
Total Home Equity Loans: $9,660  $5,963  $7,770  $5,668  $6,542  $22,355  $-  $-  $57,958 

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

 $-  $-  $-  $-  $-  $-  $-  $-  $- 
                                     
Home Equity Credit Lines:                                    
Risk rating                                    
Performing $355  $641  $248  $75  $10  $15,964  $327,059  $-  $344,352 
Nonperforming  -   -   8   56   -   2,813   186   -   3,063 
Total Home Equity Credit Lines: $355  $641  $256  $131  $10  $18,777  $327,245  $-  $347,415 

                                    
Home Equity Credit Lines Loans:                                    
Current-period Gross writeoffs $-  $-  $-  $-  $-  $8  $-  $-   8 

 $-  $-  $-  $-  $-  $8  $-  $-  $8 
                                     
Installments:                                    
Risk rating                                    
Performing $8,473  $4,592  $1,484  $360  $198  $605  $1,008  $-  $16,720 
Nonperforming  -   49   51   -   63   3   -   -   166 
Total Installments $8,473  $4,641  $1,535  $360  $261  $608  $1,008  $-  $16,886 

                                    
Installments Loans:                                    
Current-period Gross writeoffs $16  $67  $50  $1  $21  $21  $-  $-   176 

 $16  $67  $50  $1  $21  $21  $-  $-  $176 

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 Balance Sheet.  Other real estate owned included $2.2 million and $-0- of commercial foreclosed properties, and $126 thousand and $1.9 million of residential foreclosed properties as of March 31, 2024 and 2023, respectively.  In addition, non-accrual residential mortgage loans that are in the process of foreclosure had an amortized cost of $6.7 million and $8.7 million, respectively, as of March 31, 2024 and 2023. 

23
Index
The following tables present the aging of the amortized cost in past due loans by loan class and by region as of March 31, 2024 and December 31, 2023:


 
As of March 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 $-  $ 
-  $ 
520  $ 
520  $ 
213,638  $214,158 
Other  11   -   -   11   23,525   23,536 
Real estate mortgage - 1 to 4 family:                        
First mortgages  4,576   1,279   5,873   11,728   2,732,566   2,744,294 
Home equity loans  13   89   175   277   43,930   44,207 
Home equity lines of credit  383   436   1,578   2,397   211,357   213,754 
Installment  38   4   99   141   11,440   11,581 
                         
Total $5,021  $1,808  $8,245  $15,074  $3,236,456  $3,251,530 

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 $-  $
-  $-  $
-  $
40,757  $
40,757 
Other  -   -   314   314   327   641 
Real estate mortgage - 1 to 4 family:                        
First mortgages  956   1,152   1,287   3,395   1,548,862   1,552,257 
Home equity loans  -   91   6   97   13,514   13,611 
Home equity lines of credit  146   -   143   289   141,836   142,125 
Installment  6   8   -   14   4,571   4,585 
                         
Total $1,108  $
1,251  $1,750  $
4,109  $
1,749,867  $1,753,976 

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 $-  $
-  $
520  $
520  $
254,395  $
254,915 
Other  11   -   314   325   23,852   24,177 
Real estate mortgage - 1 to 4 family:                        
First mortgages  5,532   2,431   7,160   15,123   4,281,428   4,296,551 
Home equity loans  13   180   181   374   57,444   57,818 
Home equity lines of credit  529   436   1,721   2,686   353,193   355,879 
Installment  44   12   99   155   16,011   16,166 
                         
Total $6,129  $
3,059  $
9,995  $
19,183  $
4,986,323  $
5,005,506 

* Includes New York, New Jersey, Vermont and Massachusetts.
24
Index
  
As of December 31, 2023
 

                  
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 $-   -   521   521   212,233   212,754 
Other  -   26   -   26   20,837   20,863 
Real estate mortgage - 1 to 4 family:                        
First mortgages  4,330   811   6,008   11,149   2,745,765   2,756,914 
Home equity loans  20   138   157   315   43,837   44,152 
Home equity lines of credit  591   135   1,499   2,225   210,073   212,298 
Installment  6   18   95   119   11,938   12,057 
                         
Total $4,947   1,128   8,280   14,355   3,244,683   3,259,038 

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 $-   -   -   -   39,501   39,501 
Other  -   -   314   314   83   397 
Real estate mortgage - 1 to 4 family:                        
First mortgages  1,290   78   1,433   2,801   1,547,390   1,550,191 
Home equity loans  73   6   -   79   13,727   13,806 
Home equity lines of credit  184   -   56   240   134,877   135,117 
Installment  16   -   60   76   4,753   4,829 
                         
Total $1,563   84   1,863   3,510   1,740,331   1,743,841 

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 $-   -   521   521   251,734   252,255 
Other  -   26   314   340   20,920   21,260 
Real estate mortgage - 1 to 4 family:                        
First mortgages  5,620   889   7,441   13,950   4,293,155   4,307,105 
Home equity loans  93   144   157   394   57,564   57,958 
Home equity lines of credit  775   135   1,555   2,465   344,950   347,415 
Installment  22   18   155   195   16,691   16,886 
                         
Total $6,510   1,212   10,143   17,865   4,985,014   5,002,879 

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

As of March 31, 2024, there were no loans that were 90 days past due and still accruing interest. As a result, non-accrual loans table.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, 2024 and 2023, 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 are collectively evaluated to determine the allowance for credit loss.

25
Index
The following tables present the amortized cost basis in non-accrual loans by portfolio segment:

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

 other states*  Florida  Total 
Loans in non-accrual status:         
Commercial:         
Commercial real estate $532  $
-  $
532 
Other  -   314   314 
Real estate mortgage - 1 to 4 family:            
First mortgages  11,274   2,607   13,881 
Home equity loans  281   43   324 
Home equity lines of credit  2,803   272   3,075 
Installment  149   -   149 
Total non-accrual loans  15,039   3,236   18,275 
Restructured real estate mortgages - 1 to 4 family  -   -   - 
Total nonperforming loans $15,039  $
3,236  $
18,275 

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

  
As of December 31, 2023
 
(dollars in thousands) New York and       

 other states*  Florida  Total 
Loans in non-accrual status:         
Commercial:         
Commercial real estate $536  $
-  $
536 
Other  -   314   314 
Real estate mortgage - 1 to 4 family:            
First mortgages  11,324   1,981   13,305 
Home equity loans  235   44   279 
Home equity lines of credit  2,816   247   3,063 
Installment  151   15   166 
Total non-accrual loans  15,062   2,601   17,663 
Restructured real estate mortgages - 1 to 4 family  3   -   3 
Total nonperforming loans $15,065  $
2,601  $
17,666 

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

26
Index
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, 2024 and December 31, 2023:

  As of March 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 $532  $-  
- 
Other  314   -   - 
Real estate mortgage - 1 to 4 family:            
First mortgages  12,785   1,096   - 
Home equity loans  275   49   - 
Home equity lines of credit  2,759   316   - 
Installment  126   19   - 
Total loans, net $16,791  $1,480  
- 

  
As of December 31, 2023
 
(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 $536  $-   
- 
Other  314   -   - 
Real estate mortgage - 1 to 4 family:
            
First mortgages
  12,584   721   - 
Home equity loans  271   8   - 
Home equity lines of credit  2,395   668   - 
Installment  144   22   - 
Total loans, net $16,244  $1,419   
- 

The non-accrual balance of $1.5 million and $1.4 million was collectively evaluated and the associated allowance for credit losses on loans was determined not to be material as of March 31, 2024 and December 31, 2023, respectively.

27
Index
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, 2024 and December 31, 2023:

  
As of March 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  2,742   46,295   183   49,220 
                 
Total ending allowance balance $2,742  $
46,295  $
183  $
49,220 
                 
Loans:                
Individually evaluated for impairment $952  $
23,769  $
126  $
24,847 
Collectively evaluated for impairment  278,140   4,686,479   16,040   4,980,659 
                 
Total ending loans balance $279,092  $
4,710,248  $
16,166  $
5,005,506 

  
As of December 31, 2023
 
(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  2,735   45,625   218   48,578 
                 
Total ending allowance balance $2,735   45,625   218   48,578 
                 
Loans:                
Individually evaluated for impairment $957   23,628   144   24,729 
Collectively evaluated for impairment  272,558   4,688,850   16,742   4,978,150 
                 
Total ending loans balance $273,515   4,712,478   16,886   5,002,879
 

28
Index
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, 2024 and December 31, 2023:

  As of March 31, 2024 
  Type of Collateral 
(dollars in thousands)    
    

 Real Estate  
Investment
Securities/Cash
  Other 
Commercial:         
Commercial real estate $638   -   - 
Other  314   -   - 
Real estate mortgage - 1 to 4 family:   
    
    
 
First mortgages  19,774   -   - 
Home equity loans  373   -   - 
Home equity lines of credit  3,622   -   - 
Installment  126   -   - 
Total
 $24,847   -   - 

  
As of December 31, 2023
 
  Type of Collateral 
(dollars in thousands)
         
  Real Estate  Investment Securities/Cash  Other 
Commercial:         
Commercial real estate $643   -   - 
Other  314   -   - 
Real estate mortgage - 1 to 4 family:
  
   
   
 
First mortgages
  20,018   -   - 
Home equity loans  371   -   - 
Home equity lines of credit  3,239   -   - 
Installment  144   -   - 
Total $24,729   -   - 

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, 2024 and 2023.

As of March 31, 2024 and 2023 loans individually evaluated included approximately $8.1 million and $8.8 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.

29
Index
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.

The following table presents the amortized cost basis of loans at March 31, 2024 that were both experiencing financial difficulty and modified during the three months ended March 31, 2024, by class and by type of modification.  There were no loan modifications for the three months ended March 31, 2023.  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 March 31, 2024
New York and other states*:
Payment% of Total Class
(dollars in thousands)Delayof Loans
Commercial:
Commercial real estate$--
Other--
Real estate mortgage - 1 to 4 family:--
First mortgages--
Home equity loans--
Home equity lines of credit--
Installment--
Total$-0.00%

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

* Includes New York, New Jersey, Vermont and Massachusetts.
30
Index

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, 2024:

(6)Fair ValueAs of Financial InstrumentsMarch 31, 2024
New York and other states*:30-59
60-89
90+
Days
Days
Days
(dollars in thousands) CurrentPast 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
Index
The following tables describes the financial effect of the modifications made to borrowers experiencing financial difficulty:

For the three months ended March 31, 2024
Weighted
New York and other states*:Average
Payment
(dollars in thousands)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
Florida:Average
Payment
(dollars in thousands)Delay (Months)
Commercial:
Commercial real estate$
-
Other-
Real estate mortgage - 1 to 4 family:
First mortgages12
Home equity loans-
Home equity lines of credit-
Installment-
Total$
12

Weighted
Average
Payment
(dollars in thousands)Delay (Months)
Commercial:
Commercial real estate$
-
Other-
Real estate mortgage - 1 to 4 family:
First mortgages12
Home equity loans-
Home equity lines of credit-
Installment-
Total$
12
  
* Includes New York, New Jersey, Vermont and Massachusetts.
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 no loans that defaulted during the three months ended March 31,2024 and 2023 which had been classified as a loan modification within the priortwelve 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 was 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 was discharged and they did 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 Measurement (“Measurements (“ASC 820”820”) definesdefines 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 1 or 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. Also classified as available for sale securities, the fair value of equity securities is determined by quoted market prices and these are designated as Level 1. The Company does not have any securities that would be designated as Level 3.
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.


Impaired Loans
Individually evaluated loans: AtPeriodically the time a loan is considered impaired, it is valued atCompany records non-recurring adjustments to the lowercarrying value of cost or fair value. Impaired loans carried atbased 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 chargeoffcharge-off through the allowance for loancredit 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. Impaired loansLoans individually evaluated are evaluated on a quarterly basis for additional impairment and adjusted accordingly.


Indications of value for both collateral-dependent impaired 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, 2024 and 2023.

29
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, 2024 Using:
 
        Significant    
 
Fair Value Measurements at
September 30, 2017 Using:
      Quoted Prices in   Other   Significant 
                 Active Markets for   Observable   Unobservable 
 
Carrying
Value
  
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
  
Significant
Other
Observable
Inputs
(Level 2)
  
Significant
Unobservable
Inputs
(Level 3)
   Carrying   Identical Assets   Inputs   Inputs 
(dollars in thousands)             Value  (Level 1)  (Level 2)  (Level 3) 
Securities available for sale:            

            
U.S. government sponsored enterprises $123,658  $-  $123,658  $-  $128,854  $-  $128,854  $- 
State and political subdivisions  533   -   533   -   26   -   26   - 
Mortgage backed securities and collateralized mortgage obligations - residential  227,078   -   227,078   - 
Corporate bonds  40,381   -   40,381   -   53,341   -   53,341   - 
Mortgage backed securities and collateralized mortgage obligations - residential  335,531   -   335,531   - 
Small Business Administration- guaranteed participation securities  69,818   -   69,818   -   16,260   -   16,260   - 
Mortgage backed securities and collateralized mortgage obligations - commercial  9,824   -   9,824   - 
Other securities  685   35   650   -   682   -   682   - 

                
Total securities available for sale $580,430  $35  $580,395  $-  $426,241  $-  $426,241  $- 


 Fair Value Measurements at 
 
December 31, 2023 Using:
 
           Significant    
 
Fair Value Measurements at
December 31, 2016 Using:
      Quoted Prices in   Other   Significant 
                 Active Markets for   Observable   Unobservable 
 
Carrying
Value
  
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
  
Significant
Other
Observable
Inputs
(Level 2)
  
Significant
Unobservable
Inputs
(Level 3)
   Carrying   Identical Assets   Inputs   Inputs 
(dollars in thousands)             Value  (Level 1)  (Level 2)  (Level 3) 
            
Securities available for sale:                        
U.S. government sponsored enterprises $117,266  $-  $117,266  $-  $118,668  $-  $118,668  $- 
State and political subdivisions  886   -   886   -   26   -   26   - 
Mortgage backed securities and collateralized mortgage obligations - residential  372,308   -   372,308   -   237,677   -   237,677   - 
Corporate bonds  40,705   -   40,705   -   78,052   -   78,052   - 
Small Business Administration- guaranteed participation securities  78,499   -   78,499   -   17,186   -   17,186   - 
Mortgage backed securities and collateralized mortgage obligations - commercial  10,011   -   10,011   - 
Other securities  685   35   650   -   680   -   680   - 
                
Total securities available for sale $620,360  $35  $620,325  $-  $452,289  $-  $452,289  $- 

30
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Index
There were no transfers between Level 1 and Level 2 during the three and nine months ended September 30, 2017 and 2016.

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


 Fair Value Measurements at       
 March 31, 2024 Using:       
        Significant          
     Quoted Prices in   Other   Significant       
 
Fair Value Measurements at
September 30, 2017 Using:
            Active Markets for   Observable   Unobservable       
 
Carrying
Value
  
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
  
Significant
Other
Observable
Inputs
(Level 2)
  
Significant
Unobservable
Inputs
(Level 3)
 Valuation technique Unobservable inputs Range (Weighted Average)   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 $2,879  $-  $-  $2,879 Sales comparison approach Adjustments for differences between comparable sales  2% - 10% (4%)  $2,334  $-  $-  $2,334 Sales comparison approach Adjustments for differences between comparable sales  1% - 1% (1%)
Impaired loans:                       
                       
Real estate mortgage - 1 to 4 family  651   -   -   651 Sales comparison approach Adjustments for differences between comparable sales  2% - 5% (4%) 


          
  
Fair Value Measurements at
December 31, 2016 Using:
       
  
Carrying
Value
  
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
  
Significant
Other
Observable
Inputs
(Level 2)
  
Significant
Unobservable
Inputs
(Level 3)
 Valuation technique Unobservable inputs Range (Weighted Average) 
(dollars in thousands)                  
                   
Other real estate owned $4,268  $-  $-  $4,268 Sales comparison approach Adjustments for differences between comparable sales  1% - 14% (7%) 
Impaired loans:                       
Commercial real estate  1,250   -   -   1,250 Sales comparison approach Adjustments for differences between comparable sales  7% - 35% (23%) 
                        
Real estate mortgage - 1 to 4 family  458   -   -   458 Sales comparison approach Adjustments for differences between comparable sales  5% - 14% (10%) 
  Fair Value Measurements at       
  
December 31, 2023 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 $194  $-  $-  $194 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 $2.9$2.3 million at September 30, 2017as of March 31, 2024 and consisted of $358 thousand ofresidential and commercial real estate and $2.5 million of residential real estate properties.  ValuationThere were no valuation charges of $461 thousand and $823 thousand are included in earnings for the three and nine months ended September 30, 2017, respectively.March 31, 2024.


Of the total impairedindividually evaluated loans of $24.6$24.8 million at September 30, 2017, $651 thousandas of March 31, 2024, there are no loans that are collateral dependent and are carried at fair value measured on a non-recurring basis. Due to the sufficiency of charge offscharge-offs taken on these loans and the adequacy of the underlying collateral, there were no specific valuation allowances for these loans at September 30, 2017.  Gross charge offsas of March 31, 2024. There were no gross charge-offs related to residential impairedindividually evaluated loans included in the table above were $15 thousand and $41 thousand for the three and nine months ended September 30, 2017, respectively.above.


Other real estate owned, thatwhich is carried at fair value less costs to sell, was approximately $4.3 million$194 thousand at December 31, 20162023, and consisted of $756 thousand of commercial real estate and $3.5 million ofonly residential real estate properties. A valuation charge of $1.2 million$143 thousand is included in earnings for the year ended December 31, 2016.2023.


Of the total impairedindividually evaluated loans of $24.0$24.7 million at December 31, 2016, $1.7 million2023, 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 offscharge-offs taken on these loans and the adequacy of the underlying collateral, there were no specific valuation allowances for these loans at December 31, 2016. Gross charge offs2023. There were no gross charge-offs related to commercial impairedresidential individually evaluated loans included in the table above were $482 thousand for the year ended December 31, 2016, while gross charge offs related to residential impaired loans included in the table above amounted to $226 thousand.above.

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Index
In accordance with FASB Topic 825, Financial Instruments (“ASC 825”), the carrying amounts and estimated fair values of financial instruments, at September 30, 2017March 31, 2024 and December 31, 20162023 are as follows:


(dollars in thousands) Carrying  
Fair Value Measurements at
September 30, 2017 Using:
     Fair Value Measurements at 
 Carrying  
March 31, 2024 Using:
 
 Value  Level 1  Level 2  Level 3  Total  Value  Level 1  Level 2  Level 3  Total 
Financial assets:                              
Cash and cash equivalents $624,197   624,197   -   -   624,197  $609,683   609,683   -   -   609,683 
Securities available for sale  580,430   35   580,395   -   580,430   426,241   -   426,241   -   426,241 
Held to maturity securities  29,268   -   30,731   -   30,731   6,206   -   6,108   -   6,108 
Federal Reserve Bank and Federal                    
Home Loan Bank stock  8,779   N/A   N/A   N/A   N/A 
Federal Home Loan Bank stock  6,203   N/A   N/A   N/A   N/A 
Net loans  3,534,200   -   -   3,541,135   3,541,135   4,956,286   -   -   4,432,000   4,432,000 
Accrued interest receivable  10,813   56   2,473   8,284   10,813   14,460   799   2,073   11,588   14,460 
Financial liabilities:                                        
Demand deposits  397,623   397,623   -   -   397,623   742,997   742,997   -   -   742,997 
Interest bearing deposits  3,767,739   2,691,853   1,069,906   -   3,761,759   4,612,172   2,708,264   1,886,696   -   4,594,960 
Short-term borrowings  216,508   -   216,508   -   216,508   94,374   -   94,374   -   94,374 
Accrued interest payable  470   67   402   -   470   3,900   248   3,652   -   3,900 


(dollars in thousands) Carrying  
Fair Value Measurements at
December 31, 2016 Using:
     Fair Value Measurements at 
 Carrying  
December 31, 2023 Using:
 
 Value  Level 1  Level 2  Level 3  Total  Value  Level 1  Level 2  Level 3  Total 
Financial assets:                              
Cash and cash equivalents $707,274   707,274   -   -   707,274  $578,004   578,004   -   -   578,004 
Securities available for sale  620,360   35   620,325   -   620,360   452,289   -   452,289   -   452,289 
Held to maturity securities  45,490   -   47,526   -   47,526   6,458   -   6,396   -   6,396 
Federal Reserve Bank and Federal                                        
Home Loan Bank stock  9,579   N/A   N/A   N/A   N/A   6,203   N/A   N/A   N/A   N/A 
Net loans  3,386,696   -   -   3,370,976   3,370,976   4,954,301   -   -   4,422,027   4,422,027 
Accrued interest receivable  11,070   145   2,654   8,271   11,070   13,683   234   1,920   11,529   13,683 
Financial liabilities:                                        
Demand deposits  377,755   377,755   -   -   377,755   754,532   754,532   -   -   754,532 
Interest bearing deposits  3,818,408   2,658,945   1,156,025   -   3,814,970   4,596,245   2,760,221   1,819,789   -   4,580,010 
Short-term borrowings  209,406   -   209,406   -   209,406   88,990   -   88,990   -   88,990 
Accrued interest payable  526   82   444   -   526   3,612   256   3,356   -   3,612 
The specific estimation methods and assumptions used can have a substantial impact on the resulting fair values of financial instruments. The following is a brief summary of the significant methods and assumptions used in estimating fair values:

Cash and Cash Equivalents

The carrying values of these financial instruments approximate fair values and are classified as Level 1.

Federal Reserve Bank and Federal Home Loan Bank stock

It is not practical to determine the fair value of Federal Reserve Bank and Federal Home Loan Bank stock due to their restrictive nature.

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Index
Securities Held to Maturity
Similar to securities available for sale described previously, the fair value of securities held to maturity are 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 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.

Loans

The fair values of all loans are estimated using discounted cash flow analyses with discount rates equal to the interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification. Impaired loans are valued at the lower of cost or fair value as described previously. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

Deposit Liabilities

The fair values disclosed for noninterest bearing demand deposits, interest bearing checking accounts, savings accounts, and money market accounts are, by definition, equal to the amount payable on demand at the balance sheet date resulting in a Level 1 classification. The carrying value of all variable rate certificates of deposit approximates fair value resulting in a Level 2 classification. The fair value of fixed rate certificates of deposit is estimated using discounted cash flow analyses with discount rates equal to the interest rates currently being offered on certificates of similar size and remaining maturity resulting in a Level 2 classification.

Accrued Interest Receivable/Payable

The carrying amounts of accrued interest approximate fair value resulting in a Level 1, Level 2 or Level 3 classification consistent with the asset or liability that they are associated with.

Short-Term Borrowings and Other Financial Instruments

The fair value of all short-term borrowings, and other financial instruments approximates the carrying value resulting in a Level 2 classification.

Financial Instruments with Off-Balance Sheet Risk

The Company is a party to financial instruments with off-balance sheet risk. Such financial instruments consist of commitments to extend financing and standby letters of credit. If the commitments are exercised by the prospective borrowers, these financial instruments will become interest earning assets of the Company. If the commitments expire, the Company retains any fees paid by the prospective borrower. The fair value of commitments is estimated based upon fees currently charged to enter into similar agreements, taking into consideration the remaining terms of the agreements and the present creditworthiness of the borrower. For fixed rate commitments, the fair value estimation takes into consideration an interest rate risk factor. The fair value of these off-balance sheet items approximates the recorded amounts of the related fees, which are considered to be immaterial.

The Company does not engage in activities involving interest rate swaps, forward placement contracts, or any other instruments commonly referred to as derivatives.
33(7) Accumulated Other Comprehensive Loss
(7)Accumulated Other Comprehensive Income (Loss)


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

 Three months ended March 31, 2024 
       Amount  
    
    Other  reclassified  Other    
    Comprehensive  from Accumulated  Comprehensive loss-    
 Three months ended 9/30/17  Balance at  loss-Before  Other Comprehensive  Three months ended  Balance at 
(dollars in thousands) 
Balance at
7/1/2017
  
Other
Comprehensive
Income (loss)-
Before
Reclassifications
  
Amount
reclassified
from Accumulated
Other Comprehensive
Income
  
Other
Comprehensive
Income (loss)-
Three months
ended 9/30/2017
  
Balance at
9/30/2017
  12/31/2023
  Reclassifications  Loss
  3/31/2024  3/31/2024 
                              
               
Net unrealized holding gain (loss) on securities available for sale, net of tax $(4,049)  562   -   562   (3,487)
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  456   -   (29)  (29)  427   (2,814)  -   (148)  (148)  (2,962)
                                        
Accumulated other comprehensive income (loss), net of tax  (3,593)  562   (29)  533   (3,060)
Accumulated other comprehensive loss, net of tax $(13,237)  (1,378)  (148)  (1,526)  (14,763)

Three months ended March 31, 2023
 
       Amount       
    Other  reclassified  Other    
    Comprehensive
  from Accumulated  Comprehensive loss-    
 Three months ended 9/30/2016  Balance at  loss-Before  Other Comprehensive  Three months ended  Balance at 
(dollars in thousands) 
Balance at
7/1/2016
  
Other
Comprehensive
Income (loss)-
Before
Reclassifications
  
Amount
reclassified
from Accumulated
Other Comprehensive
Income
  
Other
Comprehensive
Income (loss)-
Three months
ended 9/30/2016
  
Balance at
9/30/2016
  
12/31/2022
  Reclassifications  Loss
  3/31/2023  3/31/2023 
                              
               
Net unrealized holding gain (loss) on securities available for sale, net of tax $2,667   (75)  -   (75)  2,592 
Net unrealized holding gain on securities available for sale, net of tax $(32,271) 
3,901 
-  
3,901 
(28,370)
Net change in overfunded position in pension and postretirement plans arising during the year, net of tax  7,588   -   -   -   7,588 
Net change in net actuarial gain and prior service cost on pension and postretirement benefit plans, net of tax  (272)  -   8   8   (264)  (2,511)  -   (82)  (82)  (2,593)
                                        
Accumulated other comprehensive income (loss), net of tax  2,395   (75)  8   (67)  2,328 
Accumulated other comprehensive loss, net of tax $(27,194) 
3,901 
(82) 
3,819 
(23,375)
  Nine months ended 9/30/17 
(dollars in thousands) 
Balance at
1/1/2017
  
Other
Comprehensive
Income (loss)-
Before
Reclassifications
  
Amount
reclassified
from Accumulated
Other Comprehensive
Loss
  
Other
Comprehensive
Income (loss)-
Six months
ended 9/30/2017
  
Balance at
9/30/2017
 
                
                
Net unrealized holding gain (loss) on securities available for sale, net of tax $(6,762)  3,275   -   3,275   (3,487)
Net change in net actuarial gain and prior service cost on pension and postretirement benefit plans, net of tax  511   -   (84)  (84)  427 
                     
Accumulated other comprehensive income (loss), net of tax  (6,251)  3,275   (84)  3,191   (3,060)
  Nine months ended 9/30/16 
(dollars in thousands) 
Balance at
1/1/2016
  
Other
Comprehensive
Income (loss)-
Before
Reclassifications
  
Amount
reclassified
from Accumulated
Other Comprehensive
Income
  
Other
Comprehensive
Income (loss)-
Six months
ended 9/30/2016
  
Balance at
9/30/2016
 
                
                
Net unrealized holding gain (loss) on securities available for sale, net of tax $(4,492)  7,483   (401)  7,084   2,592 
Net change in net actuarial gain and prior service cost on pension and postretirement benefit plans, net of tax  (289)  -   25   25   (264)
                     
Accumulated other comprehensive income (loss), net of tax  (4,781)  7,483   (376)  7,109   2,328 

The following represents the reclassifications out of accumulated other comprehensive income (loss)loss for the three and nine months ended September 30, 2017March 31, 2024 and 2016:2023:


(dollars in thousands) 
Three months ended
September 30,
  
Nine months ended
September 30,
   Three months ended  
 2017  2016  2017  2016 Affected Line Item in Statements
March 31,
  
Net unrealized holding gain on securities available for sale                 
                   2024  2023 Affected Line Item in Financial Statements
Realized gain on securities transactions $-   -  $-   668 Net gain on securities transactions
Income tax effect  -   -   -   (267)Income taxes
Net of tax  -   -   -   401  
                      
Amortization of pension and postretirement benefit items                     
                      
Amortization of pension and postretirement benefit items:           
Amortization of net actuarial gain  72   8   208   25 Salaries and employee benefits $203   114 Salaries and employee benefits
Amortization of prior service cost  (23)  (22)  (68)  (67)Salaries and employee benefits  (3)  (3)Salaries and employee benefits
Income tax effect  (20)  6   (56)  17 Income taxes
Income tax benefit  (52)  (29)Income taxes
Net of tax  29   (8)  84   (25) 
                                      
Total reclassifications, net of tax $29   (8) $84   376  

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Index
(8)Agreement with the Office of the Comptroller of the Currency

On July 21, 2015 Trustco Bank (the “Bank”), the wholly owned subsidiary of the Company, entered into a formal agreement (the “Agreement”) with the Comptroller of the Currency of the United States (the “OCC”).

The Agreement relates to the findings of the OCC following an examination of the Bank. Since the completion of the examination and entry into the Agreement, the Bank believes it has been working diligently to address the findings of the examination and to develop and implement appropriate formal action plans.

The Agreement requires the Bank to take various actions, within prescribed time frames, with respect to certain areas of the Bank. These include, among others, (i) establishment of a committee of at least three Directors to monitor and coordinate the Bank’s response to the Agreement; (ii) adoption of compliance plans to respond to the Agreement with the assistance of an independent qualified consultant; (iii) evaluation and implementation of improvements in corporate governance with the assistance of an independent qualified consultant; (iv) evaluation and implementation of improvements in internal audit; (v) development of a strategic plan; (vi) development of a revised capital plan consistent with the strategic plan; (vii) development and implementation of improvements to the Bank’s loan review system; and (viii) such other necessary steps to address the issues and questions noted by the OCC in the Agreement.

(9)New Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue(8) Revenue from Contracts with Customers (Topic 606)” which implements a common

All of the Company’s revenue standard that clarifies the principles for recognizing revenue. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services tofrom contracts with customers in an amountthe 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, 2024 and 2023. Items outside the scope of ASC 606 are noted as such.

(dollars in thousands) Three months ended 
  
March 31,
 
  2024  2023 
Non-interest income      
Service Charges on Deposits      
Overdraft fees $663  $680 
Other  511   532 
Interchange Income  1,597   1,479 
Wealth management fees  1,816   1,774 
Other (a)
  256   204 
         
Total non-interest income $4,843  $4,669 

(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, statement rendering and ACH fees, are recognized at the time the transaction is executed as that reflectsis the considerationpoint 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 entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: (i) identify the contract(s) with a customer, (ii) identifyCompany satisfies the performance obligationsobligation.  Overdraft fees are recognized at the point in time that the contract, (iii) determineoverdraft 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 price, (iv) allocate the transaction priceprocessing services provided to the performance obligations in the contractcardholder.

Wealth Management fees: Trustco Financial Services provides a comprehensive suite of trust and (v) recognize revenue when (or as) the entity satisfieswealth management products and services, including financial and estate planning, trustee and custodial services, investment management, corporate retirement plan recordkeeping and administration of which a performance obligation. In July 2015, FASB deferred the effective date of the ASU by one year which means ASU 2014-09 will be effectivefee 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 January 1, 2018.  In addition, the FASB has begun to issue targeted updates to clarify specific implementation issuesa percentage of ASU 2014-09. These updates include ASU No. 2016-08 - Principal versus Agent Considerations (Reporting Revenue Gross versus Net), ASU No. 2016-10 - Identifying Performance Obligations and Licensing and ASU No. 2016-12 - Narrow-Scope Improvements and Practical Expedients. The Company is in process of evaluating disclosure impact.  Based on the Company’s preliminary evaluation, the ASU does not have a material impact on the Company’s financial position or the results of operations.  The Company is in process of evaluating disclosure impact.

In January 2016, the FASB issued ASU No. 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities” which amended existing guidance to improve accounting standards for financial instruments including clarification and simplification of accounting and disclosure requirements and the requirement for public business entities to use the exit price notion when measuring the fair value of financial instrumentsassets under management or administration.  Other services are based on a fixed fee for disclosure purposes. These amendmentscertain account types, or based on transaction activity and are effective for public business entities for annual periods and interim periods within those annual periods beginning after December 15, 2017. The ASU is not expected to significantly impactrecognized when services are rendered.  Fees are withdrawn from the Company’s consolidated financial statements.customer’s account balance.

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Index
In February 2016,
(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 FASB issued ASU No. 2016-02, “Leases” which amended existing guidancedefinition 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 increase transparencyuse an underlying asset for the lease term and comparability among organizations by recognizing lease liabilities represent the Company’s obligation to make lease payments arising from the lease.  Operating lease ROU assets and lease liabilities onare recognized at the balance sheet and disclosing key information about leasing arrangements. These amendments are effective for public business entities for annual periods and interim periods within those annual periods beginning after December 15, 2018. It is expected that assets and liabilities will increasecommencement 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, 2024, the Company did not have any leases with terms of twelve months or less.

As of March 31, 2024, the Company did not have any leases for which the construction had not yet started. As of March 31, 2024, lease expiration dates ranged from two months to 20.5 years and have a weighted average remaining lease term of 8.4 years. Certain leases provide for increases in future minimum annual rental payments foras 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 place at the adoption date which will impact the financial position and capital ratios of the Company.  As of December 31, 2016, the Company has approximately $69.7 million inannual rental payments.

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Other information related to leases was as follows:

(dollars in thousands) Three months ended 

 
March 31,
 
  2024  2023 
Operating lease cost $2,097  
2,050 
Variable lease cost  606   585 
         
Total Lease costs $2,703  
2,635 

(dollars in thousands) Three months ended 

 
March 31,
 
  2024  2023 
Supplemental cash flows information:      
Cash paid for amounts included in the measurement of lease liabilities:      
Operating cash flows from operating leases $2,124  
2,072 
         
Right-of-use assets obtained in exchange for lease obligations:  759   385 
      
  
Weighted average remaining lease term 
8.4 years
  
8.7 years
 
Weighted average discount rate  3.12%  3.00%

Future minimum lease payments under non-cancellable leases as of March 31, 2024 were as follows:

(dollars in thousands)
   
    
 Year ending   
December 31,
   
2024(a)
 $6,362 
2025  8,156 
2026  7,183 
2027  5,974 
2028  4,786 
Thereafter  17,085 
Total lease payments $49,546 
Less: Interest  6,108 
     
Present value of lease liabilities $43,438 

(a)
Excluding the three months ended March 31, 2024.

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A member of the Board of Directors has an ownership interest in five entities that own commercial real estate leased by the Company for existinguse as branch locations.  Total lease payments from the Company to those entities, which are included in the table above, owed as of March 31, 2024, were $2.6 million, which includes interest in the amount of $292 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, 2024, 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, 2024 and December 31, 2023, the most recent regulatory notifications 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.

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The Bank and the Company reported the following capital ratios as of March 31, 2024 and December 31, 2023:

(Bank Only)       Minimum for 
  As of March 31, 2024  Well Capital Adequacy plus
 Capital Conservation
(dollars in thousands) Amount  Ratio  
Capitalized(1)
  
Buffer (1)(2)
 
             
Tier 1 leverage ratio 
$
640,288   10.427%  5.000%  4.000%
Common equity tier 1 capital  640,288   18.505   6.500   7.000 
Tier 1 risk-based capital  640,288   18.505   8.000   8.500 
Total risk-based capital  683,633   19.758   10.000   10.500 

  As of December 31, 2023  Well  Minimum for 
Capital Adequacy plus
Capital Conservation
(dollars in thousands) Amount  Ratio  
Capitalized(1)
  
Buffer (1)(2)
 
             
Tier 1 leverage ratio 
$
636,327   10.428%  5.000%  4.000%
Common equity tier 1 capital  636,327   18.280   6.500   7.000 
Tier 1 risk-based capital  636,327   18.280   8.000   8.500 
Total risk-based capital  679,924   19.532   10.000   10.500 

(Consolidated)      
  As of March 31, 2024  Minimum for 
Capital Adequacy plus
Capital Conservation
(dollars in thousands) Amount  Ratio  
Buffer (1)(2)
 
          
Tier 1 leverage ratio
$
663,400   10.798%  4.000%
Common equity tier 1 capital 
663,400   19.168   7.000 
Tier 1 risk-based capital 
663,400   19.168   8.500 
Total risk-based capital 
706,757   20.421   10.500 

  As of December 31, 2023  Minimum for 
Capital Adequacy plus
Capital Conservation
(dollars in thousands) Amount  Ratio  
Buffer (1)(2)
 
          
Tier 1 leverage ratio 
$657,968   10.780%  4.000%
Common equity Tier 1 capital  657,968   18.896   7.000 
Tier 1 risk-based capital  657,968   18.896   8.500 
Total risk-based capital  701,577   20.149   10.500 

(1)Federal regulatory minimum requirements to be considered to be Well Capitalized and Adequately Capitalized
(2)The March 31, 2024 and December 31, 2023 common equity tier 1, tier 1 risk-based, and total risk-based capital ratios include a capital conservation buffer of 2.50 percent

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(11) New Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 expands reportable segment disclosure requirements through enhanced disclosures about significant segment expenses. ASU 2023-07 implements a new requirement to disclose significant segment expenses regularly provided to the chief operating leasesdecision maker, expands certain annual disclosures to interim periods, clarifies that single reportable segment entities must apply Topic 280 in its entirety and permits more than one measure of branch locationssegment profit or loss to be reported under certain conditions. ASU 2023-07 is effective for the Company for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with varying expiration dates from 2017 and after.early adoption permitted. The Company is evaluating the requirements of the expanded segment disclosures but does not currently expect the ASUadditional disclosures to have a material impact on the Company’s results of operations.

In June 2016, the FASB released ASU No. 2016-13, “Financial Instruments – Credit Losses” which amended existing guidance to replace current generally accepted accounting principles used to measure a reporting entity’s credit losses.  The main objective of this update is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. To achieve this objective, the amendments in this update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. These amendments are effective for public business entities for annual periods and interim periods within those annual periods beginning after December 15, 2019. The ASU represents a significant departure from current GAAP and the Company is evaluating the impact of the ASU on its consolidated financial statements.  The Company has established a roadmap for implementation and is currently evaluating vendor solutions that will assist in implementing required changes to loan loss estimation model.


In January 2017,December 2023, the FASB issued ASU No. 2017-04, “Intangibles-Goodwill and Other2023-09, Income Taxes (Topic 350)” which simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had740): Improvements to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, under the amendments in thisIncome Tax Disclosures. ASU an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider2023-09 is focused on additional income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The Board also eliminated the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessmentdisclosures and if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. Therefore, the same impairment assessment applies to all reporting units. An entity is required to disclose the amount of goodwill allocated to each reporting unit with a zero or negative carrying amount of net assets.  An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary.  A public business entity that is a U.S. Securities and Exchange Commission (SEC) filer should adopt the amendments in this ASU for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019.  The ASU is not expected to significantly impact the Company’s consolidated financial statements.
In March 2017, the FASB issued ASU No. 2017-07, “Compensation-Retirement Benefits (Topic 715)”.  The amendments in this ASU require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost as defined in paragraphs 715-30-35-4 and 715-60-35-9 are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. If a separate line item or items are used to present the other components of net benefit cost, that line item or items must be appropriately described. If a separate line item or items are not used, the line item or items used in the income statement to present the other components of net benefit cost must be disclosed.  The amendments in this ASU are effective forrequires public business entities, on an annual basis, to disclose specific categories in the rate reconciliation and provide additional information for annual periods beginning after December 15, 2017, including interim periods withinreconciling items that meet a quantitative threshold (if the effect of those annual periods.  Thereconciling 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 not expected to significantly impact the Company’s consolidated financial statements.

In March 2017, the FASB issued ASU No. 2017-08, “Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20)”.  The amendments in this ASU shorten the amortization period for certain callable debt securities held at a premium. Specifically, the amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity.  The amendments in this ASU are effective for public business entitiesthe Company for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.  The2024, with early adoption permitted. While the Company is evaluatingcurrently assessing the impact applying this standard will have on its income tax disclosures, the adoption of ASU No. 2017-08 on its consolidated financial statements.

In May 2017, the FASB issued ASU No. 2017-09, “Compensation - Stock Compensation – Scope of Modification Accounting (Topic 718)”.  The amendments in this ASU clarifies the application of the guidance in Topic 718, Compensation – Stock Compensation, by providing guidance about which changes in terms or conditions of a share-based payment award require and entity to apply modification accounting.  An entity should account for the effects of a modification unless all the following are met: 1) The fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification; 2) The vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified; 3) The classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The current disclosure requirements in Topic 718 apply regardless of whether an entity is required to apply modification accounting under the amendments in this ASU.  The amendments in this Update are effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017.  The ASU2023-09 is not expected to significantlyhave a material impact on the Company’s consolidated financial statements.

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Crowe Horwath LLP
Independent Member Crowe Horwath International
graphic

Crowe LLP
Independent Member Crowe Global

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


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

Results of Review of Interim Financial Information

We have reviewed the accompanying consolidated statementsstatement of financial condition of TrustCo Bank Corp NY (the "Company") as of September 30, 2017,March 31, 2024, and the related consolidated statements of income, and comprehensive income, for the three-month and nine-month periods ended September 30, 2017 and 2016 and the related changes in shareholders’ equity and cash flows for the nine-monththree-month periods ended September 30, 2017March 31, 2024 and 2016. These interimMarch 31, 2023, 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 arereferred to above for them to be in conformity with accounting principles generally accepted in the responsibilityUnited States of the Company’s management.America.


We conducted our reviewshave 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, 2023, 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 11, 2024, 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, 2023, 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 Public Company Accounting Oversight Board,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.

Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with U.S. generally accepted accounting principles.


/s/ Crowe Horwath LLP


New York, New YorkBoston, Massachusetts
November 7, 2017May 9, 2024

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

Forward-looking Statements
Statements included in this report and in future filings by TrustCo Bank Corp NY (“TrustCo” or the “Company”) with the Securities and Exchange Commission, in TrustCo’s press releases, and in oral statements made with the approval of an authorized executive officer, which 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.  Examples of forward-looking statements include, among others, statements TrustCo makes regarding its expectations for complying with the new regulatory capital rules, costs associated with the Formal Agreement that the Company’s subsidiary, Trustco Bank (or the “Bank”) has entered into with the Office of the Comptroller of the Currency (“OCC”), the Company’s ability to grow its balance sheet and the profitability of such growth, the ability of its loan products to continue to attract customers if long-term rates rise and the ability to secure new sources of liquidity should the need arise.  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, if any, and under the Risk Factor discussion in TrustCo’s Annual Report on Form 10-K for the year ended December 31, 2016, the following important factors, 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:

·TrustCo’s ability to continue to originate a significant volume of one- to- four family mortgage loans in its market areas and to otherwise maintain or increase its market share in the areas in which it operates;
·TrustCo’s ability to continue to maintain noninterest expense and other overhead costs at reasonable levels relative to income;
·TrustCo’s ability to comply with the Formal Agreement entered into with Trustco Bank’s regulator, the OCC, and potential regulatory actions if TrustCo or Trustco Bank fails to comply;
·restrictions or conditions imposed by TrustCo’s and Trustco Bank’s regulators on their operations that may make it more difficult to achieve TrustCo’s and Trustco Bank’s goals;
·the future earnings and capital levels of TrustCo and Trustco Bank and the continued receipt of approvals from TrustCo’s and Trustco Bank’s primary federal banking regulators under regulatory rules and the Formal Agreement to distribute capital from Trustco Bank to TrustCo, which could affect the ability of TrustCo to pay dividends;
·the results of supervisory monitoring or examinations of Trustco Bank and the Company by their respective primary federal banking regulators, including the possibility that the regulators may, among other things, require us to increase our loss allowance or to take other actions that reduce capital or income;
·TrustCo’s ability to make accurate assumptions and judgments regarding the credit risks associated with its lending and investing activities, including changes in the level and direction of loan delinquencies and chargeoffs, changes in property values, and changes in estimates of the adequacy of the allowance for loan losses;
·the effects of and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System, inflation, interest rates, market and monetary fluctuations;
·adverse conditions in the securities markets that lead to impairment in the value of securities in TrustCo’s investment portfolio;
·changes in law and policy accompanying the new presidential administration and uncertainty or speculation pending the enactment of such changes;
·the perceived overall value of TrustCo’s products and services by users, including the features, pricing and quality compared to competitors’ products and services and the willingness of current and prospective customers to substitute competitors’ products and services for TrustCo’s products and services;
·changes in consumer spending, borrowing and savings habits;
·the effect of changes in financial services laws and regulations (including laws concerning taxation, banking and securities) and the impact of other governmental initiatives affecting the financial services industry, including new regulatory capital requirements that took effect beginning in 2016;
·changes in management personnel;
·real estate and collateral values;
·changes in accounting policies and practices, as may be adopted by the bank regulatory agencies Financial Accounting Standards Board (“FASB”) or the Public Company Accounting Oversight Board;
·disruptions, security breaches, or other adverse events affecting the third-party vendors who perform several of our critical processing functions;
·technological changes and electronic, cyber and physical security breaches;
·changes in local market areas and general business and economic trends, as well as changes in consumer spending and saving habits;
·TrustCo’s success at managing the risks involved in the foregoing and managing its business; and
·other risks and uncertainties included under “Risk Factors” in our Form 10-K for the year ended December 31, 2016.

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.

Following this discussion are the tables “Distribution of Assets, Liabilities and Shareholders’ Equity: Interest Rates and Interest Differential” which gives a detailed breakdown of TrustCo’s average interest earning assets and interest bearing liabilities for the three and nine month periods ended September 30, 2017 and 2016.
Introduction
The review that follows focuses on the factors affecting the financial condition and results of operations of TrustCo during the three and nine month periodsperiod ended September 30, 2017,March 31, 2024, with comparisons to the corresponding period in 2016,2023, as applicable.  NetUnless otherwise indicated, net interest income and net interest margin isare presented in this discussion on a fullynon-GAAP, taxable equivalent basis in this discussion.basis.   The consolidated interim financial statements and related notes, as well as the 2016 Annual Report to Shareholders on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on March 3, 2017,11, 2024 (the “2023 Form 10-K”), should also be read in conjunction with this review.  Amounts in the prior period consolidated interim financial statements are reclassified whenever necessary to conform to the current period’speriod's presentation.


Following this management 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, 2024 and 2023.

Economic Overview
During the thirdfirst quarter of 20172024, financial markets were influenced by both underlying economic conditions and by political developments.  Equity markets endedgot off to a good start as the third quarter up, gaining gradually over the quarter.economy showed signs of improvement. For the full thirdfirst quarter of 2024, the S&P 500 Index was up 4.0%10.16%, Nasdaq was up 9.1%, and the Dow Jones Industrial Average was up 4.9%.  Credit markets continue to be driven by worldwide economic news and demand shifts between segments of the bond market as investors seek to capture yield in a continued low rate environment.  The shape of the yield curve continued to flatten during the quarter, with average yields flat or down for longer maturities and up for shorter maturities in the third quarter as5.6% compared to the second quarter.fourth quarter of 2023.  The 10-year10‑year Treasury bond averaged 2.24%4.16% during Q3Q1 2024 compared to 2.26%4.45% in Q2,Q4 2023, a decrease of 229 basis points.  The 2-year2‑year Treasury bond average rate increased 6decreased 33 basis points to 1.36%4.48%, resulting in flattening ofwhich slightly improved the curve.  Theinverted yield curve over the prior quarter.  Consequently, the spread between the 10-year10‑year and the 2-year Treasury bonds contracteddecreased from 0.96%a -0.36% on average in Q2Q4 2023 to 0.88%-0.33% in Q3.  This spread had been depressed in recent years, and compares to 2.42% during its most recent peak in Q4 of 2013.  SteeperQ1 2024.  Generally, steeper yield curves are favorable for portfolio mortgage lenders like TrustCo.  TheTrustCo, and the table below illustrates the range of rate movements for both short term and longer term rates.  TheCommencing in March 2022, the Federal Open Market Committee (“FOMC”) increased the target Fedrange for the Federal Funds range was increasedrate seven times in 2022 and four times in 2023 by 25a total of 525 basis points, on June 14, 2017 to a range of 1.00%5.25% to 1.25%.  This increase follows a similar 25 basis point5.50%, which is where it remains as of March 31, 2024.  All of these increases announcedwere expressly made in December of 2016 and March of 2017.response to inflationary pressures.  Spreads of most asset classes to the comparative treasury yield, including agency securities, corporates, municipals and mortgage-backed securities, werecontinue to be down by the end of the quarter as compared to the levels seen a year earlier, but generally roughly flat with levels seen atbefore the end of the second quarter of 2017.  Changespandemic.  Accordingly, changes in rates and spreads during the current quarter were duecontinue to a number of factors; however, uncertainty about the timing of additional actions that the Federal Reserve Board (“FRB”) would take in regard to the extraordinary accommodations that have influenced markets in recent years and further uncertainty regarding the economy and related issues were key factors.  Low risk free rates in major nations have also caused investors to shift into alternative fixed income instruments, contributing to the compression of spreads over the risk free rate.  On September 20, 2017 the Federal Open Market Committee announced that it would initiate the balance sheet normalization program discussed in June of 2017.  Information regarding this program provided some additional direction to the market.be effected by global economic concerns.

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     3 Month  2 Year  5 Year  10 Year  10 - 2 Year 
     Yield (%)  Yield (%)  Yield (%)  Yield (%)  Spread (%) 
                  
Q1/23 Beg of Q1  4.42   4.41   3.99   3.88   -0.53 
 Peak  5.06   5.05   4.34   4.08   -0.38 
 Trough  4.52   3.76   3.39   3.37   -1.07 
 End of Q1  4.97   4.10   3.66   3.55   -0.55 
 Average in Q1  4.78   4.35   3.80   3.65   -0.70 
                       
Q2/23 Beg of Q2  4.97   4.10   3.66   3.55   -0.55 
 Peak  5.55   4.87   4.14   3.85   -0.38 
 Trough  4.86   3.75   3.29   3.30   -1.06 
 End of Q2  5.43   4.87   4.13   3.81   -1.06 
 Average in Q2  5.27   4.26   3.69   3.60   -0.67 
                       
Q3/23 Beg of Q3  5.43   4.87   4.13   3.81   -1.06 
 Peak  5.61   5.12   4.67   4.61   -0.44 
 Trough  5.44   4.59   3.93   3.75   -1.08 
 End of Q3  5.55   5.03   4.60   4.59   -0.44 
 Average in Q3  5.54   4.92   4.31   4.15   -0.77 
                       
Q4/23 Beg of Q4  5.55   5.03   4.60   4.59   -0.44 
 Peak  5.63   5.19   4.95   4.98   -0.13 
 Trough  5.40   4.20   3.78   3.79   -0.53 
 End of Q4  5.40   4.23   3.84   3.88   -0.35 
 Average in Q4  5.52   4.81   4.43   4.45   -0.36 
                       
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 

     
3 Month
Yield (%)
  
2 Year
Yield (%)
  
5 Year
Yield (%)
  
10 Year
Yield (%)
  
10 - 2 Year
Spread (%)
 
                  
Q3/16 Beg of Q3  0.28   0.59   1.00   1.46   0.87 
Peak  0.37   0.84   1.26   1.73   0.97 
Trough  0.18   0.56   0.94   1.37   0.76 
End of Q3  0.29   0.77   1.14   1.60   0.83 
Average in Q3  0.30   0.73   1.13   1.56   0.84 
                       
Q4/16 Beg of Q4  0.32   0.80   0.91   1.63   0.83 
Peak  0.55   1.29   1.61   2.60   1.34 
Trough  0.30   0.80   0.91   1.63   0.83 
End of Q4  0.51   1.20   1.47   2.45   1.25 
Average in Q4  0.43   1.01   1.24   2.14   1.13 
                       
Q1/17 Beg of Q1  0.16   1.06   1.76   2.27   1.21 
Peak  0.79   1.40   2.14   2.62   1.30 
Trough  0.50   1.12   1.80   2.31   1.11 
End of Q1  0.76   1.27   1.93   2.40   1.13 
Average in Q1  0.60   1.24   1.95   2.45   1.20 
                       
Q2/17 Beg of Q2  0.76   1.27   1.93   2.40   1.13 
Peak  1.04   1.38   1.94   2.42   1.11 
Trough  0.79   1.18   1.71   2.14   0.78 
End of Q2  1.03   1.38   1.89   2.31   0.93 
Average in Q2  0.91   1.30   1.81   2.26   0.96 
                       
Q3/17 Beg of Q3  1.03   1.38   1.89   2.31   0.93 
Peak  1.18   1.47   1.95   2.39   1.00 
Trough  0.98   1.27   1.63   2.05   0.77 
End of Q3  1.06   1.47   1.92   2.33   0.86 
Average in Q3  1.05   1.36   1.81   2.24   0.88 

The United States economy continuesproved to showbe resilient 2023 and has also seen some modest improvements in some areas, but continues to face challenges. Employment metrics have generally improved, but remain inconsistent and not particularly robust.as we continue into 2024.  Economic conditions can vary significantly over geographic areas, with strength concentrated in and around major population centers on the coasts and in certain areas where economic activity has been driven by specific regional factors.  The unprecedented intervention

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Index
On March 10, 2023, Silicon Valley Bank (“SVB”) was closed by governmentsthe California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. Similarly, on March 12, 2023, Signature Bank and Silvergate Capital Corp. were each placed into receivership.  Additionally, following the rapid withdrawal of deposits and large losses reported by Credit Suisse in markets and attemptsSwitzerland, Swiss Bank UBS Group AG acquired Credit Suisse in an emergency arrangement brokered by the Swiss government.  Lastly, due to stimulate the economy, includingdestabilization of First Republic, the sharp easingFDIC assisted in arranging a sale of monetary policy during 2007-2008, will eventually be reversed. How and whenFirst Republic to JPMorgan Chase on May 1, 2023. In response to the U.S. bank failures in the spring of 2023, the Federal Reserve resolves its own balance sheet expansion has been an areaestablished a Bank Term Funding Program (“BTFP”) to offer emergency loans of significant focusup to one year to eligible depository institutions pledging qualifying assets as collateral.  Nevertheless, the closures of economiststhose banks and adverse developments affecting other banks over the course of 2023 have resulted in heightened levels of market participants.  As noted, guidance on this issue was providedactivity and volatility. For instance, the share price of a number of regional banks continues to be adversely affected by continuing concerns regarding the liquidity of these banks and the stability of the banking system in late September.  Economic activitygeneral.  The full impact of market volatility from the adverse developments in Europe, China and elsewhere has also improved in some aspects, but remains mixed.  Finally, regulatory changes that have been enacted are expected to continue to impact the banking industry, going forward. These regulatory changes have added significant operating expensealong with continued elevated interest rates, will depend on future developments, which are highly uncertain and operational burdendifficult to predict. Our business and have fundamentally changedfinancial results may be impacted by a variety of other factors as well, such as an economic slowdown or recession.

Additionally, in November 2023, the wayFDIC adopted a final rule to implement a special assessment on banks conduct business.with total assets greater than $5.0 billion and uninsured deposits in excess of $5 billion, to recover the cost associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank.  The current presidential administration has set policy initiatives that include attempts to reduce the regulatory burden; the timing and extentspecial assessment will be collected at an annual rate of any success on that front is yet to be determined.  Fiscal policy initiatives, particularly a plan to significantly reduce corporate tax rates could have a major impact on the economy and on TrustCo, but there is no certainty that those initiatives will take effect at all orapproximately 13.4 basis points for an anticipated total of eight quarterly assessment periods, which it estimates will result in any timely and/total revenue of $16.3 billion. Because (i) the estimated loss pursuant to the systemic risk determination will be periodically adjusted and (ii) assessments collected may change due to corrective amendments to the amount of uninsured deposits reported for the December 31, 2022 reporting period, the FDIC has retained the ability to cease collection early, extend the special assessment collection period one or significant change.more quarters beyond the initial eight-quarter collection period to collect the difference between actual or estimated losses and the amounts collected, or impose a final shortfall special assessment on a one-time basis after the receiverships for SVB and Signature Bank terminate. The final rule will be effective April 1, 2024, with the first collection for the special assessment reflected on the invoice for the first quarterly assessment period of 2024 (i.e., January 1 through March 31, 2024), with a payment date of June 28, 2024. There will be no additional cost to TrustCo as a result of uninsured deposits being under $5 billion.

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TrustCoManagement believes that itsTrustCo’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.  TrustCo has not engaged in the types of high risk loans and investments that have ledWhile we continue to the widely reported problems in the industry.  Nevertheless, the Company may experience increases in nonperforming loans (“NPLs”) relativeadhere to historical levels from time to time.   While the Company does not expect to see a significant change in the inherent risk of loss in its loan portfolio at September 30, 2017,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 $12.6$12.1 million, or $0.131$0.64 of diluted earnings per share, for the three months ended September 30, 2017,March 31, 2024, compared to net income of $10.9$17.7 million, or $0.114$0.93 of diluted earnings per share, in the same period in 2016.2023.  Return on average assets was 1.02%0.80% and 0.90, respectively, for the three months ended September 30, 2017 and 2016.  Return on average equity was 11.06% and 10.05%1.20%, respectively, for the three months ended September 30, 2017March 31, 2024 and 2016.

For the nine months ended September 30, 2017, net income was $35.8 million or $0.372 of diluted earnings per share, compared to $31.8 million and $0.333 per share, respectively, in the same period in 2016.  Return on average assets was 0.98% and 0.89%, respectively, for the nine months ended September 30, 2017 and 2016.2023.  Return on average equity was 10.77%7.54% and 9.97%11.84%, respectively, for the ninethree months ended September 30, 2017March 31, 2024 and 2016.2023.


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Index
The primary factors accounting for the change in net income for the three months ended September 30, 2017March 31, 2024 compared to the same period of the prior year were:

·
An increase in the average balance of interest earning assets of $55.8 million to $4.80 billion for the third quarter of 2017 compared to the same period in 2016.

·An increase in taxable equivalent net interest margin for the third quarter of 2017 to 3.26% from 3.09% in the prior year period.  The increase in the margin, coupled with the increase in average earning assets, resulted in an increase of $2.5 million in taxable equivalent net interest income in the third quarter of 2017 compared to the third quarter of 2016.

·An increase of $497 thousand in Financial Services income for the third quarter of 2017 as compared to the prior year period due to cash received from the settlement of several estates resulting in revenue greater that the estimated accrued amount.

43A decrease of $10.4 million, or 22.1%, in GAAP net interest income and taxable equivalent net interest income (non-GAAP) compared to the first quarter of 2023 primarily as a result of an increase in interest expense as a result of the current interest rate environment.

·An increase of $1.4 million in salaries and benefits expense for the third quarter of 2017 compared to the third quarter of 2016, due to a combination of higher staffing levels, the impact of a higher stock price on liability-based stock compensation plans and other factors.

·A decrease of $280 thousand in Professional Services expense for the third quarter of 2017 compared to the third quarter of 2016.

·A increase of $210 thousand in Advertising expense for the third quarter of 2017 compared to the third quarter of 2016.

·A decrease of $620 thousand in Other Real Estate expense for the third quarter of 2017 compared to the third quarter of 2016 due to increased gains recognized in the sale of properties.

·An increase of $694 thousand  in income taxes in the third quarter of 2017 compared to the prior year due primarily to higher pre-tax earnings.
The primary factors accountingAn increase of $300 thousand in provision for credit losses for the changefirst quarter of 2024 compared to the first quarter 2023.

An increase of $174 thousand in netnoninterest income for the nine months ended September 30, 2017first quarter of 2024 compared to the same periodsfirst quarter of the prior year were:2023.

·
An increase in the average balance of interest earning assets of $104.5 million to $4.90 billion for the first nine months of 2017 compared to the same period in 2016.

·An increase in taxable equivalent net interest margin for the first nine months of 2017 to 3.20% from 3.10% in the prior year period.  The increase in the margin coupled with the increase in average earning assets, resulted in an increase of $6.0 million in taxable equivalent net interest income in the first nine months of 2017 compared to the same period in 2016.

·A decrease of $668 thousand in securities gains for the first nine months of 2017 as compared to the prior year period.

·
An increase of $663 in Financial Services income for the first nine months of 2017 as compared to the prior year period, the majority of which was recognized in the third quarter as noted previously.

·
An increase of $3.2 million in salaries and benefits for the first nine months of 2017 as compared to the prior year period, for similar reasons as previously noted in regard to the third quarter of 2017.

·A decrease of $2.0 million in FDIC and other insurance expense and a decrease of $1.1 million in net other real estate (“ORE”) expense, for the first nine months of 2017 compared to the same period in 2016.

44
·An increase of $2.2 million in income taxes, in the first nine months of 2017A decrease of $2.8 million in noninterest expense for the first quarter 2024 compared to the same period in 2016, due to an increase in pretax earnings.

Regulatory Agreement
On July 21, 2015 Trustco Bank, the wholly owned subsidiary of the Company, entered into a formal agreement with the OCC (the “Agreement”).

The Agreement relates to the findings of the OCC following its regularly scheduled examination of the Bank in January 2015.  Since the completion of the examination and entry into the Agreement, the Bank believes it has been working diligently to address the findings of the examination and to develop and implement appropriate formal action plans.

The Agreement requires the Bank to take various actions, within prescribed time frames, with respect to certain activities of the Bank.  These include, among others, (i) establishmentfirst quarter 2023, primarily as a result of a committeedecrease in salaries and employee benefits in the first quarter of at least three Directors2024 due to monitor and coordinate the Bank’s responsea favorable true-up to the Formal Agreement; (ii) adoption of compliance plans to respond to the Formal Agreement with the assistance of an independent qualified consultant; (iii) evaluation and implementation of improvementsincentive compensation accrual upon payout, as well as decreases in corporate governance with the assistance of an independent qualified consultant; (iv) evaluation and implementation of improvements in internal audit; (v) development of a strategic plan; (vi) development of a revised capitalvarious other employee benefit plan including dividends, consistent with the strategic plan; (vii) development and implementation of improvements to the Bank’s loan review system; and (viii) such other necessary steps to address the issues and questions noted by the OCC in the Agreement.  The costs to implement the recommendations in the agreement are expected to remain elevated, reflecting the Company’s investment in additional personnel and systems within the retail loan, deposit and regulatory compliance areas.expenses.


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-termshort‑term and long-termlong‑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 Annual Report to Shareholders on2023 Form 10-K for the year ended December 31, 2016 is a description of the effect that continued elevated interest rates had on the results for the year 20162023 compared to 2015.2022.  Many of the same market factors discussed in the 2016 Annual Report2023 Form 10-K, including instability in the financial services sector, heightened global economic concerns, and continued elevated interest rates continued to have a significant impact on results through the thirdfirst quarter of 2017.2024.


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 implementcontrol national economic policy is the Federal Funds“Federal Funds” rate.  This is the interest rate utilized within the banking system for overnight borrowings for institutions with the highest credit rating.  TheBeginning in the second half of 2019, the Federal Reserve Board began lowering the rate in response to a slowing economy.  During the first quarter of 2020, the target range for the Federal Funds target rate was significantly decreased from 4.25% at the beginning of 2008 to a target range of 0.00% to 0.25% byas a result of the end of 2008. In December 2015,COVID-19 pandemic.  However, as discussed above, the targetFOMC increased to a range of 0.25% to 0.50%, and  25 basis point increases in the target range were also announced in December of 2016 and March and June of 2017, producing the current range of 1.00% to 1.25%.  Additional increases in 2017 and beyond will largely be dependent on the strength of economic conditions.  In the November 1, 2017 statement from the Federal Open Market Committee, it was noted that, “In determining the timing and size of future adjustments to the target range for the federal funds rate the Committee will assess realizedseven times in 2022 and expected economic conditions relativefour times in 2023 by a total of 525 basis points, to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee will carefully monitor actual and expected inflation developments relative5.25% to its symmetric inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.”

Traditionally, interest rates on bank deposit accounts are heavily influenced5.50% by the Federal Funds rate.  The average rate on interest bearing deposits was 3 basis points lower in the third quarterend of 2017 relative to the prior year period.  Rates were flat or lower on all deposit categories2023 where it remains as compared to the same period in 2016 except money market accounts.  Please refer to the statistical disclosures in the table below entitled “Distribution of Assets, Liabilities and Shareholders’ Equity: Interest Rates and Interest Differential.”March 31, 2024.


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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.  The FRB has attempted to influence rates on mortgage loans by means other than targeting a lower Federal Funds rate, including direct intervention in the mortgage-backed securities market through purchasing these securities in an attempt to raise prices and reduce yields.  In recent periods this includes the reinvestment of principal payments received on its holdings of agency securities, agency mortgage-backed securities and Treasury securities. The FRB has stated its intent to unwind these positions, which could put upward pressure on rates, although other factors may mitigate this pressure.  These changes in interest rates can have an effect on the Company relative to the interest income on loans, securities, and Federal Funds sold and other short termshort-term instruments as well as onthe interest expense on deposits and borrowings.  The FRB plan to reduce its holdings began in October 2017 and will occur gradually.
TrustCo’s principal loan products are residential real estate loans.  As noted above, residentialResidential real estate loans and longer-termlonger‑term investments are most affected by the changes in longer term market interest rates such as the 10-year10‑year Treasury.  The 10-year Treasury yield was down 2 basis points,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 average, during the third quarterrecorded balance of 2017 compared to the second quartersecurities available for sale portfolio, which are recorded at fair value.  Generally, as market interest rates increase, the fair value of 2017 but was up 68 basis points as compared to the third quarter of 2016.

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.  As a portfolio lender, TrustCo does not sell loans into the secondary market in the normal course of business and is able to establishThe Company establishes rates that management determines are appropriate in light of the long-term nature of residential real estate loans while remaining competitive withcompetitive.  Higher market interest rates also generally increase the secondary market rates.  Financial market volatilityvalue 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 the problems facedlonger‑term investments are most affected by the financial services industry have lessened the influence of the secondary market; however, various programs initiated by arms of the federal government have had an impact on rate levels for certain products.  Most importantly, a government goal of keeping mortgage rates low has been supported by targeted buying of certain securities, thus supporting prices and constraining yields, as noted above.  Very lowchanges in longer term market interest rates in many markets aroundsuch as the world have also increased demand for US fixed income assets, which has also contributed10-year Treasury.  The 10‑year Treasury yield was down 29 basis points, on average, during the first quarter of 2024 compared to the decline of yields on these assets.

The Federal Funds sold and other short term investments portfolios are affected primarily by changes in the Federal Funds target rate. 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 interest rates increase the fair value of these securities will decrease.

Interest rates generally remained below historic norms on both short term and longer term investments during the thirdfourth quarter of 2017 despite2023, however, it was up 51 basis points as compared to the increases seen during the quarter.first quarter of 2023.


While TrustCo has been affected by changes in financial markets over time, management believes that the impact of the financial crisis that began in 2007 wasimpacts 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 balance sheet.  TheseManagement believes that these characteristics provide the Company with increased flexibility and stability during periods of market disruption and interest rate volatility.


A fundamental component of TrustCo’s strategy has been to grow customer relationships and the deposits and loans that are part of those relationships.  The Company has significant capacity to grow its balance sheet given its existing infrastructure.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.

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50
Index
For the thirdfirst quarter of 2017,2024, the net interest margin was 3.26%is 2.44%, up 17down 77 basis points versus the prior year’s first quarter.  The quarterly results reflect the following significant factors:

The average balance of Federal Funds sold and other short-term investments decreased by $61.9 million while the average yield increased 74 basis points in the third quarter of 2017 compared to the same period in 2016.  The decrease in the average balance helped to fund increases in loans.


The average balance of securities available for sale decreased by $39.8 million while the average yield increased 13 basis points to 1.92%.  The average balance of held to maturity securities decreased by $13.1$38.8 million and the average yield increased 724 basis points to 4.10% for2.50%.

The average balance of Federal funds sold and other short-term investments decreased $79.3 million; however the third quarter of 2017 comparedaverage yield increased 84 basis points to 5.45% which was enough to offset the same period in 2016, with the increase in yield in both portfolios due to a combination of slower prepayment speeds on mortgage-backed securities and the fact that corporate securities, which have higher yields, comprised a larger component of the portfoliodecrease in the 2017 period than in the 2016 period.average balance.


The average loan portfolio grew by $171.0$249.4 million to $3.54$5.01 billion and the average yield decreased 5increased 25 basis points to 4.24%3.98% in the thirdfirst quarter of 20172024 compared to the same period in 2016.  The decline in the average yield primarily reflects the decline in market interest rates on new loan originations as older, higher rate loans pay down or are paid off, as well as declines in higher yielding commercial and installment loans.2023.


The average balance of interest bearing liabilities (primarily deposit accounts) increased $13.2$193.3 million and the average rate paid decreased 2increased 136 basis points to 0.36%1.99% in the thirdfirst quarter of 20172024 compared to the same period in 2016.2023.


During the thirdfirst quarter of 2017,2024, the Company continued to focus on its strategy to expand theits 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 continueswas to beoffer competitive shorter term rates which allowed the Bank to attractmaintain our existing deposits.  This strategy drove growth at a relatively low cost that management believes should sustain TrustCo’s strong liquidity position and retain deposit customerscontinue to the Company based upon a combinationallow us to cross sell products to new and existing relationships and take advantage of service, convenience and interest rate.opportunities as they arise.


Earning Assets
Total average interest earning assets increased from $4.75$5.86 billion in the thirdfirst quarter of 20162023 to $4.80$5.99 billion in the same period of 20172024 with an average yield of 3.56%3.99% in the thirdfirst quarter of 20172024 and 3.41%3.69% in the thirdfirst quarter of 2016.2023.  The shift in the mix of assets towards a higher proportion ofinvested in Federal Funds sold and other short-term investments and securities available for sale decreased while loans along withincreased over the increase in yield on cash, more than offset the declining yields on loans.prior year period.  Interest income on average earning assets increased from $40.5$5.8 million in the thirdfirst quarter of 2016 to $42.8 million in2024 from the third quarter of 2017,prior year period, on a tax equivalent basis. TheThis increase was primarily driven by an increase in interest income on loans due to higher interest rates on loan originations over the result oflast year, and also the higher volumeinterest rates on Federal Funds sold and yield.other short-term investments and securities available for sale which resulted from the continued increases in the Federal Funds target rate throughout 2023.
Loans
The average balance of loans was $3.54$5.01 billion in the thirdfirst quarter of 2017 and $3.372024 up from $4.76 billion in the comparable period in 2016.2023.  The yield on loans decreased 5also increased 25 basis points to 4.24%3.98%.  The higher average balances more than offset the lower yield, leading to an increase in interest income on loans from $36.2 million in the third quarter of 2016 to $37.5 million in the third quarter of 2017.


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Index
Compared to the thirdfirst quarter of 2016,2023, the average balance of residential mortgage loans, increased, however other loan categories decreased.commercial loans, installment loans, and home equity loans all increased.  The average balance of residential mortgage loans was $3.04$4.36 billion in 20172024 compared to $2.82$4.21 billion in 2016,2023, an increase of 7.7%3.5%.  The average yield on residential mortgage loans decreasedincreased by 1221 basis points to 4.16%3.71% in the thirdfirst quarter of 20172024 compared to 2016.2023, 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 a 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 and the fact that the Company typically holds these loans in portfolio and does not sell them into the secondary markets.borrowers.  Assuming a continued rise 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, decreased $11.2increased $38.3 million to an average balance of $183.9$277.2 million in the thirdfirst quarter of 20172024 compared to the same period in the prior year.  The average yield on this portfolio was up 822 basis points to 5.40%5.28% compared to the prior year period, primarily reflectingas a result of the increase in the prime rate.continued elevated interest rates on new originations and variable rate loans repricing.  The Company has beensought to remain selective in underwriting commercial loans in recent periods as the apparent risk/reward balance has been less favorable in many cases.


The average yield on home equity credit lines increased 4449 basis points to 4.14%6.22% during the thirdfirst quarter of 20172024 compared to the prior year earlier period.  The increase in yield is the result of prime rate increases which impacted some loans and a smaller proportion of lower yielding initial rate balances.  The average balances of home equity lines decreased 9.8%increased 21.2% to $312.8$353.0 million in the thirdfirst quarter of 20172024 as compared to the prior year.  Some customers with home equity lines have refinanced their balances into fixed rate mortgage loans.


Securities Available for Sale
The average balance of the securities available for sale portfolio for the thirdfirst quarter of 20172024 was $594.2$477.4 million compared to $633.9$516.2 million for the comparable period in 2016.2023.  The decrease in the balance reflects routine paydowns, calls and maturities, partially offset by new investment purchases.  The average yield was 1.92%2.50% for the thirdfirst quarter of 20172024 compared to 1.79%2.26% for the thirdfirst quarter of 2016.2023.  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), agency-issued commercial mortgage backed securities, 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),loss, net of tax.
The net unrealized loss in the available for sale securities portfolio was $5.8$34.1 million as of September 30, 2017March 31, 2024 compared to a net unrealized loss of $11.3$32.2 million as of December 31, 2016.2023.  The increase in the net unrealized losslosses in the portfolio is primarily the result of changes in marketthe current interest rate levels.environment.


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Index
Held to Maturity Securities
The average balance of held to maturity securities was $36.9$6.3 million for the thirdfirst quarter of 20172024 compared to $50.0$7.5 million in the thirdfirst quarter of 2016.2023.  The decrease in balances reflects routine paydowns and calls.paydowns.  No new securities were added to this portfolio during the period.  The average yield was 4.10%4.30% for the thirdfirst quarter of 20172024 compared to 4.03%4.14% for the year earlier period.  The higher yield reflects a change in mix and slower prepayments on mortgage-backed securities (MBS), which reduced premium amortization.  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 $98 thousand as of March 31, 2024 compared to a net unrecognized loss of $62 thousand as of December 31, 2023.  The decrease in the net unrecognized losses in the portfolio is the result of changes in market interest rate levels.

As of September 30, 2017,March 31, 2024, 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 2017 third2024 first quarter average balance of Federal Funds sold and other short-term investments was $621.9$497.7 million, a $61.9$79.3 million decrease from the $683.8$576.9 million average for the same period in 2016.2023.  The yield was 1.24%5.45% for the thirdfirst quarter of 20172024 and 0.50%4.61% for the comparable period in 2016.2023.  Interest income from this portfolio increased $1.1 million$195 thousand from $866 thousand in 2016 to $1.9$6.6 million in 2017, reflecting2023 to $6.8 million in 2024.  While the average balances decreased year over year, the increase in the Federal Funds target rate increases that took effectthrough the end of 2023 resulted in December of 2016 and March and June of 2017, partly offset byan increase in interest income over the decreasesame period in balances.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 deposits, interest-bearing checking, money market and time deposit accounts.


Total average interest bearing deposits (which includes interest bearing checking, money market accounts, savings and certificates of deposit) decreased $20.1time deposits) increased $231.9 million to $3.79$4.58 billion for the thirdfirst quarter of 20172024 versus the thirdfirst quarter in the prior year, and the average rate paid decreasedincreased from 0.37%0.62% for 20162023 to 0.34%1.34% for 2017.2024.  Total interest expense on these deposits decreased $291 thousandincreased $16.3 million to $3.3$23.0 million in the thirdfirst quarter of 20172024 compared to the year earlier period.  From the thirdfirst quarter of 20162023 to the thirdfirst quarter of 2017,2024, interest bearing demandchecking account average balances were up 10.4%down  12.6%, certificates of deposit average balances were down 8.3%up 62.8%, non-interestnon‑interest demand average balances were up 3.1%down 11.1%, average savings balances decreased 0.3%20.4% and money market balances were down 9.3%.  Overall, average balances are up 0.1%.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.

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As of March 31, 2024, the maturity of total time deposits was as follows:

(dollars in thousands)   
    
Under 1 year $1,785,931 
1 to 2 years  22,971 
2 to 3 years  1,491 
3 to 4 years  92,184 
4 to 5 years  1,303 
Over 5 years  28 
  $1,903,908 

As of March 31, 2024 and December 31, 2023, approximately $1.04 billion and $1.03 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 2024 were $93.3 million compared to $131.9 million in the same period in 2023.  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 both the first quarter of 2023 and 2024.  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)(“FHLBNY”) and is an eligible borrower at the Federal Reserve Bank of New York (FRBNY)(“FRBNY”) and has the ability to borrow utilizing securities and/or loans as collateral at either.  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.readiness.

At September 30, 2017, the maturity of total time deposits is as follows:

(dollars in thousands)   
    
Under 1 year $773,959 
1 to 2 years  274,233 
2 to 3 years  23,568 
3 to 4 years  1,912 
4 to 5 years  1,989 
Over 5 years  225 
  $1,075,886 

Average short-term borrowings for the quarter were $223.2 million in 2017 compared to $189.9 million in 2016.  The average rate increased during this time period from 0.59% in 2016 to 0.62% in 2017.  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.


Net Interest Income
Taxable equivalent net interest income increased by $2.5was down $10.4 million to $39.2from $47.0 million in the thirdfirst quarter of 20172023 to $36.6 million in the first quarter of 2024.  The net interest spread was down 106 basis points to 2.00% in the first quarter of 2024 compared to the same period in 2016.  The net interest spread was up 18 basis points to 3.21% in the third quarter of 2017 compared to the same in 2016.2023.  As previously noted, the net interest margin was up 17down 77 basis points to 3.26%2.44% for the thirdfirst quarter of 20172024 compared to the same period in 2016.2023.   While yields on earning assets increased in Q1 2024 compared to Q1 2023, rates on interest-bearing liabilities with shorter maturities increased at a faster pace, causing margin compression. The Company has seen the erosion of margin begin to slow when comparing the decrease to prior quarters and management believes that we are nearing the bottom of this rate cycle.  The Federal Reserve’s decision regarding whether to cut or hold rates in the 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 2024, 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. 


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Nonperforming Assets
Nonperforming assets include nonperforming loans (“NPLs”), which are those loans in a non-accrualnon‑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 September 30, 2017:March 31, 2024:

Nonperforming loans and foreclosed real estate: estate:Total NPLs were $24.6$18.3 million at September 30, 2017,as of March 31, 2024, compared to $25.1$17.7 million at December 31, 20162023, and $26.0$19.2 million at September 30, 2016.  There were $24.5 millionas of non-accrual loans at September 30, 2017 compared to $25.0 million at DecemberMarch 31, 2016 and $26.0 million at September 30, 2016.2023.  There were no loans at September 30, 2017as of March 31, 2024 and 20162023 and December 31, 20162023 that were past due 90 days or more and still accruing interest.

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At September 30, 2017,As of March 31, 2024, nonperforming loans primarily include a mix of commercial and residential loans.  Of total nonperforming loans of $24.5$18.3 million at September 30, 2017, $22.8as of March 31, 2024, $17.3 million were residential real estate loans, $1.7 million$846 thousand were commercial loans and mortgages and $30$149 thousand were installment loans, compared to $23.2$16.7 million, $1.8 million$850 thousand and $48$166 thousand, respectively at December 31, 2016.2023.


A significant percentage of nonperforming loans are residential real estate loans, which are historically lower-risk than most other types of loans.  Annualized net chargeoffsNet recoveries were 0.07% of average$78 thousand on residential real estate loans (including home equity lines of credit) for the thirdfirst quarter of 2017 compared to 0.06% for2024 as well as the thirdfirst quarter of 2016.2023.  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 secured nonaccrual loans is evaluated periodically, and the loan value is written down if the collateral value is insufficient.


The Company originates loans throughout its deposit franchise area.  At September 30, 2017, 77.2%As of March 31, 2024, 65.0% of its gross loan portfolio balances were in New York State and the immediately surrounding areas (including New Jersey, Vermont and Massachusetts), and 22.8%35.0% were in Florida.  Those figures compare to 78.5%65.1% and 21.5%34.9%, respectively at December 31, 2016.  Within these two geographic regions, commercial loans constitute a larger component of the local outstandings in New York than in Florida, at 6.3% and 1.6%, respectively, as of September 30, 2017.2023.


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Economic conditions vary widely by geographic location.  Florida experienced a more significant downturn than New York during the recession, however conditions in Florida have improved more than in New York in recent periods.   As a percentage of the total nonperforming loans as of September 30, 2017, 7.7%March 31, 2024, 17.7% were to Florida borrowers, compared to 92.3%82.3% to borrowers in New York and surrounding areas.  For the three months ended September 30, 2017,March 31, 2024, New York and surrounding areas experienced net chargeoffsrecoveries of approximately $667$42 thousand, compared toand Florida experienced no net recoveries of $37 thousand in Florida.recoveries.
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 September 30, 2017,March 31, 2024, there were no other loans classified for regulatory purposes that management reasonably expects will materially impact future operating results, liquidity, or capital resources.


TrustCo has identified nonaccrualLoans individually evaluated for impairment are non-accrual loans delinquent greater than 180 days, non-accrual commercial and commercial real estate loans, as well as all loans restructured under a troubled debt restructuring (TDR),classified as impaired loans.loan modifications.  There were $3.0 million$952 thousand of commercial mortgages and commercial loans classified as impairedindividually evaluated as of September 30, 2017March 31, 2024 compared to $2.4$957 thousand at December 31, 2023.  There were $23.8 million of individually evaluated residential loans as of March 31, 2024 compared to $23.6 million at December 31, 2016.  There were $21.6 million of impaired residential loans at September 30, 2017 and $21.6 million at December 31, 2016.  The average balances of all impaired loans were $25.0 million for the nine months of 2017 and $22.4 million for the full year 2016.2023.


As of September 30, 2017March 31, 2024 and December 31, 2016,2023 the Company’s loan portfolio did not include any subprime mortgages or loans acquired with deteriorated credit quality.


At September 30, 2017As of March 31, 2024 there was $2.9$2.3 million of foreclosed real estate compared to $4.3 million$194 thousand at December 31, 2016.2023.


Allowance for loan losses: credit losses on loans: The balanceCompany evaluated several external forecasts in choosing the forecast to element for the economic components of the allowance for credit losses on loans. The Company selected the stagflation forecast and there have been no changes in the economic modeling since its adoption on January 1, 2022.

In the first quarter of 2024, the Company recorded a provision for credit losses of $600 thousand, which is all related to the provision for credit losses on loans, as there was no provision for credit losses on unfunded commitments.  The increase in the ACLL from during the first quarter of 2024 was primarily a result of loan losses is maintained at a level that is,growth and an increase in management’s judgment, representativethe expected life of loans.

From December 31, 2023 to March 31, 2024 the actual performance was in line with the forecasted performance pertaining to key variables such as consumer price indices, and Gross Metro Product.

See Note 5 of the amount of probable incurred losses infinancial statements for additional discussion related to the loan portfolio.process for determining the provision for credit losses.

Allocation of the Allowance for Loan Losses

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The allocation of the allowance for loanscredit losses ison loans as follows:

(dollars in thousands) 
As of
March 31, 2024
  
As of
December 31, 2024
  
  Amount  
Percent of
Loans to
Total Loans
  Amount  
Percent of
Loans to
Total Loans
  
Commercial $2,557   5.21% $2,519   5.05% 
Real estate - construction  258   0.52%  291   0.58% 
Real estate mortgage - 1 to 4 family  41,303   86.84%  40,745   87.09% 
Home equity lines of credit  4,919   7.11%  4,805   6.94% 
Installment Loans  183   0.32%  218   0.34% 
  $49,220   100.00% $48,578   100.00% 
(dollars in thousands) 
As of
September 30, 2017
  
As of
December 31, 2016
 
  Amount  
Percent of
Loans to
Total Loans
  Amount  
Percent of
Loans to
Total Loans
 
Commercial $4,490   4.94% $4,820   5.32%
Real estate - construction $343   0.78%  318   0.72%
Real estate mortgage - 1 to 4 family $33,083   85.34%  32,452   83.94%
Home equity lines of credit $5,440   8.71%  5,570   9.76%
Installment Loans $726   0.23%  730   0.26%
  $44,082   100.00% $43,890   100.00%

At September 30, 2017,As of March 31, 2024, the allowance for loancredit losses on loans was $44.1$49.2 million, compared to $44.0 million at September 30, 2016 and $43.9$48.6 million at December 31, 2016.2023.  The allowance represents 1.23%0.98% of the loan portfolio as of September 30, 2017March 31, 2024 compared to 1.30% at September 30, 2016 and 1.28% at0.97% as December 31, 2016.2023. The coverage ratio was 269.3% and 275.0% as of March 31, 2024 and December 31, 2023, respectively.

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The provision for loan losses was $550 thousand for the quarter ended September 30, 2017 and $750 thousand for the quarter ended September 30, 2016.  Net chargeoffsrecoveries for the three-month period ended September 30, 2017March 31, 2024 were $630$42 thousand and were $864$53 thousand for the prior year period.


During the thirdfirst quarter of 2017,2024, there were no commercial loan chargeoffs and $847charge-offs, $117 thousand of gross residential mortgageloan charge-offs, and $44 thousand of consumer loan chargeoffscharge-offs compared with $356no commercial or residential loan charge-offs and $48 thousand of grossconsumer loan charge-offs in the first quarter of 2023.  During the first quarter of 2024 there were no commercial loan chargeoffsrecoveries and $611 thousand of gross residential mortgage and consumer loan chargeoffs in the third quarter of 2016.  Gross recoveries during the third quarter of 2017 were zero for commercial loans and $217$203 thousand for residential mortgage and consumer loans,loan recoveries, compared to $3 thousand forno commercial loansloan recoveries and $100$101 thousand for residential mortgage and consumer loan recoveries in the thirdfirst quarter of 2016.2023.


In determiningThe following table presents the adequacy ofnet charge-off ratio for the allowance for loan losses, management reviews the current nonperforming loan portfolio as well as loans that are past duethree months ended March 31, 2024 and not yet categorized as nonperforming for reporting purposes.  Also, there are a number of other factors that are taken into consideration, including:2023:

·The magnitude and nature of recent loan chargeoffs and recoveries;
 
 For the three months ended March 31:
 
 
 2024
  2023
 
Commercial
  0.00
%
  
0.00
%
Real estate mortgage - 1 to 4 family
  0.00%
  0.00
%
Installment
  0.22%
  0.19
%
Total
  0.00
%
  
0.00
%
·The growth in the loan portfolio and the implication that it has in relation to the economic climate in the Bank’s market territories, and;

·The economic environment in the Upstate New York and Florida territories over the last several years, as well as in the Company’s other market areas.

Management continues to monitor these factors in determining the provision for loan losses in relation to loan chargeoffs, recoveries, the level and trends of nonperforming loans and overall economic conditions in the Company’s market territories.

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 CDscertificates 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.

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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 September 30, 2017March 31, 2024 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 September 30, 2017.March 31, 2024.  The 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 or to decrease by 100 bp.


As of September 30, 2017March 31, 2024
 
Estimated Percentage of
Fair value of Capital to
Fair value of Assets
 
+400 BP
  19.8119.60%
+300 BP
  21.1020.10 
+200 BP
  22.3721.60 
+100 BP
  23.4123.10 
Current rates
  23.8523.40 
-100 BP
  21.5723.10
-200 BP
21.60
-300 BP
19.20
-400 BP
16.40 

Noninterest Income
Total noninterest income for the thirdfirst quarter of 20172024 and 2023 was $4.9$4.8 million compared toand $4.7 million, respectively.  The increase over the same period in the prior year period.  The increase of $125 thousand was dueprimarily related to an increase of $118 thousand in Financial Services income, offset by a decline in other income.  There were no net gains on securities transactions in either period.  The increase ininterchange fees.  Financial Services income was dueup $42 thousand to $1.8 million in the first quarter of 2024 as compared to the settlementyear-ago period, primarily as a result of several estates in the third quarterhigher market values of 2017 that generated more revenue than previously accrued for.  Fees for services to customers were up $103 over the prior year period.assets under management.  The fair value of assets under management was $876 million at September 30, 2017 and $846$1.0 billion as of March 31, 2024, $967 million as of December 31, 20162023 and $863$922 million at September 30, 2016.as of March 31, 2023.


For the nine months through September 30, 2017 total noninterest income was $14.1 million, compared to $14.5 million for the prior year period.  The decline was due to a decrease of $668 thousand in net gains on securities transactions and a decrease of $549 in other income, offset by an increase of $663 thousand in Financial Services revenue, as noted previously.

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Noninterest Expenses
Total noninterest expenses were $23.5$24.9 million for the three months ended September 30, 2017,March 31, 2024, compared to $23.0$27.7 million for the three months ended September 30, 2016March 31, 2023.  Significant changes included a $1.4 million increasedecrease in salaries and employee benefits offset byprimarily as a $620 thousand decreaseresult of a favorable true-up to the incentive compensation accrual, as well as decreases in various other employee benefit plan expenses.  Other significant changes were decreases in equipment expense, professional services, other real estate costsexpense, net, and a $487 thousand decrease in other expenses.  These decreases were offset by an increase in outsourced services.  Full time equivalent headcount increaseddecreased from 790776 as of September 30, 2016March 31, 2023 to 815761 as of September 30, 2017, which wasMarch 31, 2024 and represents a primary cause, along with the increase in the market pricenormal fluctuation of TrustCo shares,  of the increase in salary and benefits expense.headcount.
For the nine months through September 30, 2017 total noninterest expense was $70.5 million for both the third quarters of 2017 and 2016.  An increase of $3.2 million in salaries and benefits was offset by a decrease of $2.0 million decrease in FDIC and other insurance expenses and a decrease of $1.1 million in other real estate expense.  Changes in other categories were less significant.


Income Taxes
In the thirdfirst quarter of 2017,2024, TrustCo recognized income tax expense of $7.4$3.8 million compared to $6.7$5.9 million for the thirdfirst quarter of 2016.2023.  The effective tax rates were 36.9%23.8% and 37.9% for the third quarters of 2017 and 2016, respectively.  For the nine month periods through September 30, income taxes increased $2.2 million, with effective tax rates of 37.3% and 37.4%25.0%, respectively, for the nine months ended September 30, 2017first quarters of 2024 and 2016.2023.


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“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.

Trustco Bank’s Agreement with the OCC requires the Bank to develop and comply with a capital plan, and the Bank may declare or pay a dividend or make a capital distribution only (a) when the Bank is in compliance with its approved written capital plan, and would remain in compliance with such capital plan immediately following the declaration or payment of any dividend or capital distribution and (b) following OCC approval under OCC capital distribution rules.


Total shareholders’ equity at September 30, 2017as of March 31, 2024 was $454.9$649.2 million compared to $435.6$614.7 million at September 30, 2016.as of March 31, 2023.  TrustCo declared a dividend of $0.065625$0.36 per share in the thirdfirst quarter of 2017.2024.  This results in a dividend payout ratio of 50.07%56.48% based on thirdfirst quarter 20172024 earnings of $12.6$12.1 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.

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The Bank and the Company reported the following capital ratios as of September 30, 2017March 31, 2024 and December 31, 2016:2023:

(Bank Only)          Minimum for 
           Capital Adequacy plus 
  As of March 31, 2024  Well  Capital Conservation 
(dollars in thousands) Amount  Ratio  
Capitalized(1)
  
Buffer (1)(2)
 
             
Tier 1 leverage ratio $640,288   10.427%  5.000%  4.000 
Common equity tier 1 capital  640,288   18.505   6.500   7.000 
Tier 1 risk-based capital  640,288   18.505   8.000   8.500 
Total risk-based capital  683,633   19.758   10.000   10.500 
(Bank Only)
           Minimum for 
           Capital Adequacy plus 
  As of December 31, 2023  Well  Capital Conservation 
(dollars in thousands) Amount  Ratio  
Capitalized(1)
  
Buffer (1)(2)
 
             
Tier 1 leverage ratio 
$
636,327
   
10.428
%
  
5.000
%
  
4.000
 
Common equity tier 1 capital  
636,327
   
18.280
   
6.500
   
7.000
 
Tier 1 risk-based capital  
636,327
   
18.280
   
8.000
   
8.500
 
Total risk-based capital  
679,924
   
19.532
   
10.000
   
10.500
 

(Consolidated)       
     Minimum for 
     Capital Adequacy plus 
 As of March 31, 2024 Capital Conservation 
(dollars in thousands) As of September 30, 2017  
Well
Capitalized(1)
 
Adequately
Capitalized(1)(2)
  Amount Ratio 
Buffer (1)(2)
 
 Amount Ratio          
                
Tier 1 leverage capital $443,310   9.071%  5.000%  4.000%
Tier 1 leverage ratio $663,400 10.798% 4.000%
Common equity tier 1 capital  443,310   17.763   6.500   5.750  663,400 19.168 7.000 
Tier 1 risk-based capital  443,310   17.763   8.000   7.250  663,400 19.168 8.500 
Total risk-based capital  474,669   19.019   10.000   9.250  706,757 20.421 10.500 

     Minimum for 
     Capital Adequacy plus 
 As of December 31, 2023 Capital Conservation 
(dollars in thousands) As of December 31, 2016 
Well
Capitalized(1)
 
Adequately
Capitalized(1)(3)
  Amount Ratio 
Buffer (1)(2)
 
 Amount Ratio          
                
Tier 1 (core) capital $424,802   8.829%  5.000%  4.000%
Common equity tier 1 capital  424,802   17.238   6.500   5.125 
Tier 1 leverage ratio 
$
657,968
 
10.780
%
 
4.000
%
Common equity Tier 1 capital 
657,968
 
18.896
 
7.000
 
Tier 1 risk-based capital  424,802   17.238   8.000   6.625  
657,968
 
18.896
 
8.500
 
Total risk-based capital  455,772   18.492   10.000   8.625  
701,577
 
20.149
 
10.500
 


(1)Federal regulatory minimum requirements to be considered to be Well Capitalized and Adequately Capitalized
(2)The September 30, 2017March 31, 2024 and December 31, 2023 common equity tier 1, tier 1 risk-based, and total risk-based capital ratios include a transition capital conservation buffer of 1.252.50 percent
(3)The December 31, 2016 common equity tier 1, tier 1 risk-based, and total risk-based capital ratios include a transition capital conservation buffer of 0.625 percent

(Consolidated)
(dollars in thousands) 
As of September 30, 2017
 
  Amount  Ratio 
         
Tier 1 leverage capital $457,434   9.359%
Common equity tier 1 capital  457,434   18.319 
Tier 1 risk-based capital  457,434   18.319 
Total risk-based capital  488,810   19.576 
(dollars in thousands) As of December 31, 2016 
  Amount Ratio 
         
Leverage capital $438,426   9.110%
Common equity tier 1 capital  438,426   17.782 
Tier 1 risk-based capital  438,426   17.782 
Total risk-based capital  469,411   19.038 

In addition, at September 30, 2017, theas of March 31, 2024, Trustco’s consolidated equity to total assets ratio was 9.34%,10.51% compared to 8.89%10.46% at December 31, 20162023 and 9.05% at September 30, 2016.

Both TrustCo and Trustco Bank are subject to regulatory capital requirements. On January 1, 2015, a new capital rule took effect that revised the federal bank regulatory agencies’ risk-based capital requirements and subjected the Company to consolidated regulatory capital requirements. Among other matters, the rule also established a new common equity Tier 1 minimum capital requirement10.17% as of 4.5% of risk-weighted assets, increased the minimum Tier 1 capital to risk-based assets requirement from 4.0% to 6.0% of risk-weighted assets, changed the risk-weightings of certain assets, and changed what qualifies as capital for purposes of meeting the various capital requirements. In addition, the Company and the Bank are required to maintain additional levels of Tier 1 common equity (the capital conservation buffer) over the minimum risk-based capital levels before they may pay dividends, repurchase shares, or pay discretionary bonuses. The new rule will be phased-in over several years and will be fully in effect in 2019.  Calendar year 2016 was the third year of implementation of the new capital rules. Prior to January 2015, the Company had not been subject to consolidated regulatory capital requirements.

March 31, 2023.

As of September 30, 2017,March 31, 2024, the capital levels of both TrustCo and the Bank exceeded the minimum standards, including ifwith the current (and also if the fully phased-in) capital conservation buffer is taken into account.

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60
Index
Under the OCC’sOffice of the Comptroller of the Currency’s (“OCC”) “prompt corrective action” regulations, a bank is deemed to be “well-capitalized”“well capitalized” when its CET1, Tier 1, total risk-based and leverage capital ratios are at least 6.5%7%, 8%8.5%, 10%,10.5% and 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%.  At September 30, 2017As of March 31, 2024 and 2016,December 31, 2023, Trustco Bank met the definition of “well-capitalized.“well capitalized.”


As noted, the Company’s dividend payout ratio was 50.07%56.48% of net income for the thirdfirst quarter of 20172024 and 57.40%38.59% of net income for the thirdfirst quarter of 2016.2023.  The per-share dividend paid in both the third quartersfirst quarter of 20162024, the fourth quarter of 2023, and 2017the first quarter of 2023 was $0.065625.$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 and the Bank’s compliance with the capital plan required under the terms of the Agreement. Under the OCC agreement, the Bank may declare or pay a dividend or make a capital distribution only (a) when the Bank is in compliance with its approved written capital plan, and would remain in compliance with such capital plan immediately following the declaration or payment of any dividend or capital distribution, and (b) following OCC approval under OCC capital distribution rules.requirements.  The OCC may disapprove a dividend if: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 statue,statute, regulation or agreement. In addition, under the Agreement, the payment of dividends by the Bank are subject to prior approval.


TrustCo maintains a dividend reinvestment plan (DRP) with approximately 12,0006,586 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 29, 2024 the Company’s Board of Directors authorized, and the Company announced, another share repurchase program of up to 200,000 shares, or approximately 1% of its currently outstanding common stock.  There were no repurchases during the three months ended March 31, 2024.

Critical Accounting Policies and Estimates
PursuantOur 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 Securitiesmake estimates and Exchange Commission (SEC) guidance, managementassumptions 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 Company is encouragedthree months ended March 31, 2024, there were no significant changes to evaluate and disclose thoseour critical accounting policies judged to be critical policies - those most important toand estimates as described in the portrayal offinancial statements contained in the Company’s financial condition and results, and that require management’s most difficult subjective or complex judgments.2023 Form 10-K other than what is set forth immediately below.
 
Management considers the accounting policy relating to the allowance for loancredit losses to be a critical accounting policy given the inherentmeasurement uncertainty and subjective judgement necessary in evaluating the levels of the allowance required to cover the inherent risk oflife-time losses in the loan portfolio and the material effect that such judgments can have on the results of operations. Included in Note 1 to the Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 is a description of the significant accounting policies that are utilized by the Company in the preparation of the Consolidated Financial Statements.

58
61
Index
TrustCo Bank Corp NY
Management’sManagement's Discussion and Analysis
STATISTICAL DISCLOSURE


I. DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’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 (adjusted for tax equivalency) 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) gain, net of tax, in the available for sale portfolio of ($3.0) million 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.
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
September 30, 2017
  
Three months ended
September 30, 2016
          
(dollars in thousands) 
Average
Balance
  Interest  
Average
Rate
  
Average
Balance
  Interest  
Average
Rate
  
Change in
Interest
Income/
Expense
  
Variance
Balance
Change
  
Variance
Rate
Change
 
Assets                           
                            
Securities available for sale:                           
U. S. government sponsored enterprises $123,055   465   1.51% $109,488   408   1.49% $57   51   6 
Mortgage backed securities and collateralized mortgage obligations-residential  345,248   1,815   2.10%  400,103   1,829   1.83%  (14)  (1,053)  1,039 
State and political subdivisions  522   11   8.43%  953   20   8.39%  (9)  (10)  1 
Corporate bonds  42,528   153   1.44%  27,161   97   1.43%  56   -   - 
Small Business Administration-guaranteed participation securities  72,204   380   2.11%  85,305   445   2.09%  (65)  (87)  22 
Mortgage backed securities and                                    
collateralized mortgage obligations-commercial  9,918   22   0.89   10,247   36   1.41   (14)  (1)  (13)
Other  685   4   2.34%  685   4   2.34%  -   -   - 
                                     
Total securities available for sale  594,160   2,850   1.92%  633,942   2,839   1.79%  11   (1,099)  1,054 
                                     
Federal funds sold and other short-term Investments  621,878   1,927   1.24%  683,777   866   0.50%  1,061   (522)  1,583 
                                     
Held to maturity securities:                                    
Corporate bonds  6,738   102   6.06%  10,644   156   5.86%  (54)  (88)  34 
Mortgage backed securities and collateralized mortgage obligations-residential  30,161   276   3.66%  39,307   347   3.53%  (71)  (150)  79 
                                     
Total held to maturity securities  36,899   378   4.10%  49,951   503   4.03%  (125)  (237)  112 
                                     
Federal Reserve Bank and Federal Home Loan Bank stock  9,117   125   5.48%  9,579   131   5.47%  (6)  (8)  2 
                                     
Commercial loans  183,867   2,482   5.40%  195,115   2,597   5.32%  (115)  (338)  223 
Residential mortgage loans  3,035,745   31,600   4.16%  2,819,343   30,175   4.28%  1,425   5,895   (4,470)
Home equity lines of credit  312,812   3,237   4.14%  346,744   3,211   3.70%  26   (1,365)  1,391 
Installment loans  8,096   200   9.88%  8,331   195   9.36%  5   (28)  33 
                                     
Loans, net of unearned income  3,540,520   37,519   4.24%  3,369,533   36,178   4.29%  1,341   4,165   (2,824)
                                     
Total interest earning assets  4,802,574   42,799   3.56%  4,746,782   40,517   3.41%  2,282   2,298   (72)
                                     
Allowance for loan losses  (44,284)          (44,473)                    
Cash & non-interest earning assets  127,004           137,462                     
                                     
Total assets $4,885,294          $4,839,771                     
                                     
Liabilities and shareholders’ equity                                    
                                     
Deposits:                                    
Interest bearing checking accounts $861,387   113   0.05% $780,058   120   0.06%  (7)  54   (61)
Money market accounts  572,168   469   0.33%  571,333   463   0.32%  6   0   6 
Savings  1,280,318   435   0.14%  1,284,533   504   0.16%  (69)  (1)  (68)
Time deposits  1,078,085   2,247   0.83%  1,176,115   2,468   0.84%  (221)  (80)  (141)
                                     
Total interest bearing deposits  3,791,958   3,264   0.34%  3,812,039   3,555   0.37%  (291)  (27)  (264)
Short-term borrowings  223,238   345   0.62%  189,910   281   0.59%  64   50   14 
                                     
Total interest bearing liabilities  4,015,196   3,609   0.36%  4,001,949   3,836   0.38%  (227)  23   (250)
                                     
Demand deposits  389,286           377,455                     
Other liabilities  28,809           27,496                     
Shareholders’ equity  452,003           432,871                     
                                     
Total liabilities and shareholders’ equity $4,885,294          $4,839,771                     
                                     
Net interest income , tax equivalent      39,190           36,681      $2,509   2,275   178 
                                     
Net interest spread          3.21%          3.03%            
                                     
Net interest margin (net interest income to total interest earning assets)          3.26%          3.09%            
                                     
Tax equivalent adjustment      (11)          (14)                
                                     
Net interest income      39,179           36,667                 
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 (adjusted for tax equivalency) 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’shareholders' equity is the unrealized loss, net of tax, in the available for sale portfolio of ($4.2) million in 2017 and  ($0.5)$25.6 million in 2016.2024 and $29.5 million in 2023.  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.

 
Nine months ended
September 30, 2017
  
Nine months ended
September 30, 2016
           Three months ended Three months ended       
(dollars in thousands)
 
Average
Balance
  Interest  
Average
Rate
  
Average
Balance
  Interest  
Average
Rate
  
Change in
Interest
Income/
Expense
  
Variance
Balance
Change
  
Variance
Rate
Change
  March 31, 2024 March 31, 2023       
                   
 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 $139,629   1,667   1.59% $97,281   1,067   1.46% $600   497   103  
$
125,973
 
$
906
 
2.88
%
 
$
120,692
 
$
692
 
2.29
%
 
$
214
 
$
31
 
$
183
 
Mortgage backed securities and collateralized mortgage obligations-residential  357,347   5,717   2.13%  419,185   6,114   1.94%  (397)  (1,204)  807  
258,814
 
1,494
 
2.30
%
 
287,046
 
1,585
 
2.20
%
 
(91
)
 
(450
)
 
359
 
State and political subdivisions  736   41   7.43%  1,007   60   7.94%  (19)  (11)  (8) 
26
 
-
 
6.90
%
 
34
 
-
 
6.74
%
 
-
 
-
 
-
 
Corporate bonds  42,272   458   1.44%  9,120   97   1.42%  361   359   2  
73,625
 
476
 
2.59
%
 
85,578
 
521
 
2.43
%
 
(45
)
 
(211
)
 
166
 
Small Business Administration-guaranteed participation securities  75,429   1,189   2.10%  87,896   1,371   2.08%  (182)  (205)  23  
18,224
 
100
 
2.20
%
 
22,129
 
117
 
2.12
%
 
(17
)
 
(45
)
 
28
 
Mortgage backed securities and collateralized mortgage obligations-commercial  10,003   66   0.88%  10,320   110   1.42%  (44)  (3)  (41)
Other  685   12   2.34%  683   12   2.34%  -   -   -  
696
 
3
 
1.72
%
 
686
 
2
 
1.17
%
 
1
 
-
 
1
 
                                                                
Total securities available for sale  626,101   9,150   1.95%  625,492   8,831   1.88%  319   (567)  886  
477,358
 
2,979
 
2.50
%
 
516,165
 
2,917
 
2.26
%
 
62
 
(675
)
 
737
 
                                                       
Federal funds sold and other short-term Investments  635,450   4,900   1.03%  675,948   2,542   0.50%  2,358   (256)  2,614  
497,652
 
6,750
 
5.45
%
 
576,931
 
6,555
 
4.61
%
 
195
 
(4,097
)
 
4,292
 
                                                       
Held to maturity securities:                                                       
Corporate bonds  8,897   410   6.14%  10,202   464   6.06%  (54)  (64)  10 
Mortgage backed securities and collateralized mortgage obligations-residential  32,202   888   3.68%  42,192   1,123   3.55%  (235)  (297)  62  
6,329
 
68
 
4.30
%
 
7,542
 
78
 
4.14
%
 
(10
)
 
(27
)
 
17
 
                                                          
Total held to maturity securities  41,099   1,298   4.21%  52,394   1,587   4.04%  (289)  (361)  72  
6,329
 
68
 
4.30
%
 
7,542
 
78
 
4.14
%
 
(10
)
 
(27
)
 
17
 
                                                       
Federal Reserve Bank and Federal Home Loan Bank stock  9,467   393   5.54%  9,545   369   5.15%  24   (5)  29  
6,203
 
152
 
9.80
%
 
5,797
 
110
 
7.59
%
 
42
 
8
 
34
 
                                                       
Commercial loans  184,932   7,313   5.27%  198,461   7,777   5.22%  (464)  (586)  122  
277,183
 
3,661
 
5.28
%
 
238,870
 
3,024
 
5.06
%
 
637
 
502
 
135
 
Residential mortgage loans  2,969,363   92,910   4.17%  2,768,579   89,523   4.31%  3,387   7,652   (4,265) 
4,359,476
 
40,415
 
3.71
%
 
4,212,878
 
36,913
 
3.50
%
 
3,502
 
1,312
 
2,190
 
Home equity lines of credit  321,276   9,453   3.92%  353,461   9,569   3.61%  (116)  (1,193)  1,077  
353,004
 
5,464
 
6.22
%
 
291,326
 
4,119
 
5.73
%
 
1,345
 
958
 
387
 
Installment loans  8,117   563   9.25%  8,435   579   9.15%  (16)  (22)  6  
16,128
 
264
 
6.58
%
 
13,323
 
216
 
6.56
%
 
48
 
47
 
1
 
                                                                
Loans, net of unearned income  3,483,688   110,239   4.22%  3,328,936   107,448   4.30%  2,791   5,850   (3,059) 
5,005,791
 
49,804
 
3.98
%
 
4,756,397
 
44,272
 
3.73
%
 
5,532
 
2,819
 
2,713
 
                                                       
Total interest earning assets  4,795,805   125,980   3.50%  4,692,315   120,777   3.43%  5,203   4,660   543  
5,993,333
 
59,753
 
3.99
%
 
5,862,832
 
53,932
 
3.69
%
 
5,821
 
(1,972
)
 
7,793
 
                                                       
Allowance for loan losses  (44,317)          (44,832)                    
Allowance for credit losses on loans 
(48,824
)
     
(46,290
)
           
Cash & non-interest earning assets  129,384           136,584                      
185,230
     
175,097
           
                                                       
Total assets $4,880,872          $4,784,067                      
$
6,129,739
     
$
5,991,639
           
                                                       
Liabilities and shareholders’ equity                                    
Liabilities and shareholders' equity                   
                                                       
Deposits:                                                       
Interest bearing checking accounts $840,322   371   0.06% $758,314   350   0.06%  21   44   (23) 
990,130
 
240
 
0.10
%
 
$
1,133,383
 
$
66
 
0.02
%
 
174
 
(58
)
 232 
Money market accounts  576,518   1,403   0.32%  585,019   1,426   0.33%  (23)  (21)  (2) 
544,687
 
2,342
 1.73
%
 
600,855
 
814
 
0.55
%
 
1,528
 
(527
)
 
2,055
 
Savings  1,280,473   1,300   0.14%  1,273,565   1,712   0.18%  (412)  16   (428) 
1,158,558
 
712
 
0.25
%
 
1,456,242
 
530
 
0.15
%
 
182
 
(632
)
 
814
 
Time deposits  1,104,731   6,711   0.81%  1,162,603   7,301   0.84%  (590)  (343)  (247) 
1,889,929
 
19,677
 
4.19
%
 
1,160,969
 
5,272
 
1.84
%
 
14,405
 
4,757
 
9,648
 
                                                          
Total interest bearing deposits  3,802,044   9,785   0.34%  3,779,501   10,789   0.38%  (1,004)  (304)  (700) 
4,583,304
 
22,971
 
2.02
%
 
4,351,449
 
6,682
 
0.62
%
 
16,289
 
3,540
 
12,749
 
Short-term borrowings  226,447   1,043   0.61%  182,453   800   0.58%  243   196   47  
93,316
 
204
 
0.88
%
 
131,867
 
285
 
0.88
%
 
(81
)
 
(81
)
 
-
 
                                                                
Total interest bearing liabilities  4,028,491   10,828   0.36%  3,961,954   11,589   0.39%  (761)  (108)  (653) 
4,676,620
 
23,175
 
1.99
%
 
4,483,316
 
6,967
 
0.63
%
 
16,208
 
3,459
 
12,749
 
                                                       
Demand deposits  380,216           368,852                      
726,299
     
816,565
           
Other liabilities  27,880           27,179                      
80,158
     
84,092
           
Shareholders’ equity  444,285           426,082                     
Shareholders' equity 
646,662
     
607,666
           
                                                       
Total liabilities and shareholders’ equity $4,880,872          $4,784,067                     
Total liabilities and shareholders' equity 
$
6,129,739
     
$
5,991,639
           
                                                       
Net interest income , tax equivalent      115,152           109,188      $5,964   4,768   1,196 
Net interest income, tax equivalent    
36,578
     
46,965
   
$
(10,387
)
 
$
(5,431
)
 
$
(4,956
)
                                                       
Net interest spread          3.14%          3.04%                 
2.00
%
     3.06
%
       
                                                       
Net interest margin (net interest income to total interest earning assets)          3.20%          3.10%                 
2.44
%
     
3.21
%
       
                                                       
Tax equivalent adjustment      (32)          (40)                    
-
      
-
         
                                                       
Net interest income      115,120           109,148                    
$
36,578
     
$
46,965
         

60
62
Index
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 Annual Report to Shareholders as of December 31, 2016,2023 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 and nine month periods ended September 30, 2017March 31, 2024 and 2016,2023 the Company continues to respondstrives 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 thirdfirst quarter of 2017,2024, the Company had an average balance of Federal Funds sold and other short-term investments of $621.9$497.7 million compared to $683.8$576.9 million in the thirdfirst quarter of 2016.2023.  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.

The Company maintains disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (“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.  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.


63
Index
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 IIOTHER 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.
None.

Item 1A.
Risk Factors


There were no material changes toAn investment in the Company involves risks, including the risks discussed in Item 1A. “Risk Factors” of the Company’s 2023 Form 10-K, which risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.have not materially changed.


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, 2024:

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, 2024 through January 31, 2024
-
$
-
-
February 1, 2024 through February 29, 2024
-
-
-
March 1, 2024 through March 31, 2024
-
-
-
200,000
Total
-
$
-
-
200,000

(1)
On March 29, 2024 the Company’s Board of Directors authorized, and the Company announced, another share repurchase program of up to 200,000 shares, or approximately 1% of its currently outstanding common stock.  There were no repurchases during the three months ended March 31, 2024.


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Index
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).
None.

Item 6.
Exhibits

Reg S-K (Item 601)
Exhibit No.Description
  
15
3(a)
Crowe Horwath LLP Letter Regarding Unaudited Interim Financial InformationAmended 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.
  
31(a)
3(b)
Rule 13a-15(e)/15d-15(e) CertificationAmended and Restated Bylaws of Robert J. McCormick, principal executive officer.
31(b)Rule 13a-15(e)/15d-15(e) Certification of Michael M. Ozimek, principal financial officer.
32Section 1350 Certifications of Robert J. McCormick, principal executive officer and Michael M. Ozimek, principal financial officer.
101.INSInstance Document
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRLTaxonomy Extension Presentation Linkbase Document
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
President and Chief Executive Officer
By: /s/ Michael M. Ozimek
Michael M. Ozimek
Senior Vice President and Chief Financial Officer
Date:  November 7, 2017
Exhibits Index
Reg S-K
effective October 17, 2023, incorporated by reference to Exhibit No.
Description3.1 to TrustCo Bank Corp NY’s Current Report on Form 8-K, filed October 17, 2023.
  
15
Crowe Horwath LLP Letter Regarding Unaudited Interim Financial Information
  
31(a)
Rule 13a-15(e)/15d-15(e) Certification of Robert J. McCormick, principal executive officer.
  
31(b)
Rule 13a-15(e)/15d-15(e) Certification of Michael M. Ozimek, principal financial officer.
  
32
Section 1350 Certifications of Robert J. McCormick, principal executive officerexecutiveofficer and Michael M. Ozimek, principal financial officer.

 
101Sections of the Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, formatted in Inline XBRL (eXtensible Business Reporting Language), submitted in the following files:

101.INSInline XBRL Instance Document
  
101.SCHInline XBRL Taxonomy Extension Schema Document
  
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
  
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
  
101.LABInline XBRL Taxonomy Extension Label Linkbase Document
  
101.PREXBRLTaxonomyInline XBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

64
65
Index
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, 2024


65